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Here's Why Clovis (CLVS) Stock is Up Almost 350% in One Year

Zacks Equity Research

Shares of Clovis Oncology, Inc. CLVS continue to witness an upside. The uptrend started in the third quarter of 2016. In fact, shares of this small biotech company are up a massive 343.7% in the past one year, outperforming the 4.3% decrease registered by the Zacks classified Biomed/Genetics industry during this period. Let’s analyze the factors that led to the rally.

The shares got a huge boost in Dec 2016 when the company received accelerated FDA approval for its only marketed drug, Rubraca (rucaparib), two months earlier than expected. The approval was based on an encouraging objective response rate and duration of response.

Rubraca is the only approved drug in the company’s portfolio and is the first and only oral PARP inhibitor to receive approval for the treatment of advanced BRCA-mutant ovarian cancer from the FDA.

Rubraca has bright prospects, given the immense commercial potential in the target market and the tremendous demand for PARP inhibitors. According to the American Cancer Society, ovarian cancer ranks fifth in deaths from cancer among women. It is estimated that more than 22,000 cases of ovarian cancer are diagnosed in the U.S. each year. There is a huge unmet need for new treatment options, given that one in four women with ovarian cancer have a germline or somatic BRCA mutation.

Rubraca recorded sales of $7 million in the first quarter of 2017. The company at the first quarter earnings call said that over 300 different healthcare practitioners had prescribed Rubraca in the quarter with over 350 new patients starting therapy.

Successful commercialization will significantly boost Clovis’ top line, going forward.

Meanwhile, Rubraca is also under review in the EU for a comparable ovarian cancer indication. Clovis expects an approval in EU in late 2017 or early 2018 and is establishing the commercial infrastructure for the same.

Rubraca’s continued approval in this indication depends on clinical benefit in confirmatory studies. While the ARIEL3 maintenance confirmatory study has completed enrollment, the same for ARIEL4 treatment confirmatory study is ongoing. An approval would give Rubraca access to a broader advanced ovarian cancer patient population.

Clovis is also looking to expand Rubraca’s label into additional indications like prostrate, breast and pancreatic cancers, among others, either as monotherapy or in combination with other agents, including Tecentriq-Rubraca combination in gynecologiccancers. This combination study is sponsored by Roche Holding AG RHHBY.

The company will face competition from currently marketed drugs for ovarian cancer including AstraZeneca plc’s AZN Lynparza. In Mar 2017, Tesaro, Inc.’s TSRO niraparib was approved for the same indication, which makes the commercialization of the drug challenging. However, several studies on Rubraca, targeting different types of advanced ovarian cancer patient populations, are currently underway. Label expansion in these indications following positive results and approval will boost the drug’s prospects.

Meanwhile, estimates for the second quarter were stable at $1.61 per share over the last 60 days. In the trailing four quarters, the company has delivered an average earnings surprise of 3.01%.

Clovis Oncology, Inc. Price and Consensus

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

Zacks Rank

Clovis has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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