Goldman Just Raised Its Clovis Oncology Target ~50%, Upgrades To Buy

In a report published Monday, Goldman Sachs analysts upgraded the rating on Clovis Oncology Inc CLVS from Neutral to Buy, while raising the price target from $68 to $117. The analysts raised their adjusted peak sales projection for Clovis' pipeline lung cancer medication, Rocilentinib (Roci), from $1.5 billion to $2 billion. The analysts "now see higher probability of M&A (increasing visibility on lead asset and scarcity of unpartnered cancer drugs)," while adding, "Earlier this year CLVS reported updated Ph2 data from Roci, which in our view begin to differentiate the drug from AZN's AZD9291 (nearest competitor) on efficacy as well as increase our confidence that CLVS will be able to successfully move the drug into the front-line setting (larger market opportunity), where a Ph2/3 trial is ongoing." Goldman Sachs expects Clovis to file for approval in the US and the EU for Roci "as second-line therapy for T790 lung cancer" by mid-2015, which should facilitate the launch of the drug by 1Q16. At the same time, the analysts also believe that would be more effective in the front-line setting than the existing drugs. With Roci likely to be launched as second-line treatment in 2016, the analysts feel that Clovis should be able to move it to the front-line setting by 2018. "Since we have more confidence on Roci showing differentiation than Tarceva in front line, we are increasing Roci's treatment duration in front line to 13 months from previous 11 months," the analysts said.