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Clovis (CLVS) Q4 Earnings Lag Estimates, Rubraca Sales Recover

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Clovis Oncology, Inc. CLVS incurred adjusted loss of $1.88 per share in the fourth quarter of 2018, wider than the Zacks Consensus Estimate of a loss of $1.68 and the year-ago loss of $1.27 per share.

Net revenues, entirely from Clovis’ only marketed drug — Rubraca, were approximately $30.4 million in the quarter, up 33.3% sequentially. The top line, however, missed the Zacks Consensus Estimate of $30.57 million. The company had recorded total revenues of $17 million, entirely from Rubraca sales, in the year-ago quarter.

Clovis stated that the drug’s sales showed strong sequential growth in the fourth quarter as the company was able to expand the PARP inhibitor market through its awareness programs as well as increase its share in the segment. This fact is a breather for investors as on its third-quarter earnings call the company had said that it was facing stiff competition in capturing significant share in the ovarian cancer market. Rubraca sales in the quarter outpaced the company’s expectation of $22.8 million announced on the third-quarter earnings call.

Shares of Clovis increased almost 2.3% on Feb 26, following the earnings release. However, the stock has lost 55.1% in the past year.

Operating Expenses & Cash Details

During the fourth quarter, research & development expenses increased 87.4% year over year to $71.2 million primarily due to increased expenses for clinical studies on Rubraca in new oncology indications. Selling, general and administrative (SG&A) expenses escalated 27.6% year over year to $49.1 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 $82.7 million, higher than $65.6 million in the year-ago quarter.

Clovis ended the quarter with $520.1 million of cash equivalents and available-for-sale securities compared with $604.4 million as of Sep 30, 2018.

Full-Year Results

Clovis recorded total revenues of $95.4 million in 2018, up 71.8% from the year-ago period. However, adjusted loss per share for the year widened 27.5% to $6.53.

Update on Rubraca

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

Clovis is planning to file a supplemental new drug application (sNDA) in late 2019, seeking 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.

The company has a collaboration with Bristol-Myers BMY to develop Rubraca in combination with the latter’s PD-L1 inhibitor, Opdivo, for several cancer indications. During the quarter, Clovis expanded the agreement to include its pipeline candidate — lucitanib. The phase III ATHENA study evaluating Rubraca plus Opdivo as first-line maintenance treatment in advanced ovarian cancer is currently enrolling patients.

Our Take

The adoption of Rubraca in maintenance setting in the United States was on the path of recovery. Although the company is facing challenges for the expansion in the early line of therapy, its awareness programs are aiding the drug’s market share growth. However, Clovis might face challenges initially in Europe as it launches the drug for maintenance setting.

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 prospect. 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 expanded label in the United States.

Zacks Rank

Clovis has a Zacks Rank #4 (Sell).

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

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