(Bloomberg) -- Armistice Capital LLC, which has an activist stake in Clovis Oncology Inc., has encouraged the cancer drugmaker to pursue a sale, according to a person familiar with the matter.
The hedge fund has been in contact with Clovis's management about the matter, the person said. Last month, Armistice disclosed in a securities filing that it had amassed a 9.8 percent stake, making it Clovis' second-biggest holder. At the time, it said it could push for a sale, management changes or other options.
There's no guarantee that the company will put itself on the block or that a sale process would be successful. Representatives for Clovis and Armistice declined to comment.
Shares of Clovis reversed some of their losses from earlier in the day, and were down 5.6 percent to $19.60 at 1:13 p.m. in New York.
Clovis is developing drugs for ovarian, prostate and bladder cancers both as standalone treatments and for us in combination with other therapies. Oncology is a hot area for drugmakers and many large pharmaceutical companies have signaled an interest in growing in the field.
Earlier this month, GlaxoSmithKline Plc agreed to acquire drugmaker Tesaro Inc., which makes a treatment in the same class as Clovis's product, for $5.1 billion. However, the U.K. pharma giant saw its stock fall as investors balked at the deal's $75-a-share price tag. Tesaro's drug, Zejula, isn't expected by Wall Street analysts to reach $1 billion in annual sales until 2023.
Wall Street had hoped that the Tesaro takeover could re-awaken interest in Clovis. But deal documents released on Friday showed that Glaxo was the sole bidder for the company, although others had expressed interest. That sent shares of both Tesaro and Clovis lower in trading in the U.S. on Friday.
Shares of Clovis have fallen sharply this year, shedding more than two-thirds of their value since the start of 2018.
To contact the reporters on this story: Gillian Tan in New York at gtan129@bloomberg.net;Cynthia Koons in New York at ckoons@bloomberg.net
To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, ;Alan Goldstein at agoldstein5@bloomberg.net, Timothy Annett
©2018 Bloomberg L.P.
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