On Thursday, Jefferies initiated coverage on Verastem (NASDAQ:VSTM), a late-stage biopharmaceutical company with a market capitalization of $272 million, with a Buy rating and a price target of $15.00. Trading at $5.28, the stock has shown strong momentum with a 77% gain over the past six months. The company is currently focused on developing treatments for cancers that are connected to the RAS/MAPK signaling pathway.
Verastem’s key drug candidates include avutometinib, also known as a RAF/MEK clamp, and defactinib, a FAK inhibitor. These candidates are poised to potentially become the first FDA-approved therapy for low-grade serous ovarian cancer (LGSOC), with a Prescription Drug User Fee Act (PDUFA) date set for June 30, 2025. The company maintains a strong liquidity position with a current ratio of 3.07.
Feedback from key opinion leaders (KOLs) in the medical community indicates a high level of anticipated adoption for these treatments, regardless of patients’ KRAS mutation status. This contrasts with current market expectations, which Jefferies suggests are limited to the approximately 30% of LGSOC patients who have KRAS mutations.
Verastem’s pipeline also includes opportunities in genetically defined subsets of non-small cell lung cancer (NSCLC) with G12C mutations and in first-line pancreatic ductal adenocarcinoma (PDAC). Additionally, Verastem’s collaboration with GenFleet on a G12D ON/OFF inhibitor is seen as a further upside by Jefferies.
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