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Clovis Oncology Inc (CLVS), Synta Pharmaceuticals Corp. (SNTA): Post-ASCO Movers – Are Any a Buy?

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Late last year, Clovis Oncology Inc (NASDAQ:CLVS) saw its share price cut in half, to $11.50, after reporting that its Phase 3 drug CO-101 failed to show a benefit over chemotherapy. The company said it was shutting down the development of the trial and was going to focus on its pipeline.

Clovis Oncology Inc (NASDAQ:CLVS)

Now, Clovis Oncology Inc (NASDAQ:CLVS) is trading near $73 with gains of more than 100%. The gains followed exceptional data at ASCO for both of its clinical products. Needless to say, the market was shocked, especially considering what happened last year.

First, data from its Phase 1 PARP inhibitor rucaparib – produced clinically meaningful results – an incredible 89% of ovarian cancer patients demonstrated a clinical benefit.

Second, its Phase 1/2 candidate CO-1686 – for patients with non-small cell lung cancer who have developed T790M mutation – produced an unparalleled 75% partial response and 25% stable disease rate. Moreover, metastasis shrinkage was observed at multiple organ sites – indicating the potential for efficiency beyond its current indication.

You might notice that both are early phase drugs – but both are also gene-specific therapies that are treating diseases where there are no current therapeutics. Thus, fast-track statuses and breakthrough therapy designations could be on the horizon. In my opinion, Clovis’ data was a slam dunk, producing unprecedented results. With a $2 billion market cap, I’d buy and hold for the long-term.

A massive reversal after ASCO

Synta Pharmaceuticals Corp. (NASDAQ:SNTA) presented Phase 2 data for its lung-cancer drug ganetespip. In premarket trading, the stock was trading higher by more than 8% in response to data. However, after further consideration of data, shares traded lower by 34%.

In the trial, ganetespib extended the lives of lung-cancer patients to 9.8 months on average. Compared to those who received chemotherapy, ganetespib’s results added an additional 2.4 months to the lives of patients.

In the treatment of cancer, a 2.4 month advantage is considered “good.” However, it was not statistically significant – in biotechnology, the FDA wants to see statistically significant studies to award approvals.

The Street’s Adam Feuerstein also notes that its hazard ratio is actually rising, which indicates a lower percent reduction in the risk of death. Feuerstein notes an 18% reduction in the risk of death compared to a 31% reduction presented last September.

When combining the lowered reduction in the risk of death and its lack of being statistically significant, I think Synta Pharmaceuticals Corp. (NASDAQ:SNTA) will have a hard time convincing the FDA to eventually approve its drug. Thus, with the company still having a market cap of $330 million, I think there are too many questions to “buy”.

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