Shares of Verastem Oncology (NASDAQ:VSTM) are up nearly 15% as of 12:04 p.m. EST after the company announced it raised a fresh round of capital by selling stock in a private placement to a single institution.
The early-morning press release from Verastem notes that the company entered into an agreement to receive approximately $40 million from the sale of 7,166,666 shares at $6.00 per share, a 7.5% premium to yesterday’s closing price of $5.58.
Cantor analyst Mara Goldstein points out that this raise, plus one in May and an upfront payment from the outlicensing of duvelisib in Japan, bumps the company’s cash to at least $140 million, which the analyst thinks will go a long way in removing an overhang on the shares.
“With the pending PDUFA in early October, the near and long-term picture for the shares looks bright, in our view. The Street has been struggling with the commercial potential for duvelisib, which we believe is larger than the current valuation suggests […] and with the increased cash to the company, we see an overhang on the valuation being lifted,” the analyst concluded.
As such, Goldstein reiterates an Overweight rating on Verastem shares, with a $17 price target, which implies just above 160% upside from current levels. (To watch Mara’s track record, click here)
Goldstein is not the only fan of the biotech company on Wall Street, as TipRanks analytics exhibit VSTM as a Strong Buy. Based on 5 analysts polled in the last 3 months, all 5 rate a Buy on Verastem stock. The 12-month average price target stands at $14.60, marking a 125% upside from where the stock is currently trading.
Verastem Oncology is a biopharmaceutical company focused on developing and commercializing drugs to improve the survival and quality of life of cancer patients. Verastem Oncology is currently developing duvelisib, a dual inhibitor of PI3K-delta and PI3K-gamma, which has successfully met its primary endpoint in a Phase 2 study in indolent non-Hodgkin lymphoma and a Phase 3 clinical trial in patients with chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL).