Seeking Alpha: Clovis Oncology Trying To Rebuild A Once-Bright Outlook

In a market where biotechs that have done nothing wrong can be down 40% or more from prior highs, you can probably imagine what's happened to biotechs that have disappointed the Street. Clovis Oncology (NASDAQ:CLVS) certainly fits into the latter group, as a surprisingly negative update in November on the efficacy of its lead drug has pushed the shares down almost 75% over the past year and down closer to 80% from my last article on the company.

There are certainly very good reasons to be cautious around Clovis. Neither of its two most advanced drugs will be first to market, and it's unclear if the company can get approval for rociletinib or commercial acceptance even if it is approved. While rucaparib may have a better future, competition and identification of patients most likely to respond could be limiting factors.

In total, the market has probably overreacted to the rociletinib disappointment and that is likely shadowing the valuation of rucaparib as well. This is a consummate "show me" market for biotech, though, and Clovis comes up short of getting gold stars across the board on those attributes that biotech investors prefer. The potential upside here is still worthwhile, but I can't argue that the risk-reward balance is as compelling given the overall carnage in the sector and the option options available.

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Clovis Oncology Trying To Rebuild A Once-Bright Outlook

Seeking Alpha: Competition Will Be Tough, But Clovis Oncology Has Legitimate Compounds

One of the contributory causes to biotech bubbles seems to be a collective amnesia on the part of investors regarding the fact that not every drug launched for an indication is going to succeed. Even in underserved indications like lung cancer, there are winners and losers and competitive differentiation is an important part of long-term success.

In the case of Clovis Oncology (NASDAQ:CLVS), I think investors are right to be concerned about the potential competitive pressures from AstraZeneca (NYSE:AZN) and Tesaro (NASDAQ:TSRO) among others, but I also think the market is underestimating the value of the company's lead drug candidates for lung and ovarian cancer.

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Competition Will Be Tough, But Clovis Oncology Has Legitimate Compounds

Seeking Alpha: Competition And Momentum Weighing On Clovis Oncology

The last year hasn't actually been all that bad for biotech, as the S&P Biotech ETF (NYSEARCA:XBI) has outperformed the S&P 500 by about six or seven points. Whether or not the XBI is a great benchmark for the biotech industry is beside the point, though; by any standard Clovis Oncology (NASDAQ:CLVS) has done poorly since I wrote about it in late December of 2013. Down almost 30% since then, some of the weakness may be due to less risk appetite from biotech investors, but I think it has more to do with growing concerns over competition for the company's lead drug CO-1686 (or rociletinib).

I don't take it lightly when any stock I recommend is down 30%, but I also acknowledge that that can be the way it goes in biotech - in the absence of solid data to go on, investors obsess over the tea leaves and can run hot or cold on a stock to dramatic effect. I was concerned in December that analysts were already too aggressive with their assumptions about market share and odds of approval, but my own numbers haven't changed that much. With a fair value of $75 and several news events on the way, Clovis shares could turn the tide over the next six to 12 months (or smash on the rocks).

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Competition And Momentum Weighing On Clovis Oncology

Seeking Alpha: Clovis Oncology Has An Exciting Pipeline And A Reasonable Valuation

There aren't many cheap biotechs left out there, at least not among the higher-quality ideas. To be sure, arguing that Clovis Oncology (CLVS) is undervalued after a better than 250% rise over the past year is going to strike some as ridiculous. Even so, I believe the company has multiple exciting pipeline opportunities that make this still a name worth investigating further. Although I'm a little concerned that the Street's expectations for clinical success are ahead of industry norms, early-stage data have been quite encouraging.

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Clovis Oncology Has An Exciting Pipeline And A Reasonable Valuation

The Motley Fool: Does Sanofi Need to Turn to M&A to Bulk Up Its Oncology Assets?

It's hard to say that there's anything particularly wrong with Sanofi (NYSE: SNY  ) today. Like most of its big pharma peers, revenue growth remains a challenge (sales were down 7% as reported in the third quarter and up less than 1% in constant currency), and investors are worried that generics, biosimilars in this case, will chew into Sanofi's lucrative diabetes franchise. Even so, the shares are near an all-time high, and investors who've owned these shares for a few years aren't exactly hurting.

Even so, one of the pillars of the bear thesis is that Sanofi hasn't done enough to position itself in some of the more attractive markets within branded pharmaceuticals. Sanofi's deal with Regeneron for its anti-PCSK9 antibody was a pretty good deal for Regeneron, and Genzyme's rare disease drugs contribute less than 10% of the total revenue base.

Most specifically, though, Sanofi is weak in arguably the hottest area in pharma: oncology. Given recent pipeline failures and weak positioning in immunotherapies, it's worth asking if Sanofi may turn to M&A to appease investors worried that Sanofi's fortresses in diabetes and vaccines and emerging opportunities in cholesterol and multiple sclerosis aren't enough.

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Does Sanofi Need to Turn to M&A to Bulk Up Its Oncology Assets?