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.
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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.
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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.