Clovis Deal Chatter Heats Up Again as Goldman Says Buy: Real M&A
2015-04-22 22:40:06.506 GMT
(For a Real M&A column news alert: {SALT REALMNA <GO>}.)
By Brooke Sutherland and Caroline Chen
(Bloomberg) -- Clovis Oncology Inc.’s takeover prospects
are looking better now than when it explored a sale in 2013.
The cancer-drug developer failed to draw interest then as
it was trading at a steep price for a company whose oncology
treatments were still in early stages. Fast forward to today,
and both Clovis’ lung and ovarian cancer therapies have been
granted breakthrough status by the U.S. Food and Drug
Administration. That should speed up the approval process.
Goldman Sachs Group Inc. analyst Terence Flynn this month
boosted the odds of a takeover of $2.9 billion Clovis to at
least 30 percent and recommended investors buy the stock. A
transaction would add to what’s already a strong start for U.S.
biotechnology deals this year, with activity poised to surpass
2014’s four-year high, data compiled by Bloomberg show.
“It’s fairly noteworthy that a small biotech gets
breakthrough designation on two of their products,” Jon Loth, a
money manager for Nuveen Asset Management’s Small Cap Growth
Opportunities fund, which owns Clovis shares, said in a phone
interview. These types of drug developers are appealing targets
for larger rivals in the industry that are looking for growth
potential, he said.
Scarcity Value
Clovis’ top drug rociletinib, which is being tested in lung
cancer patients who have a mutation that causes their disease to
become resistant to other treatments, is on track for approval
by around year-end, according to Charles Duncan of Piper Jaffray
Cos.
With the drug now further along in development, and few
other cancer treatments available for buyers that aren’t already
tied up in partnership with another drug company, a takeover is
more likely, said Goldman’s Flynn. He estimates an M&A valuation
of $179 a share -- more than double the current stock price.
Potential buyers could include Roche Holding AG and Pfizer Inc.,
said Loth of Nuveen.
A representative for Boulder, Colorado-based Clovis said
the company doesn’t comment on speculation. A representative for
New York-based Pfizer declined to comment, while a
representative for Basel, Switzerland-based Roche didn’t respond
to a request for comment.
Clovis plans to apply for approval of its ovarian drug
candidate rucaparib by 2016, and it also has an experimental
drug in development for breast cancer.
Pricey Purchases
A Clovis acquisition would add to a breakneck pace of
acquisitions in the cancer-treatment area, fueled by innovative
new therapies being developed by both big pharmaceutical
companies and biotech startups. With everyone anxious for a
piece of the action, prices have been pushed up accordingly.
Bristol-Myers Squibb Co. agreed in February to acquire
closely-held Flexus Biosciences Inc. for up to $1.25 billion
including milestone payments, even though Flexus didn’t yet have
a drug in human clinical trials. AbbVie Inc. and Johnson &
Johnson’s bidding war for Pharmacyclics Inc. drove up the price
to $21 billion over a single product, Imbruvica.
A takeover of Clovis may still be a while out. Chief
Executive Officer Patrick Mahaffy sold Pharmion Corp. to Celgene
Corp. in 2008 for about $3 billion, but that company already had
a product on the market. AstraZeneca Plc is developing a lung
cancer drug that’s similar to Clovis’ rociletinib and the two
are locked in a race to get approval. Buyers may wait for more
information on how Clovis’ drug stacks up before making a move.
Clovis is set to present data at the American Society of
Clinical Oncology conference in a month that may help further
differentiate rociletinib from AstraZeneca’s treatment, said
Brian Klein, a New York-based analyst at Stifel Financial Corp.
Sales Potential
Patients with EGFR mutations can develop another mutation
that makes them no longer respond to treatments. It’s the
resistance caused by that second mutation that Clovis and
AstraZeneca are trying to treat. Both are also exploring use of
the drug as a first treatment for patients with the EGFR
mutation. Approval for that indication would expand the drug’s
peak sales potential for Clovis to $2 billion, according to
Goldman’s Flynn.
“We’ve seen a sufficient amount of data to whet the
appetite but we really haven’t seen a large enough sample size
to say ‘OK, you know what? This is definitely a consistent
effect and this drug really appears to be working in this unmet
need,’” Klein of Stifel said in a phone interview. “But
management certainly has a history of selling a company at a
time that is most beneficial for investors and I would say that
they would probably pursue that route again.”
For Related News and Information:
AstraZeneca Whale Racing With Minnow to Develop Lung Cancer Drug
AbbVie’s Bid Ups Ante as Buyers Bet on Cancer Drugs: Real M&A
Clovis Is Said to Get No Interest After Seeking Buyers
Bloomberg Intelligence, biotechnology: BI BIOT <GO>
Top deal news: DTOP <GO>
Real M&A columns: NI REALMNA <GO>
To contact the reporters on this story:
Brooke Sutherland in New York at +1-212-617-0448 or
bsutherland7@bloomberg.net;
Caroline Chen in San Francisco at +1-415-617-7211 or
cchen509@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Drew Armstrong
2015-04-22 22:40:06.506 GMT
(For a Real M&A column news alert: {SALT REALMNA <GO>}.)
By Brooke Sutherland and Caroline Chen
(Bloomberg) -- Clovis Oncology Inc.’s takeover prospects
are looking better now than when it explored a sale in 2013.
The cancer-drug developer failed to draw interest then as
it was trading at a steep price for a company whose oncology
treatments were still in early stages. Fast forward to today,
and both Clovis’ lung and ovarian cancer therapies have been
granted breakthrough status by the U.S. Food and Drug
Administration. That should speed up the approval process.
Goldman Sachs Group Inc. analyst Terence Flynn this month
boosted the odds of a takeover of $2.9 billion Clovis to at
least 30 percent and recommended investors buy the stock. A
transaction would add to what’s already a strong start for U.S.
biotechnology deals this year, with activity poised to surpass
2014’s four-year high, data compiled by Bloomberg show.
“It’s fairly noteworthy that a small biotech gets
breakthrough designation on two of their products,” Jon Loth, a
money manager for Nuveen Asset Management’s Small Cap Growth
Opportunities fund, which owns Clovis shares, said in a phone
interview. These types of drug developers are appealing targets
for larger rivals in the industry that are looking for growth
potential, he said.
Scarcity Value
Clovis’ top drug rociletinib, which is being tested in lung
cancer patients who have a mutation that causes their disease to
become resistant to other treatments, is on track for approval
by around year-end, according to Charles Duncan of Piper Jaffray
Cos.
With the drug now further along in development, and few
other cancer treatments available for buyers that aren’t already
tied up in partnership with another drug company, a takeover is
more likely, said Goldman’s Flynn. He estimates an M&A valuation
of $179 a share -- more than double the current stock price.
Potential buyers could include Roche Holding AG and Pfizer Inc.,
said Loth of Nuveen.
A representative for Boulder, Colorado-based Clovis said
the company doesn’t comment on speculation. A representative for
New York-based Pfizer declined to comment, while a
representative for Basel, Switzerland-based Roche didn’t respond
to a request for comment.
Clovis plans to apply for approval of its ovarian drug
candidate rucaparib by 2016, and it also has an experimental
drug in development for breast cancer.
Pricey Purchases
A Clovis acquisition would add to a breakneck pace of
acquisitions in the cancer-treatment area, fueled by innovative
new therapies being developed by both big pharmaceutical
companies and biotech startups. With everyone anxious for a
piece of the action, prices have been pushed up accordingly.
Bristol-Myers Squibb Co. agreed in February to acquire
closely-held Flexus Biosciences Inc. for up to $1.25 billion
including milestone payments, even though Flexus didn’t yet have
a drug in human clinical trials. AbbVie Inc. and Johnson &
Johnson’s bidding war for Pharmacyclics Inc. drove up the price
to $21 billion over a single product, Imbruvica.
A takeover of Clovis may still be a while out. Chief
Executive Officer Patrick Mahaffy sold Pharmion Corp. to Celgene
Corp. in 2008 for about $3 billion, but that company already had
a product on the market. AstraZeneca Plc is developing a lung
cancer drug that’s similar to Clovis’ rociletinib and the two
are locked in a race to get approval. Buyers may wait for more
information on how Clovis’ drug stacks up before making a move.
Clovis is set to present data at the American Society of
Clinical Oncology conference in a month that may help further
differentiate rociletinib from AstraZeneca’s treatment, said
Brian Klein, a New York-based analyst at Stifel Financial Corp.
Sales Potential
Patients with EGFR mutations can develop another mutation
that makes them no longer respond to treatments. It’s the
resistance caused by that second mutation that Clovis and
AstraZeneca are trying to treat. Both are also exploring use of
the drug as a first treatment for patients with the EGFR
mutation. Approval for that indication would expand the drug’s
peak sales potential for Clovis to $2 billion, according to
Goldman’s Flynn.
“We’ve seen a sufficient amount of data to whet the
appetite but we really haven’t seen a large enough sample size
to say ‘OK, you know what? This is definitely a consistent
effect and this drug really appears to be working in this unmet
need,’” Klein of Stifel said in a phone interview. “But
management certainly has a history of selling a company at a
time that is most beneficial for investors and I would say that
they would probably pursue that route again.”
For Related News and Information:
AstraZeneca Whale Racing With Minnow to Develop Lung Cancer Drug
AbbVie’s Bid Ups Ante as Buyers Bet on Cancer Drugs: Real M&A
Clovis Is Said to Get No Interest After Seeking Buyers
Bloomberg Intelligence, biotechnology: BI BIOT <GO>
Top deal news: DTOP <GO>
Real M&A columns: NI REALMNA <GO>
To contact the reporters on this story:
Brooke Sutherland in New York at +1-212-617-0448 or
bsutherland7@bloomberg.net;
Caroline Chen in San Francisco at +1-415-617-7211 or
cchen509@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Drew Armstrong