Home health remedies With Tesaro off the block, will Clovis be the next PARP maker...

With Tesaro off the block, will Clovis be the next PARP maker to get swallowed up?


GlaxoSmithKline stepped into the PARP inhibitor space big-time on Monday when it agreed to pay $5.1 billion to buy Zejula maker Tesaro. The $75-per-share valuation marked a 62% premium over Tesaro’s share price, which had already rocketed up on rumors of a deal.

Now, some biopharma watchers are wondering whether Clovis Oncology will be the next PARP maker to command a high premium from an asset-hungry Big Pharma player. Clovis markets Rubraca, a head-to-head competitor to Zejula, but the drug has struggled to keep up with the PARP competition, particularly AstraZeneca and Merck’s first-to-market Lynparza. In the third quarter, Clovis turned in Rubraca sales of just $22.8 million, missing the consensus analyst estimate of $31.3 million and pushing the company’s stock down 30% to $11.63.

But earlier this month, Clovis nabbed breakthrough status from the FDA for prostate cancer, setting it up to be the first PARP on the market in that indication—possibly making the company just a bit more attractive as an acquisition target. And at least some analysts figure Rubraca would be better off as part of a larger company’s portfolio.

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Clovis enjoyed a more recent piece of good news that has helped its share price rebound to $20. Tuesday, the company announced that the European Patent Office upheld key claims on Rubraca, allaying fears that if the same claims were to be challenged in the U.S., Clovis could face generic competition even before its patents run out in 2023.  

Still, Clovis’ status as a one-trick pony makes it particularly vulnerable, particularly in the PARP market. Part of the problem is that the overall market has been growing more slowly than PARP sellers had hoped it would. At the recent European Society for Medical Oncology meeting, Tesaro’s chief medical officer Marty Huber, M.D., reported that only about half of women with ovarian cancer who are eligible for PARP drugs are receiving them as maintenance therapy. This despite the release of multiple clinical trials supporting their use in that setting.

As if that isn’t making the marketing task challenging for Clovis already, there’s now a fourth player in the PARP market—a giant, no less—vying for oncologists’ attention. In October, Pfizer won FDA approval for its PARP inhibitor, Talzenna, for BRCA-mutated, HER2-negative breast cancer. 

RELATED: PARPs may be crushing it in the clinic, but half of doctors are still wary: executive

During a conference call with analysts after its third-quarter earnings report, Clovis CEO Patrick Mahaffy said “a perceived lack of differentiation” among PARP inhibitors is proving to be a challenge. To address the problem, “we are currently launching significant patient and branded resources into the marketplace across all of our customer channels,” he said.

The disappointing Q3 numbers led SunTrust Robinson Humphrey analyst Peter Lawson to slash his price target on Clovis’ shares from $90 to $20, based largely on a peak sales estimate for Rubraca of $900 million. “While Rubraca looks well positioned, downside risks relate to failure to commercialize, competition, and failure to expand into other cancers,” he wrote in a note.

That said, Lawson tabs Clovis as “well positioned” for a potential acquisition, he wrote—and he’s not alone in that opinion. JPMorgan analyst Cory Kasimov said in a note released after the third-quarter earnings report that Rubraca is a “very good drug” that “may trigger some bottom fishing.”

Kasimov added that the next opportunity for positive Rubraca data won’t come until late 2019, when the company is expected to release highly anticipated results from clinical trials in bladder cancer. That could be all the more reason for Clovis to turn up on someone’s M&A target list.

“It strikes us that this asset would be much better off in a larger organization,” Kasimov said, “where it can more quietly grow as part of an oncology portfolio, as opposed to being judged on a quarterly basis within a single-product company (as is currently the case).”

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