Clovis Oncology (CLVS) PT Raised to $45 at Stifel Amid De-Risking Events
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Stifel analyst Thomas Shrader reiterated a Buy rating and raised his price target on Clovis Oncology (NASDAQ: CLVS) to $45.00 (from $30.00), saying recent events de-risk the stock.
Shrader commented, "A series of events in the last few weeks have seemed to de-risk the Clovis story including the acceptance of the rucaparib NDA, the lack of an ODAC panel and a final update for olaparib that suggests that PARP inhibitors may never show an OS benefit in the ovarian cancer (OC) maintenance setting (not the lead rucaparib indication). In addition, we believe published data for PARP inhibitors in mCRPC strongly suggest these drugs will be used in this setting in later line patients. To our eyes, rucaparib looks more efficacious than Olaparib and easier to take than niraparib putting the drug in a good place for patients that are relatively frail (3rd and later line ovarian cancer and after Xtandi and Zytiga in mCRPC). The role of rucaparib in breast cancer is also interesting. Talizoparib will report pivotal data for the indication in 2017 but we expect safety signals may leave room for improvement. Correspondingly, we are reducing our discount rate in our valuation calculation for Clovis from 30% to 20% which raises our price target from $30 to $45."
The analyst also notes acquisition rumors are swirling around PARP inhibitors. "The Medivation acquisition made it clear that companies are willing to “pay up” in order to acquire lower risk products with potential upside in new indications. The price paid also suggests a scarcity value for oncology assets. We find these desired qualities to be very much in line with properties of PARP inhibitors. These drugs appear to lose little activity when used in progressively later lines of therapy – a property we believe is nearly unique in the oncology arena with the possible exception of immunooncology. As a result, we expect PARP inhibitors to be broadly active in many tumor types, although their imperfect safety profiles suggests they will remain later line therapies."
Shares of Clovis Oncology closed at $34.83 yesterday.
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