Clovis Oncology, Inc.
) plummeted more than 11% to $64.99 on Sep 25, 2013 following a
report from Bloomberg News that the biopharmaceutical company was
unsuccessful in finding a buyer. A person familiar with the
situation, who declined to be identified, said that following its
futile attempt in attracting a buyer, Clovis was considering
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According to an earlier report from Bloomberg News, Clovis was
exploring strategic options including a potential sale after
positive results from its early stage oncology candidates caused
its stock price to soar.
We remind investors that on Jun 3, 2013, Clovis presented
encouraging data from two early-stage studies on its candidates
rucaparib (ovarian cancer) and CO-1686 (lung cancer). The study
on rucaparib, which evaluated the drug as a monotherapy,
indicated a disease control rate of 89% in heavily-pretreated
patients suffering from ovarian cancer. Moreover, the candidate
was well tolerated in the study.
The study on CO-1686 provided no evidence of wild-type epidermal
growth factor receptor (EGFR) inhibition in heavily pretreated
lung cancer patients. The candidate too was well tolerated. The
EGFR mutant patients were resistant to the previous treatments.
Though encouraged by the positive results, we note that the
candidates are in early-stages of development and quite a
distance away from entering the market, if at all.
The other candidates at Clovis, which has no marketed product,
too are in early-stages of development. The early-stage nature of
the biopharmaceutical company's pipeline makes it a risky buyout
target. Moreover, Clovis' expensive valuation was also
instrumental in no one coming forward to acquire it according to
reports. On a price-to-book basis, the shares of Clovis are
trading at 5.3x, a huge premium to the S&P 500 average of
Clovis currently carries a Zacks Rank #3 (Hold). Stocks such as
Eli Lilly and Company
) appear to be more attractive. Roche carries a Zacks Rank
#1 (Strong Buy) while Bayer and Eli Lilly carry Zacks Rank #2