Cash-strapped Clovis bums out investors with $85M offering

Clovis Oncology
Clovis CEO Patrick Mahaffy has made it perfectly clear his company is open to deal talk. (Clovis Oncology)

Floundering in its quest to compete against Big Pharma rivals, Clovis Oncology needs money—and it’s selling stock to get it.

The Boulder, CO-based company Tuesday said it would offer up $85 million in shares and give underwriters a 30-day option to buy up to $12.75 million more. It’ll use the cash infusion in part to market Rubraca, its entrant in the PARP inhibitor field, as well as repaying or refinancing debt, funding clinical development, buying or licensing candidate drugs and more.

RELATED: Want to buy Clovis? Step up. ‘Everybody knows where to find me,’ CEO says

The news was a buzzkill for investors, who by mid-morning had sent shares down by more than 11%. That drop erased gains the stock made Friday on word that the FDA had approved Rubraca in prostate cancer, making it the first drug in its class to enter the disease area.

The move wasn’t necessarily Clovis’ first choice for drumming up funds. Over the last few years, CEO Patrick Mahaffy has been more than transparent about his openness to a buyout, saying during 2019’s J.P. Morgan confab that “Everybody knows where to find me and every company in this industry is for sale.” 

But while Rubraca’s rivals have bulked up in the marketing muscle department—the already deep-pocketed AstraZeneca joined forces with Merck to market Lynparza back in 2017, and Zejula-maker Tesaro early last year sold itself to GlaxoSmithKline—for Clovis, it’s been nothing but crickets and the occasional rumor.

RELATED: Clovis' Rubraca nabs prostate cancer OK, but Big Pharma competition looms

That’s a problem, particularly with Lynparza and Zejula recently surging into new markets. Lynparza is also gearing up to join Rubraca in the prostate cancer arena any day now after winning a priority review from the FDA, and analysts say it’s poised to edge the Clovis drug out thanks to more robust data.

Shareholders are aware. “Negative investor sentiment has reached unprecedented levels, driven primarily by the lack of M&A for the company,” Leerink Partners analyst Andrew Berens wrote in a note to clients last August, adding that that sentiment was “unlikely to dramatically change” unless a buyer comes calling.

And following Friday’s label expansion, he wasn’t too upbeat, either. “We believe the catalyst pathway for CLVS shares has become somewhat muted, and expect investors to shift focus to the company's difficult financial position and need for multiple serial financings to fund operations and service debt,” Berens wrote.