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After disclosing that it's entered into a pact with Bristol-Myers Squibb (NYSE: BMY) on its cancer-fighting drug Rubraca, shares in Clovis Oncology (NASDAQ: CLVS) lost 13.5% of their value Monday.
While teaming up with biopharma giant Bristol-Myers Squibb would normally be viewed as a good thing, investors had sent shares soaring ahead of today's announcement in hopes of an acquisition. Thus, they walked away today disappointed.
Although a deal was what investors wanted to see, Bristol-Myers Squibb's willingness to partner up with Clovis Oncology on Rubraca could someday expand Rubraca's peak sales potential.
Bristol-Myers Squibb will supply its PD-1 cancer-fighting drug Opdivo so that the two companies can evaluate whether using Opdivo and Rubraca together can improve outcomes for patients with various tumor types. Phase 3 trials will study the two-drug combination in first-line maintenance treatment for ovarian and advanced triple-negative breast cancer. The company will also conduct phase 2 studies to see if using Opdivos and Rubraca together can tackle metastatic castration-resistant prostate cancer.
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Clovis Oncology will head up the ovarian cancer study, while Bristol-Myers Squibb will run the breast cancer and prostate cancer studies. It will be a bit before we know if this mash-up works, but it's a very intriguing one-two punch.
PD-1 drugs, including Opdivo, keep cancer cells from hijacking proteins that allow them to escape detection by the immune system. Meanwhile, Rubraca is a PARP-inhibitor that keeps cancer cells from using proteins to repair damage that's caused by chemotherapy, or other cancer treatments.
Opdivo has quickly become one of the top-selling cancer drugs available, generating over $1.1 billion in sales last quarter alone. Rubraca is relatively new to the market, but it and competing PARP inhibitors are generating nine figures in annual sales, and growing.
It's anyone guess if Clovis Oncology and Bristol-Myers Squibb's drug trials will succeed, and there doesn't appear to be any money changing hands between these companies. Therefore, it's understandable that M&A-hungry investors sold this company's news today.
Nevertheless, long-term investors ought to be encouraged that companies like Bristol-Myers Squibb continue to focus attention on PARP inhibitor combination therapies. After all, if these multi-drug studies pan out, the PARP drug market could end up being worth billions of dollars in annual sales someday.
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