In a research report released Tuesday, Chardan Capital analyst Madhu Kumar initiated coverage on shares of Clovis Oncology Inc (NASDAQ:CLVS) with a Sell rating and $15 price target, which reflects a potential downside of 52% from last closing price. Kumar has based much of his thesis on his view that rucaparib’s lack of efficacy over current treatments and its safety signals are considerable risks ahead of the drug’s 23 February 2017 PDUFA date.

Kumar wrote, “In spite of rucaparib’s Breakthrough Therapy Designation by the FDA, we initiate coverage with a conviction Sell rating on the belief that rucaparib will not achieve accelerated approval. This belief is based upon our view of clinical data for rucaparib, presented on 7 October 2016 at the European Society for Molecular Oncology (ESMO) 2016 Congress, relative to data in the labels of two currently approved ovarian cancer therapies: the first-in-class PARP inhibitor, Lynparza from AstraZeneca, which is approved in fourth-line ovarian cancers with germline BRCA1/2 mutations but not approved in the third-line setting; and Avastin from Roche with paclitaxel (AP), which is approved broadly in ovarian cancer patients in the second- and third-line settings.”

“Our price target of $15 is based on a 1.5x multiple applied to $378.5 mm of cash as of the end of 2Q16. A 1.5x multiple of cash is roughly consistent with the trading of companies we cover that have had issues in the past year with mid-to-late-stage products in development. Due to Clovis’ cash burn (e.g. a $156.6 mm 2Q16 operating loss), alternatively modeling rucaparib at even a 80% probability of success, due to competitive pressures and limited patent term, could still lead to downside versus our $15 PT,” the analyst added.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Madhu Kumar has a yearly average loss of 15.3% and a 41% success rate. Kumar is ranked #3897 out of 4190 analysts.

Out of the 8 analysts polled by TipRanks (in the past 3 months), 4 rate Clovis Oncology stock a Hold, while 3 rate the stock a Buy, and 1 considers the stock a Sell. With a return potential of nearly 6%, the stock’s consensus target price stands at $34.38.