Clovis Oncology: This Treatment is Out of Reach

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Celgene’s (NASDAQ:CELG) $2.9 billion purchase of Abraxis BioScience could prove to be more beneficial than analysts anticipated.

Abraxane, a cancer treatment acquired in the 2010 deal, has shown to improve the delivery of chemotherapy to cancer cells in a late-stage study. On November 9, Celgene reported that the drug had improved survival in patients with pancreatic cancer, however the extent of the improvements will not be known until a medical meeting in January.

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But the drug is already a proven treatment; in 2005, Abraxane was approved by the Food and Drug administration to treat breast cancer, and it received approval to treat lung cancer in October of this year.

“Given solid efficacy, acceptable tolerability, and the dearth of treatment options, our conviction that Abraxane plus gemcitabine will become the new standard of care in pancreatic cancer is high,” wrote Cowen analyst Eric Schmidt in a research note on Monday. With approximately 240,000 to 270,000 new pancreatic cancer patients diagnosed each year, he estimated that sales of Abraxane could amount to $1 million or $1.25 million by 2015. Already the drug has generated $385.9 million in 2011 for its treatment of non-small cell lung cancer.

Shares in Celgene spiked to $78.46 on Monday morning, the stock’s biggest intraday increase since December 2009, and was trading up 5.8 percent at $75.64 at 12 p.m. eastern time.

In comparison, shares of Clovis Oncology (NASDAQ:CLVS) fell by more than 34 percent after reporting that its experimental cancer drug proved to be no better than the standard chemotherapy used to treat pancreatic cancer. The average survival for patients on Clovis’ treatment CO-101 was six months, the same as patients on the standard chemotherapy drug gemcitabine.

The company’s Chief Executive Patrick Mahaffy said the trial results were “even more unambiguous than we could have imagined,” according to Reuters.

Clovis will now focus on the development of its lung cancer treatment CO-1686.

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