What To Expect From Clovis Oncology Following Rubraca Approval

Clovis Oncology Inc CLVS investors certainly have reason to be excited about the potential of the company’s Rubraca cancer treatment drug. However, Oppenheimer analyst Leah Cann isn’t quite so excited about Clovis stock at its current price. On Thursday, Oppenheimer initiated coverage of Clovis with a Perform rating.

Clovis shares are up an incredible 607 percent in the past year, including a 57 percent gain since June 15. The market enthusiasm came after the company reported positive late-stage data on Rubraca.

The DNA-damage repair inhibitor drug class is an exciting new area of exploration in the biotech world, Cann said. Rubraca receives accelerated approval from the FDA back in December for treatment of third-line, BRCA mutant positive ovarian cancer, but it is also currently being tested for potential treatment of other ovarian, breast and prostate cancers as well.

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While the drug’s potential is huge, Clovis shares already reflect a reasonable valuation for Rubraca, Cann said. Oppenheimer estimates that Clovis will be able to ride the Rubraca wave to 67.3 percent compound annual revenue growth over the next four years, reaching $691.6 million by 2021.

“Using our 2021 estimated revenue of $691.6 million, and applying the average forward price-to-sales of the biotechnology sector of 12.5x, then discounting our estimated revenue for risk of failure, we arrive at a value for Clovis that is in the range of the current stock price,” Cann wrote.

Cann expects Clovis to turn its first profit in 2018 and reach $4.97 in annual EPS by 2021.

At last check, shares of Clovis were down 4.2 percent at $92.71.