Clovis Oncology Inc. (CLVS) , one of the hottest biotech stocks of the last few months, is selling off Thursday but according to at least one Wall Street firm, the sell-off may be overdone.
"Rubraca, the company's lead product candidate, will gain significant market share in the large and rapidly evolving PARP inhibitor category, which is not adequately reflected in the stock's current valuation," wrote Leerink Partners Michael Schmidt in a note Thursday following the release of the company's second quarter earnings.
Clovis said Thursday that Rubraca, which launched on Dec. 19, had revenue $14.6 million for the second quarter of 2017, compared to net product revenue of $7.0 million in the first quarter of 2017 for a total of $21.6 million for the first six months of 2017.
The company, however, posted a loss of $3.88 per share, compared to the $1.30 per share consensus estimate, according to FactSet.
Shares of Clovis dove about 3.5%, or about $2.88 per share, midday Thursday to $78.78. The company is up a 82% this year having gained 48% since the middle of June.
Leerink, however, carries a $115 price target on the stock,
The results for Rubraca are 23% above consensus estimates, "which we think is impressive, given the more competitive marketplace in 2Q following launch of a competitor in a broader patient population."
The company is currently entering phase 3 trials for its ARIEL3 study, which involves using Rubraca for the treatment of ovarian cancer.
"We believe this bodes well for our broader maintenance label that would address this larger population, if approved by the FDA next year," said Clovis CEO Patrick Mahaffy on the company's earnings call Thursday.
Clovis is currently seeing competition for Rubraca from AstraZeneca plc (AZN) , which launched Lynparza in 2015 and is seeking additional use cases for the drug.
Still, Leerink's Schmidt is confident, considering strong results in the ARIEL3 study during the second quarter that compared well to AstraZeneca's tests.
This "may provide CLVS with a marketing advantage," for Rubraca when and if the drug comes to market for ovarian cancer applications in the third quarter of 2018 as Leerink predicts.
The Boulder, Colo.-based company unveiled a collaboration with Bristol-Myers Squibb Co. (BMY) on July 31 to evaluate the combination of Bristol-Myers' s immunotherapy Opdivo and Clovis Oncology's poly (ADP-ribose) polymerase (PARP) inhibitor Rubraca in Phase 3 studies in advanced advanced ovarian cancer and advanced triple-negative breast cancers.
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