Biotech Stock News (CLVS)(SNTA)

Clovis Oncology (NASDAQ:CLVS)

On Tuesday April 13, 2016 Clovis Oncology announced that the FDA advisory panel concluded that the company’s drug, Rociletinib, had insufficient data to warrant approval. Not only did the FDA panel advise against approval, it shot down the drug with a vote of 12 “against and 1 “for” approval. This was the worst possible outcome that could have happened, and thus the stock has cratered since then.

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It is never a good thing to be overly enthusiastic which is the case of Clovis here. It believed that it had enough data to receive accelerated approval, which would have skipped having to wait for the phase 3 trial to finish for approval. The FDA was not on the side of Clovis, it expressed concerns that the company needed additional data to prove that Rociletinib is far superior in efficacy to that of chemotherapy.

Now the company will linger for quite some time, because it must await results from the phase 3 trial. This phase 3 trial, with additional lung cancer data, is not expected to release results until 2018. That would put potential approval time around sometime mid-to-late 2019. The FDA has the final say for approval so they can either accept the panel’s recommendation, or decide to go against it. Although, considering that the panel was almost unanimous in voting against it, the chance for approval is very small.

Synta Pharmaceuticals (NASDAQ:SNTA)

On Thursday April 14, 2o16 Synta Pharmaceuticals announced that it would merge with a private pharmaceutical company, known as Madrigal Pharmaceuticals. Under the terms of the arrangement Madrigal will merge with the wholly owned subsidiary of Synta in an all-stock type transaction. Many are questioning this move by management, but this move may have been the right choice.

The truth is that Synta made the right choice because their main cancer drug, ganetespib, had failed many cancer trials beforehand. It even most recently failed a pivotal clinical trial in patients with lung cancer. The newly joined company will target trials in cardiovascular metabolic disease space. With the money on hand the companies will be able to fund a lot of the phase 2b trials in the collective pipeline.

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The main target the new company will be developing a drug for is in a NASH indication. NASH stands for non-alcoholic steatohepatitis, and as the disease indicates it is due too fatty liver, and not excessive alcoholic use. Many new small-cap biotechnology stocks are targeting this indication because it commands anywhere from between $6 billion to $8 billion.  The combined company will be called Madrigal Pharmaceuticals, and is expected to close in Q3 of 2016.

[Image Courtesy of Wikipedia]

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