Clovis Shares Tumble as Analysts Give Edge to Lung-Cancer Rival
It was an American Society of Clinical Oncology meeting to remember for Clovis Oncology, but not in a good way. The sudden fall of the Boulder-based drug company’s stock price was one of the most prominent stories to emerge from the conference, which was held in Chicago over the weekend.
Clovis’s (NASDAQ: CLVS) share price fell more than 25 percent the past two days, dropping to $38.23 per share at market close Tuesday after ending last week at $51.21 per share.
The drop came after Clovis reported new information about the side effects created by its potential lung cancer drug CO-1686. The data stoked fears that a competing drug being developed by AstraZeneca (NYSE: AZN) is marginally better.
The contest between Clovis and AstraZeneca has attracted a lot of attention, with Clovis cast as the underdog, as CEO Patrick Mahaffy acknowledged in an interview with CNBC. Clovis has a market capitalization of $1.3 billion and no drugs on the market, while AstraZeneca has a market cap of $91.9 billion and more than $25.7 billion in revenue in 2013.
Each company is developing a drug for non-small cell lung cancer patients who have a genetic mutation known as T790M that makes their disease resistant to standard treatment.
AstraZeneca has estimated the market for this particular segment of lung cancer treatment could reach up to $3 billion per year. With that much at stake, analysts and investors have closely watched the progress of each drug through FDA trials since last year.
Clovis on Sunday presented findings from its Phase 1 and early Phase 2 study of its drug, named CO-1686. It found that 58 percent of the 40 subjects with the T790M responded to the drug.
The side effects included elevated blood sugar, or hyperglycemia, in about 50 percent of the patients. Clovis said the side effect could in most cases be treated with a commonly prescribed oral medication, but three or four of the patients in the study required insulin injections.
The study also found that 15 percent of patients experienced heart arrhythmia.
Analysts compared the drug to AstraZeneca’s findings about AZD9291, which it also presented at ASCO. AstraZeneca found that 64 percent of patients responded to its drug.
Analysts also seemed less concerned with AZD9291’s side effects, which include 22 percent of patients reporting a rash and 3 percent experiencing symptoms that could indicate the risk of lung tissue scaring.
Jefferies analyst Jeffrey Holford acknowledged “there remains little differentiation on efficacy” between the drugs, while Citigroup analyst Yaron Werber gave AstraZeneca the edge based on the side effect issues. Werber downgraded Clovis stock from buy to neutral in a note to clients and reduced his price target from $109 to $53.