Clovis Oncology Inc (CLVS): Is the Pullback a Buying Opportunity?


Clovis Oncology Inc (NASDAQ:CLVS) did not do enough to allay investor concerns during its positive presentation at Friday’s European Society for Medical Oncology (ESMO) conference in Madrid. Specifically, the full data read-out for ARIEL3, the firm’s Phase 3 trial evaluating PARP inhibitor rucaparib showed reassuring results for the drug as switch “maintenance” therapy; rucaparib extended progression-free survival in women suffering from platinum-sensitive ovarian cancer, both with and without BRCA mutations.

However, shares took a 7% wind down on Friday on back of investors crying out concerns of liver toxicity (13% of patients in a trial of 564 participants withdrew due to liver “tox”), 6 patient deaths, and those who find initial PARP/PD1 combo data to be “underwhelming” against the competition.

Yet, J.P. Morgan analyst Cory Kasimov emerges “encouraged by the overall results” even as he acknowledges apprehension that has “weighed on shares post the presentation/discussion.”

As such, the analyst maintains an Overweight rating on CLVS stock with a $111 price target, which represents a 65% increase from where the shares last closed. (To watch Kasimov’s track record, click here)

“As for the concerns that appeared to weigh on CLVS shares Friday, ALT/AST elevations were most frequently mentioned,” highlights Kasimov, explaining, “but this represents transient transaminitis rather than true liver toxicity. The ARIEL3 investigator at the CLVS event was quick (and adamant) to point out that elevations in liver enzymes (though at times reaching 4x upper limit of normal) were transient, self-limiting, and asymptomatic […] He further stated that other investigators share this same view that this is not a true ‘toxicity.'”

What of the 6 patient deaths? Well, argues the analyst, only two can be deemed treatment related, as four patients endured cardiac arrest, macrophage activation syndrome, and two fell to progressive disease. The verdict from Kasimov’s eyes points to patient deaths that are fairly “balanced” between the rucaparib arm and the placebo arm.

For whispers that point to rival cancer drug-maker Tesaro who likewise posted preliminary data from its TOPACIO trial at the conference, the analyst deems the data “still very early,” dismissing questions of Clovis’ PARDP/PD1 data as a case of inflated optimism. As Kasimov sees it, this will be a wait-and-see story until he sees further strong data, and he urges investors not to jump to any conclusions just yet here.

Overall, though some of the Street is running for the hills in post-ESMO light on the ARIEL 3 results, the analyst wagers the buying prospect for Clovis looks all the more appealing, contending: “In our view, the recent pullback presents a compelling opportunity as we continue to see significant strategic value in CLVS given the near- and long-term potential of its wholly owned, unencumbered oncology asset.”

The rest of Wall Street seems to echo the analyst’s bullish bet, as TipRanks analytics indicate CLVS as a Strong Buy. Based on 9 analysts polled by TipRanks in the last 3 months, 7 rate a Buy on Clovis stock while 2 maintain a Hold. The 12-month average price target stands at $111.00.

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