Gabelli Names Clovis As Top Pick, Calls The Biotech A Likely Takeout Candidate

Clovis Oncology Inc CLVS has emerged as a strong takeover candidate following GlaxoSmithKline plc GSK's proposed acquisition of TESARO Inc TSRO, according to Gabelli Research.

The Analyst

Analyst Jing He named Clovis as his top pick in 2019. The analyst reiterated a Buy rating on Clovis shares.

The Thesis

The Tesaro deal and Merck & Co., Inc. MRK's $5-billion purchase of half of the commercial rights of AstraZeneca plc AZN's Lynparza in 2017 leave Clovis as the sole standalone PARP oncology company, giving it a scarcity value, analyst He said in a Tuesday note. (See his track record here.)

Clovis is the most likely takeout target in 2019, with Bristol-Myers Squibb Co BMY, Novartis AG NVS' Sanofi and Roche Holdings AG Basel ADR Common Stock RHHBY among the potential suitors, the analyst said. 

Clovis' Rubraca — a PARP inhibitor — is being evaluated in combination with Bristol-Myers' Opdivo as a first-line maintenance therapy for ovarian cancer in the ATHENA trial, He said. Data from the trial is expected in early 2021.

Although Clovis is behind the AstraZeneca-Merck combine and Tesaro-GSK in development, Clovis is in a better long-term position due to data generated by the Rubraca-Opdivo combination, He said. 

Clovis is evaluating Rubraca as monotherapy to treat prostate cancer in TRITON2 and TRITON3 trials, thr 

The company looks forward to filing application to the FDA by year-end 2019, the analyst said. 

Gabelli views data updates from TRITON2/3 trials at the ASCO meeting in June as the next catalysts for Clovis shares. 

The Price Action

Clovis shares were higher by more than 1 percent at $21.96 at the time of publication Tuesday.

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