Clovis Oncology Slides Despite Positive Lung Cancer Data Presented At ASCO 2014

Many investors got excited when they heard that Clovis Oncology (CLVS) was set to release data from its phase 1/2 trial in patients with EGFR-mutant non-small cell lung cancer utilizing the company's clinical compound CO-1686. The company had announced positive data at ASCO which saw patients achieve a very high Objective Response Rate -- ORR -- coming at 58% which is huge in terms of cancer indications. These results were taken from 40 of the 81 patients enrolled in the study. 

This selection occurred because 40 of the 81 patients had the mutation known as T790M mutation, and the results came from both the majority of the phase 1 trial and part of the expanded phase 2 early trial. Combined, the results are very encouraging with 36 patients out of the 40 patients -- 90% -- achieving either a stable disease or partial response. These results are great because in terms of stable disease it means patients taking CO-1686 did not progress further with their cancer in that time period, and in terms of partial response some patients cancer had regressed slightly. 

Today Clovis Oncology is tumbling by more than 13% on the presented ASCO results. So Investors must be asking themselves why such an enormous drop in share price? Well for starters Citi downgraded Clovis from Buy to Neutral, so that is a part of the reason for the precipitous decline today. But more importantly Clovis failed to disclose that 22% of patients taking CO-1686 saw a big increase in hyperglycemia. The problem is that hyperglycemia is a grade 3 adverse event, and is not typically what you would want associated with a drug therapy compound. Alas, though we are pretty sure most would love to see an improvement to cancer despite an increase in diabetes. 

The problem though is that these results would be perfectly fine if Clovis was the only game in town, but unfortunately for Clovis, it is not . AstraZeneca (AZN) is working on a similar compound known as AZD9291 which also targets EGFR-mutant non-small cell lung cancer. AstraZeneca's compound though achieved a slightly higher ORR coming in at 64%. Despite this both companies are currently evaluating which one can provide a better life expectancy for these patients, but AstraZeneca is in better shape after Clovis revealing the hyperglycemia grade 3 adverse event that occurred in patients. 

We believe that Clovis Oncology is considered to be a "Hold" at this stage in time, because additional positive future data may help investors recover their position. At the same time we are inclined to tell investors not to buy share of Clovis because additional positive results coming from AstraZeneca's compound could spell more trouble for Clovis. We encourage investors to be cautious and monitor share price as all this data unfolds over the coming years. Cautioned is also warranted due to the downgrade from Citigroup and this new revelation about CO-1686 increasing the ability for patients to obtain diabetes. We believe that those investors interested in gaining a small position should wait as the company may see more downgrades from other analysts in the coming weeks.