Dive Brief:
- Burdened by debt and facing an uncertain future for its only marketed product, Clovis Oncology says it won’t be able to continue operating beyond January without a fresh infusion of cash.
- The biotech, which has never turned a profit, had more than hundreds of millions of dollars in debt as of Sept. 30, according to a Securities and Exchange Commission filing Wednesday. It took a $187.5 million net loss on $97.1 million in revenue over the first nine months of the year.
- “A potential bankruptcy filing in the very near term looks increasingly probable,” Clovis said. “We have incurred significant net losses since inception and have relied, almost entirely, on debt and equity financings to fund our operations.”
Dive Insight:
Bankruptcies in the biotech industry are relatively rare, and it would be especially unusual for a company that has a marketed product. But Clovis’s history is full of ups and downs.
The company’s shares, which are now worth less than a dollar a piece, once traded above $100 and Clovis looked like a prime target for a takeover. CEO Patrick Mahaffy in 2019 encouraged that talk, joking that he had no dream of dying as an old man with his Clovis hat on. “Everybody knows where to find me,” he said at the time.
The main draw for potential suitors was the Clovis cancer drug Rubraca, one of just a few in a class known as PARP inhibitors. But the medicine has lagged behind competitors sold by giant drugmakers including Merck & Co. and GlaxoSmithKline, and future sales may be crimped as regulators increasingly look for survival data for various indications.
The regulatory environment has complicated active talks to license rights to Rubraca outside the U.S., which would have offered one path to more cash, Clovis said. Meanwhile, the company’s low share price, small amount of issuable stock and little appetite in general among biotech investors for secondary offerings has left executives with few options in the public markets.
This week, Clovis laid off 115 employees, but the full cost savings from that move won’t be realized until next year. The company said it also took the extraordinary step of skipping an interest payment this month on notes due 2025, instead taking advantage of a 30-day grace period before default to continue “discussions with certain creditors in connection with our evaluation of strategic alternatives.”
Correction: A previous version of this story misstated Clovis’ debt levels.