Troubled Clovis telegraphs bankruptcy amid FDA hardball on key cancer drug, difficulty in fundraising

No press release, no earnings call. Clovis Oncology has used a securities filing to deliver a somber message: The beleaguered company may not survive.

Clovis “will not have sufficient liquidity to maintain our operations beyond January 2023,” the company said Wednesday in its quarterly filing (PDF). Citing difficulty in raising money, commercial challenges with cancer drug Rubraca and increased FDA scrutiny on the entire PARP inhibitor class, Clovis said “a potential bankruptcy filing in the very near term looks increasingly probable.”

The company laid off 115 employees in the U.S. on Monday to save costs, but the roughly $29 million in annual savings won’t be fully realized until next year. It has missed a $1.9 million interest payment for a debt, entering a 30-day grace period that could eventually lead to a default. And it’s talking to Pfizer to delay royalty payments tied to Rubraca.

The FDA has accepted Clovis’ application for Rubraca—currently the company’s only marketed product—for proposed use as a first-line maintenance therapy for ovarian cancer after an initial response to chemotherapy. An FDA target decision date has been set for June 25, 2023. However, the application will likely lead nowhere.

Finding itself desperately in need of a new revenue stream, Clovis filed that application despite clear advice from the FDA against it. The FDA recommended the company wait for more mature data on patient survival from the phase 3 Athena-Mono trial. But those data could take another one and a half years from now to read out, and Clovis simply can’t afford to wait that long.

During their previous communication, the FDA threatened to hold an oncologic drugs advisory committee (ODAC) meeting should Clovis move against the agency’s instructions and file the application as it is. However, in the filing acceptance letter, the FDA didn’t mention anything about an ODAC gathering, Clovis said. Still, the FDA brought up the problem of insufficient overall survival data, saying that positive results on tumor progression “may not be sufficient” for an approval because Rubraca is adding toxicity, Clovis noted.

The lack of an ODAC communication, coupled with repeated complaints about the data package, could mean that the FDA is well prepared to reject Rubraca sans external input. Similarly, the FDA has recently also canceled a planned ODAC to review GSK’s rival PARP inhibitor Zejula in second-line maintenance treatment of ovarian cancer. That indication was brought into question also because of concerning long-term overall survival results that contradict a tumor progression benefit. Before that, Rubraca, Zejula and AstraZeneca and Merck’s market-leading Lynparza have all withdrawn their late-line ovarian cancer indication amid FDA scrutiny on patient survival findings from clinical trials.

An FDA decision on Zejula could affect Rubraca as well, and that could be the last straw that breaks Clovis. As Clovis noted, if the FDA or GSK decides to withdraw or narrow Zejula’s second-line maintenance nod, the agency might push for the same with Rubraca. It’s worth noting that Lynparza backtracked its late-line nod even though the safety signals didn’t come from its own clinical trial.

Currently, “a substantial portion” of Rubraca’s revenue is coming from the second-line indication, and a setback there could cause a “significant impact” on Clovis’ top line, the company warned. Even without a formal FDA restriction, Rubraca is already on a continuous decline. During the third quarter, Rubraca sold only $30.7 million, further down from the $32.1 million it recorded in the second quarter, which was itself a decrease from $34.2 million in the first three months of this year.

The FDA’s increased stress on overall survival data has “created an uncertain commercial landscape for Rubraca” and has hurt its perceived market potential in its fight against the two Big Pharma PARP inhibitors, Clovis said. That in turn has made fundraising difficult for Clovis.

“It appears increasingly unlikely that additional funding will be available on acceptable terms or at all outside of a Chapter 11 bankruptcy process,” Clovis admitted.

As the equity fund channel appears to be a dead end, Clovis is exploring strategic partnerships or licensing agreements, including “active discussions” on a potential deal for Rubraca outside the U.S. But all the regulatory uncertainty has made it more difficult to reach agreements on good financial terms or the timing of transactions, Clovis added.

The company is also exploring a sale of its radiotherapy candidate FAP-2286 for an upfront payment and milestones. But because the talks depend on future events, Clovis warned that there’s no assurance that a deal will happen.

Given those headwinds, Clovis figured a bankruptcy filing “in the very near term … looks increasingly probable” and could be “the best way to preserve the value” of its business and assets.