Cancer

Buy Clovis Oncology After Big Nonsensical Drop

Summary

Combination deal of Rubraca and Opdivo paves the way for new first-line therapy treatment.

PARP inhibitor market potential is greatly expanded with Opdivo combination.

Current first-line therapy involves chemotherapy which is a very toxic treatment option.

Shares of Clovis Oncology (CLVS) took a huge hit on Monday falling by more than 13.5%. The fall occurred as soon as the company announced that it had established a partnership with Bristol-Myers (BMY). The stock dropped despite a partnership with a big pharmaceutical company, because the hope was that a buyout would occur instead. Now, lets evaluate this scenario. I can understand why some investors would be upset that Clovis wasn’t bought out, but in my opinion that’s no reason for the selloff. In other words, there was no reason for the stock to fall 13.5% on this news. I feel that quite the opposite should have occurred. That is because if the partnership pans out, Clovis’ drug Rubraca could generate billions of dollars in sales in the PARP inhibitor market.

Established Deal

According to the agreement the companies will combine Opdivo and Rubraca to treat patients in two phase 3 clinical trials. One phase 3 clinical trial will treat the combination in patients with advanced ovarian cancer as a first-line maintenance therapy. The second phase 3 trial will evaluate the combination therapy in patients with advanced triple-negative breast cancer as first line maintenance treatment. The collaboration also includes a phase 2 trial that will use the combination of the drugs to treat patients with metastatic castration-resistant prostate cancer (mCRPC). Clovis will be responsible for the ovarian cancer study, while Bristol-Myers will be responsible for the other two trials. This is the type of value that I am talking about. I feel that these combination treatments could produce better results for these patients as first-line therapy treatments. If that is the case, then it could mean massive revenue potential for both companies. That’s why I feel the selloff on Monday made absolutely no sense. The speculation of a buyout was just that, speculation that it would be bought out. There…