Clovis Oncology (CLVS) made major headlines after plunging 72% or $71.80 just yesterday.  But what we’re seeing may just be another overreaction to news the FDA requested further information for efficacy analysis in drugs for the treatment of epidermal growth factor receptor (EFGR) T790M-positive lung cancer.

While the company will provide the necessary information, it’s likely to delay potential approval beyond the expected March 2016 PDUFA date.   However, when it comes to Clovis, we have to consider this is just a delay, though.  It doesn't remove the drugs from FDA approval candidacy in the future.

To be clear, we’re not recommending a buy on this particular stock today.

But I want you to understand how severe overreactions – such as this – can lead to the significant profit opportunities we’ve seen with Achillion (AHN) and ACADIA (ACAD) over the years.

Chart of the Day: Clovis Oncology

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