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Verastem (VSTM)
NASDAQ:VSTM

Verastem (VSTM) AI Stock Analysis

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Verastem

(NASDAQ:VSTM)

Rating:44Neutral
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
The latest results are very encouraging for demonstrating the potential of the avutometinib, defactinib, and gemcitabine/nab-paclitaxel combination for the treatment of pancreatic cancer.
Market Opportunity
The company's KRASG12D inhibitor program presents a significant market opportunity, estimated at over $1.5 billion.
Physician Awareness
Verastem's FRAME study publication in Nature Medicine and anticipated RAMP-201 study publication are expected to expand awareness among physicians.
Negative Factors
Adverse Effects
Safety, especially gastrointestinal signals, remains a key focus due to high rates of grade 3 or higher treatment-related adverse effects.
Regulatory Challenges
Management is in discussion with the EU agency to clarify regulatory requirements, believing robust reimbursement will likely need Phase 3 study results.
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 (VSTM) vs. SPDR S&P 500 ETF (SPY)

Verastem Business Overview & Revenue Model

Company DescriptionVerastem, 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 MoneyVerastem 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
25
Negative
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
20
Very Negative
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
30
Negative
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue24.00K10.00M0.002.60M2.05M88.52M
Gross Profit6.00K9.97M-62.00K2.48M1.85M54.77M
EBITDA-137.31M-125.86M-83.17M-71.56M-61.02M-50.41M
Net Income-148.88M-130.64M-87.37M-73.85M-81.10M-67.73M
Balance Sheet
Total Assets131.70M101.54M149.72M95.05M108.66M154.35M
Cash, Cash Equivalents and Short-Term Investments117.57M88.82M137.13M87.89M100.26M141.23M
Total Debt72.77M42.25M41.56M27.07M2.26M22.54M
Total Liabilities164.13M130.43M92.34M47.66M21.10M39.08M
Stockholders Equity-32.43M-28.89M57.37M47.39M87.56M115.27M
Cash Flow
Free Cash Flow-115.15M-104.80M-86.46M-63.67M-53.70M-33.54M
Operating Cash Flow-115.14M-104.77M-86.46M-63.67M-53.50M-33.51M
Investing Cash Flow29.02M59.97M-44.45M66.19M87.00K-47.36M
Financing Cash Flow121.36M54.78M134.19M51.78M6.88M69.63M

Verastem Technical Analysis

Technical Analysis Sentiment
Negative
Last Price4.80
Price Trends
50DMA
6.44
Negative
100DMA
6.23
Negative
200DMA
5.26
Negative
Market Momentum
MACD
-0.59
Negative
RSI
39.80
Neutral
STOCH
54.42
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VSTM, the sentiment is Negative. The current price of 4.8 is below the 20-day moving average (MA) of 5.16, below the 50-day MA of 6.44, and below the 200-day MA of 5.26, indicating a bearish trend. The MACD of -0.59 indicates Negative momentum. The RSI at 39.80 is Neutral, neither overbought nor oversold. The STOCH value of 54.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VSTM.

Verastem Risk Analysis

Verastem disclosed 67 risk factors in its most recent earnings report. Verastem reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Verastem Peers Comparison

Overall Rating
UnderperformOutperform
Sector (46)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
72
Outperform
$338.33M9.13531.78%68.74%
60
Neutral
$658.02M-51.25%15.57%31.82%
58
Neutral
$561.59M-83.24%-100.32%-197.69%
46
Neutral
C$194.28M-4.22-8.60%2.64%13.54%-1.44%
44
Neutral
$263.76M-2159.50%14.39%
44
Neutral
$327.88M-32.89%27.92%
43
Neutral
$406.75M-56.24%9.22%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VSTM
Verastem
4.80
2.19
83.91%
RIGL
Rigel
18.93
11.06
140.53%
ATXS
Astria Therapeutics
5.81
-3.54
-37.86%
PSNL
Personalis
7.45
5.94
393.38%
AURA
Aura Biosciences Inc
6.56
-0.76
-10.38%
AMLX
Amylyx Pharmaceuticals Inc
6.30
4.65
281.82%

Verastem Corporate Events

Private Placements and Financing
Verastem Announces $75M Private Placement Agreement
Positive
Apr 25, 2025

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.

Product-Related AnnouncementsBusiness Operations and Strategy
Verastem Unveils Strategic Plans in New Presentation
Positive
Mar 20, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Apr 26, 2025