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Why Verastem Stock Is Crushing It Today

By George Budwell - May 24, 2021 at 4:36PM

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The biotech's experimental cancer treatment won an important regulatory designation today.

What happened

Shares of the small-cap cancer company Verastem (VSTM 7.87%) are up by a healthy 26% as of 3:22 p.m. EDT Monday afternoon. The biotech's shares are perking up today in response to the decision by the Food and Drug Administration (FDA) to grant the coveted Breakthrough Therapy Designation (BTD) for the company's experimental cancer-combo therapy.

The therapy consists of the RAF/MEK inhibitor VS-6766 and the FAK inhibitor defactinib. The FDA granted the drug BTD as a potential treatment for patients with recurrent low-grade serous ovarian cancer, regardless of KRAS status after one or more prior lines of therapy, including platinum-based chemotherapy. (Mutations of the KRAS gene are linked to cancer.) 

A rocket taking off.

Image source: Getty Images.

So what

This closely watched combo therapy is currently being evaluated in the Phase 1/2 FRAME trial. Per the latest clinical update, the therapy produced an impressive overall response rate (ORR) of 70% in ovarian cancer patients expressing the KRAS mutation (7 out of 10 evaluable patients) and a respectable 52% ORR across all patient types in the study (11 of 21 response-evaluable patients). Those are exceedingly strong efficacy data for an early-stage cancer product. As such, it's not altogether surprising that the FDA decided to grant this promising combo therapy BTD. 

Now what

While BTD doesn't guarantee a successful clinical program or subsequent regulatory review, it does expedite the regulatory review process -- that is, assuming this therapy gets to that point in its lifecycle. Investors may want to treat this upbeat regulatory news with a bit of caution. After all, Verastem still has a lot of work to do to get this combo therapy across the goal line, and any number of things can go wrong in the meantime.  

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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