Clovis Oncology, Inc.’s shares have plunged 49.6% in the past six months against the industry’s 3% rise. Image Source: Zacks Investment Research
The primary reason for the share price decline is Clovis’ announcement that it will not have sufficient liquidity to maintain its operations beyond January 2023 based on current cash and cash equivalents and revenue estimates from its sole-marketed drug, Rubraca.
The company announced this along with its third-quarter 2022 results. Per management, Clovis has been facing several regulatory setbacks for its cancer drug Rubraca. These setbacks have impacted current revenues and the commercial potential of Rubraca.
Rubraca is currently approved in the United States and Europe as a second-line maintenance treatment for recurrent ovarian cancer in patients who respond (completely or partially) to platinum-based chemotherapy. Rubraca is also approved in the United States under the accelerated pathway as monotherapy for treating BRCA-mutant metastatic castrate-resistant prostate cancer (mCRPC).
The drug was also approved in the United States and Europe in the third or later-line setting in ovarian cancer. However, the company has voluntarily withdrawn approval for this indication in both markets. While the approval in the United States was withdrawn with effect from June 2022, it was also withdrawn in Europe from September 2022. The decision to withdraw is based on data from the ARIEL4 post-marketing study, which linked Rubraca to an increased risk of death.
Through a SEC filing in May 2022, Clovis announced that it had discussed the path with the FDA for the label expansion of Rubraca as a first-line ovarian cancer maintenance treatment. However, the regulatory body recommended the company not to submit a regulatory filing until the overall survival (OS) data is at least 50% mature. At the time, management believed that the data was only 25% mature and would take approximately two years to reach the intended maturity.
Though Clovis submitted an sNDA in this regard in September 2022 and went against the FDA’s recommendation for OS data maturity, the regulatory authority will consider OS data from other clinical studies evaluating Rubraca. The FDA also plans to hold an advisory committee meeting to discuss the data supporting this label expansion.
Due to these factors highlighting the uncertain market potential of Rubraca, Clovis is also facing continuing challenges in raising additional capital. The company has also been unable to secure a strategic collaboration for its peptide-targeted radionuclide therapy (PTRT) and imaging agent candidate, FAP-2286, which is being evaluated in an early-stage study for multiple tumor types.
In the first nine months of 2022, sales of Rubraca were $97 million, down 14% year over year.
A PARP inhibitor, Rubraca also faces stiff competition from Lynparza, another PARP inhibitor jointly developed and commercialized by
AstraZeneca ( AZN Quick Quote AZN - Free Report) and Merck ( MRK Quick Quote MRK - Free Report) .
AstraZeneca/Merck’s Lynparza is approved for four cancer types, namely ovarian, breast, prostate and pancreatic cancers, in various patient populations. Merck and AstraZeneca are evaluating Lynparza across a range of tumor types.
In the first nine months of 2022, Lynparza generated product sales of $1.95 billion for AstraZeneca and alliance revenues of $825 million for Merck.
Zacks Rank & Stocks to Consider
Clovis currently carries a Zacks Rank #2 (Buy). Another top-ranked stock in the overall healthcare sector is
Angion Biomedica , carrying a Zacks Rank #2. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
In the past 60 days, estimates for Angion Biomedica’s 2022 loss per share have narrowed from $1.64 to $1.54. During the same period, the loss estimates per share for 2023 have narrowed from $1.54 to $1.48. Shares of Angion Biomedica have plunged 70.7% in the year-to-date period.
Earnings of Angion Biomedica beat estimates in three of the last four quarters and missed the mark just once, witnessing a surprise of 66.42%, on average. In the last reported quarter, ANGN delivered an earnings surprise of 41.67%.