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Clovis (CLVS) Plummets on News of Possible Bankruptcy Filing
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Shares of Clovis Oncology plunged 71.6% after the company announced that it will not have sufficient liquidity to maintain its operations beyond January 2023, based on current cash and cash equivalents, together with current estimates for revenues to be generated by sales of the cancer drug, Rubraca. This announcement overshadowed the company’s third-quarter results.
Per management, a potential bankruptcy filing in the near term is quite plausible as the recent regulatory developments impacted current revenues and the commercial potential of Rubraca. The company is also facing continuing challenges in raising additional capital as a result of the uncertain market potential of Rubraca.
Rubraca (rucaparib), an oral small molecule inhibitor of poly ADP-ribose polymerase (“PARP”), is marketed in the United States for an indication specific to recurrent epithelial ovarian, fallopian tube or primary peritoneal cancer and also for an indication specific to metastatic castration-resistant prostate cancer (“mCRPC”).
Sales of this drug have been adversely impacted in the last two years due to the COVID-19 pandemic’s impact on patient visits and diagnoses and stiff competition from other drugs in the market, including the impact on second-line maintenance that may result from an increase in first-line maintenance treatment of ovarian cancer (indications for which competing products are approved).
The FDA and EMA are now focusing on the mature overall survival data for the drugs previously approved, based on achieving progression free survival (PFS) as a primary endpoint. This has led to withdrawals of certain later line indications in ovarian cancer for Rubraca and each of the other PARP inhibitors on the market with a later-line treatment indication in ovarian cancer.
Clovis will need to raise additional capital in the near term in order to fund its operating plan and continue beyond January 2023.
The company had indicated the same concurrent with the second-quarter results, leading to a decline in share price.
The stock has lost 89.7% in the year compared with the industry’s 21.2% decline.
Image Source: Zacks Investment Research
Q3 Results
Clovis reported a net loss of 39 cents per share for third-quarter 2022, narrower than the year-ago period’s loss of 56 cents and the Zacks Consensus Estimate of a loss of 42 cents.
Net revenues — entirely from Clovis’ only marketed drug PARP inhibitor Rubraca — were down 19.1% year over year to $30.7 million, missing the Zacks Consensus Estimate of $35 million.
Sales of Rubraca in the United States were $23 million, down 19.8% year over year. Ex-U.S. market sales were $7.6 million for the third quarter, compared with $9.2 million in the year-ago quarter.
Research and development expenses decreased 33.3% year over year to $30.8 million, primarily owing to lower spending on Rubraca clinical studies.
Selling, general and administrative expenses dropped 5.6% year over year to $30.4 million.
Clovis ended the quarter with $58.3 million of cash equivalents and available-for-sale securities compared with $94.6 million on Jun 30, 2022.
Clovis has a license agreement with Pfizer (PFE - Free Report) to develop and commercialize Rubraca. The abovementioned condition forced Clovis to discuss with Pfizer, Inc. about deferring certain royalty payments due under its in-license agreement. The agreement is with respect to Rubraca sales during the third quarter of $4.3 million and the fourth quarter until Mar 31, 2023, plus interest thereon from the date such payments would otherwise be payable under the license agreement until actually paid.
A couple of better-ranked stocks in biotech include Syndax Pharmaceuticals (SNDX - Free Report) and Puma Biotechnology (PBYI - Free Report) . While Syndax sports a Zacks Rank #1, Puma carries a Zacks Rank #2 (Buy).
Over the past 60 days, loss estimates for Puma have narrowed to 6 cents from 16 cents. Puma also surpassed estimates in three of the trailing four quarters, with the average being 201.37%.
Over the past 60 days, loss estimates for Syndax have narrowed to $2.59 from $2.68. Syndax also surpassed estimates in all of the trailing four quarters, with the average being 95.39%.
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Clovis (CLVS) Plummets on News of Possible Bankruptcy Filing
Shares of Clovis Oncology plunged 71.6% after the company announced that it will not have sufficient liquidity to maintain its operations beyond January 2023, based on current cash and cash equivalents, together with current estimates for revenues to be generated by sales of the cancer drug, Rubraca. This announcement overshadowed the company’s third-quarter results.
Per management, a potential bankruptcy filing in the near term is quite plausible as the recent regulatory developments impacted current revenues and the commercial potential of Rubraca. The company is also facing continuing challenges in raising additional capital as a result of the uncertain market potential of Rubraca.
Rubraca (rucaparib), an oral small molecule inhibitor of poly ADP-ribose polymerase (“PARP”), is marketed in the United States for an indication specific to recurrent epithelial ovarian, fallopian tube or primary peritoneal cancer and also for an indication specific to metastatic castration-resistant prostate cancer (“mCRPC”).
Sales of this drug have been adversely impacted in the last two years due to the COVID-19 pandemic’s impact on patient visits and diagnoses and stiff competition from other drugs in the market, including the impact on second-line maintenance that may result from an increase in first-line maintenance treatment of ovarian cancer (indications for which competing products are approved).
The FDA and EMA are now focusing on the mature overall survival data for the drugs previously approved, based on achieving progression free survival (PFS) as a primary endpoint. This has led to withdrawals of certain later line indications in ovarian cancer for Rubraca and each of the other PARP inhibitors on the market with a later-line treatment indication in ovarian cancer.
Clovis will need to raise additional capital in the near term in order to fund its operating plan and continue beyond January 2023.
The company had indicated the same concurrent with the second-quarter results, leading to a decline in share price.
The stock has lost 89.7% in the year compared with the industry’s 21.2% decline.
Image Source: Zacks Investment Research
Q3 Results
Clovis reported a net loss of 39 cents per share for third-quarter 2022, narrower than the year-ago period’s loss of 56 cents and the Zacks Consensus Estimate of a loss of 42 cents.
Net revenues — entirely from Clovis’ only marketed drug PARP inhibitor Rubraca — were down 19.1% year over year to $30.7 million, missing the Zacks Consensus Estimate of $35 million.
Sales of Rubraca in the United States were $23 million, down 19.8% year over year. Ex-U.S. market sales were $7.6 million for the third quarter, compared with $9.2 million in the year-ago quarter.
Research and development expenses decreased 33.3% year over year to $30.8 million, primarily owing to lower spending on Rubraca clinical studies.
Selling, general and administrative expenses dropped 5.6% year over year to $30.4 million.
Clovis ended the quarter with $58.3 million of cash equivalents and available-for-sale securities compared with $94.6 million on Jun 30, 2022.
Clovis has a license agreement with Pfizer (PFE - Free Report) to develop and commercialize Rubraca. The abovementioned condition forced Clovis to discuss with Pfizer, Inc. about deferring certain royalty payments due under its in-license agreement. The agreement is with respect to Rubraca sales during the third quarter of $4.3 million and the fourth quarter until Mar 31, 2023, plus interest thereon from the date such payments would otherwise be payable under the license agreement until actually paid.
Zacks Rank & Stocks to Consider
Clovis currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A couple of better-ranked stocks in biotech include Syndax Pharmaceuticals (SNDX - Free Report) and Puma Biotechnology (PBYI - Free Report) . While Syndax sports a Zacks Rank #1, Puma carries a Zacks Rank #2 (Buy).
Over the past 60 days, loss estimates for Puma have narrowed to 6 cents from 16 cents. Puma also surpassed estimates in three of the trailing four quarters, with the average being 201.37%.
Over the past 60 days, loss estimates for Syndax have narrowed to $2.59 from $2.68. Syndax also surpassed estimates in all of the trailing four quarters, with the average being 95.39%.