Verastem Oncology VSTM Stock News

Verastem Inc (NASDAQ: VSTM) is tumbling in the market this morning, trading down more than 15%. The tumble comes after the company announced a management shakeup with the President and CEO of VSTM stepping down. Here’s what’s going on:

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VSTM Announces Management Shakeup

After announcing that Mr. Robert Forrester, President and CEO at Verastem, will be stepping down from his position, the stock is tumbling in the market this morning. The company announced the management shakeup through a press release issued early this morning.

VSTM did not provide a reason for Mr. Forrester’s decision to step down from his role as leader of the charge. However, the company did mention that Mr. Forrester has agreed to continue serving the company in an advisory capacity.

Following Mr. Forrester’s departure, Dan Paterson, COO at the company, will serve as President and Chief Operating Officer. As such, Paterson will assume leadership of the executive team while the Board of Directors looks for a new CEO. In order to support Mr. Patterson, Rob Gagnon, CFO at VSTM will be taking on the role of Chief Business Officer.

Mr. Patterson has been part of the Verastem team since 2011. In 2014, he was appointed to Chief Operating Officer. He has a strong history in the space, serving as CBO, COO and CEO among multiple oncology and diagnostics companies.

In a statement, Michael G. Kauffman, MD, PhD, and Lead Director at VSTM, had the following to offer:

On behalf of the entire Board, I want to thank Robert for his countless contributions and leadership for the past six years and his unwavering commitment to Verastem Oncology’s patients, employees and shareholders.

We remain confident in the growth potential of COPIKTRA™ and we intend to hire a CEO with commercial expertise who will build on the foundation that Robert has established and execute on our ambitious goals for the future.

The above statement was followed up by Mr. Forrester. Here’s what he had to say:

It has been a true honor to serve as the CEO of Verastem Oncology over the past six years. I am extremely proud of the Verastem Team, the progress we have made, and our many accomplishments aimed at improving the lives of patients diagnosed with cancer, one patient at a time. I have great confidence in Verastem Oncology’s potential and I will work with the entire team to ensure a seamless transition for all of our stakeholders.

Why This News Hit So Hard

Many investors are wondering why the news caused such a dramatic decline in the value of VSTM stock. The reason is simple. First and foremost, the news came way out of left field. There was no indication that Mr. Forrester would be leaving the company any time soon and investors don’t like surprises.

Moreover, with Mr. Forrester stepping down, Verastem is lacking a CEO and not sure who it will approach to become a successor. At the end of the day, this means that there is uncertainty surrounding the management team at the company. Ultimately, the only thing investors dislike more than surprises is uncertainty. So, it’s not surprising to see that the stock is falling.

The Good News

The good news is that the fact that Mr. Forrester is stepping down seems to have no effect on the company’s expectations. In fact, in the release, VSTM said that it continues to expect net product revenue from the sales of COPIKTRA to be between $10 and $12 million.

The company said that these estimates are based on product revenue to date, current run rates and near-term expectations. As such, while investors were hit with a surprise and a bit of uncertainty, the declines may be presenting a strong opportunity to get in on long-run growth at a discounted price.

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What Do You Think?

Where do you think VSTM stock is headed moving forward? Join the discussion in the comments below!

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