Clovis Oncology Inc., the developer of cancer treatments that was considering a sale, hasn’t received any interest from buyers, said a person with knowledge of the matter.
The company, which was working with Credit Suisse Group AG and JPMorgan Chase & Co. to explore its options, contacted some potential suitors, though no sale negotiations took place, the person said, asking not to be identified as the information is private. Boulder, Colorado-based Clovis is no longer soliciting bids and is considering its alternatives, the person said.
Clovis fell to $66.47 in after-market trading, down 9.5 percent from a close of $73.52 today.
Clovis sought the offers after its stock more than quadrupled this year amid takeover speculation and optimism about its lung and ovarian cancer drugs. The $2.2 billion company’s oncology treatments are in early stages of clinical trials and they could still fail, making it difficult to find a buyer at the current share price, said Brian Klein, a New York-based analyst at Stifel Financial Corp.
“If you are the management of this company and your valuation seems a little bit exuberant, then it behooves you to explore a potential sale,” Klein said in a phone interview yesterday. “I’m not sure if it necessarily makes sense from an acquirer’s perspective.”
There needs to be “a better characterization of the two clinical assets before a potential acquirer is going to feel comfortable enough to bite the bullet,” he said.
Clovis spokeswoman Breanna Burkart declined to comment on the sale process.
Clovis currently has no revenue and analysts don’t project it to have sales until 2015. On June 3, the company’s shares more than doubled in one day after it reported positive early results in trials of its cancer medicines. One, CO-1686, treats non-small cell lung cancer patients who have a mutation that makes the disease resistant to current drugs. The other, rucaparib, is an experimental ovarian cancer medicine.
Even without a premium, an acquisition of Clovis would be the largest takeover of a biotechnology company with no revenue since at least 1998, according to data compiled by Bloomberg.
There have been larger takeovers of biotechnology companies without products and only minimal revenue. In 2011, Gilead Sciences Inc. agreed to buy Pharmasset Inc., which had $900,000 in sales that year, for more than $10 billion. Pharmasset’s lead product was in the final stage of testing at the time the deal was announced.
When Gilead bought Pharmasset, “the expectation was things were going to come up in short order as far as the sales were concerned and delivery of the product,” Sachin Shah, a special situations and merger arbitrage strategist at New York-based Albert Fried & Co., said in a phone interview yesterday. With Clovis, “there’s a lot of unknowns. For somebody to make an acquisition of this, they really have to convince their shareholders what the deal is and they have to do a lot more due diligence.”