What: Shares of Clovis Oncology (NASDAQ:CLVS), a clinical-stage biopharma, dropped by over 70% today after the company announced that a mid-cycle review of the company's experimental epidermal growth factor receptor, or EGFR, inhibitor, rociletinib, indicated for T790M-positive lung cancer revealed markedly lower responses rates than originally projected. Specifically, the maturing data set showed that the response rates for the 500 mg and 625 mg doses of rociletinib were 28% and 34%, respectively. Earlier data releases, however, suggested the responses rates would come in closer to 59%. 

So what: The FDA is now asking Clovis for additional efficacy data that is surely going to push back the FDA's target review date of March 30, 2016. 

Now what: If these efficacy data don't improve and do so in dramatic fashion moving forward, Clovis could have a much bigger problem on its hands. Last Friday, the FDA approved AstraZeneca's (NYSE:AZN) Tagrisso, which is expected to compete directly against rociletinib in the T790M positive lung cancer market.

The issue is that AstraZeneca's Tagrisso pivotal-stage trial data showed that the drug produced objective response rates of 59% in this patient population. So, Tagrisso could end up taking the prize for both first and best-in-class for this indication, meaning that rociletinib's commercial prowess may not amount to very much, or worst still, the FDA may even reject the drug based on its substantial inferiority to a product already on the market. Investors may want to stay away from this falling knife today in the wake of this disappointing clinical update.  

 

George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.