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Clovis (CLVS) Q4 Loss Wider Than Expected, Revenues Beat

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Clovis Oncology incurred loss of $1.81 per share in the fourth quarter of 2019, wider than the Zacks Consensus Estimate of a loss of $1.61. However, the loss was narrower than the year-ago loss of $1.88 per share.

Net revenues, entirely from Clovis’ only marketed drug, Rubraca, were up almost 29.5% year over year to $39.3 million in the quarter, slightly beating the Zacks Consensus Estimate of $38.79 million. Sales were up 4.5% sequentially.

Shares of Clovis were down almost 9.1% in after-market trading on Feb 24, following the earnings release. The stock has plunged 63.4% in the past year compared with the industry’s decrease of 3.4%.

Quarter in Details

Sales of Rubraca, a PARP inhibitor, in the United States were $36.1 million, a slight decline from $36.5 million in the third quarter of 2019. Ex-U.S. market sales were $3.2 million in the fourth quarter compared with $2.1 million the third quarter of 2019 driven by higher sales in Germany and launches in England and Italy during the fourth quarter.

During the fourth quarter, the company gained reimbursement agreements for Rubraca in England and Italy. Subsequently, in February, the company successfully negotiated reimbursement agreement for the drug in France.

In the fourth quarter, research & development expenses increased 1.8% year over year to $72.5 million. Selling, general and administrative expenses declined 8.1% year over year to $45.2 million.

Clovis ended the quarter with $296.7 million of cash equivalents and available-for-sale securities compared with $354.1 million as of Sep 30, 2019.

The company expects its cash resources to be enough to support its operations in the second half of 2021.

Full-Year Results

Clovis reported total revenues of $143 million, up almost 50% year over year. The company incurred an adjusted loss of $7.40 per share, wider than the year-ago adjusted loss of $6.68. Adjusted loss excludes expense related to acquired in-process research and development, and a gain on extinguishment of debt. Including these items, the company had incurred a loss of $7.43 in this year.

Update on Rubraca

Last month, the FDA granted priority review to the supplemental new drug application (sNDA) seeking label expansion for Rubraca as monotherapy for BRCA-mutant recurrent, metastatic castrate-resistant prostate cancer (mCRPC). A decision from the FDA is expected by May 15, 2020.

Clovis is currently in the process of launching the drug in European countries for the recurrent ovarian cancer maintenance indication. It is also preparing for the U.S. launch of the drug in mCRPC, following a potential approval.

A phase III TRITON3 study evaluating Rubraca in mCRPC patients with BRCA mutation and ATM mutation, and who have not received chemotherapy is currently enrolling patients.

The company has a collaboration with Bristol-Myers (BMY - Free Report) to develop Rubraca and pipeline candidate, lucitanib, in combination with the latter’s PD-L1 inhibitor, Opdivo, for several cancer indications. The phase III ATHENA study evaluating Rubraca plus Opdivo as first-line maintenance treatment in advanced ovarian cancer is currently enrolling patients. A phase II study – FRACTION-GC – to evaluate doublet and triplet combination of Rubraca and Bristol-Myers’ Yervoy and Opdivo in patients with advanced gastric cancer is also enrolling patients.

During the fourth quarter, Clovis initiated a phase II LODESTAR study to evaluate Rubraca in patients with recurrent solid tumors associated with the deleterious homologous recombination repair, or HRR gene mutations.

Our Take

Clovis reported mixed fourth-quarter results with earnings missing estimates and revenues beating the same. The company’s cancer drug, Rubraca, showed strong year-over-year growth in 2019. A successful launch following potential approval in the mCRPC indication should drive sales higher in 2020. The company remains committed to expand the drug’s label into earlier-line setting in ovarian cancer as well in new cancer indications. These regulatory, commercial and developmental activities are likely to drive operating expenses higher this year. Meanwhile, successful label expansion boosts the prospects of the drug.

However, Rubraca faces stiff competition in the PARP inhibitor segment, especially from AstraZeneca’s (AZN - Free Report) Lynparza and Glaxo’s (GSK - Free Report) Zejula. While Lynparza is approved for treating ovarian, breast and pancreatic cancer, Rubraca and Zejula are available only to ovarian cancer patients. Competition is set to rise with several other pharma companies marketing/developing PARP inhibitors.

Clovis Oncology, Inc. Price, Consensus and EPS Surprise


Clovis Oncology, Inc. Price, Consensus and EPS Surprise

Clovis Oncology, Inc. price-consensus-eps-surprise-chart | Clovis Oncology, Inc. Quote

Zacks Rank

Clovis currently has a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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