Episode Details

Erasca, Inc. (ERAS) Q2 2026 — Q2 2026 (quarter ended June 30, 2026): no revenue. R&D $35.900M vs $21.170M; G&A $11.719M vs $9.455M; operating expenses $47.619M. Net loss $44.079M vs $33.876M. Loss per share $(0.14) vs a $(0.111) bar. Stock +1.47% to $18.58. Erasca lost 14 cents a share against an 11-cent bar and the stock still rose 1.47% to $18.58. The print is not the story. On April 27 Erasca published Phase 1 data it called positive, and the next session the stock fell 48.3%, from $19.15 to $9.90. Inside that release were a treatment-related death and a patent claim from the company whose drug it benchmarked against. THE CALL: AVOID (4/5, A PHASE 1 ASSET PRICED AT PHASE 3 ODDS) — base-case value ~$5.7 vs ~$18.58 today. KEY METRICS: - CALL: AVOID, 4/5. Fair value ~$5.70 vs the $18.58 Aug 12 close, 69% below. No revenue, so we price each asset as peak sales x probability: ERAS-0015 at $4.0B peak and a 22% chance of approval is $1,647M; ERAS-4001 at 10% adds $202M; discovery at 3% adds $23M; less 15% for the patent claim leaves $1,625M. - THE INVERSION: market cap $6,499M less $978M pro forma cash is $5,521M of enterprise value. Add back unfunded development and the market pays about $5,950M for the pipeline, 3.7x what our weights produce. That implies roughly an 80% chance ERAS-0015 is approved. Oncology assets entering Phase 1 historically convert near 5%; Phase 3 assets near 65%. - THE APRIL SESSION: the stock closed $19.15 on data day and $9.90 the next session, down 48.3% on 51.3M shares. The release disclosed a Grade 3 pneumonitis that progressed to Grade 5 in a 66-year-old pancreatic cancer patient at 24 mg, and a April 24 letter from Revolution Medicines. A securities class action followed on June 10. - THE NUMBERS BEHIND THE HEADLINE: every response rate is a uORR, confirmed and unconfirmed pooled. 62% in 2L+ KRAS G12X NSCLC (N=37), 75% post-platinum (N=16), 40% in 2L PDAC (N=20). The July headline of 57% in pancreatic cancer had a denominator of SEVEN patients. The lung figures pool two trials with different cut-off dates. - BALANCE SHEET: cash and marketable securities $384.3M at June 30, plus $593.5M net from the July offering is about $977.8M pro forma. No debt. But the release names no runway year, only a list of milestones, and every one of those milestones is a trial starting rather than finishing. Shares went 284.2M at Dec 31 to 349.8M at Aug 4. What to watch: UP: confirmed response rates at a defined dose in the H1 2027 AURORAS-1 expansion readout; strong first ERAS-4001 data in H2 2026; the Revolution Medicines claim resolved or licensed cheaply. DOWN: unconfirmed responses failing to confirm; further safety events; an adverse patent or trade-secret outcome; another equity raise below $17.50. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.