Last week Verastem presented additional Copiktra data at the Leerinks Health Care Conference followed by a Q&A session by analysts. The webcast can be accessed here. In this article, I discuss the data presented, Copiktra’s sales potential, and walk you through my technical take on Verastem.
Positive 2-Year Clinical Data For Copiktra
A subset of 46 patients with Relapsed or Refractory CLL/SLL treated with Copiktra as a monotherapy for two years exhibited overall response rates (ORR) higher than previously observed. The ORR here was 89% and the median progression-free survival rate (PFS) was 40 months.
Among the responders, 20% had a complete response or complete response with incomplete blood count recovery (CR/CRi) and 70% had partial responses (PR). Ten patients had 17p deletions/TP53 mutations which inhibit, or completely deletes, tumor suppressor gene(s). Among them, there was a 100% ORR consisting of 30% CR/CRi and 70% PR. This is especially impressive given patients with 17p deletions/TP53 mutations are difficult to treat.
Is Copiktra Stealing Market Share From Zydelig?
There have been comparative discussions about Gilead’s (Nasdaq: GILD) Zydelig (idelalisib), which is currently used for second-line treatment, and Verastem’s Copiktra which was approved for 3rd line treatment of CLL/SLL and FL in September of 2018. The ORR between the drugs only differed by ~2% when Verastem presented data in December. A notable difference is that Zydelig has a bio-perforation (hole forms in the stomach) risk associated with its box-label warning. Copiktra does not. The most frequent box label adverse events (AEs) associated with Copiktra were diarrhea and colitis. According to VSTM’s remarks at the conference, these have been manageable.
A closer look suggests Copiktra is stealing market share from Zydelig and physicians are not keen to
Compared to the same 3-month and 12-month periods in 2018 and 2017 sales in the U.S declined 2% and 8% respectively. Copiktra has only been on the market since September 24th, 2018 which means additional factors are impeding Zydelig’s market penetrance further strengthening Copiktra’s position. More should be revealed regarding this point on Tuesday.
The Market Undervalues Copiktra Sales Potential
At the health conference, VSTM projected sales numbers of between $2 million and $3 million for Q4 2018. These sales are almost exclusively in CLL/SLL. In Q1 2019 however,
According to management, the peak sales value of Copiktra as a third-line monotherapy for patients with CLL/SLL and FL is between $200-$300 million. It’s clear though that they do not plan to stop there.
The next step is to broaden Copiktra’s reach in CLL/SLL and FL and to penetrate the PTCL market. Clinical trials sponsored by Verastem are underway for the latter indication. After that, it’s onward to capture revenue from more NHL subtypes and combination therapies with I-O and CAR-T.
With regards to FL Copiktra has shown robust potential. In a very difficult to treat cohort of double refractory patients Copiktra achieved an ORR of 42%. These patients had underwent two prior lines of therapy with no success. Copiktra was their last option and for 42% of them it yielded positive results.
Additionally, VSTM has a global approach to maximizing sales. In the coming
Technicals Look Good Too
We all know VSTM has been in “oversold” conditions, so I’m not going to beat that drum. It is known in t
Harmonic trading is a highly sophisticated TA theory that aims to forecast major price reversal based on chart patterns meeting Fibonacci ratios and the fundamentals of a company. As you see on the left-hand side of the chart, from June to November of 2013 the stock price went from $8.99 back up to $18.82 and retraced back down. There is a significant similarity where VSTM had 100% retracement from previous highs and lows. The stock price made a sharp correction and V-lines upward back to $16.52. When extensions retrace more than .618 depending on fundamentals, studies suggest we can expect some type of bounce to the upside. I am looking for a similar extreme price action to take place again.
Another technical indicator I see is on the short-term horizon is a downward wedge presenting a 3-drives pattern. It is currently at the bottom of the channel, ready to drive the share price up.
You can click play on the interactive chart to zoom in and see the wedge play out.
I believe Verastem has turned into a value and growth scenario. Given the prolonged downtrend in share price since regulatory approval investors are rightly skeptical. A royalty monetization deal last week between Health Care Royalty Partners (HCR) and Infinity Pharmaceuticals (Nasdaq: INFI) bodes well for Copiktra’s long-term outlook.
On Tuesdays earning call we should gain more clarity to near-term sales performance, clinical trial progress, and the aforementioned deal between HCR and Infiniti. Based on remarks from Verastems leadership sales revenue for Q1 2019 should be at least $4 million. We believe these events will provide the spark the company needs to reverse its share price trajectory.
The coming weeks and months will undoubtedly be exciting. In its current state VSTM is flashing bullish fundamental and bullish technical signals supporting notions of positive price action in 2019.
You can access the earnings call by clicking here or going to events and presentation on the company website.
I am long VSTM. This is my opinion and you should do your own homework before investing.