Why Clovis Oncology Shares Are Falling 14.5% Today

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What happened

After the company updated investors on the efficacy and safety of its ovarian cancer drug rucaparib, shares in Clovis Oncology (NASDAQ: CLVS) are tumbling by 14.5% at 2 p.m. EDT.

So what

Rucaparib is in midstage studies evaluating its use in treatment-resistant advanced ovarian cancer, and the FDA is scheduled to consider its early approval in this indication next February.

Across two studies -- Ariel 2 and Study 10 -- a 600-milligram oral dose of rucaparib resulted in an objective response rate of 54%. Of the participating patients, 9% showed complete response (absence of cancer after treatment) and 45% showed partial response (a decrease in the size of the tumor). The median duration of response was 9.2 months.

While that efficacy data is encouraging, investors are focusing on the safety data, which is raising some questions. Notably, 61% of patients had a grade 3 or higher severe adverse event. Adverse events that led to an interruption in treatment occurred in 59% of patients, and 44% of patients required a dose reduction.

Now what

If approved next February, rucaparib will be the first PARP inhibitor, a type of drug that blocks a DNA-damaging enzyme, in theU.S. approved totreat ovarian cancer patients with germline or somatic BRCA mutations who have received two prior chemotherapies. Currently, the PARP inhibitor Lynparza is approved for use in patients who have received three prior chemotherapies, and that approval was based on an overall response rate of 34% in the drug's trials.

The safety data is concerning; however, if the FDA determines that dose interruption or dose reduction can effectively manage adverse events, a green light could still be in the cards. If approved, rucaparib could become an important option for previously treated ovarian cancer patients with otherwise limited treatment options. Overall, roughly 25% of ovarian cancer patients have a genetic makeup that could be amenable to rucaparib therapy.

Nevertheless, there are no sure bets when it comes to FDA decisions, especially decisions on drugs under accelerated review. Therefore, investors' caution isn't unwarranted. Risk-tolerant investors, however, might want to consider this stock because today's sell-off brings its market cap down to a more reasonable $1.1 billion.

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Todd Campbell has no position in any stocks mentioned.Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned.Like this article? Follow him onTwitter where he goes by the handle@ebcapitalto see more articles like this.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.