Verastem: Market Overreaction Creates A Dip Buying Opportunity (NASDAQ:VSTM)

koto_feja Thesis overview Verastem (NASDAQ:VSTM) is a clinical-stage biotech developing small molecule inhibitors targeting the RAS signaling pathways, which are overactivated in more than a third of cancers. The stock has dipped by about 70% following updated clinical data in low-grade serous ovarian cancer (LGSOC) and in pancreatic ductal adenocarcinoma (PDAC). The following are the most likely reasons: Objective response rate (ORR) in LGSOC was lower than reported earlier. VSTM has announced plans for a rolling NDA submission but only for KRAS-mutant (KRASmt) subset of patients, which is 1/3 of the already small LGSOC patient population. Serious adverse events were reported in 29% of patients in the PDAC study. VSTM will soon need to raise cash (estimated cash runway into mid/late Q1 2025). Despite the above, I believe the dip creates a trading opportunity for the following reasons: The reported ORR is likely to increase at final readout because some patients with tumor regression not yet meeting partial response (PR) criterion may further improve. Even the currently reported ORR is much better than standard of care (SOC). Additionally, the safety/tolerability profile is considerably better. The FDA has agreed to a rolling NDA submission based on the data. Although this does not guarantee a positive outcome it means that VSTM likely has sufficient data for an approval. VSTM believes that a submission for wild-type KRAS (KRASwt) is still possible considering outperformance of standard of care (SOC) in terms of both safety and efficacy. KRASmt represents 1/3 of the LGSOC patients but VSTM estimates that it represents 2/3 of the total market potential considering better prognosis of KRASmt patients, which means longer time on treatment. Therefore, I believe there is high probability of accelerated approval for at least KRASmt and possibly KRASwt. Furthermore, there is strong potential for positive readouts in additional indications. But the risk associated with the relatively short cash runway for a pre-commercial biotech should not be underestimated. Overview of Avutometinib, VSTM’s lead asset VSTM’s lead candidate is avutometinib, an orally bioavailable inhibitor of the RAS pathway. By blocking both MEK and RAF, avutometinib can produce stronger inhibition of the RAS pathway (which could translate to better therapeutic responses) and is less susceptible to emergence of resistance (which could translate to more durable responses). The latter is important because cancer cells have multiple mechanisms to overcome blocking of any single target in the RAS pathway. This is also the reason why avutometinib is being evaluated in combination with other molecules targeting the RAS pathway. Avutometinib prevents compensatory phosphorylation of MEK, an advantage over existing MEKi (Company presentation) Preclinical data show wide potential (variety of RAS/MAPK alterations and variety of tumors) (Company presentation) Rationale for combining avutometinib with defactinib (Company presentation) Specifically, avutometinib is being evaluated in combination with the following molecules: + Defactinib (FAK Inhibitor) against recurrent LGSOC + Defactinib + Chemotherapy against 1L PDAC ± Defactinib + KRAS G12C Inhibitors against mKRAS G12C NSCLC Avutometinib has received the following designations: “Orphan Drug Designation for avutometinib alone or in combination with defactinib in recurrent LGSOC” “Breakthrough Therapy Designation for combination of avutometinib and defactinib for treatment of recurrent LGSOC after one or more prior lines of therapy including platinum-based chemotherapy” “FDA Fast Track Designation for avutometinib in combination with Amgen’s G12C inhibitor sotorasib in KRAS G12C-mutated metastatic NSCLC” FDA Fast Track Designation for avutometinib plus defactinib in combination with sotorasib in KRAS G12C-mutated metastatic NSCLC “FDA Fast Track Designation granted for avutometinib in combination with Mirati’s (BMS) G12C inhibitor adagrasib in KRAS G12C-mutated metastatic NSCLC” Of note, Fast Track Designation means potential for accelerated approval (in the case of oncology this means approval based on ORR and duration of response) and priority review (shorter review timeline). Overview of the pipeline As explained above, avutometinib is being evaluated in various combinations against a variety of solid tumors. Although LGSOC is the most advanced indication and nearing approval it represents a small market (see section below). Therefore, I personally view a potential approval in LGSOC as validation of VSTM’s pipeline rather than a major source of future revenue. Beyond LGSOC VSTM is also targeting NSCLC and PDAC. Furthermore, numerous investigator-sponsored trials are ongoing targeting additional indications, including breast cancer, colorectal cancer, melanoma and thyroid cancer. Finally, beyond avutometinib (which is the backbone in all ongoing clinical trials) VSTM also has a discovery and development agreement with GenFleet for development of molecules targeting RAS-driven cancers (this will be discussed in a subsequent section). VSTM’s pipeline (Company presentation) Ongoing investigator-sponsored trials (Company presentation) Overview of LGSOC and market potential According to current estimates, close to 20K women in US are being diagnosed with ovarian cancer per year. LGSOC represents <5% of ovarian cancer cases, meaning a yearly incidence of less than 1000 new cases. This is quite lower than the estimate provided by VSTM (incidence of 1,000-2,000K patients per year, the source of this estimation being unclear). Patients are typically managed with cytoreductive surgery followed by adjuvant chemotherapy ± maintenance therapy with an aromatase inhibitor. However, as high as 80% of women with LGSOC will have a recurrence, although newer data suggest the recurrence rate may be lower (as low as 50%, but I believe this is an underestimation given the length of follow-up in that study) with maintenance aromatase inhibitors. Assuming a yearly incidence of 1000 and recurrence rate of 70% this means the incidence of recurrent disease (1st recurrence) is 700 cases per year. Now consider that VSTM is currently targeting KRASmt (although I expect eventual approval in KRASwt as well) which represents about a third of LGSOC cases, meaning about 230 new cases per year. Based on a median treatment duration of 18 months, the max number of patients on treatment is estimated at 345 cases per year (prevalence=incidence*duration). Assuming VSTM also captures KRASwt recurrent LGSOC patients I estimate an additional prevalence of patients on treatment of about 153 (based on an incidence of 770 cases per year and median treatment duration of 8 months). Therefore, as explained by VSTM, KRASwt target market represents roughly 2/3 of the total LGSOC market potential. Considering premium pricing associated with orphan disease designation, and benefits of the treatment over competition I anticipate a yearly price of at least $200K per patient for avutometinib+defactinib combo, and maybe even higher considering the rarity of the indication. For comparison, Mekinist, an approved MEK-inhibitor is priced at about $200K per year. Based on above estimates this means peak sales of $69M for KRASmt recurrent LGSOC population and $30M for KRASwt recurrent LGSOC population (total about $100M). Based on comparative safety and efficacy (to be discussed below) I anticipate VSTM to capture the majority of this market potential. This is admittedly a relative small target market but consider the following: the above reflects just the US population and does not account for global sales potential. VSTM’s current enterprise value is just $50M. Therefore, even $50M in sales revenue is considerable. Approval in LGSOC is just the start with high probability for approval in additional indications. For some perspective, the global MEKi market size was valued at $2.1 billion in 2023 and is expected to reach $6.3 billion by 2033. US (45%) and NSCLC indication (55%) dominate the market share. Of note current MEKi are limited by AEs (see discontinuation rates in table in subsequent section) which could aid avutometinib in both capturing market share as well as further expanding the market potential. In other words, LGSOC is just the beginning for VSTM. Important statistics about LGSOC (Company presentation) Improved efficacy over SOC and competitors in LGSOC In the table below I summarize efficacy results from three VSTM trial readouts compared to 2 landmark trials in recurrent LGSOC. The 1st column represents the latest readout from Parts A+B+C of the ongoing RAMP 201 trial. This is the main trial based on which VSTM will apply for accelerated approval. Of note this readout reflects patients with a minimum of 5 months follow-up, which is insufficient to reflect the full response potential. The 2nd column represents a readout from Part A of RAMP 201, in which case all patients had a follow-up of at least 12 months. The 3rd column represents the readout for the combo from an earlier phase trial (FRAME study). The next columns represent the readouts from the arms (MEKi vs. SOC) of two landmark trials. Between trial comparison (Table created by me) Looking at the table, it is important to note the following: Response rates were similar comparing Part A of RAMP 201 to FRAME study but much better comparing to the preliminary readout from Parts A+B+C of the ongoing RAMP 201 trial. This is a major reason for the dip after public release of these results. Nevertheless, as explained above, the follow up in this readout was insufficient to capture the full ORR potential. Notably, in Part A median time to best response was 5.5 months (range 1.6-14.7) meaning that for half of the patients best response was reached only after 5.5 months (and as long as 14.7 months in one patient). In other words some of the patients with SD and tumor regression not yet sufficient to meet PR definition may further improve resulting in a higher final number of PRs. Based on 14 patients with SD or unconfirmed PR still on treatment, the final ORR may be as high as 53% (range 37-53%) in KRASmt patients and as high as 25% (range 15-25%) in KRASwt patients. Avutometinib + Defactinib clearly outperforms SOC in terms of both efficacy and tolerability. On the other hand, based on post-hoc analyses of GOG 218 and Milo studies, similarly high ORR were reported in KRASmt patients being treated with competing MEK inhibitors. Nevertheless, safety and tolerability is much better with avutometinib+defactinib combo. Furthermore, preliminary results suggest potential for more durable responses (see DOR and PFS results from FRAME study), although this remains to be proven from the ongoing RAMP 201. More durable responses can be explained by better tolerability (much lower discontinuation rate due to AEs can allow patients to remain longer on treatment) and lower potential for resistance emergence (due to avutometinib’s dual mechanism of action). Comparing to SOC and competing MEKi VSTM’s combo performs at least as good in KRASwt patients and with a much safer tolerability profile. Therefore, I doubt the combo will be approved for just KRASmt and not KRASwt (even if not as part of an accelerated approval). Of interest is that beyond KRAS there are other potential mutations affecting the MAPK pathway in LGSOC. Notably, based on a post-hoc analysis of Milo study ORR was 41% among patients with alterations in MAPK pathway. It’s unfortunate that VSTM didn’t take this into account. Patients enrolled in RAMP 201 trial were more heavily pre-treated (higher median number of prior lines of therapy) which may underestimate benefits over competitors. Additionally, RAMP 201 allowed enrollment of patients after prior MEKi treatments. Notably, in RAMP 201 part A, 3 of 4 patients on prior MEKi demonstrated a PR while the other had tumor regression not meeting the PR criterion. This supports greater efficacy over MEKi monotherapy. Considerably improved ORR vs. prior lines of therapy (SGO Annual Meeting on Women’s Cancer March 16-18, 2024, San Diego, CA.) Responses in patients with prior MEKi therapy (SGO Annual Meeting on Women’s Cancer March 16-18, 2024, San Diego, CA.) Improved safety over competitors in LGSOC As seen in the table above, as well as the image below, the combination avutometinib+defactinib is much more tolerable than both SOC and MEK-inhibitors, including both lower frequency of Gr3 or greater adverse events and much lower discontinuation rate due to adverse effects. The latter is important because it allows patients to remain on treatment for longer, which may further improve outcomes. Optimized intermittent dosing regimen considerably improves safety and tolerability profile (Company presentation) Regulatory pathway for LGSOC indication Considering Breakthrough Therapy Designation and above results FDA has agreed on VSTM initiating a rolling submission, albeit at the moment only for KRASmt patients. Mature data (at least 12 months follow-up per patient) are expected in 2H 2024 and will be necessary for completion of the NDA submission. Importantly, “based on discussions with the FDA, we understand that the proposed indication for final submission of the clinical module can be expanded in the event Verastem provides data that demonstrates a substantial improvement over available therapy in the KRAS wild-type (KRAS wt) population”. Personally, I believe the above presented data from RAMP 201 and FRAME is substantial enough to allow approval in KRASwt as well, although it seems that the FDA is not yet convinced. Even if efficacy was similar to SOC, VSTM has produced more than enough data showing compellingly better safety/tolerability. Outside the US, VSTM “plans to discuss regulatory path with CHMP and PMDA (EU and Japan)”. VSTM targets full enrollment by end of 2025 for its ongoing confirmatory RAMP 301 study. A well-progressing confirmatory trial is very important for accelerated approval. Results in PDAC VSTM has recently announced very promising interim results from the RAMP 205 trial evaluating avutometinib+defactinib+gemcitabine+nab-paclitaxel in newly diagnosed patients with metastatic PDAC. Results have been presented in ASCO 2024. Study design, and dosing levels, are being evaluated, and interim results are summarized in the images below. Design of RAMP 205 (Company presentation) Dose levels being evaluated in RAMP 205 (Company presentation) Interim swimmer plot from RAMP 205 (Company presentation) Interim waterfall plot from RAMP 205 (Company presentation) Notably, in Dose Level 1, the cohort with the most mature data (follow-up > 6 months), an 83% (5/6) ORR was observed, with a median time to response of 4.6 months (range 1.9-6.1). Looking at all (n=27) efficacy evaluable patients (swimmer plot above), a best response of PR was observed in n=7 (26%) of the patients and SD in n=14 (52%) patients (excluding n=2 that progressed at subsequent assessment), resulting in a DCR of 77%. Of note, all n=14 patients with SD, of which n=10 remain on treatment, were on treatment for only a short time, less than the median time to response. Therefore, it is likely that at least some of those patients will further improve on longer follow-up. Above results compare very favorably to SOC: Efficacy of SOC in 1L mPDAC (Company presentation) However, 29% (12 of 41) of the patients experienced Serious Adverse Events (SAEs), which may partly explained the dip in the stock price. Specifically, the following Grade ≥3 treatment-emergent SAEs were observed; blood bilirubin increased (n=2), biliary obstruction (n=2), febrile neutropenia (n=2), pulmonary embolism (n=2), sepsis (n=2), anaemia (n=1), pneumoperitoneum (n=1), septic shock (n=1), skin infection (n=1), malignant neoplasm progression (n=1) and vomiting (n=1). Safety profile (ASCO 2024 poster) For those that are not familiar with clinical trials, anything is recorded as an adverse event, even if not related to the treatment. Therefore, the above-mentioned AEs are not necessarily related to the treatment. Notably, pancreatic cancer is one of the worst malignancies someone can have, itself associated with serious complications. For example, biliary obstruction is a common complication of pancreatic cancer. Biliary obstruction can result in elevated bilirubin as well as in sepsis due to cholangitis and/or associated bacteremia. Furthermore, pancreatic cancers confer high risk for pulmonary embolism. Malignancies can also result in anemia by various mechanisms. Additionally, I am surprised that “malignant neoplasm progression” is recorded as a SAE. Finally, it seems implausible to me that “pneumoperitoneum” is an adverse event of the treatment. In other words, I believe that most of the above SAEs are not related to the treatment. Of note, only “two patients discontinued treatment due to treatment emergent adverse events (febrile neutropenia, blood bilirubin increased, and detachment of retinal pigment epithelium)”. Additionally, hematological toxicity (including anemia and neutropenia) are known side effects of both gemcitabine and nab-paclitaxel. Therefore, these AEs may not be attributable to avutometinib/defactinib. Furthermore, neutropenia is a manageable adverse effect, that may be even proactively treated with G-CSF. To sum up, avutometinib+defactinib+gemcitabine+nab-paclitaxel has demonstrated very promising efficacy, much better that what would be expected from gemcitabine+nab-paclitaxel alone. Furthermore, the above-reported SAEs are not a concern to me at all at this point, not only because most of them are unlikely to be related to the treatment, but especially because PDAC is associated with dismal prognosis. Potential in NSCLC As above-mentioned VSTM is evaluating avutometinib (± defactinib) in combination with approved KRAS G12C inhibitors (sotorasib or adagrasib) against KRAS G12C NSCLC, in collaboration with Amgen and Mirati Therapeutics. A limitation of approved therapies is a relatively low response rate as well as short time to progression. For example, in a phase 3 trial sotorasib achieved a PFS of just 5.6 months, and an ORR of 28% with a median duration of response of 8.6 months. There is strong preclinical support for the combination of avutometinib (± defactinib) with KRAS G12C inhibitors, as well as promising preliminary clinical results: Preclinical data (in vitro against various cancer cell lines, as well as in mice NSCLC models) suggest strong synergy potential of avutometinib (± defactinib) with both sotorasib and adagrasib. Preclinical data also suggest that avutometinib is active against cancer cell lines with mutations that confer resistance to sotorasib and/or adagrasib. Furthermore, in a mice model of KRAS G12C/Y96D (conferring resistance to both sotorasib and adagrasib) NSCLC, addition of avutometinib + FAKi results in considerable tumor growth inhibition. Additionally, in a mice model addition of avutometinib + FAKi restores antitumor activity after progression on sotorasib monotherapy. Finally, according to preliminary data from an ongoing RAMP 2023 study (evaluating avutometinib ± defactinib + sotorasib in KRAS G12C NSCLC) the combination avutometinib + sotorasib was active in patients with prior KRAS G12C inhibitor treatment. “The confirmed ORR was 25% (3/12) across efficacy-evaluable patients and seen in both KRAS G12C inhibitor-resistant (14.3%; 1/7) and naïve (40%; 2/5) patients”. Note that based on preclinical data efficacy is expected to be better with addition of defactinib. Overview of potential in NSCLC (Company presentation) Preclinical data demonstrating synergy potential (Company presentation) Preclinical data demonstrating potential to overcome sotorasib resistance by combination with avutometinib ± FAKi (Company presentation) Promising activity from ongoing RAMP 203 trial (Company presentation) GenFleet collaboration In August 2023 VSTM entered into an agreement with GenFleet. According to the agreement, VSTM has the option to license global rights outside the GenFleet territory (mainland China, Hong Kong, Macau, and Taiwan) for up to 3 programs targeting the RAS pathway. GenFleet is responsible for the preclinical and early-clinical (phase 1) development of selected programs. Upon “successful completion of pre-determined milestones in Phase 1 trials” VSTM will have the option to in-license molecules of interest. VSTM has already “made an upfront payment of $2.0 million to GenFleet in September 2023 and will provide $1.5 million of research support over the first three years of the GenFleet Agreement”. The total deal potential for GenFleet (to be paid by VSTM) is up to $622.0 million, including option payments and development and commercial milestones, plus “royalties on net sales of licensed products in the GenFleet Territory ranging from the mid to high single digits”. So far VSTM has selected GFH375 (VS-7375), an oral, potent and selective small molecule KRAS G12D (ON/OFF) inhibitor as lead program, with two more programs still in the discovery phase. As explained by VSTM, “KRAS G12D represents 26% of all KRAS mutations, making it the most prevalent KRAS mutation in human cancer”. A variety of solid tumors could represent good targets for the treatment (image below). So far preclinical data have demonstrated both single-agent activity, as well as synergy potential with other treatments, including VSTM’s avutometinib. GenFleet plans initiation of a Phase 1 trial in China in 2H 2024. The total cost for VSTM according to the agreement to develop GFH375 through Phase 1 is estimated at $11.5M. Potential in a variety of solid tumors indications (Company presentation) Preclinical antitumor activity (Company presentation) Other licensing agreements Avutometinib has been licensed from Chugai Pharmaceutical on January 2020. According to the agreement VSTM will owe to Chugai double-digit royalties on net sales of products containing avutometinib. Defactinib has been licensed from Pfizer on July 2012. According to the agreement, Pfizer is “eligible to receive up to $2.0 million in developmental milestones and up to an additional $125.0 million based on the successful attainment of regulatory and commercial sales milestones” plus “single to mid-double-digit royalties on future net sales”. Finally, in August 2020 Secura Bio purchased an exclusive worldwide license for VSTM’s duvelisib (currently approved as COPIKTRA for relapsed/refractory chronic lymphocytic leukemia/small lymphocytic lymphoma). According to the agreement VSTM is entitled to: (i) regulatory milestone payments up to $45.0 million, consisting of a payment of $35.0 million upon receipt of regulatory approval of COPIKTRA in the United States for the treatment of peripheral T-cell lymphoma (“PTCL”) and a payment of $10.0 million upon receipt of the first regulatory approval for the commercial sale of COPIKTRA in the European Union for the treatment of PTCL, (ii) sales milestone payments of up to $50.0 million, consisting of $10.0 million when total worldwide net sales of COPIKTRA exceed $100.0 million, $15.0 million when total worldwide net sales of COPIKTRA exceed $200.0 million and $25.0 million when total worldwide net sales of COPIKTRA exceed $300.0 million, (iii) low double-digit royalties on the annual aggregate net sales above $100.0 million in the United States, European Union, and the United Kingdom of Great Britain and Northern Ireland and (iv) 50% of all royalty, milestone and sublicense revenue payments payable to Secura under our existing license agreements with Sanofi, Yakult, and CSPC, and 50% of all royalty, and royalty payments payable to Secura under any license or sublicense agreement entered into by Secura in certain jurisdictions. Of note, COPIKTRA specifically, and PI3K inhibitors as a class, are limited by FDA warnings of fatal and/or serious toxicities. Therefore, for CLL (currently approved indication) it is generally considered a last resort treatment option with a favorable benefit-to-risk balance only for otherwise incurable diseases. Considering the safety profile it looks like the commercial potential is limited. Therefore, I wouldn’t count on the above-mentioned sales milestones and royalties, although considering premium pricing associated with orphan drug designation I wouldn’t rule out achievement of some of the above sales milestones. Furthermore, the $45M regulatory milestone payments is an important potential source of non-dilutive funding. Secura Bio has completed two phase 2 trials, one for PTCL indication and one for indolent Non-Hodgkin Lymphoma. Preliminary results in PTCL are promising. However, it is unclear to me if Secura Bio will pursue further development considering the above limitations. Even if Secura Bio pursues an NDA submission, approval (and associated milestone payments) is not to be expected before 2H 2025 at the earliest. Financials As of March 31, 2024, VSTM reported $110M in cash, cash equivalents and investments. Total operating expenses in Q1 2024 were $28.1M (R&D $17.7M, SG&A $10.4M). At this rate (about $9.4M cash burn/month) I estimate a cash runway of close to 12 months (i.e., up to March 2025). Notably, the latest 10-Q includes a “going concern” statement. Furthermore, expenses will eventually increase both to support ongoing trials as well as to support a potential commercial launch in 2025 for LGSOC. VSTM also has a debt facility available. On March 2022, VSTM entered into a loan agreement with Oxford Finance LLC Credit Facility for up to $150M. VSTM has already received $40M and is eligible for additional $110M loan tranches, including; $25M following approval (accelerated or full) of avutometinib for LGSOC $35M, when VSTM has achieved at least $50M in gross product on a trailing six-month basis (based on above estimations of market potential for LGSOC this may be difficult to achieve, or at the least it will take time) $50M at the sole discretion of the lenders. VSTM will start to have paying back the loans (plus interest) in consecutive equal monthly payments starting from April 2025, or April 2026 “if either (A) avutometinib has received FDA approval for the treatment of LGSOC or (B) COPIKTRA has received FDA approval for the treatment of peripheral T-cell lymphoma”. All principal and accrued interest will need to be paid by March 1, 2027. Based on the above, I expect that VSTM will need to raise cash soon, most likely by the end of 2024/ early 2025. Hopefully, VSTM will be able to raise cash from a stronger position following positive updates from ongoing trials. Furthermore, there is theoretical potential for non-dilutive funding by establishing a licensing agreement. Short/medium-term catalysts The following are the most important short/medium-term catalysts to wait on: Mature results from ongoing RAMP 201 trial (2H 2024). Updated data from ongoing RAMP 203 trial (2H 2024). Initial interim data from ongoing RAMP 204 trial (2H 2024). Updated data from ongoing RAMP 205 trial (no guidance by VSTM on the timing of an updated readout, but it will likely be late 2024/ early 2025). Data from the multiple ongoing investigator-sponsored trials (unclear timeline). Successful NDA submission for accelerated approval in LGSOC (2H 2024). A nice surprise would be a submission for both KRASmt and KRASwt. Acceptance of NDA and granting of priority review (2H 2024). FDA approval. Potential commercial launch in 2H 2025. IND acceptance and initiation by GenFleet of ph1 trial of GFH375/VS-7375 in China is anticipated sometime in 2H 2024, but the catalyst will be the readout from this trial. A speculative catalyst is announcement of a potential partnership providing non-dilutive capital. Risk factors The following are the main risk factors: ORR in LGSOC may remain the same or minimally improved at final readout. This will still be a good outcome, but not as good as investors likely hoped based on prior readouts. Even with positive results there is risk for regulatory delays. Efficacy/safety may prove to be suboptimal in later readouts of ongoing trials. Oncology is a very competitive field with numerous other therapeutics under investigation for the same pathways and solid tumor indications being targeted by VSTM. VSTM will need a lot more cash to support the rest of the pipeline and commercialization of its candidates. As explained above I expect VSTM to raise cash in late 2024/early 2025. Without partnerships this could be dilutive. Nevertheless, with positive results in ongoing trials VSTM should be able to raise cash from a stronger position and a higher market capitalization. Beyond above risks there are a couple of things I consider concerning; In the current company’s presentation results from the 2 LGSOC landmark studies are presented only for SOC arms and for the total population (smaller proportion of KRASmt in these studies vs. VSTM studies), which I believe overestimates the competitive advantage of VSTM’s candidates. As seen in the table above, results in these studies were much better in MEKi arms. To be fair, VSTM has presented a more complete table including the above data in a prior conference presentation of RAMP 201 Part A study. VSTM claims an incidence of 1000-2000 new LGSOC cases per year in the US but without a reference to support this estimation (according to my estimations explained above incidence is <1000 cases per year). In other words, I see the above as potential evidence of selective reporting, a concern for me. Conclusion Lower than previously reported ORR and targeting just KRASmt patients of an already very small LGSOC populations has resulted in a 70% dip in VSTM’s stock price. I believe this to be an overreaction because: (1) It looks like VSTM will soon have its first approval, a major milestone for a clinical-stage biotech providing validation for the rest of the pipeline. (2) Mature data (expected 2H 2024) may be considerably better (potential for more responses with longer duration of treatment). (3) Data is compelling enough for approval in KRASwt LSOGC as well, even if not in the form of an accelerated approval. (4) LSOGC is a very small market but is just the start. VSTM has already produced good data in other indications (including PDAC and NSCLC). Therefore, for me the risk/reward potential is compelling. Nevertheless, as with every clinical-stage biotech, investing in VSTM is not without major risks. VSTM will soon need to raise cash, readouts of ongoing trials may not turn out competitive enough and there is also the risk of significant regulatory delays even with good clinical data. Invest only what you can afford to lose. Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

Buy cryptocurrency

Source link

Refer And Earn Demat Account – Get ₹300 | Referral Program

Open Demat Account In Angel One For FREE