Verastem (VSTM) Stock Climbs On Global Licensing Deal

Verastem Oncology VSTM Stock News

Verastem Inc (NASDAQ: VSTM) is having a strong day in the market today. The stock is up more than 38% after announcing that it has entered into a new global licensing agreement. Here’s what’s happening:

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VSTM Stock Pops On Global Licensing Agreement

In a press release issued early this morning, Verastem said that it has entered into a new global licensing agreement. The agreement, signed with Chugai Pharmaceutical Co., gives VSTM worldwide development and commercialization rights to a new asset.

The agreement surrounds an RAF/MEK inhibitor known as CK127. CK127 is a treatment under development for patients with KRAS mutant solid tumors.

In the release, VSTM said that the drug, in combination with its focal adhesion kinase inhibitor, defactinibi, is currently the subject of a Phase 1 clinical study. In the study, patients with KRAS mutant advanced solid tumors, including low grade serous ovarian cancer, non-small cell lung cancer, and colorectal cancer are being provided the treatment.

The combination is supported by the single-agent Phase 2 studies of defactinib in KRAS mutant NSCLC and CH5126766 in KRAS mutant NSCLC and LGSOC.

In a statement, Dan Paterson, President and COO at VSTM, had the following to offer

Based on the single-agent defactinib results in KRAS mutant NSCLC, we conducted an internal pre-clinical effort to identify drug classes that were synergistic with defactinib and saw the highest level of synergy in combination with MEK inhibitors and, specifically, with CH5126766. The exciting early clinical results led to our decision to enter into a partnership with Chugai for CH5126766 and accelerate the combination development program for patients with KRAS mutant cancers, which are highly aggressive and recurrent. We plan to initiate discussions with regulatory authorities about our development plans and to define the registration path early this year.

As part of the agreement, Verastem Oncology will be responsible for the development and wordlwide commercialization of the treatment. In exchange for this right, the company has agreed to make an upfront payment of $3 million to Chugai and has agreed to pay royalties on sales.

Why Investors Are Excited

The licensing of the new asset is great news for VSTM and all investors involved. First and foremost, Verastem is already pretty well versed in this asset as it is currently in the process of a Phase 1 clinical trial that includes it. So, the company has a good idea of what to expect from the asset acquisition.

Moreover, CK127 falls right in line with the company’s goals and seems to have great similarities to other assets within the company’s pipeline.

Finally, with VSTM owning one asset in the combination treatment mentioned above already, it only made sense that it would push to license the other asset in the combination. After all, should things go well, the company has full control over both assets and the potential to see tremendous gains as a result.

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