Here's Why Clovis Oncology's Stock Is Getting Pummeled Today

What: Shares of Clovis Oncology , a clinical-stage biopharma, dropped by over 70% today after the company announced that a mid-cycle review of the company's experimentalepidermal growth factor receptor, or EGFR, inhibitor,rociletinib, indicated for T790M-positivelung cancer revealed markedly lower responses rates than originally projected. Specifically, the maturingdata set showed that the response rates for the 500 mg and 625 mg doses of rociletinib were28% and 34%, respectively. Earlier data releases, however, suggested the responses rates would come in closer to 59%.

So what: The FDA is now asking Clovis for additional efficacy data that is surely going to push back the FDA's target review date of March 30, 2016.

Now what: If these efficacy data don't improve and do so in dramatic fashion moving forward, Clovis could have a much bigger problem on its hands. Last Friday, the FDA approvedAstraZeneca's Tagrisso, which is expected to compete directly againstrociletinib in theT790M positivelung cancer market.

The issue is that AstraZeneca's Tagrisso pivotal-stage trial data showed that the drug produced objective response rates of 59% in this patient population. So, Tagrisso could end up taking the prize for both first and best-in-class for this indication, meaning thatrociletinib's commercial prowess may not amount to very much, or worst still, the FDA may even reject the drug based on its substantial inferiority to a product already on the market. Investors may want to stay away from this falling knife today in the wake of this disappointing clinical update.

The article Here's Why Clovis Oncology's Stock Is Getting Pummeled Today originally appeared on Fool.com.

George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.