Verastem (VSTM) AI Stock Analysis

• Market Cap: $309.77M
• Dividend Yield: N/A
• Average Volume (3M): 869.16K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.29
• Revenue Growth: N/A
• EPS Growth: 21.19%
• Country: US
• Employees: 73
• Sector: Healthcare
• Sector Strength: 74
• Industry: Biotechnology
• EPS (TTM): -3.19
• Shares Outstanding: 44,506,527
• 10 Day Avg. Volume: 932,264
• 30 Day Avg. Volume: 869,159
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 30.98
• Price to Cash Flow (P/CF): -3.30
• 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: $11.33
• Price Target Upside: 61.86% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

Verastem's overall stock score reflects significant financial challenges and high leverage, balanced by some positive technical momentum and strategic corporate actions. The acquisition of VS-7375 and strengthening of financials are promising but need to translate into improved operational results for a more favorable outlook.

Positive Factors

Efficacy and Clinical Advancements

The combination of avutometinib and defactinib shows a significant improvement in efficacy over current regimens, with a relevant reduction in tumor size and better tolerability.

Regulatory and Market Opportunities

FDA has accepted the company's NDA filing for Avutometinib in combination with Defactinib for the treatment of Recurrent KRAS Mutant Low-Grade Serous Ovarian Cancer under priority review.

Negative Factors

Market Reaction and Stock Performance

Verastem Inc shares fell 20% due to market disappointment over a regulatory update limiting initial approval to a subset of patients.

Verastem Business Overview & Revenue Model

Company Description

Verastem, Inc. (VSTM) is a biopharmaceutical company that focuses on developing and commercializing transformative cancer therapies. Operating in the biotechnology sector, Verastem is committed to improving the lives of patients with cancer by advancing innovative treatments. The company's primary focus is on small molecule drugs that target and inhibit critical signaling pathways involved in cancer progression, offering potential therapeutic options for various malignancies, including leukemia and lymphoma.

How the Company Makes Money

Verastem makes money primarily through the development and commercialization of its cancer therapies. The company generates revenue from the sale of its pharmaceutical products, which are developed internally or acquired through strategic partnerships and collaborations. Licensing agreements and milestone payments from collaborations with other pharmaceutical companies also contribute to its revenue streams. Additionally, Verastem may receive funding support and grants for clinical trials and research, further supplementing its income. The company's financial performance is significantly influenced by the success of its drug candidates in clinical trials, regulatory approvals, and market acceptance of its therapies.

Verastem Financial Statement Overview

Summary

Verastem's financial performance is challenged by consistent losses, high leverage, and negative cash flows. Despite some revenue growth, the company's reliance on financing activities to maintain liquidity highlights operational inefficiencies and financial instability.

Income Statement

Verastem's income statement reveals a challenging financial position with consistent losses. The TTM data shows a negative net income of -$93.45 million, indicating significant operational challenges. Despite a revenue increase to $10.11 million from $0 in the previous year, the company struggles with profitability as reflected by negative EBIT and EBITDA margins. This negatively impacts the overall financial health.

Balance Sheet

The balance sheet highlights high leverage with a debt-to-equity ratio of 3.74. However, the company maintains a relatively stable cash position with $113.18 million in cash and equivalents. Stockholders' equity decreased significantly, indicating financial instability. The equity ratio at 8.75% suggests limited buffer to absorb losses, posing a risk to future financial flexibility.

Cash Flow

Cash flow analysis reveals negative operating and free cash flows, reflecting operational inefficiencies. The operating cash flow to net income ratio is negative, suggesting cash outflows exceed the net losses. However, substantial financing cash flow of $53.59 million has provided liquidity support, mitigating immediate cash concerns yet not supporting sustainable growth.

Breakdown
TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Income Statement		Total Revenue
10.11M	0.00	2.60M	2.05M	88.52M	17.46M
	Gross Profit
10.10M	-62.00K	2.48M	1.85M	54.77M	14.65M
	EBIT
-114.50M	-92.08M	-72.94M	-61.41M	-49.36M	-132.34M
	EBITDA
-103.11M	-83.17M	-71.56M	-61.02M	-50.41M	-126.60M
	Net Income Common Stockholders
-93.45M	-87.37M	-73.85M	-81.10M	-67.73M	-169.18M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
211.66M	137.13M	87.89M	100.26M	141.23M	75.51M
	Total Assets
243.37M	149.72M	95.05M	108.66M	154.35M	145.05M
	Total Debt
125.98M	41.56M	27.07M	2.26M	22.54M	107.53M
	Net Debt
34.46M	-36.35M	-47.87M	-97.99M	-45.24M	64.02M
	Total Liabilities
154.91M	92.34M	47.66M	21.10M	39.08M	137.87M
	Stockholders Equity
88.46M	57.37M	47.39M	87.56M	115.27M	7.17M
Cash Flow		Free Cash Flow
-109.37M	-86.46M	-63.67M	-53.70M	-33.54M	-138.53M
	Operating Cash Flow
-109.35M	-86.46M	-63.67M	-53.50M	-33.51M	-138.52M
	Investing Cash Flow
72.41M	-44.45M	66.19M	87.00K	-47.36M	89.61M
	Financing Cash Flow
53.59M	134.19M	51.78M	6.88M	69.63M	-2.44M

Verastem Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 7.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VSTM, the sentiment is Positive. The current price of 7 is above the 20-day moving average (MA) of 5.84, above the 50-day MA of 5.64, and above the 200-day MA of 4.08, indicating a bullish trend. The MACD of 0.21 indicates Negative momentum. The RSI at 71.91 is Negative, neither overbought nor oversold. The STOCH value of 89.23 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VSTM.

Verastem Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VSTM	51 Neutral	$309.77M	―	-136.87%	―	―	21.19%
Sector *	49 Neutral	$7.05B	0.34	-55.09%	2.46%	25.27%	-3.43%
GERN	46 Neutral	$1.10B	―	-66.09%	―	32387.34%	15.93%
KPTI	37 Underperform	$52.35M	―	41.08%	―	-0.55%	49.85%
IGXT	30 Underperform	$29.17M	―	81.06%	―	20.11%	1.86%

Verastem Corporate Events

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.