IPO NOTE: VERASTEM (VSTM: $10.00)
KILLING CANCER AT THE ROOT Boston | New York | Paris
A VERY LONG TERM PLAY ON GOOD SCIENCE AND A SOLID TEAM January 27, 2012
Verastem priced at $10, the mid-point of the $9 to $11 filing range. Demand was solid though as the deal size was
increased from 4.5 to 5.5 million shares. The company has a promising but deeply scientific and complicated story
that includes improved treatments for cancer and personalized diagnostics. VSTM is a bet on some good science
and IP targeting cancer stem cells and the management team and advisory board that will play out over a decade.
Another name investors might wish to look into is Viral Genetics which is another early stage company with sci-
ence and technology that disrupts cellular metabolism.
MORE ON MANAGEMENT & SCIENCE
As far as management goes it's an impressive team. The co-founder/CEO Christoph Westphal has chalked up
several major successes including Alnylam (ALNY $461M market cap), Momenta (MNTA $775M market cap) and
two others that were acquired by large drug companies (Glaxo and Lilly.)
The scientific advisory board is outstanding. The mix of talent, expertise and accomplishment suggests that
Verastem has a scientific network that will give them best possible access to developing science and potential part-
ners in the ecosystem. Some biotechnology types talk about Verastem as a possible "next Vertex" which is another
very successful small-molecule biotechnology company based in Cambridge, MA.
Vertex (VRTX) is a $1B+ revenue company that has reached
profitability and has pipeline of additional drugs that will fuel
further growth. Investors should note that Vertex has been a
very long term and extremely volatile stock. Just over the last
decade the shares declined for nearly a few years (2002-2005)
before quadrupling in 2006. Since then the stock has been "basi-
cally flat" but with gyrations from $15 to $55 during that time
Although it's a complex story the "money shot"
for Verastem illustrates the potential the compa-
ny has to have a major impact on treating cancer.
Verastem basically targets the "root" of tumor to
accomplish total removal rather than just a re-
In order to accomplish this Verastem has devel-
oped technology to find the specific cancer stem
cells and create molecules that inhibit their for-
mation and growth.
Along with clinical drug development Verastem
is developing companion diagnostics tools to
provide more individualized treatments known to
be more effective.
1 Scientific ill