Due Diligence for Investors in Verastem, Inc.
The Reuters article and company press release linked below discuss the VSTM decision to halt the Phase II study currently underway and to stop the enrollment of patients. We included a blog page by Derek Lowe that specializes in developmental drugs and treatments. VSTM is involved in theoretical and complex treatments for cancer and the blog has information and links that are informative in the VSTM cancer treatment area.
Our View: Investors seem to have panicked over the VSTM failure in the Phase II study of its VS-6063 FAK Inhibitor. These things happen, not every clinical trial is successful and not every treatment gets FDA approval. When the company had its IPO in 2012 investors saw the words “Stem Cell” and had to be in. In the years since then it hasn’t been unusual to see VSTM shares trading in the $10-$15 range. Yesterday the market drove these shares down to $1.85 giving VSTM, representing a market cap of $68 million. They have $131 million in cash.
Bio-technology stocks are highly speculative and investors should take a deeper look, doing their due diligence into the platforms that new bio-technology treatments are based upon. Most of these platforms are technically advanced but many public companies are good at laying them out so the layman can understand.
Where does Verastem go from here? They still have that $131 million in cash. Just because VS-6063 was not effective against mesothelioma doesn’t mean it can’t eventually be effective against other cancers. VSTM could be a steal at the current price, if only because their cash position is twice the market value.
Reuters – Vidya L Nathan in Bengaluru; Editing by Savio D’Souza – September 28, 2015
VSTM Press Release – September 28, 2015
In The Pipeline – Derek Lowe – September 28, 2015
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