Clovis and execs pay $20 million for past mislead of investors

BOULDER — Clovis Oncology’s (Nasdaq: CLVS) CEO, Patrick Mahaffy, and former CFO, Erle Mast, have agreed to pay more than $20 million in penalties to settle charges of misleading investors about the efficacy of the lung cancer drug, rociletinib.

The U.S. Securities and Exchange Commission claims that over a four-month period in 2015, the company misled investors about how well rociletinib worked compared with another drug. The company was able to raise about $298 million in July of that year, and the promising results of the drug were a factor. In November of that year, a much lower level of effectiveness was disclosed, and the company’s shares collapsed. Clovis stopped developing rociletinib in May 2016.

The SEC complaint adds that Mahaffy and Mast continued to advertise the higher efficacy to investors even after learning about the lower level.

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In the last quarter, Clovis recorded a $20 million charge, so the penalty was expected. Last year, the company settled class action lawsuits for $142 million in cash and stock options.