Clovis Investors Lose Roci Value Entirely, JPMorgan Sees Clovis Worth Just What Ruca Can Pay: $15/Share

The FDA AdCom meeting had the panel voting 12-1 in favor of waiting for TIGER-3 data for roci in T790M+ lung cancer. JPMorgan’s Cory Kasimov downgraded the rating for Clovis Oncology Inc (NASDAQ: CLVS) from Overweight to Neutral, while slashing the price target from $42 to $15.

Disappointing Vote

The FDA panel voted against accelerated approval for roci and laid out key concerns. “We think the FDAs focus on QTc – in particular the table comparing roci's 13% rate of QTcF>500ms vs. the next highest approved drug at 4.3% – resonated with panel members, as did the discussion around lack of clear data supporting dose selection,” analyst Cory Kasimov wrote.

While a part of Clovis’ risk mitigation plan was dose reductions, several panel members indicated that dose reductions would not help if the AUC is consistent across doses.

Taking Only Ruca In Valuation

Citing the uncertainty related to roci’s potential path to market, the analyst said that the drug’s value contribution had been removed from the model. He further wrote, “In addition to removing roci from our model we are also removing the cash contribution from our valuation until we get a better idea of next steps.”

Now Clovis’ valuation is “driven entirely by rucaparib,” for which only ovarian cancer indication has been included, assuming peak worldwide sales of ~$450M and assigning a 70 percent probability of success.

“Given the number of outstanding Qs and strategic uncertainty, we believe it’s best to watch this play out from the sidelines,” Kasimov added.