Clovis Oncology may have ditched development of cancer treatment rociletinib years ago, but the drug is going to cost the company, its CEO and its former CFO more than $20 million.
Tuesday, the Securities and Exchange Commission (SEC) said it would require Clovis, skipper Patrick Mahaffy and ex-finance chief Erle Mast to cough up penalties to settle charges that they misled the investors about rociletinib’s development.
Trouble with rociletinib began brewing back in 2015, when Mahaffy and Mast allegedly learned that the drug’s efficacy rate was 42%—a far cry from the 60% they’d recently touted to investors. Instead of squaring the figures with shareholders, Clovis “continued referring to the 60% efficacy figure,” including in solicitation materials to a July public offering that raised the company about $298 million, the SEC said.
It wasn’t until that November that the company disclosed the drug’s real efficacy figures, which by that time had sunk to 28%. Displeased investors sent Clovis’ stock crashing, and Clovis shelved rociletinib the following May.
Now, Clovis is on the hook for $20 million, while Mahaffy will shell out $250,000 and Mast will fork over $100,000, though none of the parties has either admitted or denied the SEC’s allegations, the agency said.
These days, Clovis is focused on Rubraca, a member of the red-hot PARP inhibitor field. The drug is up against fierce competition in AstraZeneca and Merck’s Lynparza and Tesaro’s Zejula, and Evercore ISI analysts have predicted it will bring in $133 million this year.