AstraZeneca Success On Prostate Cancer Drug Lowers Enthusiasm For Clovis

Positive top-line results from a competitor’s prostate cancer drug trial led Bank of America to downgrade Clovis Oncology Inc CLVS.

The Analyst

Bank of America's Tazeen Ahmad downgraded Clovis Oncology from Buy to Neutral while lowering the price target from $13 to $7.

The Thesis

Last week, AstraZeneca plc AZN reported positive results for its prostrate cancer treatment Lynparza for patients with certain genetic profiles. Ahmad wrote in a note on Tuesday that AstraZeneca’s incremental success changes the game for Clovis.

Ahmad said the competitive scene would be important to its view of Clovis, and the news makes it more likely that AstraZeneca will be on the market soon. Bank of America now sees it as “prudent to assume a two-player prostate cancer market from day one,” Ahmad wrote.

Clovis has slowly gained share in ovarian cancer treatment with its Rubraca drug, and Bank of America sees the company as better positioned in prostrate cancer treatments, Ahmad said.

But Ahmad views a strong launch of the prostrate cancer drug as critical, given a slower-than-expected ovarian cancer drug launch and the prostate cancer drug has been the biggest driver of Bank of America's model on Clovis.

Clovis’ prostrate drugs could, at least initially, also have a narrower use label relative to AstraZeneca’s drug, and more “visibility is needed into its continued uptake against competitors … and ability to pay down current debt,” Ahmad said of the prospects for the stock.

Price Action

Clovis stock was down more than 1.5% Tuesday at $5.58 per share.

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