Can the rally continue for Clovis?

Disclaimer

I own shares of Clovis (NYSE: CLVS).

My story with Clovis and how I ended up buying some of its shares

I started buying Clovis (NYSE: CLVS) back in early April when it was highlighted on yahoo news for their upbeat data from their Ovarian cancer study. The study evaluated Rubraca (rucaparib) as a first-line maintenance treatment of ovarian cancer in women who responded to first-line platinum-based chemotherapy. The stock was up around 24% when I noticed it, but still I decided to invest some money at that point. Why did I invest in CLVS you might ask? Well, I saw a potential with CLVS. After reading about their upbeat data and the potential to partner up with other much bigger companies such as Bristol Myers’ (BMY), it hit me.

Diving deep – Rubraca could be a winner

I came to know from reading the news that CLVS is intending to seek label expansion for Rubraca as a first-line ovarian cancer maintenance treatment in both the United States and in Europe. CLVS management plans to file a regulatory application with the FDA and EMA by second-quarter 2022 and third-quarter 2022, respectively. Moreover, CLVS is also evaluating the combination of Rubraca and Bristol Myers’ BMY Opdivo (nivolumab) against Rubraca monotherapy in an independent spin of their study for advanced ovarian cancer as a first-line maintenance treatment. Data from the study, which was earlier expected in fourth-quarter 2022, is now awaited in first-quarter 2023, delayed by a quarter due to slower-than-expected event count. I will be monitoring these results very closely.

According to the data I gathered from reading other news articles, I am guessing that Rubraca alone can generate hundreds of millions of dollars, if not single digits billions, in revenues for CLVS once it gets approved. This is huge for a company with current market cap of around 200 million dollars.

Investors sold off after the news

In a very strange and unexpected way, CLVS went down from around $3 per share to as low as 0.67 cents per share following their first quarter earnings results, despite the good results from the Rubraca study which I highlighted above. This was a big opportunity to add more to my investment. I did purchase more shares around $1 and I wish I had purchased more.

Stock made a U-Turn

On Jun 14th CLVS stock made a U-Turn and went from 0.67 cents to around $2.85 as of close of business July 1st. Heavy volume with many millions shares were being bought to push the stock price up. This maybe in anticipation of more news to support the Rubraca story. CLVS has been shorted heavily as well with over 27% of its shares are being sold short. This might play a key role in pushing the stock price even higher with any new and positive news.

Looking ahead

I am monitoring the situation closely. This coming couple of months might reveal more positive news which will push this undervalued stock higher. I am saying undervalued because I feel on Rubraca success this company can be a potential takeover or at least partnership with a larger company. The stock is heavily shorted because of bad management not managing the balance sheet efficiently. The fear is that the company will run out of cash and will need to raise money by selling more stocks. At this price I feel the margin of safety is pretty good and is already factored into the stock price. This has the potential to increase in multiple folds from here in my opinion.