Clovis Oncology facing class-action lawsuits in wake of stock plunge

BOULDER — Clovis Oncology Inc. (Nasdaq: CLVS) has been named a defendant in at least four class-action lawsuits filed in recent weeks on behalf of shareholders who allege the company and its top executives made false and misleading statements about the company and clinical data regarding one of its cancer drug candidates.

Those statements, the plaintiffs say, led to an inflated share price and, ultimately, the loss of billions of dollars for investors when Boulder-based Clovis’ stock price plunged 70 percent on Nov. 16.

Three such cases were filed in U.S. District Court in Colorado between Nov. 19 and Dec. 14. A fourth was filed Nov. 20 in U.S. District Court in northern California.

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Clovis officials declined comment on the pending lawsuits.

Clovis is a clinical-stage pharmaceutical company developing multiple cancer drugs, with plans to commercialize its first, rociletinib, sometime this year in the United States and Europe.

Clovis filed a New Drug Application with the U.S. Food and Drug Administration last summer for approval of rociletinib in treating lung cancer, with a decision expected by March 30 of this year. But on Nov. 16, Clovis disclosed that the FDA had requested more clinical data on rociletinib in part because the number of study patients with unconfirmed responses to rociletinib who had converted to confirmed responses was lower than had been expected. That request was expected to delay the FDA’s decision, and on Dec. 15, Clovis announced that the FDA had extended the goal date by three months to June 28.

Clovis’ share price had risen steadily through 2015 and closed at $99.43 on Friday, Nov. 13. After the early-morning announcement of the FDA request the following Monday, shares closed at $30.24, representing a loss of nearly $2.2 billion in market capitalization. The company’s stock price has languished primarily between $30 and $35 per share since, and was down $1.13 to $29.67 per share in mid-afternoon trading Thursday.

The respective lawsuits were filed in the names of John Moran, Sonny P. Medina, Ralph P. Rocco and Steve Kimbro. They name Clovis CEO Patrick Mahaffy and chief financial officer Erle Mast as defendants, along with the company. The suits aim to represent investors who purchased Clovis stock between Oct. 31, 2013, and Nov. 15, 2015, a period during which they contend that statements made by the company about the progress of rociletinib and the anticipated timeline for commercialization of the drug caused the stock price to rise artificially. The plaintiffs are seeking damages and attorneys’ fees.

The lawsuits contend that Clovis officials knew the data submitted to the FDA on rociletinib was insufficient and could cause a delay in approval before disclosing that information on Nov. 16.

Specifically, the California suit alleges that the company failed to disclose that Clovis’ New Drug Application contained immature data sets based on both unconfirmed and confirmed response rates, and that as the efficacy data matured, the number of patients with unconfirmed responses to the drug who converted to confirmed responses was lower than expected. As a result, the lawsuit alleges that company officials failed to disclose that Clovis’ NDA was likely to be delayed and/or rejected, and that the company was in possession of such data during its third-quarter conference call on Nov. 5 in which company officials discussed Clovis’ financial outlook, including statements implying that commercialization of the drug was imminent.

Clovis, which went public in 2011, was founded in 2009 and has burned through hundreds of millions of dollars in developing drugs. But the company has been eyeing a big year in 2016 for some time, and last summer closed a $298.4 million follow-on stock offering as it prepared for regulatory approvals and commercialization. In addition to rociletinib, the company has been aiming to submit a New Drug Application for rucaparib for the treatment of ovarian cancer sometime this year.

Clovis received a boost in May 2014, when rociletinib was granted Breakthrough Therapy designation by the FDA, a designation intended to help expedite development and review of certain drugs. The company received the same designation for rucaparib early last year.