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Clovis (CLVS) Q2 Loss Wider Than Expected, Revenues Beat
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Clovis Oncology, Inc. incurred an adjusted loss of $1.94 per share on a reported basis in the second quarter of 2018, wider than the Zacks Consensus Estimate of a loss of $1.38 but narrower than the year-ago loss of $3.88 per share. However, the adjusted loss (excluding one-time legal charges) for the reported quarter was $1.55 per share.
Clovis’ only marketed drug, Rubraca, was granted label expansion in the United States and first approval in Europe.
Net revenues, entirely from Rubraca, were approximately $23.8 million in the quarter, up 28.7% sequentially, due to an expanded label in earlier-line setting. Revenues beat the Zacks Consensus Estimate of $23 million. The company had recorded total revenues of $14.7 million entirely from Rubraca sales in the year-ago quarter.
Shares of the company declined almost 10.7% on Aug 2, presumably on lower-than-expected price and performance of Rubraca. Moreover, Clovis has underperformed the industry in the past year. While the stock has lost 39.5%, the industry declined 2.7%.
Quarter in Detail
During the second quarter, research & development expenses increased 59.2% year over year to $52.7 million primarily due to increased expenses for clinical studies on Rubraca. Selling, general and administrative (SG&A) expenses escalated 24.4% year over year to $44.9 million, reflecting increased activities to support commercialization of Rubraca in the United States as well as Europe.
Cash used in operating activities in the quarter was $110.2 million, higher than $69.1 million in the year-ago quarter. The increase was due to higher product supply costs as the company is building additional inventory prior to transition to new manufacturing facility for Rubraca. Moreover, Clovis paid $58 million to Pfizer in milestone payments related to approval of Rubraca in the United States and Europe.
Clovis ended the quarter with $682.2 million of cash equivalents and available-for-sale securities compared to $463.8 million as of Mar 31, 2018. The cash position was boosted by the proceeds from sales of common stock and issuance of convertible debt in April.
Update on Rubraca
In April 2018, the FDA approved the label expansion of Rubraca to include maintenance treatment in recurrent ovarian cancer. The drug can now also be prescribed irrespective of BRCA-mutation in the second-line setting. The drug was launched immediately for the indication. Moreover, the drug was granted full approval as monotherapy for treatment of ovarian cancer patients with BRCA-mutation in third- or later-line setting.
In May 2018, the European Medicines Agency approved Rubraca for treating advanced ovarian cancer indication with BRCA mutation. Additionally, Clovis has submitted a supplemental application seeking approval for second-line or later maintenance treatment indication in the EU. An opinion from the Committee for Medicinal Products for Human Use is expected by the end of 2018.
The company is actively working on expanding the label of Rubraca beyond ovarian cancer. The company is evaluating Rubraca as monotherapy or in combination with immunotherapies – Bristol-Myers’ (BMY - Free Report) Opdivo or Roche's (RHHBY - Free Report) Tecentriq – in multiple clinical studies in additional indications including first-line ovarian cancer, prostate and breast cancer.
Apart from Rubraca, Clovis is also developing lucitanib for treating breast and lung cancer. The company’s partner, Servier, will return ex-U.S. (excluding China) rights to the candidate in 2018. Following this, Clovis will own global development rights for lucitanib, except China.
Our Take
Adoption of Rubraca following the FDA approval for use in ovarian cancer patients irrespective of BRCA-mutation in the United States has increased sales. Moreover, this approval brings the drug on par with other approved maintenance therapies including Tesaro, Inc.’s Zejula and AstraZeneca’s Lynparza.
Operating expenses are expected to rise in 2018 as the company will incur higher investments to support Rubraca’s launch in Europe and expanded indication in the United States. However, the company anticipates product supply costs to be as low as $10 million in the second half, which will boost the bottom line. Moreover, an improved cash position will also help the company to better compete in the market with continued development and commercialization programs for Rubraca.
Clovis Oncology, Inc. Price, Consensus and EPS Surprise
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Clovis (CLVS) Q2 Loss Wider Than Expected, Revenues Beat
Clovis Oncology, Inc. incurred an adjusted loss of $1.94 per share on a reported basis in the second quarter of 2018, wider than the Zacks Consensus Estimate of a loss of $1.38 but narrower than the year-ago loss of $3.88 per share. However, the adjusted loss (excluding one-time legal charges) for the reported quarter was $1.55 per share.
Clovis’ only marketed drug, Rubraca, was granted label expansion in the United States and first approval in Europe.
Net revenues, entirely from Rubraca, were approximately $23.8 million in the quarter, up 28.7% sequentially, due to an expanded label in earlier-line setting. Revenues beat the Zacks Consensus Estimate of $23 million. The company had recorded total revenues of $14.7 million entirely from Rubraca sales in the year-ago quarter.
Shares of the company declined almost 10.7% on Aug 2, presumably on lower-than-expected price and performance of Rubraca. Moreover, Clovis has underperformed the industry in the past year. While the stock has lost 39.5%, the industry declined 2.7%.
Quarter in Detail
During the second quarter, research & development expenses increased 59.2% year over year to $52.7 million primarily due to increased expenses for clinical studies on Rubraca. Selling, general and administrative (SG&A) expenses escalated 24.4% year over year to $44.9 million, reflecting increased activities to support commercialization of Rubraca in the United States as well as Europe.
Cash used in operating activities in the quarter was $110.2 million, higher than $69.1 million in the year-ago quarter. The increase was due to higher product supply costs as the company is building additional inventory prior to transition to new manufacturing facility for Rubraca. Moreover, Clovis paid $58 million to Pfizer in milestone payments related to approval of Rubraca in the United States and Europe.
Clovis ended the quarter with $682.2 million of cash equivalents and available-for-sale securities compared to $463.8 million as of Mar 31, 2018. The cash position was boosted by the proceeds from sales of common stock and issuance of convertible debt in April.
Update on Rubraca
In April 2018, the FDA approved the label expansion of Rubraca to include maintenance treatment in recurrent ovarian cancer. The drug can now also be prescribed irrespective of BRCA-mutation in the second-line setting. The drug was launched immediately for the indication. Moreover, the drug was granted full approval as monotherapy for treatment of ovarian cancer patients with BRCA-mutation in third- or later-line setting.
In May 2018, the European Medicines Agency approved Rubraca for treating advanced ovarian cancer indication with BRCA mutation. Additionally, Clovis has submitted a supplemental application seeking approval for second-line or later maintenance treatment indication in the EU. An opinion from the Committee for Medicinal Products for Human Use is expected by the end of 2018.
The company is actively working on expanding the label of Rubraca beyond ovarian cancer. The company is evaluating Rubraca as monotherapy or in combination with immunotherapies – Bristol-Myers’ (BMY - Free Report) Opdivo or Roche's (RHHBY - Free Report) Tecentriq – in multiple clinical studies in additional indications including first-line ovarian cancer, prostate and breast cancer.
Apart from Rubraca, Clovis is also developing lucitanib for treating breast and lung cancer. The company’s partner, Servier, will return ex-U.S. (excluding China) rights to the candidate in 2018. Following this, Clovis will own global development rights for lucitanib, except China.
Our Take
Adoption of Rubraca following the FDA approval for use in ovarian cancer patients irrespective of BRCA-mutation in the United States has increased sales. Moreover, this approval brings the drug on par with other approved maintenance therapies including Tesaro, Inc.’s Zejula and AstraZeneca’s Lynparza.
Operating expenses are expected to rise in 2018 as the company will incur higher investments to support Rubraca’s launch in Europe and expanded indication in the United States. However, the company anticipates product supply costs to be as low as $10 million in the second half, which will boost the bottom line. Moreover, an improved cash position will also help the company to better compete in the market with continued development and commercialization programs for Rubraca.
Clovis Oncology, Inc. Price, Consensus and EPS Surprise
Clovis Oncology, Inc. Price, Consensus and EPS Surprise | Clovis Oncology, Inc. Quote
Zacks Rank
Clovis currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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