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Here's Why Verastem Oncology Is Tanking Today

By Cory Renauer – Apr 27, 2020 at 1:11PM

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Details from a clinical trial with the company's latest lead candidate weren't what investors had hoped for.

What happened

Shares of Verastem Oncology (VSTM -8.67%), a biotechnology company developing novel cancer therapies, are sliding after a highly anticipated data drop failed to impress investors. Shares of the biotech stock were down 42.9% as of 12:12 p.m. EDT on Monday.

So what

This year, the American Association for Cancer Research granted independent researchers who have been testing a combination of Verastem's experimental therapies a virtual poster presentation during this year's meeting. Verastem shares ballooned last week after the company told investors it would hold a conference call today to discuss results of an independently sponsored clinical trial that used VS-6766 plus defactinib to treat cancer patients with aggressive tumors driven by the same mutation.

Person looking at a downward-sloping chart arrow crashing through the floor.

Image source: Getty Images.

The stock is tanking today because there wasn't much to be excited about, at least from an investor's viewpoint. Among 10 lung cancer patients in the study with KRAS-mutant tumors, just 1 showed signs of tumor shrinkage.

Now what

Tumors driven by KRAS mutations are difficult to treat, but not for lack of trying. Amgen (AMGN -0.34%) and Mirati Therapeutics (MRTX -2.52%) are both running clinical trials with drugs aimed at this target, and both have notched a great deal more success than Verastem's candidates.

Despite seemingly unbeatable competition from Amgen and Mirati for lung cancer patients, Verastem will probably try to convince investors there's a future for VS-6766 as an ovarian cancer treatment. Four out of six patients with KRAS-mutant-positive ovarian cancer responded to treatment with VS-6766 plus defactinib.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Verastem, Inc. Stock Quote
Verastem, Inc.
$0.92 (-8.67%) $0.09
Amgen Inc. Stock Quote
Amgen Inc.
$226.97 (-0.34%) $0.78
Mirati Therapeutics, Inc. Stock Quote
Mirati Therapeutics, Inc.
$68.18 (-2.52%) $-1.76

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