Verastem (VSTM) AI Stock Analysis

• Market Cap: $271.85M
• Dividend Yield: N/A
• Average Volume (3M): 900.88K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.33
• Revenue Growth: N/A
• EPS Growth: 14.39%
• Country: US
• Employees: 78
• Sector: Healthcare
• Sector Strength: 74
• Industry: Biotechnology
• EPS (TTM): -3.49
• Shares Outstanding: 51,486,706
• 10 Day Avg. Volume: 904,615
• 30 Day Avg. Volume: 900,885
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 29.60
• Price to Cash Flow (P/CF): -3.10
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $12.38
• Price Target Upside: 134.47% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 8

Verastem's stock score reflects significant financial challenges, with persistent losses and reliance on external financing as key risks. However, recent positive corporate developments and technical indicators suggest potential for future growth. The valuation is constrained by negative earnings, limiting immediate investor appeal. Overall, the stock represents a speculative opportunity in the biotechnology sector, with potential upside if strategic initiatives succeed.

Positive Factors

Financial Stability

Recent debt refinancing and new credit facilities are seen positively, as they improve VSTM's financial stability and extend its cash runway.

Product Launch

Verastem Inc is preparing for the potential US launch of its lead asset avutometinib + defactinib in low grade serous ovarian cancer, a condition with no approved therapies.

Regulatory Progress

The FDA acceptance of the new drug application for the combination of avutometinib and defactinib for low-grade serous ovarian cancer is seen as a key milestone for Verastem Inc.

Negative Factors

Approval Strategy

VSTM shares are down approximately 20% due to the news that the company will initially seek approval only in KRAS-mutant patients, not KRAS-wild-type patients.

Clinical Development

The initiation of a US Phase 1/2 study for Verastem's novel KRAS G12D inhibitor in advanced solid tumors is on track for mid-year.

Market Reaction

Despite the share weakness, the recommendation is to be opportunistic at current levels, as the share drop is seen as an overreaction.

Verastem Business Overview & Revenue Model

Company Description

Verastem, Inc., a development-stage biopharmaceutical company, focusing on developing and commercializing drugs for the treatment of cancer. Its product in development includes VS-6766, a dual rapidly accelerated fibrosarcoma (RAF)/mitogen-activated protein kinase (MEK) clamp that blocks MEK kinase activity and the ability of RAF to phosphorylate MEK. The company also engages in developing RAMP 201, an adaptive two-part multicenter, parallel cohort, randomized open label trial to evaluate the efficacy and safety of VS-6766 and in combination with defactinib, an oral small molecule inhibitor of focal adhesion kinase (FAK) in patients with recurrent low grade serous ovarian cancer; and RAMP 202, which is in Phase 2 trial to evaluate the safety of VS-6766 in combination with defactinib in patients with KRAS and BRAF mutant non-small cell lung cancer following treatment with a platinum-based regimen and immune checkpoint inhibitor. Verastem, Inc. has license agreements with Chugai Pharmaceutical Co., Ltd. for the development, commercialization, and manufacture of products containing VS-6766; and Pfizer Inc. to research, develop, manufacture, and commercialize products containing Pfizer's inhibitors of FAK for therapeutic, diagnostic and prophylactic uses in humans. In addition, it has clinical collaboration agreement with Amgen, Inc. to evaluate the combination of VS-6766 with Amgen's KRAS-G12C inhibitor LUMAKRASTM which in Phase 1/2 trial entitled RAMP 203. The company was incorporated in 2010 and is headquartered in Needham, Massachusetts.

How the Company Makes Money

Verastem makes money through the development and commercialization of its oncology therapies. The company's revenue model includes income from product sales, particularly from its commercialized therapies, licensing agreements, and potential milestone payments from strategic partnerships. These partnerships often involve collaboration with other pharmaceutical companies for the development and marketing of its drug candidates. Additionally, Verastem may receive research and development funding from these partnerships, contributing to its financial earnings. The company's ability to generate revenue is significantly influenced by the success of its clinical trials, regulatory approvals, and market acceptance of its drugs.

Verastem Financial Statement Overview

Summary

Verastem is facing significant financial challenges with persistent losses, negative equity, and reliance on external financing. While there are signs of revenue growth, the underlying profitability and cash flows are weak, indicating that the company needs to address operational inefficiencies and improve its financial health to ensure long-term sustainability.

Income Statement

Verastem's income statement highlights significant challenges with profitability. The gross profit margin is positive due to cost control, but net income remains deeply negative, reflecting ongoing losses. The revenue growth rate is misleadingly high, as revenue increased from zero, indicating volatility rather than sustainable growth. EBIT and EBITDA margins are negative, pointing to operational inefficiencies.

Balance Sheet

The balance sheet shows a concerning debt-to-equity scenario, with negative equity indicating financial instability. The company's liabilities exceed assets, suggesting potential solvency issues. The equity ratio is negative, further highlighting financial distress. ROE is negative, consistent with the company's net losses.

Cash Flow

Cash flow analysis reveals negative operating and free cash flows, indicating cash burn. The company relies on financing activities for liquidity, posing a risk if financing dries up. The operating cash flow to net income ratio is negative, reflecting cash flow challenges and inefficiencies in converting net income to cash.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
10.00M	0.00	2.60M	2.05M	88.52M
	Gross Profit
10.00M	-62.00K	2.48M	1.85M	54.77M
	EBIT
-114.96M	-92.08M	-72.94M	-61.41M	-49.36M
	EBITDA
-125.86M	-83.17M	-71.56M	-61.02M	-50.41M
	Net Income Common Stockholders
-130.64M	-87.37M	-73.85M	-81.10M	-67.73M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
88.82M	137.13M	87.89M	100.26M	141.23M
	Total Assets
101.54M	149.72M	95.05M	108.66M	154.35M
	Total Debt
42.25M	41.56M	27.07M	2.26M	22.54M
	Net Debt
-46.56M	-36.35M	-47.87M	-97.99M	-45.24M
	Total Liabilities
130.43M	92.34M	47.66M	21.10M	39.08M
	Stockholders Equity
-28.89M	57.37M	47.39M	87.56M	115.27M
Cash Flow		Free Cash Flow
-104.80M	-86.46M	-63.67M	-53.70M	-33.54M
	Operating Cash Flow
-104.77M	-86.46M	-63.67M	-53.50M	-33.51M
	Investing Cash Flow
59.97M	-44.45M	66.19M	87.00K	-47.36M
	Financing Cash Flow
54.78M	134.19M	51.78M	6.88M	69.63M

Verastem Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 5.28
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VSTM, the sentiment is Negative. The current price of 5.28 is below the 20-day moving average (MA) of 6.24, below the 50-day MA of 6.11, and above the 200-day MA of 4.22, indicating a neutral trend. The MACD of 0.02 indicates Positive momentum. The RSI at 41.02 is Neutral, neither overbought nor oversold. The STOCH value of 16.50 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VSTM.

Verastem Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RIGL	70 Outperform	$304.38M	16.85	531.78%	―	53.38%	―
PSNL	51 Neutral	$287.00M	―	-48.91%	―	15.15%	39.27%
Sector *	48 Neutral	$6.36B	1.24	-44.94%	2.70%	18.33%	1.47%
VSTM	47 Neutral	$271.85M	―	-526.33%	―	―	14.39%
AMLX	45 Neutral	$309.22M	―	-100.88%	―	-77.06%	-705.82%
ATXS	39 Underperform	$230.25M	―	-33.52%	―	―	27.92%
AURA	39 Underperform	$269.21M	―	-46.01%	―	―	9.22%

Verastem Corporate Events

Verastem Unveils Strategic Plans in New Presentation

On March 20, 2025, Verastem, Inc. released an updated corporate presentation outlining its strategic plans and product development efforts, particularly in the area of Low-Grade Serous Ovarian Cancer. The announcement highlights the company’s ongoing clinical trials and collaborations, including those with GenFleet Therapeutics, as well as the potential market opportunities for its drug candidates. The release underscores the company’s commitment to advancing its pipeline, despite the inherent risks and uncertainties in drug development and commercialization.

Verastem Expands Oncology Pipeline with VS-7375 Acquisition

On January 14, 2025, Verastem, Inc. exercised its option to acquire exclusive rights to develop and commercialize VS-7375, a selective KRAS G12D inhibitor, outside of certain Asian territories, from GenFleet Therapeutics. This strategic move is a significant step in Verastem’s expansion of its oncology pipeline, particularly in targeting RAS pathway driven cancers, potentially enhancing its competitive position in the biotech sector.

Verastem Appoints Matthew E. Ros as COO

Verastem, Inc. has appointed Matthew E. Ros as Chief Operating Officer effective January 14, 2025. Mr. Ros brings over 35 years of experience in global pharmaceutical and biotechnology sectors, previously serving in leadership roles at FORE Biotherapeutics and Epizyme, Inc. In this new role, he will receive a base salary of $485,000 with eligibility for a performance-based bonus, and stock units contingent upon his continued service and achievement of specific milestones. This strategic appointment is expected to strengthen Verastem’s operational capabilities and strategic direction, potentially impacting stakeholder interests positively.

Verastem Strengthens Financials and Partnerships for Drug Launch

Verastem has secured a $150 million credit facility and $7.5 million equity investment from Oberland Capital, along with a strategic partnership with IQVIA, to support the launch of their investigational drug combination avutometinib and defactinib for recurrent KRAS mutant low-grade serous ovarian cancer. The collaboration aims to leverage IQVIA’s commercialization solutions, enhancing Verastem’s financial strength ahead of the potential FDA approval, which could significantly impact their market presence and provide new treatment options for complex cancer cases.