On Tuesday, The U.S. Securities and Exchange Commission (SEC) announced that Clovis Oncology, CEO Patrick Mahaffy, and former Chief Financial Officer Erle Mast have been instructed to pay more than $20 million in penalties to settle accusations of misleading investors about the company’s developmental lung cancer drug rociletinib.
Stephanie Avakian, co-director of the SEC’s enforcement division, commented, “”Biopharmaceutical companies cannot mislead investors about efficacy results,” adding that the available data should have alerted Clovis to “the inaccuracy of the claims about the effectiveness of its developmental drug.”
The data in question was first revealed May 2015 when Clovis told investors that the recommended 500-mg dose of rociletinib, also known as Roci, resulted in tumor shrinkage in 60 percent of patients. However, despite Mahaffy and Mast eventually learning that the efficacy rate of the drug was 42 percent in July 2015, the company continued to report the 60 percent figure, including in stock offering materials.
Then in November 2015, Clovis released data that indicated a 28 percent effectiveness rate. According to the SEC, Clovis raised approximately $298 million in the stock offering, but saw its share price fall more than 70 percent following the disclosure of the latest efficacy rate.
An FDA advisory panel recommended against approval of rociletinib for the treatment of T790M-positive non-small-cell lung cancer in April 2016. The following month, Clovis ceased clinical development of the irreversible, mutant-selective EGFR inhibitor.
