Verastem could be angling for an accelerated approval of its ovarian cancer treatment, an analyst said Thursday as she upgraded VSTM stock.
During a recent update, Verastem said 45% of patients with a form of ovarian cancer responded to its combination of drugs avutometinib and defactinib. That improved from a lower 28% overall response rate in January, and is in line with a 46% rate reported for an earlier study of the regimen.
Mizuho Securities analyst Mara Goldstein says Verastem could potentially seek accelerated approval for the combination due to the consistent responses across two studies. But the company will likely wait for six-month follow-up data before making a decision on that, she said in a report.
"While the question of accelerated review is not likely to be known until late 2023/early 2024, we see the evolution of the data as a positive," she said.
On the stock market today, VSTM stock surged 16.1% to close at 10.82. But, in after-hours action, shares fell more than 8% after the company announced a public offering.
VSTM Stock: Tumor Shrinks In 86% Of Patients
Verastem is testing its drugs in patients with low-grade serous ovarian cancer, a disease that typically occurs in younger patients, is slow progressing and has a long-term survival rate.
In addition to the improved responses, Verastem said tumors shrank in 86% of patients who received its ovarian cancer treatment.
Patients with this disease often have mutations in their KRAS gene. Normally functioning, KRAS makes a protein involved in cell growth, maturation and death. But a mutated gene can drive cancer. Verastem said 60% of patients with a mutated KRAS gene responded to its treatment. The responses were lower in patients with normal KRAS genes, at 29%.
Bullishly for VSTM stock, the ovarian cancer treatment seems durable. After a year, patients continued responding to the treatment. So, Verastem couldn't report results for median duration of response and progression-free survival. In comparison, patients who receive the approved drug, Novartis' Mekinist, survived for 13 months before their cancer worsened.
"We see these results as indicating competitive durability," Goldstein said.
Highly Rated Biotech Stock
Goldstein boosted her price target on VSTM stock to 36 from 24 and upgraded shares to a buy rating.
She sees a 65% likelihood that Verastem will gain approval for its ovarian cancer treatment, up from 50% previously. She notes Verastem plans to begin a confirmatory study in the second half of 2023.
Promisingly, VSTM has a strong IBD Digital Relative Strength Rating of 92, putting shares in the top 8% of all stocks when it comes to 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
