Clovis Oncology (CLVS) Declines On FDA Information Request

Clovis Oncology Inc (NASDAQ: CLVS)

Clovis Oncology is having an incredibly hard time in the market today after announcing that the FDA has requested more information with regard to the efficacy analysis for an experimental treatment. Today, we’ll discuss the FDA’s request, the announcement CLVS made with regard to the request, and what we can expect to see from the stock moving forward. So, lets get right to it…

FDA Requests More Efficacy Data For Rociletinib

CLVS has been working on an experimental treatment for patients with mutant EGFR T790M-positive lung cancer known as rociletinib. Recently, the company provided the FDA with a new drug application, hoping for FDA approval of the treatment.  The FDA has responded, and not in the way that the company had hoped. According to a recent announcement, the FDA has requested additional clinical data to be used for the efficacy analysis for both 500mg and 625mg BID dose patient groups. In response, CLVS has stated that they plan to work with the FDA And provide all information necessary. In a statement, Patrick J. Mahaffy, President and CEO of CLVS had the following to say:

We remain confident in rociletinib and its potential to treat patients with mutant EGFR T790M-positive lung cancer… We will continue to work diligently with the FDA on our NDA submission.”

How The Market Reacted To The News

As we can expect any time there is negative news with regard to a publicly traded company, Clovis Oncology is experiencing declines in the market today. However, the declines that we’re seeing today are far more than what we are used to seeing in these scenarios. Currently (10:37), CLVS is trading at $32.28 per share after a loss of 67.54% so far today.

Why CLVS Declines Are So Dramatic

While we can expect to see declines in circumstances like this, it’s not every day that we see stocks crash by nearly 70% on this kind of news. However, the reason for the crash does justify such movement. First and foremost, any requests for more information from the FDA are a grim sign, and will result in declines. However, the more pressing matter here is that investors don’t like being misled, and in a way, CLVS did mislead investors, leading to undeserved growth. In the beginning of rociletinib clinical trials, CLVS presented interim data in a public setting. The data presented was based on preliminary and unconfirmed responses. In fact, even in the FDA, data was submitted that was unconfirmed. Releasing unconfirmed data is a poor business practice and when the reality hits investors, we generally see big changes in the stock associated with the misleading data.

What We Can Expect To See Moving Forward

In any situation like this, it’s important to remember that price movement in the market tends to happen through a series of overreactions. As a result, I’m expecting to see slight gains tomorrow, bringing CLVS back up from lows. However, on the long term stage, I don’t have much hope for this stock. At the very least, I’m expecting to see slow and steady declines until the final word from the FDA becomes available. Of course, if the FDA rejects the NDA in the end, we can expect more declines. Adversely, if the FDA accepts and approves the NDA, we can expect to see solid gains. Nonetheless, now is not the time to be throwing money at CLVS.

What Do You Think?

Where do you think CLVS is headed and why? Let us know your opinion in the comments below!

[Image Courtesy of Wikipedia]

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