UPDATED: Clovis Oncology shares crash after lung cancer response rate deteriorates

Clovis CEO Patrick Mahaffy

Clovis Oncology's expected showdown with AstraZeneca may have to be put off following an unexpected twist in their R&D path. The Boulder, CO-based Clovis ($CLVS) says that the FDA demanded fresh efficacy data for the lung cancer drug rociletinib (CO-1686) in order to complete its review. And while the biotech plans to hand that over today, it adds that the updated data include a significantly worse response rate than expected and could force a delay in the accelerated March 30, 2016, deadline that the FDA had set for a marketing decision.

The problem for Clovis is that the agency wants to focus on confirmed responses to the drug among patients with non-small cell lung cancer. The interim data that the biotech was submitting for rociletinib relied heavily on unconfirmed responses. Clovis noted that its updated results include a much lower rate of complete responses than had been expected based on interim analyses. And that raises new questions about Clovis' ability to compete, giving AstraZeneca's rival drug ($AZN) a big edge as it seeks to dominate its market niche.

Clovis' executive team, led by CEO Patrick Mahaffy, told analysts this morning that the company has known about the lower response rate for several weeks, which triggered a considerable amount of hooting on Twitter for the delayed announcement. The news forced a disastrous 71% plunge in the value of Clovis' shares, wiping out $2.6 billion in its market cap in minutes.

AstraZeneca's shares, meanwhile, are up 2.75% today, a big advance for a company of that size.

The fresh hurdle and new data are being announced just three days after AstraZeneca scored a big approval for its rival therapy AZD9291, to be sold as Tagrisso. Analysts had given AstraZeneca the edge on efficacy to begin with. The way Clovis reported the data issue also raises serious questions about the biotech's credibility, forcing it to operate under a cloud when it most needs market confidence.

Clovis' statement notes that as the data matured in its study, "the number of patients with an unconfirmed response who converted to a confirmed response was lower than expected."

"In the intent to treat analysis of the 79 patients in the 500mg dose group, the current confirmed response rate is 28 percent, and 34 percent in the 170 patients in the 625mg dose group, with an encouraging duration of response in both doses," Clovis added. "The most frequent reasons that patients' responses were not confirmed in a subsequent scan were due to progression, often due to brain metastasis, and due to subsequent scans not demonstrating tumor shrinkage greater than 30%.

The new data are "20 points lower than the unconfirmed response rate," Mahaffy told analysts. The results will likely shift the approval focus to getting an OK on the 625 mg dose, he added. And all the data were available ahead of the company's Q3 announcement, he confirmed, which didn't even hint at the changing prospects for the drug. 

"This is certainly not what we were expecting," said Stifel's Tom Shrader with an uncomfortable laugh. 

Both rociletinib and Tagrisso are targeted at non-small cell lung cancer patients whose tumors share a T790M EGFR mutation. The FDA's approval of Tagrisso last week came months ahead of schedule, and Clovis had been on track to gain a relatively quick decision if the agency stuck with the March 30 deadline. AstraZeneca has estimated that Tagrisso could be worth $3 billion a year in peak annual sales.

- here's the release