What happened

Shares of the small-cap oncology specialist Verastem (NASDAQ:VSTM) fell by as much as 19.1% on nearly double the average daily volume in early morning trading today. Verastem's shares have since recovered to some degree but remain down by 6.2% as of 1:08 p.m. EDT.  

So what

The oncology company's shares are getting trounced today in response to its disappointing fourth-quarter earnings report released after the bell yesterday. Most critically, Verastem's newly approved leukemia and lymphoma drug Copiktra badly missed consensus revenue estimates for the three-month period.

Man wearing glasses appearing to panic with his hands on top of his head, while sitting in front of a laptop.

Image Source: Getty Images.

Specifically, the company reported that Copiktra sales came in at $1.2 million for the fourth quarter. Wall Street, on the other hand, was expecting a much higher figure of around $2.9 million, according to Factset Consensus.

Check out the latest earnings call transcript for Verastem.

Now what

On the bright side, this latest drop might represent an attractive entry point for bargain hunters for two reasons. First off, Verastem's shares are now being valued at approximately $24 million less than the company's current cash position. That's unusual, even for a pre-revenue biotech, suggesting that Verastem's shares might be near a bottom. Secondly, Copiktra's sales are projected to pick up steam from here on out, perhaps making this beaten-down biotech stock a great pick at these levels. 

The counterpoint to this argument is that Copiktra's commercial launch is already underwater from a momentum standpoint, and it belongs to a class of drugs that simply haven't performed well in the marketplace. As such, investors may want to strongly consider both sides of the argument before taking a flier on this early commercial-stage biotech.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.