Verastem Inc (NASDAQ: VSTM) is running for the top in the market today after announcing that the United States Food and Drug Administration has not only accepted an NDA filing, but accepted it with priority review. Of course, the news proved to be a point of excitement for investors, sending the stock screaming for the top. Today, we’ll talk about:
- The regulatory update;
- what we’re seeing from VSTM as a result,
- risks to consider; and
- what we’ll be watching for ahead.
VSTM Announces Regulatory News
As mentioned above, Verastem is having a strong start to the trading session this morning after announcing regulatory news. In a press release issued early this morning, the company announced that the U.S. Food and Drug Administration (FDA) has accepted the company’s New Drug Application (NDA) for filing with Priority Review. The filing surrounds the company’s lead drug candidate, known as Duvelisib.
Duvelisib is a first-in-class oral dual inhibitor of phosphoinositide 3-kinase (PI3K)-delta and PI3K-gamma. The treatment was designed for patients with relapsed or refractory chronic lymphocytic leukemia/ small lymphocytic lymphoma (CL/SLL). The company is also looking for accelerated approval for the treatment in the relapsed or refractory follicular lymphoma (FL). It is expected that VSTM will receive approval or a CRL by no later than October 5, 2018. In a statement, Robert Forrester, President and CEO at VSTM, had the following to offer:
Obtaining Priority Review in the U.S. for duvelisib marks another important milestone for Verastem and speaks to the unmet need in relapsed/refractory CLL/SLL and FL and the urgency to identify effective therapies to treat these patients… As an orally administered therapy, we believe duvelisib will provide an important treatment option for patients with CLL/SLL and FL, and for the physicians who treat them. We look forward to working with the FDA during the review process. We are continuing our commercial preparations for duvelisib to execute the launch promptly in the U.S. if approved. In parallel, we are exploring ex-U.S. partnering opportunities for duvelisib and plan to file a European Marketing Application towards the end of the year.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market, and with such strong news coming out of Verastem, it only makes sense that the stock is flying at the moment. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:23), VSTM is trading at $3.39 per share after a gain of $0.43 per share (14.53%) thus far today.
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Risks To Consider
No matter what type of investment you make, you’re going to take on some risk. An investment in VSTM would be no different. At the moment, Verastem is a clinical-stage biotechnology company. This means that, while there is some promise in today’s news, the company does not yet have an approved treatment. So, its success is largely hinged on its ability to achieve regulatory approval. Of course, if the NDA ends in approval, it will be great news for all involved. However, if the FDA issues a CRL on October 5th, the stock could tank.
It’s also important to keep in mind that the company is heavily dependent on both investors and lenders to stay alive at the moment. If either of these parties decided that they were no longer interested in funding VSTM, well, the company could run out of money and fall apart.
Finally, the commercialization process will be coming soon if approval is achieved. Of course, this process takes time and, perhaps more importantly, money. Therefore, upon approval, the CNA Finance team is expecting that a public offering of common stock, or a private placement, will take place. Of course, this could dilute shares. So, keep a close eye out for this as well.
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on VSTM. In particular, we’re interested in following the story surrounding the Duvelisib NDA and we’re excited about the results of the application, as the data surrounding the treatment seems promising. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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