Clovis Oncology Inc (NASDAQ:CLVS) just reported that the FDA has accepted its new drug application (NDA) and the company is up close to 30% ahead of the market open in the US on Wednesday. This is a pretty big response to a relatively minor development. Don’t get us wrong, an acceptance is a positive step, but doesn’t generally warrant a move of tis scale. Mainstream media have picked up on the news, and with the fast track designation that accompanies it, there might be some degree of confusion outside of the biotech space as to what the term ‘acceptance’ actually refers to. Whatever the reason for the rapid gain, Clovis and it’s shareholders aren’t going to be complaining, and the volume indicates that there is plenty of interest in the drug in question. This, in turn, suggests there’s plenty of upside potential on approval come PDUFA.

With this in mind, here’s our interpretation of the drug’s chances.

The drug we are looking at is rucaparib, and it’s part of a family of drugs called PARP inhibitors. As an noteworthy aside, Pfizer Inc.(NYSE:PFE) just picked up a PARP inhibitor of its own in the Medivation Inc (NASDAQ:MDVN) deal – a breast cancer target drug called talazoparib. Clovis’ candidate is an ovarian cancer target, but if it gets approval, there’s every chance it will go after a breast cancer approval as a secondary extension indication. That’s for the future, however.

PARP inhibitors inhibit an enzyme called poly ADP ribose polymerase. When all cells divide, be they tumor or normal cells, there oftentimes occurs breaks in these cells during replication. In a normal situation, the body will repair these breaks and the process of replication and proliferation will continue as normal. The PARP1 protein plays a key role in one of two primary methods used in the body to repair these DNA breaks. Using a biomarker test, Clovis identifies ovarian cancer tumor cells that are sensitive to PARP inhibition, and the treatment targets these cells. By inhibiting the actions of PARP 1, essentially, the drug stops the body from repairing the DNA breaks that occur during cell replication for ovarian cancer cells. In turn, this slows or stops the growth of tumors.

It’s a pretty elegant solution.

The fact that the drug is fast tracked means that the data that underpins the NDA is not yet all-in, and the company is likely going to submit the relevant parts to the FDA in a nmber of stages across the next couple of quarters. From the data we have, however, the drug looks pretty good. The FDA will likely consider approving rucaparib on a surrogate endpoint, the biomarker ctDNA. ctDNA has been shown to correlate with partial response in this indication, and that’s what a large portion of the phase II data relies on. There was a second phase II that focused on response specifically, and in this trial, the disease control rate was 32% for all patients (6/19) and 50% for patients with one prior chemotherapy (3/6). An ongoing phase III maintenance study is set to finish up in March next year.

The efficacy data isn’t bad, but the safety data isn’t great. Grade 1/2 AEs seem to happen pretty frequently (more than 20% of patients on average across the phase II studies) and grade 2/3 AEs are also pretty frequent. Notably, 21% experienced anemia/decreased hemoglobin.

Of course, the indication that the drug is targeting doesn’t have a great prognosis, so there’s a real chance that the FDA will focus more on the efficacy side of things than it will the tolerability. In these sorts of situations, the agency is often a little laxer on the adverse events simply because many patients are willing to suffer AEs if the other option is death. If it was an asthma drug, it’s a different story, but this is ovarian cancer.

So what’s the bottom line?

We think there’s a good chance the FDA will approve the drug, but without full access to the data it’s difficult to say with high levels of certainty. There’s a significant unmet need in the space, so an approval would certainly give patients who currently have little to no options an extra chance at treatment, and this will likely factor into the decision at PDUFA.