SVB Leerink cuts Clovis Oncology to underperform; PT to $5 from $10

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SVB Leerink downgraded Clovis Oncology (NASDAQ:CLVS) to “underperform” from “market perform” and halved its price target to $5 from $10, citing a fading opportunity in prostate cancer and escalating cash constraints. The stock closed at $9.03 on April 24.

Analyst Dr. Andrew Berens writes that the overall survival benefit demonstrated by AstraZeneca and Merck’s Lynparza drug candidate will “sufficiently shift the prostate cancer market dynamics and revenues so that Clovis may be unable to fund operations and service debt without multiple serial equity raises over the next five years.”

This is the first time a poly (ADP-ribose) polymerase (PARP) inhibitor has demonstrated a survival benefit in any tumor, a “commercial advantage we think will give [Lynparza] a significant and sustainable advantage,” he added.

Dr. Berens still expects Clovis’ Rubraca to receive accelerated approval on the May 15 PDUFA date, but “believe this result is largely anticipated, and in our view, less fundamentally relevant now.”

While Clovis has an ongoing TRITON3 randomized trial with overall survival as a key secondary endpoint, “we would not expect this benefit to be demonstrated in time to have a significant commercial impact, as Lynparza may have already advanced to the frontline,” Dr. Berens said.