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American biotech company Clovis
Oncology (Clovis Oncology Drug) recently released the company's third-quarter earnings, "or will file for bankruptcy" major bearish news, causing capital market shocks
.
"We don't have enough money to maintain operations beyond January 2023, and we are likely to file for bankruptcy
in the short term.
"
"PARP inhibitor Rubraca had volatile earnings in previous quarters and yields have been declining
over the past two years.
"
"We have executed layoffs on November 7, laying off 115 people and saving an estimated $29 million a year
.
"
As soon as the above news was released, investor sentiment instantly fell to freezing point
.
Clovis' share price plunged 72% on the day, leaving a total market value of just over $40 million
.
Clovis also defaulted on $1.
9 million in interest on the debt and is now in a 30-day grace period that could eventually lead to default; At the same time, the company is also in talks with Pfizer to delay payment of Rubraca-related royalties
.
However, in the industry's view, even if the commercial asset Rubraca is sold, Clovis will not be able to survive until next year, and there is no other way
to do it than file for bankruptcy.
01 The "cold winter" of the market intensifies, is there still a chance to save yourself?
01 The "cold winter" of the market intensifies, is there still a chance to save yourself?In December 2016, Rubraca (rucaparib) was successfully approved by the FDA as a third-line therapy
for advanced BRCA gene mutated ovarian cancer.
Rubraca is the second PARP inhibitor to be marketed in the world, originally developed by Pfizer and later transferred to Clovis, and its only commercial product
.
Rubraca is a polyADP-ribose polymerase (PARP) inhibitor that blocks an enzyme
involved in repairing damaged DNA.
Ovarian cancer is a gynecological malignancy with the highest mortality rate, and 70% of ovarian cancer patients are in the advanced clinical stage at the
time of presentation.
For a long time, PARP inhibitors could be called the "salvation"
for ovarian cancer patients.
However, from a market perspective, Rubraca's sales are not optimistic
.
In the first full year after the R&D market (2017), Rubraca's sales were only $55 million, and the growth was very weak.
Rubraca's sales of $149 million in 2021 are already declining year-over-year ($165 million in 2020).
Rubraca continued to decline in 2022, with sales of only $30.
7 million in the third quarter, down from $32.
1 million in the second quarter, compared to $34.
2 million in the first quarter of this year.
Disappointing sales also sent investor confidence to rock bottom
.
Rubraca couldn't live up to expectations, and Clovis' stock fell 90 percent
.
In addition, the company team is also less
confident.
In 2019, CEO Patrick
Mahaffy said at the JPMorgan Chase & Co Healthcare conference that he wanted the company to be acquired, but never got a response
from buyers.
Struggling to do so, Rubraca is once again facing an existential crisis
this year.
In June, Clovis withdrew Rubraca as a third-line or more line treatment for patients with BRCA-mutant ovarian cancer in the United States, based on overall survival data
from the primary efficacy population in a pivotal double-blind clinical trial ARIEL3.
The findings showed a 31.
3% increased risk of death in people with Rubraca efficacy compared to chemotherapy, particularly in patients with
platinum-resistant tumors.
To generate new revenue streams, Clovis filed a supplemental new drug application for Rubraca's first-line maintenance therapy for ovarian cancer, with a proposed Prescription Drug User Payment Act (PDUFA) target review date of June 25
, 2023.
The market view is that considering that the FDA has explicitly advised Clovis to wait for patient survival data from the Phase III Athena-Mono trial, which could take a year and a half to complete, Clovis may not be able to wait until that day
today.
In order to save itself, Clovis is also further considering monetizing its assets, and negotiates the sale of its investigational radionuclide therapy FAP-2286 to obtain an advance payment and milestone payment; However, Clovis also indicated that the deal may not go through
.
02 Tens of billions of dollars of market value evaporated, where does the commercialization of Biotech go?
02 Tens of billions of dollars of market value evaporated, where does the commercialization of Biotech go?As early as 2019, a biopharmaceutical industry website published an analysis: 31 troubled biopharmaceutical companies are at the highest risk of bankruptcy in the next 12 months, and Clovis is on the list
.
Three years on, as a small biotech company, Clovis still not on the path to
redemption.
Strategically, Clovis opted for a "me-too" layout of the PARP track, which is already slightly crowded
around the world.
Prior to the approval of Rubraca's "me-too" product, AstraZeneca's Lynparza was approved for marketing in 2014, nearly 3 years
ahead of schedule.
PARP inhibitors have been shown to be effective against a wide range of cancer types, including ovarian, breast, prostate, fallopian tube, peritoneal, and pancreatic cancers
.
This means that PARP inhibitors are suitable for a large number of people and have high commercial value
.
However, the lack of commercialization and embarrassing market sales figures have overturned everyone's expectations
.
In 2021, Clovis sold $128 million in expenses, and Clovis faced with research and development expenses
of up to $187 million.
The disappointing "self-hematopoietic" ability has prevented Clovis from crossing the long-term development inflection point, and as of the end of the third quarter of this year, the company had only $5,832 in cash on the books, making it difficult to keep the company running
.
For the reason for Rubraca's poor sales, Clovis dumped the pot on the epidemic, but this statement does not satisfy investors, because Bigpharma's market growth in the segment is still maintained
.
Under the same conditions, the predecessor AstraZeneca's Lynparza and the latecomer GlaxoSmithKline's Zejula both achieved sales growth figures in 2021: Lynparza grew by 30% and Zejula by 17%.
What's more, both Lynparza and Zejula have far more sales than Rubraca
.
In 2021, sales of the two products were $2.
35 billion and $520 million
, respectively.
In both absolute terms and growth rates, AstraZeneca and GlaxoSmithKline far outperform Clovis
.
It can be seen that in the field of PARP inhibitors, Clovis not only has an embarrassing status, its living space is extremely squeezed, and its commercialization ability cannot allow it to compete
with other BigPharma in the subdivision field.
Six years later, Clovis, which used to be worth tens of billions of dollars, is now trading at just $0.
28
.
In essence, Clovis' survival dilemma is probably a microcosm
of the global biotech company under the capital winter.
Big Pharma often has a broad pipeline of products that can promote drugs
through combinations.
One more commercial innovative drug can bring significant "scale effect"; On the other hand, commercialization is precisely the advantage of
big pharma.
Specific to hospital resources, hospital capacity, sales number and coverage, are the result of the accumulation of big pharmaceutical companies over the years, which is not destined to be the goal
that every biotech company can achieve in the short term.
Layoffs reduce burdens, stock prices plummet, "me-too" strategies fail, production facilities are shut down.
.
.
Since the beginning of this year, many biotech companies have accelerated their strategic contraction
.
Industry insiders pointed out that the gap between Biotech and Bigpharma in commercialization capabilities directly determines that even if it is the same target drug, if the product lacks sufficient clinical advantages, the commercial business cannot reach the same order of magnitude, which also sounded the alarm for China's biotech companies
.
