September 28, 2015 / 12:20 PM / 4 years ago

Verastem stops cancer therapy development; shares plunge

(Reuters) - Verastem Inc said it would wind down studies testing VS-6063, its lead therapy in development, to treat mesothelioma cancer, raising questions about the therapy’s potential to treat other forms of cancers.

The company’s shares plunged as much as 63.7 percent to a record low in heavy trading on Monday.

Verastem said on Monday it would halt a mid-stage study of VS-6063 to treat a cancer that affects the internal wall of organs, after a review showed the therapy was not effective enough to warrant continuing studies.

“Verastem will be looking at the potential for combination studies, however we believe VS-6063’s longevity as a drug is now also being called into question,” Roth Capital analyst Joseph Pantginis said.

The company is also testing VS-6063 to treat a form of lung cancer and ovarian cancer. It has two other experimental cancer therapies.

The company said it would focus its resources on other programs in its pipeline. It had $131.5 million in cash and cash equivalents as of June 30.

Pantginis said he expects Verastem to restructure, given the development plans for the rest of its pipeline. He slashed his price target on the stock to $2 from $23.

The company’s shares hit a record low of $2.06 before recouping some losses to trade down 62.4 percent at $2.13. Nearly 4.6 mln shares were traded in what will easily be the stock’s busiest day ever.

Up to Friday’s close, the Needham, Massachusetts-based company’s stock had fallen 38 percent so far this year.

Reporting by Vidya L Nathan in Bengaluru; Editing by Savio D'Souza

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