Clovis (CLVS) Q1 Earnings Top Estimates, Rubraca Sales Strong

Clovis Oncology, Inc. CLVS incurred adjusted loss of $1.63 per share in the first quarter of 2019, narrower than the Zacks Consensus Estimate of a loss of $1.80. However, it was wider than the year-ago loss of $1.38 per share.

Net revenues, entirely from Clovis’ only marketed drug, Rubraca, were approximately $33.1 million in the quarter, up 8.9% sequentially. The top line also beat the Zacks Consensus Estimate of $31.68 million. The company had recorded total revenues of $18.5 million, entirely from Rubraca sales, in the year-ago quarter.

Shares of Clovis increased almost 1.9% on May 7, following the earnings release. The stock has increased 8.3% so far this year compared with the industry’s rise of 3.2%.

Quarter in Details

Rubraca sales in the United States were $31.9 million during the quarter. The drug recorded first ever sales in ex-U.S. market of $1.2 million during the quarter.

During the first quarter, research & development expenses increased 42.5% year over year to $62 million primarily due to increased expenses for label expansion studies on Rubraca. Selling, general and administrative (SG&A) expenses escalated 21.6% year over year to $47.8 million, reflecting increased activities to support commercialization of Rubraca in the United States as well as Europe.

Cash used in operating activities in the quarter was $98.5 million, lower than $100.6 million in the year-ago quarter.

Clovis ended the quarter with $460.8 million of cash equivalents and available-for-sale securities compared with $520.1 million as of Dec 31, 2018.

The company stated in its earnings release that it has entered into a clinical trial financing for up to $175 million. The company will use the fund to support its late-stage ATHENA study conducted in collaboration with Bristol-Myers BMY to evaluate Rubraca combination regimens for advanced ovarian cancer. The company anticipates that available funds following the financing agreement will extend cash runaway into the first half of 2022 from previously expected second half of 2020.

Update on Rubraca

In January 2019, Rubraca received approval for its second indication in Europe as a maintenance treatment for recurrent ovarian cancer patients, irrespective of BRCA-mutation, who have responded to platinum-based chemotherapy. In March, the company launched the drug in Europe starting with Germany. It will continue to launch the drug in other European countries through 2019 and 2020.

Clovis is planning to file a supplemental new drug application (sNDA) in late 2019 for label expansion of Rubraca in advanced prostate cancer based on the availability of mature data from the TRITON clinical study program. In October, the company presented encouraging initial data from the phase II TRITON2 study evaluating Rubraca in metastatic castration resistant prostate cancer. A phase III TRITON3 study evaluating Rubraca in prostate cancer patients who have not received chemotherapy is currently enrolling patients.

The company has a collaboration with Bristol-Myers 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 is evaluating the same combination in prostate cancer.

In April, the company discontinued its phase II ATLAS study, which was evaluating Rubraca as monotherapy in recurrent metastatic bladder cancer as it was unlikely to provide a meaningful clinical benefit to patients.

Our Take

Clovis reported encouraging first-quarter results as it beat both earnings and sales estimates on the back of growing Rubraca sales and launch of the drug in ex-U.S. markets. The drug also maintained its market share amid competition and slower penetration of PARP inhibitors. Clovis maintained its 20% market share of the ovarian cancer PARP inhibitor market in the first quarter.

We are also encouraged about the company’s efforts to develop the drug as monotherapy or combination regimens for new cancer indications. Collaboration and clinical study agreements with other pharma companies, especially Bristol-Myers, provide expertise and lead to sharing of cost of development.

Notably, Rubraca is the first approved PARP inhibitor in Europe that is available for treatment as well as maintenance treatment for ovarian cancer. This may help the drug to gain market share, boosting its prospects. However, the market is competitive with the presence of Glaxo’s GSK Zejula and Merck/AstraZeneca’s AZN Lynparza.

Operating expenses are expected to rise in 2019 as the company will incur higher investments to support Rubraca’s launch in Europe and for ongoing clinical studies.

Clovis Oncology, Inc. Price, Consensus and EPS Surprise


Clovis Oncology, Inc. Price, Consensus and EPS Surprise | Clovis Oncology, Inc. Quote

Zacks Rank

Clovis currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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