Here's Why Clovis Oncology Stock Dropped as Much as 13% Today
What happened
Shares of Clovis Oncology (NASDAQ: CLVS) fell 13% on Monday in the wake of a disclosure published Friday after the stock market closed. An SEC filing from April 12, 2019, says that the company decided to discontinue a phase 2 trial evaluating rucaparib as a monotherapy treatment for recurrent, metastatic bladder cancer based on recommendations from an independent data-monitoring committee. The decision to pull the plug wasn't related to safety.
Despite the setback, Clovis Oncology said it would continue to evaluate rucaparib in combination with other cancer drugs as a treatment for patients with advanced bladder cancer. Those trials are ongoing, while a new trial evaluating combination treatments for advanced bladder cancer expressing certain genetic mutations will begin in the second half of 2019.
As of 1:52 p.m. EDT, the stock had settled to a 12.3% loss.
So what
Investors aren't taking the setback for the company's lead drug candidate lightly. Rucaparib, also branded as Rubraca, is currently approved as a maintenance treatment for individuals with ovarian cancer who are responding to a platinum-based chemotherapy. But its potential is much greater.
Rubraca belongs to a class of drugs called PARP inhibitors that block enzymes used by cancer cells to repair damaged DNA. Stopping the enzymes could make cancer cells more susceptible to treatment, and the drug class seems to work best against cancers with a BRCA mutation, such as breast, prostate, and ovarian cancers.
The competition is fierce, however. AstraZeneca and Merck are developing Lynparza, while Tesaro -- recently acquired by GlaxoSmithKline for $5.1 billion -- is developing Zejula. Meanwhile, a start-up named Ribon Therapeutics is developing next-generation PARP inhibitors and has raised capital from Novartis, Johnson & Johnson, and Celgene.
Simply put, every failure and success has magnified importance in the highly competitive space.
Now what
Clovis Oncology has struggled to move out of third place in the race for PARP inhibitor glory. The recent news that Rubraca wasn't cutting it as a stand-alone treatment in bladder cancer certainly doesn't help the situation. If there's any silver lining, it's that the business exited 2018 in a much better financial position than it was in when it started the year. That said, Clovis' success will be dictated by its pipeline, which means it needs a few more big wins.
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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CELG. The Motley Fool has a disclosure policy.