Verastem Inc (NASDAQ:VSTM) Derails Following A Miserable Clinical Failure

[[tagnumber 0]][[tagnumber 1]]In an industry that is as intensely competitive as the biopharmaceutical sector, discovering the right drug for a so far unmet medical need is the key to success. Verastem Inc (NASDAQ:VSTM), a biotech, set off to create a drug capable of killing cancer stem cells when it incorporated in 2010. So far, so good. Until yesterday, when the company received a such shattering blow that it not only hit its market value but also seems likely to put the brakes on its clinical activities for a while.[[tagnumber 2]] [[tagnumber 0]][[tagnumber 4]]Closing trade at $1.85 per share, VSTM probably recorded its worst ever single–day market performance, losing a staggering 67% in value. The meltdown came after management announced the premature termination of Verastem‘s Command VS–6063 study, the company‘s leading drug candidate designed to kill cancer stem cells in patients with malignant pleural mesothelioma, a rare and aggressive cancer of the protective lining of the lung. Having been initiated to measure VS–6063‘s safety and efficacy in destroying residual cancer cells in post–chemotherapy patients, the study only made it to Phase II because the level of efficacy shown by the VS–6063 agent has so far proved insufficient to justify any further developments.[[tagnumber 2]] [[tagnumber 0]]That this announcement triggered a massive sell–off on the stock market is hardly surprising given that more than 15 million shares of common VSTM stock changed hands yesterday, an all–time high for Verastem. Needless to say, the stock tanked from $5.67 to an intra–day (and all–time) low of $1.50 yesterday before clocking in at $1.85 at the closing bell. As a result, the value of Verastem‘s outstanding stock has collapsed from $200 million to less than $40 million, a five–fold devaluation in just a single day.[[tagnumber 2]] [[tagnumber 0]]Inevitably, this free–fall has now hit each and every VSTM stockholder, including institutional stockholders who own 57% of the stock. Whether the colossal waste of value will urge them to follow suit remains to be seen, though the odds for Verastem launching a highly promising new trial in the immediate future are pretty much stacked against the biotech.[[tagnumber 2]]