Clovis' Lung Cancer Bravado Falls Flat With New Diabetes Revelation

Updated from Sunday with Clovis stock price.

CHICAGO (TheStreet) -- Clovis Oncology's ( CLVS) lung cancer drug CO-1686 is turning patients into diabetics.

"Three or four" lung cancer patients in the ongoing phase I/II study of '1686 are now taking insulin to control hyperglycemia (high blood sugar) caused by the experimental drug, Clovis CEO Pat Mahaffay told a roomful of investors and analysts on Saturday night. 

The new disclosure ratchets up the seriousness of the link between '1686 and hyperglycemia and should raise more investor concerns about the drug's tolerability. The safety issue is magnified in light of the tight, competitive race between Clovis and AstraZeneca ( AZN), which is developing a similar lung cancer drug known as AZD9291.

Clovis shares are dow 11% to $45.61 in Monday trading.

Both Clovis' '1686 and AstraZeneca's '9291 are designed to be effective against non-small cell lung cancer containing a genetic mutation known as T790M, which renders tumors resistant to treatment with drugs like Roche's ( RHHBY) Tarceva. Updated, positive study results for both drugs were presented Saturday morning at the American Society of Clinical Oncology (ASCO) annual meeting. But Wall Street demands drug development be a zero-sum game, so healthcare investors spent much of the weekend debating whose drug -- Clovis' or AstraZeneca's -- was superior. 

In the phase I/II study of Clovis' '1686, hyperglycemia was observed in 55% of lung cancer patients, with 22% of these patients reporting hyperglycemia severe enough to require treatment with metformin, a blood-sugar lowering pill commonly prescribed to Type 2 diabetics. 

On Saturday night at a Clovis-sponsored event, investors and analysts learned for the first time about a small number of '1686-treated lung cancer patients unable keep their blood sugar levels under control with metformin, requiring doctors to start them on insulin injections. 

Mahaffey is very savvy Wall Street guy, so he deftly pivoted the ominous conversation about the insulin disclosure to an uplifting and positive anecdote about a lung cancer patient with pre-existing diabetes who was responding remarkably well to '1686. Mahaffay's message: Sure, turning some of our '1686 patients into insuling-injecting diabetics sucks, but lung cancer sucks worse.

Undoubtedly true, but it's also true that the ramped-up diabetes concern weakens Clovis' assertion that '1686 is superior to AstraZeneca's '9291. An objective read of the data presented so far reveals no winner between Clovis and AstraZeneca. Lung cancer patients with T790 mutated tumors win because both '1686 and '9291 appear to be very effective with their own, unique side effect issues. Which drug works best or is better tolerated cannot be determined at this time.

Yale lung cancer expert Dr. Thomas Lynch took on the winner vs. loser issue head on during a discussion of the '1686 and '9291 data on Saturday morning. 

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