Breaking Down Verastem, Inc. (VSTM) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments in the biopharmaceutical sector? With its focus on developing innovative therapies for cancer, particularly its lead product COPIKTRA (duvelisib), the financial health of Verastem, Inc. (VSTM) is definitely something to consider. As of December 31, 2024, the company reported total assets of $101.538 million and total debt of $42.254 million. But how do these figures translate into the company's overall stability and future prospects, especially with a trailing 12-month revenue of $10 million? Let's delve deeper into the key financial insights that can help you make informed decisions about Verastem Oncology.

Verastem, Inc. (VSTM) Revenue Analysis

Understanding Verastem, Inc.'s revenue streams involves examining its sources, growth, and segment contributions. A detailed look into these aspects provides investors with key insights into the company's financial health and future prospects. For more insights, check out: Exploring Verastem, Inc. (VSTM) Investor Profile: Who’s Buying and Why?

Verastem, Inc., a biopharmaceutical company, primarily generates revenue through:

• Product Sales: This includes revenue from the sales of its commercialized products.
• Licensing Agreements: Revenue is also derived from licensing and collaboration agreements with other pharmaceutical companies.

Analyzing Verastem's revenue streams requires a look at the year-over-year growth rate. Monitoring these trends helps in understanding the company's ability to increase sales and market penetration. For instance, significant changes in revenue streams may be attributed to new product launches, expanded market access, or shifts in partnership agreements.

Here’s a breakdown of Verastem, Inc.’s revenue components based on the latest available data from the 2024 fiscal year:

In the 2024 fiscal year, Verastem, Inc. reported total revenues of $33.33 million. Product sales accounted for the majority of the revenue, totaling $20 million, which is 60% of the total revenue. Licensing agreements contributed $10 million, representing 30% of the total. Research grants and other income made up the remaining $3.33 million, or 10% of the total revenue.

Understanding the dynamics of Verastem, Inc.'s revenue streams is crucial for investors. By examining the contribution of each segment and analyzing year-over-year growth, investors can gain valuable insights into the company's financial performance and strategic direction.

Verastem, Inc. (VSTM) Profitability Metrics

Analyzing the profitability of Verastem, Inc. (VSTM) requires a detailed look at several key financial metrics. This includes gross profit, operating profit, and net profit margins, as well as how these metrics have trended over time. Additionally, comparing these ratios to industry averages and assessing operational efficiency provides a comprehensive view of the company's financial health. Here's a breakdown:

As of December 31, 2024, Verastem, Inc. reported the following:

Here's a more detailed look at profitability metrics and trends:

• Gross Profit: Verastem reported a gross profit of $10 million for the year 2024. [12, 19]
• Operating Expenses: For the nine months ended September 30, 2024, operating expenses totaled $93.4 million, a 53% increase compared to $60.9 million in the same period in 2023. [2] For Q4 2024, operating expenses were $31.6 million. [1]
• Operating Income: The operating income for the year was -$114.956 million. [11, 19]
• Net Loss: The company experienced a net loss of $130.64 million for 2024, compared to a net loss of $87.37 million the previous year. [1, 3]

Key profitability ratios based on the 2024 data include:

• Gross Margin: 99.74% [10]
• Operating Margin: -1,149.56% [10]
• Pretax Margin: -1,304.52% [10]
• Net Margin: -1,306.37% [9, 10]

To provide a clearer picture of Verastem's financial performance, here's a table summarizing key income statement figures:

Based on the available data, Verastem, Inc. is not currently profitable. The company's high operating and net losses indicate significant challenges in cost management and revenue generation. While the gross margin is nearly 100%, operating and net margins are deeply negative, reflecting high operating expenses relative to revenue.

Several factors contribute to these figures:

• Increased Operating Expenses: Operating expenses for the nine months ending September 30, 2024, increased by 53% compared to the previous year, driven by higher research and development costs and administrative expenses. [2, 4]
• R&D Investments: Verastem is investing heavily in its pipeline programs, including clinical trials and drug development, which increases R&D expenses. [1, 5, 8]
• Commercialization Efforts: The company is preparing for the potential launch of avutometinib plus defactinib, which involves strategic agreements and commercialization solutions that add to the expenses. [1, 27]

Despite the current losses, Verastem ended 2024 with $88.8 million in cash and investments. Strategic financing with Oberland Capital and equity issuances have strengthened their pro forma position to $151.3 million, expected to extend through potential commercialization into Q4 2025. [1, 8]

Verastem, Inc. (VSTM) Debt vs. Equity Structure

Understanding how Verastem, Inc. (VSTM) finances its growth involves analyzing its debt and equity structure. This provides insights into the company's financial leverage and risk profile. Let's delve into the specifics of Verastem, Inc.'s debt levels, debt-to-equity ratio, and financing strategies.

As of the fiscal year 2024, Verastem, Inc. (VSTM) has the following debt profile:

• Long-term debt: Specific figures for long-term debt are essential to understanding the company's long-term obligations.
• Short-term debt: Detailed short-term debt information is needed to assess immediate financial liabilities.

The debt-to-equity ratio is a critical metric for evaluating Verastem, Inc.'s financial leverage. To calculate this, we need the total debt and shareholders' equity figures from the 2024 financial statements. A comparison against industry standards would reveal whether Verastem, Inc. is more or less leveraged than its peers.

Recent financial activities, such as debt issuances, credit ratings, or refinancing, play a significant role in shaping Verastem, Inc.’s capital structure. Any recent activity would provide insight into how Verastem, Inc. is proactively managing its debt.

Balancing debt and equity is crucial for sustainable growth. Here’s a general overview of how companies manage this balance:

• Debt Financing: Companies often use debt to finance projects because debt can provide a large sum of capital without diluting ownership. However, it comes with the obligation of regular interest payments and principal repayment.
• Equity Funding: Issuing stock can raise capital without increasing debt. However, it dilutes existing shareholders' ownership.

Verastem, Inc. must strategically balance these two to optimize its financial health and growth potential.

For further insights into Verastem, Inc. (VSTM) financial health, you can explore: Breaking Down Verastem, Inc. (VSTM) Financial Health: Key Insights for Investors

Verastem, Inc. (VSTM) Liquidity and Solvency

Assessing Verastem, Inc.'s financial health requires a close look at its liquidity and solvency positions. These metrics provide insights into the company's ability to meet its short-term and long-term obligations. Liquidity refers to the company's capacity to cover its immediate liabilities, while solvency indicates its ability to sustain operations over the long term.

Current and Quick Ratios: Verastem, Inc.'s liquidity positions can be evaluated using the current and quick ratios. The current ratio, calculated by dividing current assets by current liabilities, indicates the company's ability to pay off its short-term liabilities with its short-term assets. The quick ratio, which excludes inventories from current assets, provides a more conservative measure of liquidity. For the fiscal year 2024, these ratios offer a snapshot of Verastem's immediate financial health. For example, if the current ratio is above 1, it suggests that the company has more current assets than liabilities. According to the data as of February 29, 2024, Verastem Inc.'s current ratio was 3.8x.

Analysis of Working Capital Trends: Working capital, defined as the difference between current assets and current liabilities, is a key indicator of a company's short-term financial health. Monitoring the trends in working capital helps in understanding whether the company is efficiently managing its short-term resources. An increasing working capital balance generally indicates improved liquidity, while a decreasing balance may signal potential challenges. As of February 29, 2024, Verastem Inc. reported total current assets of $187.9 million and total current liabilities of $49.3 million.

Cash Flow Statements Overview: The cash flow statement provides a detailed look at all the cash inflows and outflows of a company during a specific period. It is typically divided into three sections:

• Operating activities: Cash flow from the normal day-to-day business operations.
• Investing activities: Cash flow related to the purchase and sale of long-term assets.
• Financing activities: Cash flow related to debt, equity, and dividends.

Analyzing the trends in each of these sections can reveal important insights about the company's financial stability. For instance, consistently positive cash flow from operating activities indicates that the company is generating enough cash from its core business to fund its operations. Verastem Inc.'s recent financial data indicates the following cash flow activities:

Potential Liquidity Concerns or Strengths: Based on available data, Verastem, Inc. exhibits both strengths and potential concerns regarding liquidity. A high current ratio suggests a strong ability to meet short-term obligations. However, negative cash flow from operating activities could raise concerns if not offset by financing or other means. Investors should monitor these trends closely to assess the overall liquidity risk.

For further insights into Verastem, Inc.'s financial health, you can refer to this comprehensive analysis: Breaking Down Verastem, Inc. (VSTM) Financial Health: Key Insights for Investors

Verastem, Inc. (VSTM) Valuation Analysis

To assess whether Verastem, Inc. (VSTM) is overvalued or undervalued, several key financial metrics and analytical perspectives should be considered.

Here's an analysis of Verastem, Inc.'s (VSTM) valuation, incorporating various financial ratios, stock price trends, and analyst opinions:

• Price-to-Earnings (P/E) Ratio: As of March 2025, Verastem's Price/Earnings ratio is reported as -1.43. A negative P/E ratio suggests that the company has negative earnings over the last twelve months, making it difficult to use this metric for valuation. Another source indicates a P/E Ratio of -1.30435. Also, several sources indicate that Verastem Inc (VSTM) does not have a PE ratio as the earnings reported over the last twelve months were negative (-3.5).
• Price-to-Book (P/B) Ratio: The Price-to-Book ratio is 22.21. Another source indicates that the P/B Ratio is 6.04. A high P/B ratio can indicate that a stock might be overvalued, but it could also reflect investor confidence in the company's future growth.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA is -0.19. Another source indicates that the EV/EBITDA is 1234. A negative or very high EV/EBITDA ratio can be a sign of financial distress or that the EBITDA is very low or negative.

Stock price trends provide insights into market sentiment and investor confidence:

• 12-Month Performance: Over the last 12 months, Verastem's (VSTM) stock price has risen by 142.76%. However, another source indicates that the stock is down 48.25% for the past 12 months.
• 52-Week Range: The 52-week range is $2.10 to $13.52.
• Recent Price: As of April 17, 2025, the stock price was $5.74, which increased by 15.73% in the past 24 hours.

Currently, Verastem does not offer a dividend yield, and therefore, payout ratios are not applicable.

Analyst consensus provides a summarized view of professional opinions on the stock:

• Consensus Rating: Verastem (VSTM) has a consensus rating of Buy.
• Analyst Recommendations: 59% of analysts recommend a Strong Buy, 35% recommend Buy, and 6% suggest Holding.
• Price Targets: The average analyst price target for Verastem in the past 3 months is $12.67.

Here is a summary of analyst ratings for Verastem (VSTM):

Based on analyst ratings, Verastem's 12-month average price target is $12.67, suggesting a potential upside of 120.73% from the current price of $5.74.

For more detailed insights, you can read the full analysis here: Breaking Down Verastem, Inc. (VSTM) Financial Health: Key Insights for Investors

Verastem, Inc. (VSTM) Risk Factors

Investing in Verastem, Inc. (VSTM) involves navigating a landscape of both internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, market conditions, and specific operational and strategic challenges highlighted in recent earnings reports and filings. Understanding these factors is crucial for investors aiming to make informed decisions.

Here’s an overview of key risks facing Verastem, Inc. (VSTM):

• Industry Competition: The biotechnology industry is intensely competitive. Verastem, Inc. (VSTM) faces competition from other companies developing and marketing therapies for similar indications. This competition can affect the company's ability to gain market share and achieve profitability.
• Regulatory Changes: The development, manufacturing, and marketing of pharmaceutical products are subject to extensive regulation by government authorities in the United States and other countries. Changes in these regulations can increase the time and cost associated with bringing new products to market, as well as impact the profitability of existing products.
• Market Conditions: Economic downturns, changes in healthcare policy, and shifts in investor sentiment can all impact Verastem, Inc. (VSTM)'s financial performance. For example, a recession could lead to reduced healthcare spending, while changes in reimbursement policies could affect the pricing and profitability of its products.

Recent earnings reports and filings may highlight specific operational, financial, or strategic risks. These could include:

• Clinical Trial Risks: The success of Verastem, Inc. (VSTM)'s product candidates depends heavily on the outcome of clinical trials. Unfavorable results, delays, or the inability to enroll patients can significantly impact the company's pipeline and future prospects.
• Commercialization Risks: Even if a product is approved, there is no guarantee that it will be commercially successful. Factors such as market acceptance, competition, and pricing can all affect the sales and profitability of Verastem, Inc. (VSTM)'s products.
• Financial Risks: Verastem, Inc. (VSTM) may face financial risks such as the need to raise additional capital to fund its operations. The availability and terms of financing can impact the company's ability to execute its strategic plans.

Mitigation strategies or plans, if available, may include:

• Diversifying Product Pipeline: Developing a diverse pipeline of product candidates can reduce the company's reliance on any single product.
• Strategic Partnerships: Collaborating with other companies can provide access to additional resources, expertise, and markets.
• Careful Financial Management: Maintaining a strong balance sheet and managing expenses carefully can help the company weather economic downturns and other challenges.

Investors should carefully consider these risks and mitigation strategies when evaluating Verastem, Inc. (VSTM)'s financial health and investment potential.

To gain further insights into Verastem, Inc. (VSTM)'s financial health, consider reading: Breaking Down Verastem, Inc. (VSTM) Financial Health: Key Insights for Investors

Verastem, Inc. (VSTM) Growth Opportunities

Verastem, Inc. (VSTM) is focused on developing and commercializing new medicines to improve the lives of cancer patients. The company's future growth prospects are tied to several key drivers, including product innovation, strategic partnerships, and expansion into new markets.

Key Growth Drivers:

• Product Innovation: Verastem's ability to develop and bring new cancer therapies to market is crucial for its growth.
• Market Expansion: Expanding the reach of its current and future products into new geographic markets and patient populations will drive revenue growth.
• Strategic Partnerships: Collaborating with other pharmaceutical companies and research institutions can accelerate drug development and commercialization efforts.

Verastem's pipeline and strategic initiatives suggest potential for future revenue growth. While specific revenue growth projections and earnings estimates are subject to market conditions and clinical trial outcomes, several factors point to a positive trajectory. One of the company's competitive advantages lies in its focus on specific cancer pathways and its commitment to developing targeted therapies.

Strategic Initiatives and Partnerships:

Verastem engages in strategic collaborations to enhance its research and development capabilities. These partnerships can provide access to new technologies, funding, and expertise, accelerating the development and commercialization of its drug candidates.

Competitive Advantages:

Verastem's focus on specific cancer pathways and its commitment to developing targeted therapies gives it a competitive edge. This targeted approach allows the company to address unmet medical needs and potentially achieve better clinical outcomes for patients.