Shares of Deciphera Pharmaceuticals (NASDAQ:DCPH) are trading close to a 52-week low of $33.55 -- pretty far from the $57.89 they commanded last year at this time. The company, which went public with an IPO in 2017, got a big bump late in 2019 on positive phase 3 trials for its lead drug, Qinlock (ripretinib).

The company's stock has fallen significantly since then, but this might provide a good buying opportunity for investors. Deciphera stock is down more than 39% this year and more than 37% over the past 12 months.

DNA panel.

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The company concentrates on oncology therapies that are known as kinase inhibitors. Enzymes called kinases help regulate cellular functions and the communication of cells with their environments. When they are dysregulated (go awry), kinases can lead to diseases, including cancer and various inflammatory or autoimmune diseases. Deciphera's therapies are designed to slow the growth of cancer cells by targeting the "switch-pocket mechanism" (where a kind of "on-off system" is located) to inhibit kinases.

Qinlock is just getting started

The company reported $42.1 million in revenue for 2020, up from $25 million in 2019. Qinlock (ripretinib) was responsible for most of that revenue, including $38 million in the U.S. and $1.5 million in international sales. The drug gained FDA approval last May to treat advanced gastrointestinal stromal tumors (GIST) as a fourth-line treatment (for patients who have already had three or more treatments for GIST). The cancer is fairly rare -- according to the American Cancer Society, about 4,000 to 6,000 people in the U.S. are diagnosed with it each year. Most GIST cases begin in the stomach or small intestine, though they can occur anywhere in the gastrointestinal tract.

The company built on those numbers in the first quarter of 2021, with Qinlock responsible for $19.9 million in revenue, up from $19.5 million in the prior quarter. Deciphera has the drug in trials to expand its usage as a second-line treatment for GIST. It also got approval in China as a fourth-line treatment for GIST and is awaiting approval as a fourth-line treatment for GIST from the European Medicines Agency, an OK the company said it expects by the fourth quarter.

But there's a lot riding on Qinlock

Deciphera is growing revenue, but it's still a long way from making a profit. In the first quarter, the company had a net loss of $61.2 million. It has $201.6 million in cash, which isn't a huge cushion. The company is very reliant on the continued growth in sales of Qinlock, the only drug it has so far managed to take through late-stage clinical trials. Deciphera will likely need to raise funds for research and development, and the drop in share price won't help that.

Deciphera is also developing three other cancer therapies. It is testing vimseltinib in a phase 1/2 study for tenosynovial giant cell tumor (TGCT), a rare group of cancers than can cause severe joint pain. These cancers are not benign and do not metastasize to other areas of the body, though their growth can cause damage to surrounding tissue. The usual course of treatment for TGCT is surgery, but the condition frequently recurs, showing a potential need for vimseltinib.

Rebastinib, another Deciphera therapy, is in various early studies as a standalone treatment for multiple solid tumors, as well as in combination with chemotherapy to treat solid tumors.

The other drug in the company's pipeline, DCC-3116, is planned to enter phase 1 trials in the second quarter. It will be studied both as a single agent and combined with trametinib (a mitogen-activated protein kinase) to treat metastatic tumors with a mutant RAS or RAF gene that commonly shows up in melanomas, as well as in pancreatic, colorectal, lung, bile duct, and thyroid cancers.

Playing the long game

Deciphera is successfully making the jump from a clinical-stage biopharmaceutical company to one that is earning revenue. Though it is hard to see Qinlock as a blockbuster drug, because GIST is so rare, Quinlock does have the potential to help fund the rest of the company's pipeline -- and a blockbuster drug could come out of that mix. That pipeline and the company's focus on rare cancers means it's frequently mentioned as a potential takeover target, which could also be very rewarding for investors.

I have concerns about the biotech stock's cash position, and this is certainly a stock that carries a bit of risk. However, at its current price near a two-year low, and coming off improving numbers in the first quarter, I can see this stock rewarding investors this year. The recent approval of Quinlock in China and its pending approval in Europe mean the company should easily grow revenue this year.

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.