HCW ups Verastem price target to $10

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H.C. Wainwright raised its price target for Verastem (NASDAQ:VSTM) to $10 from $6.50 after the company reported positive top-line results from a Phase DUO study of duvelisib for the treatment of relapsed/refractory chronic lymphocytic leukemia. The stock closed at $4.92 on Sept. 6.

In the DUO study, patients treated with duvelisib achieved median progression free survival of 13.3 months, compared with 9.9 months for patients treated with ofatumumab, with a 48% reduction in the risk of progression or death. According to Verastem, duvelisib also had a manageable safety profile that is consistent with prior clinical results. 

“In our view, the top-line results from DUO are generally in-line with our expectations, and in combination with the results from the previous DYNAMO study in indolent non-Hodgkin’s lymphoma (NHL), would be sufficient to support a NDA with the FDA, with a potential commercial launch in the fourth quarter of 2018,” writes analyst Swayampakula Ramakanth. 

He expects the company to present full results from the DUO study at an upcoming scientific conference, such as the 2017 American Society of Hematology annual meeting in December. 

“Should the detailed DUO results suggest that duvelisib is more effective, perhaps in specific patient subpopulations, or has a superior safety profile, compared with competitor products, such as Gilead’s Zydelig, we believe there could be significant upside to our commercial projections,” Mr. Ramakanth added.

Verastem also announced plans to initiate a new Phase 2 study of duvelisib for the treatment of relapsed/refractory peripheral T-cell lymphoma (PTCL), an aggressive form of NHL, which affects some 9,500 people in the U.S. each year. 

“Due to the small PTCL patient population as well as the high unmet medical need, we believe that if duvelisib can demonstrate significant clinical benefit, even a small Phase 2 study may be sufficient to support regulatory approval,” he added.