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.
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”.
Making a stellar cancer debut
BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is a company that develops drugs to treat serious and rare conditions. At this year’s ASCO, it was presenting data from its first cancer drug BMN 673. Much like Clovis’ rucaparib, BMN 673 is a PARP inhibitor, meaning it targets patients who carry certain genes (BRCA).
BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) traded lower by more than 8% after its candidate meaningfully shrunk the tumors of less than half of ovarian and breast cancer patients who were tested. The drug’s response rate of roughly 30% was not enough to create optimism – but it doesn’t mean that BMN 673 won’t eventually be FDA approved.
With BMN 673 being a PARP inhibitor, there is no other drug that targets BRCA-expressing ovarian and breast cancer patients. Therefore, a 30% response rate is decent – but not extraordinary.
Basically, BioMarin didn’t disappoint, but it didn’t impress either. The company is currently valued at around $8 billion, and I believe this weakness is a good buying opportunity.
Last year, the company’s product, GALNS, for the life-threatening disease Morquio Syndrome Type A produced unparalleled results. GALNS will be approved in the near future. Thus, BioMarin’s 67% one-year return has been tied to GALNS, not BMN 673. Therefore, with GALNS expected to double BioMarin’s total sales, I would buy on this weakness, and would worry about BMN 673 later down the road.
Final thoughts
Looking at these three stocks, the risks associated with Synta Pharmaceuticals Corp. (NASDAQ:SNTA) appear too great. Thus, I can’t identify clear value.
Clovis Oncology Inc (NASDAQ:CLVS) produced results like I’ve never seen – but the company still has additional testing – meaning its story is far from complete. While I think it would make a great buy-and-hold, biotechs in this phase of development are typically volatile. Therefore, it might be a bad choice for those with short-term goals or for those who can’t stomach the volatility.
My post-ASCO play is BioMarin. The stock is currently trading about 16% off its 52-week highs and has an exciting year ahead with the launch of GALNS. Thus, I think the pullback was healthy and will prove to be a wise entry point for both short and long-term investors.
The article Post-ASCO Movers: Are Any a Buy? originally appeared on Fool.com.
Brian Nichols has no position in any stocks mentioned. The Motley Fool recommends BioMarin Pharmaceutical. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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