Clovis defaults on loan, expects to file Chapter 11

BOULDER — Clovis Oncology Inc. (Nasdaq: CLVS) has defaulted on a loan agreement and expects to file for Chapter 11 bankruptcy protection soon.

The bankruptcy filing has yet to occur, according to records maintained by the federal bankruptcy court.

Clovis reported to the Securities and Exchange Commission on Dec. 1 that it “elected to not make the interest payment” that was due on Nov. 1 on senior notes that carried a maturity date  in 2025. The company had 30 days to make the payment before it became “an event of default” and “as a result, an ‘event of default’ has occurred,” according to the SEC filing signed by Paul Gross, the company’s executive vice president and general counsel.

Failure to make the payment “may cause the principal and interest due … (generally consisting of twice the amount borrowed…) to become immediately due and payable.”

The company disclosed to the SEC that given the company’s liquidity situation, it “expects to file a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in the very near term.”

Clovis said when it released its second quarter financial statement that it needed to raise capital in order to remain a going concern.

Its third quarter report filed with the SEC, showing financial performance through Sept. 30, indicated quarterly revenues of $30.6 million compared with $37.9 million for the same period a year earlier. Year-to-date revenue was reported as $97 million, compared with Y-T-D 2021 revenue through the third quarter of $112.7 million.

It recorded a net loss for the quarter of $56 million, down from the $67.4 million net loss in the third quarter of 2021. 

The company said it had cash on hand of $58.3 million as of the end of the third quarter. It had $143.4 million in the bank at the end of 2021.

A primary drug product for Clovis is Rubraca, which is used in the treatment in adult patients of recurrent epithelial ovarian, fallopian tube or primary peritoneal cancer. The Food and Drug Administration asked the company to voluntarily revise the label to limit its usage, and Clovis agreed as of Dec. 1, according to the SEC filing.

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