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Motley Fool Issues Rare “All In” Buy Alert
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It was a strange day for Clovis Oncology ( CLVS -1.75% ) as the stock dropped 10.5% early in the day, only to close the day higher than it opened. The stock closed at $2.28 on Thursday but opened at $2.13 per share on Monday. It fell to as low as $2.04 in the early morning hours before rallying. Shortly before 2 p.m., the stock hit a high of $2.36, and it closed at $2.24. Clovis’ shares are down more than 15% for the year.
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Clovis has a relatively small market cap of $318 million, so wild swings are not surprising. In 2021, the stock ranged from $2.70 to $10.34 per share. Since then, it has come down. A rumor of a buyout offer or the report of a potential short squeeze is enough to move the needle. The company didn’t make any big announcement that would lead to the wild swing.
Clovis only has one commercial drug, Rubraca (rucaparib), which is approved in certain indications to treat ovarian cancer, fallopian tube cancer, primary peritoneal cancer, and castration-resistant prostate cancer. Rubraca is an oral, small molecule inhibitor of poly (ADP-ribose) polymerase.
The company has several clinical trials to expand Rubraca’s indications, most notably its phase 3 ATHENA-MONO study in which the company saw significant progression-free survival (PFS) rates in ovarian cancer when Rubraca was used as a first-line maintenance treatment. Rubraca showed a median PFS rate of 20.2 months compared to 9.2 months with a placebo. Based on those results, the company said it plans to submit a supplemental New Drug Application (sNDA) to the Food and Drug Administration (FDA) during the second quarter of 2022 and a type II variation to the European Medicines Agency during the third quarter of 2022.
The pharmaceutical company reported annual revenue in 2021 of $148.7 million, down from $164.5 million in 2020. It did lose less money, however, with an annual earnings per share (EPS) loss of $2.29 compared to an EPS loss of $4.38 in the same period in 2020. A label expansion on Rubraca will be a big help for Clovis as it will bring in more revenue and help the company fund its pipeline that contains two other promising therapies: Lucitanib, an investigational angiogenesis inhibitor that is being tested to fight gynecological cancers; and FAP-2286, a peptide-targeted radionuclide therapy used to target fibroblast activation proteins that are common in certain cancers, including pancreatic ductal adenocarcinoma, salivary gland, mesothelioma, colon, bladder, sarcoma, squamous non-small cell lung cancer, and head and neck cancers as well as in cancers of unknown primary. The company has solid long-term prospects, but in the short term, expect its share price to remain volatile.
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