Clovis Axes 115 Employees, Warns of Potential Bankruptcy

Bankruptcy might be looming for embattled Clovis Oncology, the company warned Wednesday in a 10-Q filing. Clovis also revealed it has taken action to reduce its workforce by 115 employees.

Rubraca, the company’s blockbuster cancer drug, has been caught up in industry-wide safety concerns over PARP inhibitors. In June, Clovis pulled the drug from the U.S. market for BRCA-mutated ovarian cancer due to an excess risk of death in highly pre-treated patients.

Clovis is hardly alone, as GSK and AstraZeneca have also removed PARP inhibitors from the market in ovarian cancer. But the uncertainty is weighing on Clovis.

In a business report issued Wednesday, the company referred to the cancelation of an FDA review meeting for GSK’s Zejula. The Oncology Drugs Advisory Committee meeting was set to determine whether the second-line maintenance indication should be withdrawn from the drug’s labeling due to the final overall survival data.

While neither party has stated a reason for the cancelation, “If the outcome of discussions between the FDA and GSK is a withdrawal or narrowing of that indication, we cannot assure you that the FDA would not seek to similarly limit our second line maintenance indication in ovarian cancer,” Clovis wrote in the filing.

This indication accounts for a substantial portion of Clovis’ revenue from Rubraca, according to the company. Clovis further expressed concern over the  “likelihood and scope of an approval” for a supplemental new drug application it filed with the FDA in the first-line treatment setting.

The filing further advised that Clovis “must raise additional capital in the near term” in order to fund and continue operations beyond January 2023. The company noted it is “increasingly unlikely” that additional funding would be available on acceptable terms outside of Chapter 11 bankruptcy.

The company attributed this to unfavorable market conditions and an inability to access the equity capital markets it has traditionally relied on in a sufficient manner. Clovis’ stock has lost more than 77% of its value over the past 12 months, according to Seeking Alpha. The stock lost another 55% in reaction to Wednesday's disclosure. 

Clovis said it is considering other sources of funding, which could include going further into debt, or entering into strategic partnerships or licensing arrangements for products or product candidates, though this option may mean giving up future commercialization rights. 

The company specifically called out FAP-2286, a peptide-targeted radionuclide therapy and imaging agent targeting fibroblast activation protein, saying it is in “active discussions” to sell licensing rights for this asset. Clovis is seeking an upfront payment and additional payments in the form of milestones and R&D support. 

The workforce reduction, undertaken Monday, is expected to yield cost savings of $29 million per year, though these will not be realized until 2023.   

When approached for comment, Breanna Burkart, vice president, investor relations & corporate communications told BioSpace the company has no further details to offer beyond what was in the 10-Q.