Verastem (VSTM) AI Stock Analysis

• Market Cap: $290.68M
• Dividend Yield: N/A
• Average Volume (3M): 2.29M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.00
• Revenue Growth: N/A
• EPS Growth: 14.39%
• Country: US
• Employees: 78
• Sector: Healthcare
• Sector Strength: 37
• Industry: Biotechnology
• EPS (TTM): -0.96
• Shares Outstanding: 54,949,170
• 10 Day Avg. Volume: 1,849,911
• 30 Day Avg. Volume: 2,285,948
• PEG Ratio: -0.21
• Price to Book (P/B): -8.23
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -2.35
• Enterprise Value/Market Cap: 0.77
• Enterprise Value/Revenue: 11.04
• Enterprise Value/Gross Profit: 37.32K
• Enterprise Value/Ebitda: -0.51
• 1Y Price Target: $15.25
• Price Target Upside: 148.37% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9

• Rating: 44 Neutral
• Price Target: ―

Verastem's overall stock score is primarily impacted by its weak financial performance, characterized by ongoing losses and negative equity. However, positive technical indicators and recent corporate events, such as the $75M private placement, provide some optimism for future growth. Valuation remains constrained by negative earnings, but strategic initiatives and product development efforts could drive improvements. The stock represents a speculative opportunity, with potential upside if financial health and operational efficiencies improve.

Positive Factors

Clinical Trials

Response rates improve for KRASG12D inhibitor VS-7375 with the ASCO presentation, showing higher overall response rates in both NSCLC and PDAC studies compared to previous abstracts.

Market Opportunity

The company's KRASG12D inhibitor program presents a significant market opportunity, estimated at over $1.5 billion.

Stock Valuation

The company is seen as undervalued with current market cap under $250 million, offering potential upside with commercial sales and data catalysts.

Negative Factors

Regulatory Challenges

Management is in discussion with the EU agency to clarify regulatory requirements, believing robust reimbursement will likely need Phase 3 study results.

Safety Concerns

Safety, especially gastrointestinal signals, remains a key focus due to high rates of grade 3 or higher treatment-related adverse effects.

Stock Performance

The stock ended down ~20% due to potential pushback around the confirmed vs. unconfirmed response rates and general exiting of positions following the ASCO data catalysts.

Verastem Business Overview & Revenue Model

Company Description

Verastem, Inc. (VSTM) is a biopharmaceutical company focused on developing and commercializing medicines to improve the survival and quality of life for cancer patients. The company primarily operates in the oncology sector, with a strong emphasis on targeting malignant cells and the tumor microenvironment. Its core products and services revolve around innovative therapies for cancer treatment, particularly targeting specific pathways involved in cancer cell proliferation and survival.

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	9.97M	-62.00K	2.48M	1.85M	54.77M
EBITDA	-125.86M	-83.17M	-71.56M	-61.02M	-50.41M
Net Income	-130.64M	-87.37M	-73.85M	-81.10M	-67.73M
Balance Sheet
Total Assets	101.54M	149.72M	95.05M	108.66M	154.35M
Cash, Cash Equivalents and Short-Term Investments	88.82M	137.13M	87.89M	100.26M	141.23M
Total Debt	42.25M	41.56M	27.07M	2.26M	22.54M
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: Positive
• Last Price: 6.14
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 6.14 is above the 20-day moving average (MA) of 4.92, above the 50-day MA of 5.81, and above the 200-day MA of 5.43, indicating a bullish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 66.83 is Neutral, neither overbought nor oversold. The STOCH value of 76.89 is Neutral, 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
RIGL	73 Outperform	$365.13M	9.73	531.78%	―	68.74%	―
AMLX	57 Neutral	$739.87M	―	-83.24%	―	-100.32%	-197.69%
PSNL	56 Neutral	$592.66M	―	-51.25%	―	15.57%	31.82%
Sector *	52 Neutral	$7.61B	0.11	-63.03%	2.07%	16.35%	0.29%
VSTM	44 Neutral	$290.68M	―	-2159.50%	―	―	14.39%
ATXS	44 Neutral	$370.21M	―	-32.89%	―	―	27.92%
AURA	43 Neutral	$437.75M	―	-56.24%	―	―	9.22%

Verastem Corporate Events

Verastem Announces $75M Private Placement Agreement

On April 25, 2025, Verastem, Inc. announced a Securities Purchase Agreement with institutional investors for a private placement of approximately $75 million. The proceeds are intended to support the potential launch of avutometinib and defactinib for low-grade serous ovarian cancer, as well as ongoing clinical research and development. The private placement, led by RTW Investments and involving other investors, is expected to close on April 28, 2025, subject to customary conditions.

Spark’s Take on VSTM Stock

According to Spark, TipRanks’ AI Analyst, VSTM is a Neutral.

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.

To see Spark’s full report on VSTM stock, click here.

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.