Clovis Oncology, a Colorado-based developer of cancer drugs, said Monday that it has filed for bankruptcy.
Founded in 2009, Clovis is perhaps best known for its marketed medicine Rubraca, which targets a prominent protein in cancer research called “PARP” and is approved to treat certain ovarian and prostate cancers.
Rubraca, though, has never generated enough revenue to make the company profitable. Over the first nine months of this year, Clovis recorded a net loss of $188 million and, by the end of September, had about $440 million in debt.
Clovis has now voluntarily begun a Chapter 11 bankruptcy proceeding in the U.S. Bankruptcy Court for the District of Delaware, through which it hopes to sell assets via a court-supervised sales process. Chapter 11 bankruptcy, unlike another common form known as Chapter 7, is meant to restructure debt and business operations so that a company can continue to run.
Clovis said that, prior to its bankruptcy filing, it entered into a “stalking horse” agreement with the Swiss pharmaceutical giant Novartis, selling off “substantially all of the rights” to an experimental therapy named FAP-2286. That therapy, which stemmed from a partnership with 3B Pharmaceuticals, is designed to bind to a protein found on a variety of cancer cells and deliver radioactive isotopes that can help treat the disease or be useful for imaging.
The first portion of a Phase 1/2 trial evaluating FAP-2286 in patients with solid tumors kicked off in mid-2021, and Clovis has said it expects the second portion to begin early next year.
Novartis, which has been an active developer and acquirer of radiopharmaceuticals, agreed to pay Clovis $50 million up front for the rights to FAP-2286. Clovis may also receive up to $334 million more if its therapy hits specific research and regulatory goals. And, if it secures marketing approval, Novartis could pay as much as $297 million in additional sales milestones.
Per conditions of the bankruptcy court, Clovis said that “notice of the proposed sale to Novartis will be given to third parties and competing bids will be solicited.” The company is also “actively engaged in discussions with a number of interested parties” on the potential sale of one or more of its other assets.
Clovis said it has received a commitment of up to $75 million from a multi-draw debtor-in-possession financing facility. While this financing still needs to be approved by the bankruptcy court, Clovis anticipates that it will provide the liquidity needed to keep the business operational as it undergoes the sale process.
In late 2018, Tesaro, another company with a marketed PARP drug, was acquired by GSK in a $5 billion deal that led some to believe that Clovis could see takeover interest as well. Yet, a buyout never materialized.
Clovis shares have ticked down over the years, falling far from the roughly $90 to $100 they traded at in late 2015 and mid-2017. As of Monday, the company’s shares were valued at roughly 20 cents apiece.