Shares of commercial-stage biotech Clovis Oncology (CLVS) fell by a noteworthy 14.9% through the first four days of trading this week, according to data provided by S&P Global Market Intelligence. This move lower stands out for two reasons:
- Clovis Oncology was one of the hottest biotech stocks last month, with its shares rising by an astounding 158% in June.
- Clovis' sudden course reversal is also noteworthy because biotech stocks in general have largely traded sideways so far this week. The SPDR S&P Biotech ETF, for instance, posted a a modest 0.78% gain.
Why is Clovis' stock sinking while biotechs at large hold steady? The long and short of it is that there is a ton of uncertainty surrounding the company's long-term outlook right now.
Speaking to this point, Clovis is currently attempting to tack on additional high-value indications for its Food and Drug Administration-approved cancer drug known as Rubraca. The FDA, however, has already told Clovis that it would prefer more mature overall survival data before the company submits a label expansion application for Rubraca as a maintenance treatment for advanced ovarian cancer.
A significant regulatory delay is problematic for the company due to its sky-high cash burn rate and dwindling cash position.
Is Clovis' stock a buy on this recent weakness? It all depends on your tolerance for risk. On the plus side, Clovis could emerge as a buyout target in the near future. After all, the company does sport an FDA-approved cancer drug, along with a pipeline of intriguing early-stage assets. That being said, Clovis isn't in the strongest position financially and a buyout is far from a sure thing. As such, this stock is probably only suited for aggressive investors.