Clovis Oncology – A buying opportunity following the EOS deal

Last week, Clovis Oncology (CLVS) announced the acquisition of EOS, a small Italian company with an oncology program in phase II. To me, this is the smartest deal in 2013 so far given the relatively low price ($200M) Clovis paid for a mid stage oncology asset with a strong clinical proof of concept and a clear differentiation from competition. Clovis has commercialization rights for US and Japan while Servier has EU+ROW according to a previous licensing agreement with EOS.

EOS’ drug, lucitanib (E-3810) is a dual VEGF/FGF pathway inhibitor. The FGF pathway became a popular target based on the high incidence of FGF pathway activating mutations in many tumor types. In addition, the FGF family is implicated in general cancerous processes such as angiogenesis and migration. While the VEGF pathway has been successfully pursued with small molecules (Sutent, Inlyta, Nexavar), unlocking the therapeutic potential of the FGF pathway proved more challenging.

One of the reasons for the limited success lies in the complexity of the FGF network which includes 4 receptors and over 20 different ligands with diverse biological functions. Another reason may be the fact that even in patients whose tumors have FGF pathway activation, inhibiting the pathway alone is not sufficient for a pronounced clinical effect. In other words, “FGF-positive” cells are not addicted to FGFR signaling the way cells with other mutations (ALK, EGFR, BRAF) are addicted to their respective mutations.

Lucitanib has the right selectivity profile

There are many (>10) small molecule FGFR inhibitors in development.  Some (Novartis, Ariad, Boehringer Ingelheim) developed  broad spectrum drugs that inhibit multiple targets on top of FGFR (in some cases FGFR was not the primary target) whereas others (Astra Zeneca, Novartis, Lilly) developed more selective FGFR inhibitors. Although, both approaches have their merits, the general trend today favors selective inhibitors (especially in biomarker defined populations) due to their ability to maximally hit the desired target without unnecessary toxicity.

Lucitanib falls somewhere in the middle. It is not a pure FGFR inhibitor but it inhibits only a handful of additional targets (predominantly VEGFR).Within the FGFR and VEGFR families, lucitanib inhibits FGFR1 and VEGFR2 (both considered the primary receptors in their respective network) with similar potency. This appears to be a distinguishing property that may explain why lucitanib is the only FGFR inhibitor with good clinical activity.

Another unique feature of lucitanib is strong inhibition of CSF1R, which was noted in EOS’ presentations but not in Clovis’ recent presentation. Nevertheless, it is not clear whether CSF1R is involved in the drug’s activity.

Clinical results       

Lucitanib’s clinical proof of concept comes from a small cohort of breast cancer patients whose tumors had activation of the FGF pathway (FDF+).Of 12 evaluable patients 6 (50%) achieved a partial response (5 confirmed) and 5 achieved disease stabilization with a median progression-free survival (PFS) of 9.4 months. Despite the small sample size, this response profile cannot be coincidental and compares very favorably with other FGFR inhibitors which have demonstrated little to no effect in similar patients. As a benchmark, Kadcyla, which is considered a breakthrough drug in HER2+ breast cancer, had a response rate of 38.4% and a PFS of ~5 months in phase II.

The most provocative finding was the impressive activity lucitanib had in some patients who had previously failed other FGFR inhibitors. Clovis’ presentation reports 4 such patients, all of whom were on lucitanib much longer than on prior FGFR inhibitors. One patient, who progressed on Novartis’ (NVS) selective FGFR inhibitor after 2 weeks, is still on lucitanib for 21 months. This provides the ultimate proof that lucitanib is a best-in-class FGFR inhibitor.


Commercial opportunity

Lucitanib’s addressable market is significant based on the high incidence of FGF+ tumors across multiple tumor types. The opportunity in breast cancer alone (23.7% of cases) is comparable to the HER2+ segment, which represents a $1B market in advanced stage disease (excluding adjuvant therapy). FGF activation has been documented in other tumors including lung, ovarian and head and neck cancer. FGFR1-amplified lung cancer appears particularly promising, as there are efficacy signs in this indication with other FGFR inhibitors. FGFR1 amplification occurs predominantly in squamous-NSCLC, which are not candidates for Avastin due to safety concerns. The risk-reward profile of a dual VEGFR/FGFR inhibitor in these patients is yet to be evaluated.


There are over 10 active programs for FGFR inhibitors as well as multiple antibodies in development. To date, lucitanib remains the only drug with compelling activity (others have shown limited to no activity in FGF+ tumors) and it may be the only drug to be approved as monotherapy.

Results to date imply that selective FGFR inhibitors are not sufficiently active in humans and that VEGFR inhibition is required to potentiate the effect. There are only 2 other drugs with a similar selectivity spectrum (selective FGFR1/VEGFR2): Lilly’s (LLY) LY2874455 and a compound developed by Advenchen, which discovered lucitanib before licensing it to EOS.

Selective FGFR inhibitors such as Novartis’ BGJ398 and AstraZeneca’s (AZN) AZD4547 must be combined with VEGFR inhibitors in order to replicate lucitanib’s activity in FGF+ patients. Although technically this can be achieved even through co-formulation in the same capsule, finding the exact regimen and dose ratio is not always straightforward. On the other hand, using 2 distinct drugs allows for flexibility in dosing regimen and ratios.

Most of the VEGFR inhibitors (approved or in development) are not selective and combinations may be too toxic. The only truly selective VEGFR inhibitor is Aveo’s (AVEO) tivozanib. Its selectivity and ideal safety profile make tivozanib an ideal candidate for combination with selective FGFR. Novartis and AstraZeneca are pursuing combinations with several drugs but not with VEGFR inhibitors.

Portfolio update

We are initiating a position in Clovis, which now has 3 potential blockbusters with clinical proof of concept and biomarker-defined target populations. We are also selling Gilead (GILD) for a profit of 250%.

Portfolio holdings – December 1st 2013

Biotech portfolio - Dec 1st 2013- after changes

biotech etfs - Dec 1st 2013

90 thoughts on “Clovis Oncology – A buying opportunity following the EOS deal

  1. Martin – Yes, I am plan on adding AMBI since I think it’s fairly cheap for an almost p3 company with clear proof of concept and a biomarker for patient selection.
    With respect to the global economy and market trends, I find it almost impossible to predict the market’s direction although in general I feel a correction is imminent (full disclosure, I thought so 6 months ago too…) especially in biotech where prices are high. This is why I try to have a large cash position.

    Steve – There were signs of activity for ARRY614 but I don’t find this program so exciting. Focus should be on other programs imo, of which there is plenty.



  2. Hey Ohad,

    nice post on Clovis. Just wondering what you think about the competition in mutant EGFR NSCLC. I imagine Astra will push hard with AZD9291. I like the EOS deal, but also competition among the PARP inhibitors. Just curious to hear your thoughts on how the competition will play out allowing Clovis to keep an edge in these areas. How will PD-1 development impact EGFR inhibitors overall in NSCLC? Complementary?


  3. Care – Regarding CLVS vs. AZN. I think it’s safe to say both drugs look active in T790M NSCLC even though it’s hard to predict the eventual clinical profiles of each drug. To me, the fact CLVS’ recruit patients only immediately after progression on Tarceva (or other EGFR inhibitor) makes their case more compelling. In addition, CLVS’ compound might be more wild type EGFR sparing based on some rast AZN reported.
    Wit respect to PD-1, I don’t view them as a threat to EGFR inhibitors as I believe the vast majority of EGFR mutated cases will be treated with EGFR inhibitors, let alone patients with a documented T790M mutation. Combination of the two classes of drugs is very likely down the road (no overlapping toxicities).

    Alex – I think they have great scientific background, a compelling story but a very limited clinical package. I still can’t get the biologic rationale for selecting patients based on merlin levels…

    andre – Yes I did but still haven’t made up my mind yet. There’s definitely something there but how strong it is, I don’t know.

    Jeff – Haven’t looked at the data thoroughly. Numbers look good but based on ZIOP’s case, I would be cautious, soft tissue sarcoma is a very heterogeneous indication.



  4. Ohad, SCTPF just raised $33M to take their CD47 through rest of pre-clinical development and Phase 1. Any thoughts? It was a very dilutive offering but, as a long, I’m happy with it because it beats the alternative of them partnering their CD47 for peanuts at this early stage or, worse, going bankrupt. Also good to see some bigger name U.S. investors involved in the offering.


  5. Christian: Agree that is certainly a fair caveat on SCTPF. I’m waiting to hear back from the company to get a clear sense on fully-diluted share count. It’s important to know that for sure to get a sense of risk-reward going forward.


  6. Ohad, dicing the $kpti data, the response is really very short. I sold my entire position. The drug is not very useful and more to be proved later.


  7. mcbio – In these type of situations, a large dilutive financing is always better than several repetitive small rounds with the overhang of bankruptcy. In any case, the program looks still far from P1 as the press release states toxicology and CMC work that need to be done (1-2 years?).
    What is the fully diluted number of outstanding shares?

    BJ – Not following them closely but I am not too enthisiastic about them. Nevertheless, many are excited about them, including BMS, which will have combo data next year.

    Bridgette – Agree, durability wasn’t great but the drug is clearly active. The problem in today’s world that you need to have something phenomenal to compete with the new agents.

    Alex – I find INFI’s CLL data somewhat disappointing and undifferentiated from idelalisib, th iNHL response rate was high but the sample size was small and te PFS looks comparable. I liked the PTCL response rate, though. If responses there are durable enough , it could be a good near term opportunity.



  8. Ohad: Agree completely with you on financing for small-caps with little money. SCTPF said before they expect their CD47 to enter P1 2H’15 so a bit away but these funds should clearly get them to that point and hopefully a bit beyond. I am awaiting a response from the CFO to confirm fully-diluted share count as the numbers in the PR are a bit confusing.


  9. Bridgette: Even at over 200M fully-diluted share count, that puts valuation at only about $50M (based on Friday close). Let’s see what happens to share price on Monday. I’m happy that some legitimate American players saw it worthwhile to get involved here.

    P.S. Since you are Canadian, what are your thoughts on Lorus? They are also around $50M market cap and just raised money (much smaller and less dilutive offering than SCTPF).


  10. Thanks Bridgette. They have had a long, undistinguished history I do think and certainly very speculative, but I like that they are pursuing novel targets that few others seem to be pursuing. For example, for AML, KLF4 does seem to be an emerging AML target based on searches I’ve done (Lorus claims silencing of KLF4 is a key driver in AML) and they think their lead drug may activate it. No position, but at this small valuation and novelty of their programs, I may consider small one in the future.


  11. Mike: I took a brief look at TetraLogic. Looks like primary focus is on an IAP inhibitor. If for nothing else, I will be paying close attention to them as I’m long CRIS and CRIS also has an IAP inhibitor (though I’m mainly long for the dual PI3K/HDAC inhibitor). I’d like to know fully-diluted market cap on TLOG.


  12. Ohad, have you looked at the French company AB Science? Seems to be a true one-trick pony with a drug called masitinib that’s a TKI and hits at least c-Kit, PDGR, and Lyn but what they claim differentiates the drug from other TKIs is it also hits mast cells. Any thoughts here? They have the drug in like 9 Phase 3 trials which seems crazy. I don’t think they have ever had any kind of partner (which is probably a red flag) but they still sport about a $500M or so market cap because they had some interesting Phase 2 data in GIST and pancreatic.


  13. Mike – The data so far doesn’t look compelling enough imo. In general, smac mimetics don’t look very promising because in humans they were shown to inhibiti only cIAP and not xIAP, which is more relevant. In any case, I would go with CRIS drug, which is oral and looks more effective in humans.

    mcbio – Don’t know the program very well but my impression is that this drug has been there for years without showing good clinical activity. Therefore, I am unimpressed by the broad p3 program without a compelling biologic story.



  14. Hi Ohad, going into 2014 which ones in your portfolio are going to have a breakthrough year potential other then exel. tx and a Happy New Year to the family the new born and you.


  15. Happy Holidays Ohad! Wish you were my neighbor and I could bring you a 6pack or go out for coffee. Thanks for such an entertaining and critically thinking blog. Happy New Year


  16. Ohad, Happy Holidays and have a healthy and prosperous New Year. And thank you very much for generously sharing your vast knowledge with us here.

    Oh yeah, do you have an opinion on KBIO?


  17. hi Ohad

    ARRY with a BoD retirement effective immediately. do you read anything into this?

    by the way have u taken a look at PGNX lately, do you see value in this company?


  18. Thank Ohad for the best source of information and collegial discussion of any investment site extant. Your gracious sharing of information and insight is truly wonderful.
    Best wishes to all in 2014.


  19. Richard – Thanks. I don’t see any rason to hold KBIO despite the low valuation. None of their programs have compelling data. Imo, the most interesting one is the anti-infective program with Sanofi

    Christian – I don’t think it’s significant, sorry, haven’t been following PGNX lately.

    Jeff – Thank you for the kind words.

    Will try to publish a 2013 summary/ 2014 preview on sunday.



  20. Hi Ohad,

    Just realized no one asked your tale on the dara combo data at ASH. Looks like 8/11 PR, which might increase to 9 or 10 w/ longer follow up? No rxn in stock price, still seems relatively cheap, no?


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