(Reuters) - Clovis Oncology Inc’s shares plunged nearly 75 percent on Monday after U.S. heath regulators asked for more data on the company’s lung cancer drug, potentially delaying its approval and giving a head start to AstraZeneca’s rival treatment that was approved on Friday.
Clovis’s shares plunged as much as 73.8 percent to a two-and-a-half-year low of $26.05 in heavy trading, shaving off about $2.8 billion from the company’s market value.
Analysts had expected Clovis’s drug, rociletinib, would be approved after a similar treatment from AstraZeneca Plc was approved on Friday, three months ahead of the expected date.
But, Clovis on Monday said the Food and Drug Administration had asked for additional data on the effectiveness of its drug, which, like AstraZeneca‘s, targets a genetic mutation that prevents current therapies from working on patients.
“Clovis now appears to be at a big commercial disadvantage in both timing and label data,” Mizuho analyst Eric Criscuolo wrote in a client note, slashing his price target on Clovis’s stock to $35 from $114.
AstraZeneca’s drug, Tagrisso, is expected to generate $1.1 billion in sales in 2020, according to Thomson Reuters Cortellis. AstraZeneca expects the drug to rake in $3 billion.
Criscuolo, who also downgraded Clovis to “neutral” from “buy”, said that there had already been concerns about how Clovis’s drug would compete against AstraZeneca‘s.
“Those concerns are now much greater,” he wrote.
Analysts also noted that Clovis’s had reported confirmed response rates of up to 34 percent for rociletinib, which was substantially lower than the rate for Tagrisso.
Analysts also said the confirmed response rates were also lower than the unconfirmed rates of greater than 50 percent Clovis had highlighted previously.
Clovis said the additional study data meant that the FDA could delay its ruling on rociletinib beyond the scheduled date of March 30.
Clovis is also developing other cancer drugs, including rucaparib for ovarian cancer and lucitanib for breast cancer.
Rucaparib is in late-stage studies, while lucitanib is being tested in mid-stage studies.
Clovis’s shares were down 71 percent at $28.69 in afternoon trading, with more than 21 million shares changing hands, their busiest day ever. The stock more than erased its gains so far this year.
Reporting by Ankur Banerjee in Bengaluru; Editing by Kirti Pandey and Savio D'Souza