Shares of Clovis Oncology (CLVS) plunged in morning trading after the company said is discontinuing a trial for a drug that targets bladder cancer after a review of data showed that the drug may not provide a meaningful clinical benefit.

DRUG TRIAL DISCONTINUATION: Clovis Oncology said on Friday in a regulatory filing that it was halting a sponsored Phase 2 open-label clinical trial evaluating rucaparib, its lead drug in bladder cancer, in recurrent, metastatic bladder cancer. The company said its decision to discontinue the Phase 2 ALAS trial was based on recommendations of an independent committee, which suggested that the treatment may not provide a meaningful benefit to patients following a review of preliminary efficacy data for 62 patients enrolled and treated in the study. According to the review, the objective response rate in the intent-to-treat population did not meet the continuance criteria. The recommendation of the data monitoring committee was not based on the safety profile of rucaparib in this study population, Clovis said in a statement.

Clovis said it would continue to test the drug in combination with other treatments for bladder cancer. It also plans to enroll patients with advanced bladder cancer and selected genetic mutations in a planned pan-tumor trial of rucaparib expected to begin in the second half of 2019.

WHAT'S NOTABLE: Rucaparib, or Rubraca, is part a new class of cancer drugs called PARP-inhibitors, which look to block enzymes involved in repairing flawed DNA of cancer cells. The drug is also being tested in late-stage trials as a treatment for ovarian cancer as well as for treating patients with prostate cancer.

ANALYST COMMENTARY: Piper Jaffray analyst Joseph Catanzaro lowered his price target for Clovis to $21 from $23 after the company announced that it was discontinuing the ATLAS trial of rucaparib in urothelial bladder cancer due to lack of efficacy. The analyst noted that this outcome was "not totally surprising" to him given the limited efficacy observed thus far for PARP inhibitors in the therapeutic setting outside of BRCA+ and said the notion that rucaparib could report a response rate on par with competitive agents was "difficult to envision." H.C. Wainwright analyst Edward White lowered his price target for Clovis Oncology to $37 from $39 and said he only had given Rubraca in metastatic bladder cancer a 15% probability of success. SunTrust analyst Peter Lawson lowered his price target on Clovis to $28 from $35 and noted that he has removed the bladder cancer from his model but sees upside in the stock coming from the company's ovarian cancer program and following the 10%-15% decline in price.

PRICE ACTION: In morning trading, shares of Clovis Oncology are down nearly 12% to $20.72.