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Verastem Stock Plunged 19.98% Yesterday

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Stock performance

On September 25, Verastem (VSTM) stock fell to $7.15, a ~19.98% fall from its previous close of $8.93 and a ~45% decrease compared to its 52-week high of $10.35 on September 4. Verastem stock rose from $3.10 on January 2 to $7.15 on September 25, reflecting a ~131% year-over-year increase. Verastem hit its 52-week low of $2.77 on April 3, 2018.

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Approval of Copiktra and its future

On September 24, the US FDA approved Copiktra for the treatment of adults with relapsed or refractory CLL/SLL (chronic lymphocytic leukemia/small lymphocytic lymphoma) who have previously undergone at least two therapies. The FDA also granted accelerated approval to Copiktra for the treatment of adults with relapsed or refractory follicular lymphoma who have previously undergone at least two therapies.

Copiktra is a phosphoinositide 3-kinase (or PI3K) inhibitor and dual inhibitor of PI3K-delta and PI3K-gamma. Verastem’s Copiktra could face stiff competition from oncology drugs including Gilead Sciences’ (GILD) Zydelig, Bayer’s (BAYZF) Aliqopa, and Roche’s (RHHBY) Gazyva.

Agreement with CSPC Pharmaceutical

Verastem entered an exclusive licensing agreement with CSPC Pharmaceutical Group, a company based in China. The agreement allows CSPC Pharmaceutical to develop and commercialize Copiktra for all oncology indications in China.

According to the terms of the agreement, Verastem is subject to receive an upfront payment of $15.0 million and development milestone payments of $30.0 million along with potential sales milestone payments and double-digit royalties on future sales of Copiktra by CPSC Pharmaceutical in China.

CSPC Pharmaceutical also received the rights to collaborate with Verastem for certain worldwide clinical trial activities wherein the company would share the cost on a pro-rata basis.

Analyst recommendations

Of the seven analysts tracking Verastem in September 2018, two of them recommended a “strong buy,” while five analysts recommended a “buy” rating.

On September 25, Verastem had a consensus 12-month target price of $15.79, which represents a ~120.84% return on investment over the next 12 months.

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