Why Shares of Erasca Are Jumping Tuesday

What happened

Shares of Erasca (ERAS 14.89%) were up more than 12% as of 3 p.m. on Tuesday after a big insider buy. The healthcare company’s stock is down more than 43% this year.

So what

Erasca is a clinical-stage precision oncology company that focuses on RAS/MAPK pathway-driven cancers. Jonathan Lim, the chairman and CEO of Erasca, showed his confidence in the company by buying a million shares, with the transaction worth $2,025,999 in a filing reported to the U.S. Securities and Exchange Commission (SEC). After the transaction, Lim owns 19,456,216 shares of Erasca stock.

Now what

Investors are often swayed by big insider buys, but they should be wary regarding such decisions as they can be done for reasons other than impending positive news. Erasca focuses on fighting cancer by focusing on the ways the RAS protein operates through a cellular pathway known as mitogen-activated protein kinases (MAPK). Those kinases, in a healthy cell, control cell growth and survival, but in a malignant cell, the MAPK is deregulated. 

The company has a deep pipeline, with 12 programs. The most advanced include: naporafenib to treat several RAF-related cancers, including an upcoming phase 3 trial to treat NRASm-related skin cancer; ERAS-007 plus encorafenib and cetuximab to treat patients with BRAF-mutated colon cancer; ERAS-601 plus cetuximab to treat advanced solid tumors; and ERAS-801, which was granted Fast Track Designation by the Food and Drug Administration (FDA) as a potential treatment for recurrent glioblastoma, the most aggressive and common type of cancer that begins in the brain.

On Aug. 10, when the company reported its second-quarter numbers, it said it had $365 million in cash, enough to fund operations for the next 18 months.