Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Verastem Stock Is Jumping Today

By Cory Renauer - Updated Apr 20, 2020 at 1:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors are excited about an upcoming conference call to discuss clinical data from patients with KRAS-mutation positive tumors.

What happened

Shares of Verastem Oncology (VSTM -3.97%), a biotechnology company developing new cancer drugs, are on the rise again after the company announced an upcoming conference call. Investors excited to hear what management will have to say about an investigator-initiated study (i.e., one not controlled by the drug company) with a pair of Verastem's new drug candidates have driven the stock 20% higher as of 1:10 p.m. EDT on Monday.

So what 

On Monday, April 27, Verastem will present details from an investigator-initiated clinical trial involving two of its experimental cancer drugs candidates, VS-6766, and defactinib. The latter is a FAK inhibitor that flopped in an early stage trial with mesothelioma patients about five years ago, and VS-6766 is a more recently discovered RAF/MEK inhibitor aimed at KRAS-mutated tumors.

Upward sloping chart.

Image source: Getty Images.

Tumors driven by KRAS mutations are particularly aggressive, but there aren't any effective treatments that target this well-understood oncogene.

Now what

Verastem isn't the only biotech developing therapies for KRAS-mutated tumors. For example, Amgen (AMGN -0.21%) is developing a KRAS inhibitor called AMG 510, and it's already shown compelling results in an early stage clinical trial. If Verastem's candidate can produce data competitive with Amgen's, the stock could soar again.

Verastem will present results from several clinical-stage programs at this year's virtual meeting of the American Association for Cancer Research, but the stock's price will hinge on results from the investigator-initiated trial with VS-6766 and defactinib. 

Before getting too excited about an early look at VS-6766, it's important to remember that Verastem acquired rights to the drug from Chugai Pharmaceutical (CHGCY -0.79%) for just $3 million up front and a promise to pay royalties if necessary. It's possible that the Japanese pharmaceutical company let go of a potential blockbuster cancer therapy for such a meager sum, but not likely.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amgen Inc. Stock Quote
Amgen Inc.
AMGN
$244.85 (-0.21%) $0.52
Verastem, Inc. Stock Quote
Verastem, Inc.
VSTM
$1.21 (-3.97%) $0.05
Chugai Pharmaceutical Co., Ltd. Stock Quote
Chugai Pharmaceutical Co., Ltd.
CHGCY
$13.20 (-0.79%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.