Clovis (CLVS) Q1 Loss Wider Than Expected, Revenues Beat
Zacks Investment Research | May 08, 2018 11:09PM ET
Clovis Oncology, Inc. (NASDAQ:CLVS) incurred an adjusted loss of $1.54 per share in the first quarter of 2018, which was wider than the year-ago loss of $1.33 per share as well as the Zacks Consensus Estimate of a loss of $1.34.
Clovis’ only marketed drug, Rubraca, was granted accelerated approval by the FDA in December 2016 for the treatment of advanced ovarian cancer in patients who have received prior chemotherapies.
Net revenues, entirely from Rubraca, were approximately $18.5 million in the quarter, up 10.1% sequentially amid competition from other PARP inhibitors which are approved in patients irrespective of BRCA mutation. Revenues beat the Zacks Consensus Estimate of $17.5 million. The company had recorded total revenues of $7 million entirely from Rubraca sales in the year-ago quarter.
Importantly, the company registered 1700 new patients on Rubraca therapy since its approval. Approximately, 300 new patients were registered in the first quarter.
Shares of the company declined almost 1.2% on May 8 on wider-than-expected loss. Moreover, Clovis has underperformed the industry in the past year. While the stock has lost 37.3%, the industry declined 11.8%.
Quarter in Detail
During the first quarter, research & development expenses increased 34.2% year over year to $43.5 million primarily due to increased expenses for clinical studies on Rubraca. However, selling, general and administrative (SG&A) expenses escalated 34.4% year over year to $39.3 million, reflecting increased activities to support commercialization of Rubraca.
Cash used in operating activities in the quarter was $100.6 million, higher than $80.4 million in the year-ago quarter, mainly due to higher product supply costs.
Clovis ended the quarter with $463.8 million of cash equivalents and available-for-sale securities supported by the proceeds raised through share offerings made in January and June last year
Update on Rubraca
Subsequent to the quarter 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.
In March 2018, the Committee for Medicinal Products for Human Use (“CHMP”) of the European Medicines Agency (“EMA”) issued a positive opinion recommending approval of Rubraca for treating advanced ovarian cancer indication with BRCA mutation. An approval is anticipated in the second quarter.
Additionally, Clovis has plans to submit a supplemental application seeking approval for second-line or later maintenance treatment indication in the EU, only if approved for the advanced ovarian cancer indication.
A phase II study – ATLAS – was initiated during the quarter to evaluate Rubraca monotherapy in metastatic bladder cancer. The study is currently enrolling patients.
In July 2017, Clovis announced a collaboration with Bristol-Myers Squibb Company (NYSE:BMY) to evaluate Rubraca in combination with the latter’s PD-1 immune checkpoint inhibitor, Opdivo, in multiple tumor types. A phase III study – ATHENA – is expected to start in the first half of 2018 to evaluate Rubraca + Opdivo for treating advanced ovarian cancer in first-line maintenance setting. A phase III study is already evaluating the combination in advanced triple-negative 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 is expected to increase with the FDA approval for use in ovarian cancer patients irrespective of BRCA-mutation in the United States. This approval brings the drug on par with other approved maintenance therapies including Tesaro, Inc.’s (NASDAQ:TSRO) Zejula and AstraZeneca PLC’s (NYSE:AZN) Lynparza.
We expect operating expense to continue to increase in 2018 as the company will incur higher investments to support Rubraca’s launch in Europe and expanded indication in the United States. Moreover, the company anticipates product supply costs to increase to $44 million in the second quarter, which will affect the bottom line. However, cash position will be better at the end of the second quarter due to addition of net proceeds from common stock and senior notes offering in April.
We remind investors that Clovis has to pay $38 million in milestone payment to Pfizer (NYSE:PFE) related to two approvals of Rubraca in the United States. Another additional $20 million will be due to Pfizer if approval is received in Europe. We expect further decline in the bottom line due to these costs.
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