Erasca, Inc. (ERAS) stock intrinsic value fair value estimate & owner earnings analysis

Erasca is a clinical-stage cancer drug developer with no product revenue and no approved medicine. Its pipeline targets tumors driven by the RAS/MAPK pathway: ERAS-0015 (licensed from Guangzhou Joyo Pharmatech; in the AURORAS-1 study, cleared by the FDA in May 2025, and in a Joyo-sponsored trial in China), ERAS-4001 (licensed from Medshine) and ERAS-12. In March 2026 Erasca gave notice ending its licence to naporafenib, the drug that had been its most advanced program, effective June 3, 2026, and paid Joyo $150 million in March 2026 in connection with an option exercise. How the business earns and spends: it earns nothing, so its cash flow is a steady drain. Our measure of cash the business generates for shareholders (operating cash flow, less working-capital swings, less stock compensation, less capital spending) was about negative $1.61 per share in 2021, negative $1.26 in 2022, negative $0.87 in 2023, negative $0.59 in 2024 and negative $0.41 in 2025. The per-share improvement comes mostly from a growing share count (66 million diluted shares in 2021 to 284 million in 2025), not from lower spending: the 2025 dollar loss of about $117 million is down only modestly from about $138 million in 2024. Stock compensation of about $25 million a year is treated as a real cost. Payments for in-process research and development ($9.5 million in 2025, $22.5 million in 2024) sit outside operating cash flow; they are discretionary licensing spend and are not counted in that measure. Because the company has no revenue and no earnings, there is no earnings level to capitalize. What we credited: the only asset we can point to with evidence is cash. Cash and marketable securities were $384 million at June 30, 2026, after a $242.7 million share offering in January 2026 and the $150 million Joyo payment. Cash used in operations was $54.7 million in the first half of 2026, roughly $110 million a year. The company states this funds operations into the second half of 2028. Roughly 311 million diluted shares put cash at about $1.23 per share. What we left out: any value from ERAS-0015, ERAS-4001, ERAS-12 or any future approval. These are early-stage programs with no completed pivotal trial, no approval and no partner payment, so no named, evidenced driver supports a cash flow. Their worth in these cases is zero. We also credited no growth. Bear case, $0.53 per share: the company keeps spending about $110 million a year for two more years while trials read out, none produces a path to approval (the company has already abandoned its most advanced program, naporafenib, and paid $9.5 million in 2025 and $22.5 million in 2024 for in-process research), and it winds down with roughly $164 million left. Base case, $0.88 per share: about one year of spending, roughly $110 million, before results lead to a decision to stop, leaving about $274 million. We give no value to the pipeline because nothing in it is yet secured. Bull case, $1.23 per share: cash is preserved in full, for example if early data support a decision to stop spending or a partner funds development. Even the best case we can support from evidence equals current cash; success of a drug would be worth more, but it is not something the company has yet done, so we do not count it. What could make this wrong: a clinical result strong enough to attract a partner or acquirer would be worth far more than cash, and we do not capture that. Conversely, spending can exceed our estimate, wind-down costs (leases, severance) reduce the cash returned, and future share issuance would dilute existing holders; the company's runway ends in the second half of 2028 without new financing. Figures for the first half of 2026 come from the company's June 2026 quarterly report. Margin-of-safety price $0.40: this sits below the bear case because the value rests only on cash that management is actively spending, with no earnings behind it.