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.

Stop me if you've heard this one before: Clovis Oncology, riding high on buyout speculation and hopes for approval of a cancer drug, releases trial results that compare unfavorably to a competing AstraZeneca drug, and the stock craters. 

It happened last fall with the company's lung-cancer drug rocilitenib, when disappointing data and unfavorable comparisons to Astra's competing drug Tagrisso led to a 69 percent plunge in Clovis shares.

It happened again on Friday, with Clovis releasing data that suggests its ovarian cancer drug rucaparib might not match up as well as it hoped to Astra's Lynparza, which is already on the market. 

The lung-cancer failure was worse -- so bad Clovis halted work on the drug. Rucaparib, in contrast, is still on track for approval, which helps explain why Clovis shares are down 14 percent instead of 69. 

But Friday's news does put a substantial damper on the company's M&A prospects. And it increases the possibility this drug will be something of an also-ran in a crowded field of similar drugs, known as PARP inhibitors. It's also a reminder that betting on me-too drugs, M&A speculation, and companies with a bad track record can be a recipe for disappointment.

This Again?
Disappointing cancer-drug trial data crushed Clovis' share price on Friday, nearly a year after a similar episode
Source: Bloomberg

Clovis had been on a roll recently, its shares more than tripling since late June. This was thanks partly to growing investor excitement about PARP inhibitors, after a competing biotech, Tesaro, released promising data over the summer. That excitement turned to M&A speculation, particularly after Pfizer agreed in August to pay $14 billion for Medivation, which had previously used its own PARP inhibitor to help lure suitors. 

M&A speculation concerning Clovis specifically was stoked when the FDA in August gave rucaparib a priority drug review, raising hopes of a faster approval.

Previously burned Wall Street analysts stayed cautious even as M&A buzz mounted, but had recently started to increase their Clovis price targets. Now they risk feeling foolish again. 

Fooled Again?
Just as analysts started to raise their target prices on Clovis based on M&A speculation, the company released disappointing data.
Source: Bloomberg

The selloff may be overdone; the drug may still be approved, and with a broader label than Lynparza has.

But Friday's news highlights underlying problems for the drug. PARP inhibitors are a crowded class. If approved, rucaparib will have to make up ground on Lynparza, while also being pressured by Tesaro's drug, which has had better results. If Clovis can't prove its drug is substantially different than competing drugs, its acquisition hopes will be dimmer.

What's worse, investors remember what happened to Clovis less than a year ago, making it harder for the company to dismiss these results. 

Even with today's drop, Clovis shares are up 166 percent over about three months and change, and investors hate being fooled twice. That's a potent recipe for more downside. 

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

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