On Monday, B.Riley analyst Kalpit Patel reaffirmed a Buy rating and a $7.00 price target for Verastem (NASDAQ:VSTM), following new details from a draft listing application by GenFleet Therapeutics. Currently trading at $3.77, the stock sits well below the analyst consensus range of $7-14, suggesting significant upside potential according to InvestingPro data.
The application, submitted to The Stock Exchange of Hong Kong, provides insights into the clinical development in China of a KRAS G12D inhibitor, a project in collaboration with Verastem.
The draft filing disclosed promising preclinical data, indicating no central nervous system or respiratory effects in rats, and no cardiovascular issues in dogs from single-dose administration of the inhibitor.
Additionally, a 28-day repeated-dose toxicity study in dogs showed no deaths or negative ECG findings. Significantly, the application revealed that 26 patients have already received the oral G12D inhibitor, with early anti-tumor activity observed at the initial dose levels.
While the specifics of the response rates were not disclosed, the mention of early activity is seen as a positive sign, particularly as this is an orally administered agent. GenFleet expects to complete Phase I and commence Phase II in the first half of 2025. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 3.23, though it’s currently burning through cash reserves. This progression is interpreted as a favorable development for Verastem, which is planning to launch a U.S.-based Phase I study in the fiscal year 2025.
Verastem stock has experienced considerable volatility recently, with prices fluctuating between approximately $3 and $6 in the past few months. The stock is down 54% year-to-date but has shown resilience with a 24.5% gain over the past six months. The analyst suggests that the recent weakness in Verastem’s stock may be attributed to broader trends affecting the XBI biotechnology index and potential year-end tax-loss selling as the fiscal year 2024 wraps up.
In summary, B.Riley has reiterated its confidence in Verastem, emphasizing the company’s undervaluation based solely on the potential of its lead program targeting low-grade serous ovarian cancer. According to InvestingPro Fair Value analysis, the stock appears undervalued at current levels. Subscribers can access 10 additional ProTips and a comprehensive Pro Research Report for deeper insights into Verastem’s financial health and growth prospects.
In other recent news, Verastem, a biopharmaceutical company, has seen notable developments in its ongoing clinical studies and financial performance. H.C. Wainwright reaffirmed a Buy rating on Verastem shares, following the company’s presentation of updated results from its RAMP 203 study. The study examines a combination of avutometinib, defactinib, and sotorasib in treating KRAS G12C mutant non-small cell lung cancer.
Mizuho (NYSE:MFG) Securities raised its price target on Verastem to $9.00, maintaining an Outperform rating, due to a revised valuation model for the company’s leading cancer treatment, avutometinib plus defactinib. This change led to a projection of peak year sales for the treatment at approximately $750 million, expected to be reached in 2029.
Truist Securities maintained a Buy rating on Verastem with a $15.00 price target, expressing confidence in the company’s future value. This comes as Verastem announced an accelerated pathway opportunity focusing on KRAS mutations, which could expedite the development process for its treatments.
Verastem’s second-quarter financial results exceeded expectations due to milestone payments, and the company announced plans to raise approximately $55 million through a public offering. Lastly, Verastem received the FDA’s Orphan Drug Designation for a drug combination aimed at treating pancreatic cancer and disclosed promising interim results from its ongoing RAMP 205 trial.
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