Clo­vis soars as a new round of PhI­II Rubra­ca da­ta looks promis­ing — but ro­ci scan­dal bites again with $142M set­tle­ment

Shares of Clo­vis On­col­o­gy soared 50% Mon­day morn­ing, af­ter the biotech re­port­ed a sol­id slate of pro­gres­sion-free sur­vival da­ta for its PARP drug Rubra­ca (ru­ca­parib) that will help it line up right along­side ri­vals in the field, pos­si­bly elim­i­nat­ing an ad­van­tage held by Tesaro for ac­cess to a wider group of ovar­i­an can­cer pa­tients.

Soon af­ter the da­ta hit, though, Clo­vis re­vealed in an SEC fil­ing that it had ten­ta­tive­ly reached a deal to set­tle a class ac­tion law­suit brought by share­hold­ers af­ter Clo­vis’ dis­as­trous set­back on rocile­tinib, re­ject­ed by the FDA af­ter ques­tions arose about the dodgy da­ta that had been cir­cu­lat­ed about that can­cer ther­a­py ahead of the FDA’s de­ci­sion. The biotech is set­ting aside $142 mil­lion in cash and stock to set­tle al­le­ga­tions that it ac­tive­ly mis­led in­vestors on ro­ci. And Clo­vis al­so dis­closed that it is un­der in­ves­ti­ga­tion by the SEC as well as the Jus­tice De­part­ment over the ro­ci case.

Rubra­ca, though, looks bet­ter than ever.

In­ves­ti­ga­tors re­port­ed that the drug hit all three pri­ma­ry end­points for pro­gres­sion-free sur­vival in tu­mor BR­CA-mu­tant, HRD-pos­i­tive and over­all in­tent-to-treat pop­u­la­tions. It al­so hit a key sec­ondary end­point for an in­de­pen­dent re­view of those re­sults.

If it all holds up at the FDA, the da­ta should pave the way to broad­er use of the drug, Clo­vis’ on­ly mar­ket­ed ther­a­py. And it may well end up eat­ing in­to Tesaro’s mar­ket share, a point that helped dri­ve down its shares by 8% this morn­ing.

Clo­vis says that it will file a sup­ple­men­tal ap­pli­ca­tion “with­in the next four months for a sec­ond-line and lat­er main­te­nance treat­ment in­di­ca­tion for all women with plat­inum-sen­si­tive ovar­i­an can­cer who have re­spond­ed to their most re­cent plat­inum ther­a­py.”

The new da­ta comes as mar­ket leader As­traZeneca, with Lyn­parza, lines up to com­pete with Clo­vis and Tesaro with com­pa­ra­ble PARPs. It al­so adds pres­sure on Pfiz­er, which picked up a PARP in its $14 bil­lion Medi­va­tion buy­out, which con­tin­ues to look like a heav­i­ly in­flat­ed price for the as­sets the phar­ma gi­ant net­ted in the deal.

Leerink’s Michael Schmidt says he was im­pressed by Rubra­ca’s lat­est per­for­mance. He not­ed:

The re­sults look par­tic­u­lar­ly im­pres­sive when com­pared to pre­vi­ous com­peti­tor da­ta and we think should sup­port a broad la­bel for Rubra­ca in a broad 2L main­te­nance pa­tient pop­u­la­tion, in­de­pen­dent of BR­CA/HRD sta­tus and test­ing. We re­cent­ly ini­ti­at­ed cov­er­age of CLVS with an OP rat­ing (LINK). The top-line da­ta re­port­ed this morn­ing clear­ly re­flect the best-case out­come for CLVS high­light­ed in our pri­or re­port in­di­cat­ing that ef­fi­ca­cy of the 3 lead­ing PARP in­hibitors looks very com­pa­ra­ble and we ex­pect shares to trade up sig­nif­i­cant­ly. With best-case da­ta in hand, we think CLVS should be a prime take­out can­di­date, and we re­it­er­ate our OP rat­ing on the stock.

Over the last few weeks we’ve been treat­ed to a num­ber of stores about Tesaro’s auc­tion to sell the com­pa­ny. As to­day’s news about the PFS da­ta spreads, that could put a crimp on the high end of the mar­ket val­u­a­tions be­ing ap­plied to its drug, Ze­ju­la.

Clo­vis, mean­while, is find­ing it hard to put the ro­ci scan­dal be­hind it. The biotech was forced to re­state its da­ta sub­mit­ted for an ap­proval of rocile­tinib, prompt­ing an em­bar­rass­ing and dev­as­tat­ing drop in the num­ber of re­spons­es that the biotech had claimed for their drug. An FDA pan­el sub­se­quent­ly re­ject­ed the drug, fol­lowed by a for­mal re­jec­tion by the agency, prompt­ing Clo­vis to re­struc­ture and lay off staffers while bury­ing ro­ci as a los­er. Share­hold­ers filed dozens of law­suits as a re­sult, forc­ing the com­pa­ny to go on the de­fen­sive. Clo­vis had ear­li­er not­ed in SEC fil­ings that it was un­der fed­er­al in­ves­ti­ga­tion, but had not dis­closed who was han­dling the probe.

“Based on these en­cour­ag­ing da­ta, it is clear that ru­ca­parib demon­strates a clin­i­cal­ly mean­ing­ful im­pact in de­lay­ing dis­ease re­cur­rence in women in this tri­al with ad­vanced ovar­i­an can­cer,” said Robert Cole­man, the prin­ci­pal in­ves­ti­ga­tor for the ARIEL3 study. “The PFS and safe­ty re­sults achieved in this study are par­tic­u­lar­ly promis­ing, be­cause they sug­gest women are able to stay on ru­ca­parib for a pro­longed pe­ri­od of time while gain­ing ben­e­fit. It is al­so clin­i­cal­ly sig­nif­i­cant that ru­ca­parib not on­ly sus­tained the most re­cent re­sponse to plat­inum, but in some pa­tients al­so en­hanced that re­sponse, in­clud­ing the elim­i­na­tion of resid­ual tu­mor.”

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