Analyst Initiates Verastem With Neutral While 'Waiting For FDA Go-Ahead'

Mizuho initiated coverage on Verastem Inc VSTM with a Neutral rating and a price target of $2.
The analyst says it sees strong clinical rationale, but valuation expansion rests on the go-forward strategy in - Low-Grade Serous Ovarian Cancer (LGSOC) and clinical signals from the KRAS G12C programs.
The analyst writes that the shares are underpriced relative to the LGSOC market (~$1.5 billion) but waiting for clarity on accelerated approval and confirmatory trial, which could be a catalyst for valuation expansion.
Mizuho writes that VSTM shares are trading below what can be seen as the opportunity in LGSOC based on a multiple of peak revenue (less $100 million market cap versus peak revenue forecast of ~$800 million).
The analyst writes that the RAMP-201 interim data confirmed that the activity of avutometinib + defactinib looks competitive with other MEK inhibitors used in the setting.
Mizuho also writes that KRAS G12C combination programs offer upside as the market potential could be up to 2-3X LGSOC, but awaiting data - 2H23.
Price Action: VSTM shares are down 9.92% at $0.41 on the last check Thursday.

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