Clovis Struggles to Find Buyer, Shares Tank Print E-mail
By Brian Wilson - Lead Contributor   
Thursday, 26 September 2013 10:17
Shares of the cancer drug developer Clovis Oncology (NASDAQ: CLVS) crashed by roughly $10/share on Wednesday after Bloomberg reported that the company failed to find a company currently willing to acquire Clovis. However, it was rumored that Amgen and Pfizer may be interested in an acquisition at some other point in time.

As described in last week’s note, which initially reacted to the company’s announced decision to look for a buyer, we mentioned that the company is quite expensive for any big pharma when factoring in the fairly high risk of failure for cancer drugs. Although lead candidates CO-1686 and Rucaparib are compelling assets, the data supporting them is early stage and based on a small number of total patients. It’s also worth noting that the company is retaining most of the valuation increase it enjoyed after releasing early-stage clinical data for both drug candidates at ASCO 2013.

This seems to reflect an opinion that the Rucaparib, and especially the CO-1686 data, is too good to dismiss.

CO-1686 is an EGFR inhibitor which has seen efficacy against patients with a particular mutation known as T790M, which disables other drugs of its class in many lung cancer cases. What makes it so special is that it appears to have an exceptional safety profile, which may allow the drug to be administered in much higher doses.

Details from a previous note:

In the trial 42 total patients were enrolled, 24 entered the dose escalation phase of the study, and 6 reached the highest daily dose of the drug (1800 mg, twice daily). According to biopsies taken from the 42 patients, 74% were positive for the T790M mentioned earlier, implying that the efficacy results would be a good gauge of whether or not CO-1686 worked as well as it should in lung cancer patients with that mutation.

Patients saw none of the typical signs of EGFR inhibition-related toxicity – specifically rash and diarrhea – up to a 1800 mg daily dose of the compound (N=6) as mentioned. There was 1 possible exception in the 900 mg arm that included diarrhea and some other serious side effects, labeled as an instance of dose limiting toxicity (DLT). Total adverse events (grade 3 or higher) were limited to 4 patients – including the DLT patient, and were explained to be unrelated to the administration of CO-1686. Total adverse events were seen in 62% of the population although the most frequent of these were common symptoms like fatigue and nausea.

Going forward, investors should monitor the acquisition drama surrounding Clovis closely. Although it is suggested that the company will not breach new 52-week highs without additional data or rumors of an acquisition or new partnership, the company should be able to hang onto most of the gains realized since January of this year. After all, this valuation is well supported by exceptional clinical trial data.

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