Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Clovis Oncology had the perfect story. Then it went dark. 

Clovis had two promising late-stage cancer drugs speeding to market with breakthrough therapy designations -- a special FDA status that accelerates the drug review process -- and owns both of them entirely. Its most advanced drug, rocilitenib, for non-small-cell lung cancer, seemed possibly headed for FDA approval this year. Goldman Sachs, meanwhile, had anointed Clovis a takeover target, music to biotech investors' ears. Morgan Stanley suggested Amgen might be interested, noting how few companies had such promising, late-stage assets. Clovis' founder-CEO had already managed to get a company bought for billions by a rival.

The only questions seemed to be around how soon Clovis' cancer drug would come to market and how much share it would take from AstraZeneca's recently approved competitor. It seemed, in the world of biotech, safe.

That made it all the more painful for Clovis investors when its stock price plunged 69 percent in a morning on Monday.

Source: Bloomberg

Clovis released data on Monday showing rocilitenib's response rate -- the percentage of patients whose cancer shrinks or is cleared after getting the drug -- was far, far worse than what early, unconfirmed data suggested. The response rate plunged from 67 percent to 28 percent for a smaller dose and 35 percent for a larger one. AstraZeneca's direct competitor Tagrisso, approved just last week, has a confirmed response rate about double that. 

In other words, rocilitenib is, as Bloomberg Intelligence analyst Asthika Goonewardene puts it, "toast."

It's a double whammy. The drug will likely take quite a bit longer to get to market because the FDA wants more data. That gives AstraZeneca an even bigger head start, with extremely convincing data to wave around. Now Clovis' drug, giddily projected to pass $1 billion in sales by 2019 and possibly even more if approved as a first-line treatment, will be lucky to get anywhere close to that. 

The two firms have been racing for years. Just as Clovis was closing in, it careened off the track. Clovis was down $2.6 billion in market cap on Monday, while AstraZeneca's market valuation rose by that amount, and then by nearly a billion extra for good measure:

Day-to-day change in market cap
Goliath 1, David 0
Source: Bloomberg

Even in the context of biotech's roller-coaster norm, this is an abrupt fall from grace. Many biotechs ask investors to put faith in their management and scientists for years before they can expect any kind of return. Clovis had offered the potential of a blockbuster approval within a few months, along with the possibility of a tantalizing buyout premium in a heated market. Both Goldman and JP Morgan had price targets on the stock well above $100 (it was recently trading around $30). Analysts were talking early approval of rocilitenib's  just last week. 

Confidence was such that, when AstraZeneca released survival data earlier this year that was not quite a home run, Clovis' shares spiked more than 15 percent. When AstraZeneca's drug actually got approved, Clovis took only a 3 percent hit. This was a case where people read too much into a mesmerizing company narrative, and gave too much weight to unconfirmed data against more-solid evidence from AstraZeneca.

Clovis' hopes now rest on its earlier-stage ovarian cancer drug. It's potentially very promising as well, but not quite as enticing as merger bait. For now, Clovis is much more likely to have to figure out how to fend for itself. And investors are likely to be a great deal warier.  

It's a reminder that what looks safest in biotech can end up being the biggest disaster. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Max Nisen in New York at

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Mark Gongloff at