Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares in Clovis Oncology (NASDAQ:CLVS) rallied by 10% earlier today after Goldman Sachs upgraded the company to a buy and significantly bumped up its price target.
So What: Previously, Goldman Sachs had a neutral rating on the stock with a price target of $68, but the highly respected investment bank took that rating to a buy and slapped a $117 price target on the company on Monday.
Goldman Sachs also increased its peak annual sales projection for Clovis' lung cancer drug rocilentinib from $1.5 billion to $2 billion, citing better insight into its potential as a front line therapy and the likelihood of an FDA filing for approval as a second line therapy by mid year.
If approved, rocilentinib would initially be used as a treatment in patients who had previously taken an EGFR targeting drug such as Tarceva or Iressa, but had developed resistance to that therapy due to a mutation known as T790M.
In May 2014, the FDA granted Clovis Oncology breakthrough therapy designation for that second line indication, providing the company with a faster path to approval that could result in rocilentinib launching in early 2016.
Now What: Clovis Oncology has been on a bit of a winning streak. Last week, the company won breakthrough therapy designation for rucaparib, a therapy for ovarian cancer that at least 65% of patients responded to during phase 2 trials. Clovis Oncology expects to file for FDA approval of rucaparib in 2016.
There are a limited number of clinical stage oncology companies with unpartnered cancer drugs like rocilentinib and rucaparib, so that could make shares more valuable. But investors should remember that despite having an intriguing pipeline, Clovis Oncology doesn't have any products currently on the market and there's no guarantee that the FDA will approve rocilentinib or rucaparib, or that its other clinical trials will pan out. As a result, Clovis Oncology is a high-risk, high-reward stock, and that means that only speculative investors should consider it.