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

Clovis Oncology (NASDAQ:CLVS) 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 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 (NYSE:BMY) 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 (NYSE:AZN) Lynparza and Glaxo’s (NYSE:GSK) 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.

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Clovis Oncology, Inc. Price, Consensus and EPS Surprise

Zacks Investment Research

Written By: Zacks Investment Research