Clovis defers Pfizer rucaparib payments to save cash ahead of FDA decision

Clovis Oncology will look to pay out a higher level of milestone payments, but at a later date, to Pfizer for its licensed PARP inhibitor, as it looks to shore up reserves ahead of a key 2017 decision on its cancer candidate rucaparib.

In an amendment to the deal struck between the two companies 5 years ago, Clovis ($CLVS) said in its SEC 8-K, filed yesterday, that it will now “Defer payment [to Pfizer] of the milestone payments payable upon FDA approval of an NDA for 1st Indication in U.S. and EMA approval of an MAA for 1st Indication in EU, to a date that is 18 months after the date of achievement of such milestones.”

Back in 2011, Pfizer ($PFE) gave the rights to its PARP inhibitor, then known as PF-01367338 (now known as rucaparib), over to Clovis, but picked up equity in the biotech as an upfront license fee, and was also set to receive up to $255 million as a series of milestones payouts, as well as royalties on any product sales.

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Pfizer will now need to wait longer for its money--although it just paid $14 billion in cash to buy biotech Medivation ($MDVN) and was twice set to spend $100 billion plus on other deals, so it’s not looking down the back of the couch quite yet--but will earn more out of the pact.

In the SEC filing, Clovis said: “In the event that Clovis defers such milestone payments, Clovis has agreed to certain higher payments related to the achievement of such milestones,” although exact figures have not been disclosed.

Pfizer also now has its hands on Medivation’s late-stage PARP med, licensed from BioMarin ($BMRN) last year, and so has its bases covered when it comes to earnings from this emerging cancer class.

Since taking over the rights to rucaparib, Clovis has seen a “breakthrough” designation from the FDA for rucaparib in advanced ovarian cancer in patients who have received at least two lines of prior platinum-containing therapy, with BRCA-mutated tumors, inclusive of both germline BRCA and somatic BRCA mutations.

And earlier this month, Clovis said the FDA has accepted its drug for review in ovarian cancer and would also speed up the process, with a decision now slated to come on Feb. 23 next year.  

The biotech has had a tough 12 months, however, leading some to question its longevity after it was forced back in May to hatchet around 35% of its workforce and drop work on its other experimental cancer med, rociletinib, after it appeared that the FDA was set to reject it.

Its shares took a battering, although not by as much as they did back in November when the FDA first questioned the rociletinib data. It had been riding high up to $99 a share up to that point, but the stock fell drastically to around $30 a share, dropping to the low teens in May when it released it cuts program.

But Clovis had something of a small rebound at the end of June when fellow PARP biotech Tesaro ($TSRO) released some impressive data for its ovarian cancer candidate niraparib, as some saw this as a positive read-through for Clovis.

The biotech was up 3.5% on the news at the end of trading yesterday and continued up by nearly 1% after hours. The company now has a market cap just shy of $1 billion, with its shares in the mid-20s. 

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