Why Clovis Oncology Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Clovis Oncology , a clinical-stage biopharmaceutical company developing anti-cancer therapies, soared as much as 15% after reporting its fourth-quarter earnings results and providing its 2013 objectives.

So what: For the quarter, Clovis' net loss widened to $21.1 million from $14.4 million in the year-ago period. That's not surprising in one bit as it's spending more on clinical research. Clovis ended the quarter with $144.1 million in cash, and expects a cash burn of $53 million to $57 million for 2013. The real driver was CEO Patrick Mahaffy talking up the progress his company expects to make in 2013 with CO-1686 for non-small-cell lung cancer and with Rucaparib for ovarian cancer. Both drugs were moved into phase 1/2 monotherapy studies last year, and favorable results would start a chain of additional trials that Mahaffy outlined.


Now what: Clovis' ample cash position and the fact that it has two lead candidates advancing side-by-side has most investors stoked. As for me, I'm not nearly as enthusiastic. Let's not forget that Clovis was forced to shelve its experimental metastatic pancreatic cancer drug, CO-101, in November because it made no difference in overall survival when compared to Eli Lilly's Gemzar. Since then, the stock has recouped nearly all of its losses despite burning more cash and focusing on two drugs that are earlier in the development process than CO-101 was. The numbers just don't add up, and that's enough to make me keep a very safe distance from Clovis.

Craving more input? Start by adding Clovis Oncology to your free and personalized watchlist so you can keep up on the latest news with the company.

While you can certainly make huge gains in biotechs like Clovis, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article Why Clovis Oncology Shares Popped originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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