UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

~~For the quarterly period ended June 30, 2016.~~

¨
For the quarterly period ended June 30, 2017.

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to .

Commission file number: 001-35347

Clovis Oncology, Inc.

(Exact name of Registrant as specified in its charter)

~~Delaware~~
Delaware	90-0475355
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)		~~(I.R.S. Employer~~ Identification No.)

5500 Flatiron Parkway, Suite 100
Boulder, Colorado		80301
(Address of principal executive offices)		(Zip Code)

(303) 625-5000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x☐		Accelerated filer	o☒
Non-accelerated filer	o☐	(Do not check if a smaller reporting company)	Smaller reporting company	o☐
			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☒

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of July ~~29, 2016~~28, 2017 was ~~38,501,077.~~48,879,354.

Table of Contents

CLOVIS ONCOLOGY, INC.

FORM 10-Q

~~CLOVIS ONCOLOGY, INC.~~

~~FORM 10-Q~~

TABLE OF CONTENTS

~~PART I. Financial Information~~				3

PART I. Financial Information		3

ITEM 1.	Financial Statements (unaudited)			3

	Consolidated Statements of Operations ~~— for the three~~ and ~~six months ended June 30, 2016 and 2015~~			3

	~~Consolidated Statements of~~ Comprehensive Loss — for the three and six months ended June 30, ~~2016~~2017 and ~~2015~~2016			4	3

	Consolidated Balance Sheets — as of June 30, ~~2016~~2017 and December 31, ~~2015~~2016			5	4

	Consolidated Statements of Cash Flows — for the six months ended June 30, ~~2016~~2017 and ~~2015~~2016			6	5

	Notes to Unaudited Consolidated Financial Statements			7	6

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			20	21

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk			30	33

~~ITEM 4.~~	~~Controls and Procedures~~			30

~~PART II. Other Information~~ITEM 4.	Controls and Procedures	31	33

PART II. Other Information		35

ITEM 1.	Legal Proceedings			31	35

ITEM 1A.	Risk Factors			33	37

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds			33	38

~~ITEM 3.~~	~~Defaults Upon Senior Securities~~			33

~~ITEM 4.~~	~~Mine Safety Disclosures~~			33

~~ITEM 5.~~	~~Other Information~~			33

~~ITEM 6.~~	~~Exhibits~~			33

~~SIGNATURES~~ITEM 3.	Defaults Upon Senior Securities	38
		36
ITEM 4.	Mine Safety Disclosures	38

ITEM 5.	Other Information	38

ITEM 6.	Exhibits	38

SIGNATURES		42

Table of Contents

PART I. ~~FINANCI~~ALFINANCIAL INFORMATION

~~ITEM 1.~~

ITEM 1.FINANCIAL STATEMENTS

~~FINANCIAL STATEMENTS~~

CLOVIS ONCOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015			Three months ended June 30,				Six months ended June 30,
Revenues:
License and milestone revenue	$	—		$	—		$	—		$	—
													2017		2016		2017		2016
													(in thousands, except per share amounts)

Product revenue, net													$	14,620	$	—	$	21,665	$	—
Operating expenses:
Cost of sales - product														2,730		—		3,893		—
Cost of sales - intangible asset amortization														372		—		743		—
Research and development		67,729			60,368			142,337			117,118			33,108		67,729		65,555		142,337
General and administrative		9,552			7,204			19,379			13,955
Selling, general and administrative														36,149		9,552		65,373		19,379
Acquired in-process research and development		300			—			300			—			—		300		—		300
Impairment of intangible asset		104,517			—			104,517			—			—		104,517		—		104,517
Change in fair value of contingent purchase consideration		(25,452	)		764			(24,936	)		1,488			—		(25,452)		—		(24,936)
Total expenses		156,646			68,336			241,597			132,561			72,359		156,646		135,564		241,597
Operating loss		(156,646	)		(68,336	)		(241,597	)		(132,561	)		(57,739)		(156,646)		(113,899)		(241,597)
Other income (expense):
Interest expense		(2,106	)		(2,097	)		(4,210	)		(4,172	)		(2,598)		(2,106)		(5,178)		(4,210)
Foreign currency gains (losses)		183			(1,142	)		(368	)		2,105
Foreign currency gain (loss)														76		183		(83)		(368)
Legal settlement loss, net of insurance receivable														(117,000)		—		(117,000)		—
Other income		196			62			221			73			594		196		946		221
Other expense, net		(1,727	)		(3,177	)		(4,357	)		(1,994	)
Other income (expense), net														(118,928)		(1,727)		(121,315)		(4,357)
Loss before income taxes		(158,373	)		(71,513	)		(245,954	)		(134,555	)		(176,667)		(158,373)		(235,214)		(245,954)
Income tax benefit (expense)		29,059			(18	)		33,240			(120	)
Income tax benefit														1,281		29,059		1,365		33,240
Net loss	$	(129,314	)	$	(71,531	)	$	(212,714	)	$	(134,675	)	$	(175,386)	$	(129,314)	$	(233,849)	$	(212,714)
Other comprehensive income:
Foreign currency translation adjustments, net of tax														2,812		(1,381)		3,279		2,132
Net unrealized gain (loss) on available-for-sale securities, net of tax														—		48		(5)		278
Other comprehensive income (loss)														2,812		(1,333)		3,274		2,410
Comprehensive loss													$	(172,574)	$	(130,647)	$	(230,575)	$	(210,304)

Loss per basic and diluted common share:
Basic and diluted net loss per common share	$	(3.37	)	$	(2.10	)	$	(5.54	)	$	(3.96	)	$	(3.88)	$	(3.37)	$	(5.24)	$	(5.54)
Basic and diluted weighted-average common shares outstanding		38,389			34,088			38,375			34,049
Basic and diluted weighted average common shares outstanding														45,176		38,389		44,610		38,375

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

CLOVIS ONCOLOGY, INC.

CONSOLIDATED ~~STATEMENTS OF COMPREHENSIVE LOSS~~BALANCE SHEETS

(Unaudited)

(In ~~thousands)~~thousands, except for share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

Net loss

$
(129,314
)

$
(71,531
)

$
(212,714
)

$
(134,675
)
Other comprehensive income (loss)

Foreign currency translation adjustments, net of tax

(1,381
)

8,313

2,132

(17,602
)
Net unrealized gain on available-for-sale securities, net of tax

48

53

278

141

Other comprehensive income (loss)

(1,333
)

8,366

2,410

(17,461
)
Comprehensive loss

$
(130,647
)

$
(63,165
)

$
(210,304
)

$
(152,136
)


	June 30,		December 31,
	2017		2016

ASSETS
Current assets:
Cash and cash equivalents	$	491,786	$	216,186
Accounts receivable, net		1,143		121
Insurance receivable		25,000		—
Inventories		6,478		—
Available-for-sale securities		179,744		49,997
Prepaid research and development expenses		4,854		6,427
Other current assets		6,766		6,679
Total current assets		715,771		279,410
Property and equipment, net		4,155		4,440
Intangible assets, net		20,304		21,047
Goodwill		62,018		57,192
Other assets		47,648		2,468
Total assets	$	849,896	$	364,557
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	13,360	$	10,912
Accrued research and development expenses		21,158		35,198
Milestone liability		21,011		20,062
Accrued liability for legal settlement		142,000		—
Other accrued expenses		21,848		19,487
Total current liabilities		219,377		85,659
Deferred income taxes, net		632		��
Convertible senior notes		281,761		281,126
Deferred rent, long-term		4,333		1,406
Total liabilities		506,103		368,191
Commitments and contingencies (Note 14)
Stockholders' equity (deficit):
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized, no shares issued and outstanding at June 30, 2017 and December 31, 2016		—		—
Common stock, $0.001 par value per share, 100,000,000 shares authorized at June 30, 2017 and December 31, 2016; 48,843,131 and 38,724,090 shares issued and outstanding at June 30, 2017 and December 31, 2016 respectively		49		39
Additional paid-in capital		1,752,943		1,174,950
Accumulated other comprehensive loss		(44,306)		(47,580)
Accumulated deficit		(1,364,893)		(1,131,043)
Total stockholders' equity (deficit)		343,793		(3,634)
Total liabilities and stockholders' equity (deficit)	$	849,896	$	364,557

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of ContentsC~~LOVIS~~

CLOVIS ONCOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS ~~CONSOLIDATED BALANCE SHEETS~~

(Unaudited)

(In ~~thousands, except for share amounts)~~thousands)

June 30,

December 31,

2016

2015

ASSETS

Current assets:

Cash and cash equivalents

$
228,379

$
278,756

Available-for-sale securities

150,122

249,832

Prepaid research and development expenses

14,477

3,377

Other current assets

6,559

7,736

Total current assets

399,537

539,701

Property and equipment, net

4,974

4,946

Intangible assets

—

101,500

Goodwill

60,606

59,327

Other assets

2,868

7,912

Total assets

$
467,985

$
713,386

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$
15,008

$
11,260

Accrued research and development expenses

46,337

53,011

Other accrued expenses

11,511

11,305

Total current liabilities

72,856

75,576

Contingent purchase consideration

—

24,661

Deferred income taxes, net

333

31,133

Convertible senior notes

280,501

279,885

Deferred rent, long-term

1,463

1,481

Total liabilities

355,153

412,736

Commitments and contingencies (Note 14)

Stockholders' equity:

Preferred stock, par value $0.001 per share; 10,000,000 shares authorized, no shares issued
  and outstanding at June 30, 2016 and December 31, 2015

—

—

Common stock, $0.001 par value per share, 100,000,000 shares authorized at
   June 30, 2016 and December 31, 2015; 38,500,588 and 38,359,454 shares issued
   and outstanding at June 30, 2016 and December 31, 2015, respectively

39

38

Additional paid-in capital

1,152,463

1,129,978

Accumulated other comprehensive loss

(45,050
)

(47,460
)
Accumulated deficit

(994,620
)

(781,906
)
Total stockholders' equity

112,832

300,650

Total liabilities and stockholders' equity

$
467,985

$
713,386


	Six months ended June 30,
	2017		2016

Operating activities
Net loss	$	(233,849)	$	(212,714)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense		19,563		20,542
Depreciation and amortization		1,281		550
Amortization of premiums and discounts on available-for-sale securities		245		151
Amortization of debt issuance costs		635		616
Legal settlement loss, net of insurance receivable		117,000		—
Impairment of intangible asset		—		104,517
Change in fair value of contingent purchase consideration		—		(24,661)
Loss on disposal of property and equipment		—		170
Deferred income taxes		(1,266)		(33,207)
Changes in operating assets and liabilities:
Accounts receivable		(1,023)		—
Inventory		(6,478)		—
Prepaid and accrued research and development expenses		(15,162)		(12,772)
Other operating assets		(36,855)		1,260
Accounts payable		3,202		3,608
Other accrued expenses		3,166		270
Net cash used in operating activities		(149,541)		(151,670)
Investing activities
Purchases of property and equipment		(249)		(756)
Deposits for purchases of property and equipment		(2,515)		—
Purchases of available-for-sale securities		(180,000)		—
Maturities of available-for-sale securities		50,000		100,000
Acquired in-process research and development - milestone payment		(1,100)		—
Net cash (used in) provided by investing activities		(133,864)		99,244
Financing activities
Proceeds from the sale of common stock, net of issuance costs		546,170		—
Proceeds from the exercise of stock options and employee stock purchases		12,270		1,943
Net cash provided by financing activities		558,440		1,943
Effect of exchange rate changes on cash and cash equivalents		565		106
Increase (decrease) in cash and cash equivalents		275,600		(50,377)
Cash and cash equivalents at beginning of period		216,186		278,756
Cash and cash equivalents at end of period	$	491,786	$	228,379
Supplemental disclosure of cash flow information:
Cash paid for interest	$	3,594	$	3,594
Non-cash investing and financing activities:
Vesting of restricted stock units	$	2,627	$	34

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

CLOVIS ONCOLOGY, INC.

~~CLOVIS ONCOLOGY, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

~~(In thousands)~~

Six Months Ended June 30,

2016

2015

Operating activities

Net loss

$
(212,714
)

$
(134,675
)
Adjustments to reconcile net loss to net cash used in operating activities:

Share-based compensation expense

20,542

17,052

Depreciation and amortization

550

351

Amortization of premiums and discounts on available-for-sale securities

151

975

Amortization of debt issuance costs

616

598

Impairment of intangible asset

104,517

—

Change in fair value of contingent purchase consideration

(24,661
)

(878
)
Loss on disposal of property and equipment

170

—

Deferred income taxes

(33,207
)

—

Changes in operating assets and liabilities:

Prepaid and accrued research and development expenses

(12,772
)

10,029

Other operating assets

1,260

(2,758
)
Accounts payable

3,608

2,338

Other accrued expenses

270

1,337

Net cash used in operating activities

(151,670
)

(105,631
)
Investing activities

Purchases of property and equipment

(756
)

(1,006
)
Purchases of available-for-sale securities

—

(142,216
)
Maturities of available-for-sale securities

100,000

—

Net cash provided by (used in) investing activities

99,244

(143,222
)
Financing activities

Proceeds from the exercise of stock options and employee stock purchases

1,943

3,073

Net cash provided by financing activities

1,943

3,073

Effect of exchange rate changes on cash and cash equivalents

106

(636
)
Decrease in cash and cash equivalents

(50,377
)

(246,416
)
Cash and cash equivalents at beginning of period

278,756

482,677

Cash and cash equivalents at end of period

$
228,379

$
236,261

Supplemental disclosure of cash flow information:

Cash paid for interest

$
3,594

$
3,714

~~See accompanying Notes to Unaudited Consolidated Financial Statements.~~

~~CLOVIS ONCOLOGY, INC.~~

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Basis of Presentation

Clovis Oncology, Inc. ~~(the~~(together with its consolidated subsidiaries, the “Company”, “Clovis”, “we”, “our”, “us”) is a biopharmaceutical company focused on acquiring, developing and commercializing ~~cancer treatments~~innovative anti-cancer agents in the United States, Europe and other international markets. ~~The Company has~~We have and ~~intends~~intend to continue to license or acquire rights to oncology compounds in all stages of development. In exchange for the right to develop and commercialize these compounds, ~~the Company~~we generally ~~expects~~expect to provide the licensor with a combination of upfront payments, milestone payments and royalties on future sales. In addition, ~~the Company~~we generally ~~expects~~expect to assume the responsibility for future drug development and commercialization costs. ~~The Company~~We currently ~~operates~~operate in one segment. Since inception, ~~the Company’s~~our operations have consisted primarily of developing in-licensed compounds, evaluating new product acquisition candidates and general corporate activities.

During the second quarter of 2016, we completed the submission of our New Drug Application (“NDA”) with the U.S. Food and Drug Administration (“FDA”) for approval of rucaparib in the U.S. On December 19, 2016, the FDA approved Rubraca® (rucaparib) tablets as monotherapy for the treatment of patients with deleterious BRCA mutation (germline and/or somatic) associated advanced ovarian cancer who have been treated with two or more chemotherapies, and selected for therapy based on an FDA-approved companion diagnostic for Rubraca. We began selling Rubraca in the U.S. in the fourth quarter of 2016. Our Marketing Authorization Application (MAA) for rucaparib that was submitted to the European Medicines Agency (“EMA”) for an ovarian cancer treatment indication comparable to what was approved by the FDA is currently under review. We anticipate an opinion from the Committee for Medicinal Products for Human Use (CHMP) in late 2017, and, pending a favorable opinion from the CHMP, a potential approval would follow during the first quarter of 2018. Following a potential approval for the treatment indication, we intend to submit a supplemental application for the second-line or later maintenance treatment indication, for which we anticipate a potential approval during the third quarter of 2018.

Basis of Presentation

All financial information presented includes the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The unaudited financial statements of Clovis Oncology, Inc. included herein reflect all adjustments, consisting only of normal recurring adjustments ~~except for those discussed in the following footnotes, which~~that, in the opinion of management, are necessary to fairly state our financial position, results of operations and cash flows for the periods ~~presented.~~presented herein. Interim results may not be indicative of the results that may be expected for the full year. Certain information and footnote disclosures normally included in audited financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 (“2016 Form 10-K”) for a broader discussion of our business and the opportunities and risks inherent in such business.

~~Reclassifications~~

Certain reclassifications have been made to prior year amounts to conform to the current year presentation. These reclassifications had no effect on the Company’s previously reported results of operations, financial position or cash flows.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and revenue and related disclosures. On an ongoing basis, ~~management evaluates its~~we evaluate our estimates, including estimates related to ~~contingent purchase consideration, the allocation of purchase consideration,~~revenue deductions, intangible asset impairment, clinical trial accruals and share-based compensation expense. ~~The Company bases its~~We base our estimates on historical experience and other market-specific or other relevant assumptions that ~~it believes~~we believe to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.

Table of Contents

Liquidity

~~The Company has~~

We have incurred significant net losses since inception and ~~has~~have relied on ~~its~~our ability to fund ~~its~~our operations through debt and equity financings. ~~Management expects~~We expect operating losses and negative cash flows to continue for the foreseeable future. As ~~the Company continues~~we continue to incur losses, transition to profitability is dependent upon ~~the successful development, approval and commercialization of its product candidates and~~ achieving a level of revenues from Rubraca adequate to support ~~the Company’s~~our cost structure. ~~The Company~~We may never achieve profitability, and unless or until ~~it does, the Company~~we do, we will continue to need to raise additional cash.

~~Management intends~~

In January 2017, we sold 5,750,000 shares of our common stock in a public offering at $41.00 per share. The net proceeds from the offering were $221.2 million, after deducting underwriting discounts and commissions and offering expenses. In June 2017, we sold 3,920,454 shares of our common stock in a public offering at $88.00 per share. The net proceeds from the offering were $324.9 million, after deducting underwriting discounts and commissions and offering expenses. We intend to ~~fund future operations through~~use the net proceeds of the offerings for general corporate purposes, including sales and marketing expenses associated with Rubraca in the United States and, if approved by the EMA, in Europe, funding of our development programs, selling, general and administrative expenses, acquisition or licensing of additional ~~private~~product candidates or ~~public debt or equity offerings~~businesses and ~~may seek additional capital through arrangements with strategic partners or from other sources.~~working capital. Based on current estimates, ~~management believes~~we believe that our existing ~~working capital at June 30, 2016 is sufficient to meet the~~ cash, ~~requirements~~cash equivalents and available-for-sale securities will allow us to fund ~~planned operations~~our operating plan through at least the next 12 ~~months, although there can be no assurance that this can, in fact, be accomplished.~~months.

2. Summary of Significant Accounting Policies

Revenue Recognition

Revenues from product sales are recognized when persuasive evidence of an arrangement exists, delivery has occurred and title of the product and associated risk of loss has passed to the customer, the price is fixed or determinable, collection from the customer has been reasonably assured and all performance obligations have been met and returns and allowances can be reasonably estimated. Revenue is recorded net of estimated rebates, chargebacks, discounts and other deductions as well as estimated product returns (collectively, “sales deductions”). We only recognize revenue on product sales once the product is resold to the patient or healthcare provider by the specialty distributor or specialty pharmacy provider, therefore reducing the significance of estimates made for product returns. To date, we have not had any product returns and, we currently do not have an accrual for product returns. We will continue to assess our estimate for product returns as we gain additional historical experience.

Cost of Sales – Product

Product cost of sales consists primarily of materials, third-party manufacturing costs as well as freight and royalties owed to our licensing partners for Rubraca sales. Based on our policy to expense costs associated with the manufacture of our products prior to regulatory approval, certain of the manufacturing costs of Rubraca units recognized as revenue during the three and six months ended June 30, 2017 were expensed prior to the December 19, 2016 FDA approval, and therefore are not included in costs of sales during the current period. We expect cost of sales to increase in relation to product revenues as we deplete these inventories and we expect to use the remaining pre-commercialization inventory for product sales through the third quarter of 2017.

Cost of Sales – Intangible Asset Amortization

Cost of sales for intangible asset amortization consists of the amortization of capitalized milestone payments made to our licensing partners upon FDA approval of Rubraca. Milestone payments are amortized on a straight-line basis over the estimated remaining patent life of Rubraca.

Table of Contents

Inventory

Inventories are stated at the lower of cost or estimated net realizable value, on a first-in, first-out, or FIFO, basis. We began capitalizing incurred inventory related costs upon the regulatory approval of Rubraca. Prior to the regulatory approval of Rubraca, we incurred costs for the manufacture of the drug that could potentially be available to support the commercial launch of Rubraca and all such costs were recognized as research and development expense. We periodically analyze our inventory levels, and write down inventory that has become obsolete, inventory that has a cost basis in excess of its estimated realizable value and/or inventory in excess of expected sales requirements as cost of product revenues. Expired inventory would be disposed of and the related costs would be written off as cost of product revenues.

The ~~Company’s~~active pharmaceutical ingredient (“API”) in Rubraca is currently produced by a single supplier. As the API has undergone significant manufacturing specific to its intended purpose at the point it is purchased by us, we classify the API as work-in-process inventory.

Our other significant accounting policies are described in Note 2,Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in ~~the Company’s Annual Report on~~our 2016 Form ~~10-K for the year ended December 31, 2015.~~10-K.

~~Recently Issued Accounting Standards~~

~~In March 2016,~~From time to time, the Financial Accounting Standards Board (“FASB”) ~~issued~~or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an Accounting Standards Update (“ASU”) ~~No. 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.”~~.

Recently Issued Accounting Standards

In May 2014, the FASB issued ASU No. ~~2016-09 requires all income tax effects~~2014-09, “Revenue from Contracts with Customers” and has subsequently issued several supplemental and/or clarifying ASUs (collectively, “ASC 606”). ASC 606 prescribes a single common revenue standard that replaces most existing U.S. GAAP revenue recognition guidance. ASC 606 is intended to provide a more consistent interpretation and application of ~~awards to be recognized~~the principles outlined in the ~~income statement when~~standard across filers in multiple industries and within the ~~awards vest or are settled. The guidance also requires the presentation~~same industries compared to current practices, which should improve comparability. Adoption of ~~excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. This update~~ASC 606 is ~~effective~~required for annual and interim periods beginning after December 15, 2017. Upon adoption, we must elect to adopt either retrospectively to each prior reporting period presented or use the modified retrospective transition method with the cumulative effect of initial adoption recognized at the date of initial application. We expect to apply the new standard using the modified retrospective method upon its adoption date on January 1, 2018.

We have begun a comprehensive scoping process to identify and disaggregate all revenue streams that may be impacted by the adoption of ASC 606. To date, we have examined our revenue recognition policy specific to revenue streams from representative contracts governing product sales from Rubraca and have come to preliminary conclusions on the impact of the new standard using the 5-step process prescribed by ASC 606. However, a detailed analysis of individual contracts representative of each of the revenue streams planned for the assessment phase of our implementation plan may impact these preliminary conclusions. We are continuing to assess ASC 606’s impact on our financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to recognize assets and liabilities for the rights and obligations created by most leases on their balance sheet. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those ~~annual periods.~~fiscal years. Early ~~adoption~~application is permitted. ~~Amendments related to the timing of when excess tax benefits are recognized should be applied using a~~ASU 2016-02 requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition method. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. ~~The Company is~~relief. We are currently evaluating ~~its planned method of adoption and~~ the impact the standard may have on ~~its~~our consolidated financial statements and related disclosures.

~~3. EOS Acquisition~~In January 2017, the FASB issued ASU No. 2017-01, “Clarifying the Definition of a Business,” which clarifies the definition of a business in ASC 805. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early application is permitted. Currently, there is no impact to our consolidated financial statements and related disclosures, but we will adopt on January 1, 2018 for any business combinations and will consider adopting early for any acquisitions prior to January 1, 2018.

~~On November 19, 2013,~~

In May 2017, the ~~Company acquired all~~FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting”, which amends the ~~outstanding common and preferred stock~~scope of ~~Ethical Oncology Science, S.p.A. (“EOS”) (now known as Clovis Oncology Italy S.r.l.).~~ modification accounting for share-based payment arrangements.

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The ~~Company paid $11.8 million in cash and issued $173.7 million~~ASU provides guidance on the types of ~~common stock at~~changes to the ~~acquisition date and is obligated~~terms or conditions of share-based payment awards to ~~pay additional future cash payments~~which we would be required to apply modification accounting under ASC 718. Specifically, we would not apply modification accounting if certain lucitanib regulatory and sales milestones are achieved. The potential contingent milestone payments range from a zero payment, which assumes lucitanib fails to achieve any of the regulatory milestones, to approximately $193.2 million ($65.0 million and €115.0 million) if all regulatory and sales milestones are met, utilizing the translation rate at June 30, 2016.

~~During the second quarter of 2016, the Company recorded a $25.5 million reduction in~~ the fair value, vesting conditions, and classification of the ~~contingent purchase consideration liability due~~awards are the same immediately before and after the modification. The guidance is effective for annual reporting periods, including interim period within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. We are currently evaluating the impact the standard may have on our consolidated financial statements and related disclosures should we have a modification to our share-based payment awards in the Company’s and its development partner’s decision to discontinue the development of lucitanib for breast cancer (see Note 4). At June 30, 2016, the contingent purchase consideration liability recorded on the Consolidated Balance Sheets was zero due to the uncertainty of achieving any of the lucitanib regulatory milestones. At December 31, 2015, the liability for the estimated fair value of the payments recorded on the Consolidated Balance Sheets was $24.7 million.future.

4.3. Financial Instruments and Fair Value Measurements

~~Cash, Cash Equivalents and Available-for-Sale Securities~~

The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include bank demand deposits and money market funds that invest primarily in certificate of deposits, commercial paper and U.S. government and U.S. government agency obligations.

Marketable securities are considered to be available-for-sale securities and consist of U.S. Treasury securities. Available-for-sale securities are reported at fair value on the Consolidated Balance Sheets and unrealized gains and losses are included in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets. Realized gains and losses, amortization of premiums and discounts and interest and dividends earned are included in other income (expense) on the Consolidated Statements of Operations. The cost of investments for purposes of computing realized and unrealized gains and losses is based on the specific identification method. Investments with maturities beyond one year are classified as short-term based on management’s intent to fund current operations with these securities or to make them available for current operations.

~~A decline in the market value of a security below its cost that is deemed to be other than temporary is charged to earnings and results in the establishment of a new cost basis for the security.~~ Factors evaluated to determine if an investment is other-than-temporarily impaired include significant deterioration in earnings performance, credit rating, asset quality or business prospects of the issuer; adverse changes in the general market conditions in which the issuer operates; and the Company’s intent and ability to hold the security until an anticipated recovery in value occurs.

~~Fair Value Measurements~~

Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (at exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The three levels of inputs that may be used to measure fair value include:

Level 1:		Quoted prices in active markets for identical assets or liabilities. ~~The Company’s~~Our Level 1 assets consist of money market investments. ~~The Company does~~We do not have Level 1 liabilities.

Level 2:		Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ~~The Company’s~~Our Level 2 assets consist of U.S. treasury securities. ~~The Company does~~We do not have Level 2 liabilities.

Level 3:		Unobservable inputs that are supported by little or no market activity. ~~The Company does~~We do not have Level 3 assets or liabilities that are measured at fair value on a recurring basis. The contingent purchase consideration related to the undeveloped lucitanib product rights acquired with the purchase of EOS is a Level 3 liability. The fair value of this liability is based on unobservable inputs and includes valuations for which there is little, if any, market activity. See Note 3 of the Company’s 2015 Form 10-K for further discussion of the unobservable inputs and valuation techniques related to the contingent purchase consideration liability.

The following table identifies ~~the Company’s~~our assets and liabilities that were measured at fair value on a recurring basis (in thousands):

	Balance		Level 1		Level 2		Level 3
June 30, 2016
									Balance		Level 1		Level 2		Level 3
June 30, 2017
Assets:
Money market	$	201,711	$	201,711	$	—	$	—	$	450,588	$	450,588	$	—	$	—
U.S. treasury securities		150,122		—		150,122		—		179,744		—		179,744		—
Total assets at fair value	$	351,833	$	201,711	$	150,122	$	—	$	630,332	$	450,588	$	179,744	$	—
Liabilities:
Contingent purchase consideration	$	—	$	—	$	—	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—
December 31, 2015
December 31, 2016
Assets:
Money market	$	251,037	$	251,037	$	—	$	—	$	202,361	$	202,361	$	—	$	—
U.S. treasury securities		249,832		—		249,832		—		49,997		—		49,997		—
Total assets at fair value	$	500,869	$	251,037	$	249,832	$	—	$	252,358	$	202,361	$	49,997	$	—
Liabilities:
Contingent purchase consideration	$	24,661	$	—	$	—	$	24,661
Total liabilities at fair value	$	24,661	$	—	$	—	$	24,661

There were no transfers between the Level 1 and Level 2 categories or into or out of the Level 3 category during the three and six months ended June 30, ~~2016.~~2017.

~~The following table rolls forward the fair value of Level 3 instruments (significant unobservable inputs) (in thousands):~~

For the Six

Months Ended

June 30, 2016

Liabilities:

Balance at beginning of period

$
24,661

Change in fair value (a)

(24,936
)
Change in foreign currency gains and losses

275

Balance at end of period

$
—

~~(a)~~

During the second quarter of 2016, the Company recorded a $25.5 million reduction in the fair value of the contingent purchase consideration due to the Company’s and its development partner’s decision to discontinue the development of lucitanib for breast cancer. At June 30, 2016, the contingent purchase consideration liability recorded on the Consolidated Balance Sheets was zero due to the uncertainty of achieving any of the lucitanib regulatory milestones.

The change in the fair value of Level 3 instruments is included in change in fair value of contingent purchase consideration and foreign currency gains (losses) for changes in the foreign currency translation rate on the Consolidated Statements of Operations.

Assets measured at fair value on a nonrecurring basis include the Company’s in-process research and development (“IPR&D”) intangible assets, which were recorded as part of the acquisition of EOS (see Note 3 and Note 7). The fair value of the IPR&D intangible assets was established based upon discounted cash flow models using assumptions related to the timing of development, probability of development and regulatory success, sales and commercialization factors and estimated product life. As the valuation is based on significant unobservable inputs, the fair value measurement is classified as Level 3. IPR&D assets are evaluated for impairment at least annually or more frequently if impairment indicators exist.

During the second quarter of 2016, the Company recorded a $104.5 million impairment charge due to the Company’s and its development partner’s decision to discontinue the development of lucitanib for breast cancer. At June 30, 2016, the IPR&D intangible asset recorded on the Consolidated Balance Sheets was zero.

Financial instruments not recorded at fair value include ~~the Company’s~~our convertible senior notes. At June 30, ~~2016,~~2017, the carrying amount of the convertible senior notes was ~~$287.5~~$281.8 million, which represents the aggregate principal amount net of remaining debt issuance costs, and the fair value was ~~$207.7~~$487.0 million. The fair value was determined using Level 2 inputs based on the indicative pricing published by certain investment banks or trading levels of the Notes, which are not listed on any securities exchange or quoted on an inter-dealer automated quotation system. See Note 9, Convertible Senior Notesfor discussion of the convertible senior notes.

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4. Available-for-Sale Securities

As of June 30, 2017, available-for-sale securities consisted of the following (in thousands):


			Gross		Gross		Aggregate
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. treasury securities	$	179,758	$	—	$	(14)	$	179,744

As of December 31, 2016, available-for-sale securities consisted of the following (in thousands):

Gross

Gross

Aggregate

Amortized

Unrealized

Unrealized

Fair

Cost

Gains

Losses

Value

U.S. treasury securities

$
150,064

$
60

$
(2
)

$
150,122

~~As of December 31, 2015, available-for-sale securities consisted of the following (in thousands):~~

Gross

Gross

Aggregate

Amortized

Unrealized

Unrealized

Fair

Cost

Gains

Losses

Value

U.S. treasury securities

$
250,215

$
—

$
(383
)

$
249,832


			Gross		Gross		Aggregate
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. treasury securities	$	50,004	$	—	$	(7)	$	49,997

As of June 30, ~~2016,~~2017, the fair value and gross unrealized losses of available-for-sale securities that have been in a continuous unrealized loss position for less than 12 months were as follows (in thousands):

Aggregate

Gross

Fair

Unrealized

Value

Losses

U.S. treasury securities

$
25,001

$
(2
)


	Aggregate		Gross
	Fair		Unrealized
	Value		Losses
U.S. treasury securities	$	179,744	$	(14)

We have concluded that decline in the market value of the available-for-sales securities is temporary. A decline in the market value of a security below its cost that is deemed to be other than temporary is charged to earnings and results in the establishment of a new cost basis for the security. Factors evaluated to determine if an investment is other-than-temporarily impaired include significant deterioration in earnings performance, credit rating, asset quality or business prospects of the issuer; adverse changes in the general market conditions in which the issuer operates; and our intent and ability to hold the security until an anticipated recovery in value occurs.

As of June 30, 2016, one of the Company’s investments has been in an unrealized loss position for two months. Based upon our evaluation of all relevant factors, we believe that the decline in fair value of securities held at June 30, 2016 below cost is temporary, and we intend to retain our investment in these securities for a sufficient period of time to allow for recovery of the fair value.

As of December 31, 2015, the fair value and gross unrealized losses of available-for-sale securities that have been in a continuous unrealized loss position for less than 12 months were as follows (in thousands):

Aggregate

Gross

Fair

Unrealized

Value

Losses

U.S. treasury securities

$
249,832

$
(383
)

~~As of June 30, 2016,~~2017, the amortized cost and fair value of available-for-sale securities by contractual maturity were (in thousands):


	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	150,064	$	150,122	$	179,758	$	179,744
Due in one year to two years						—		—
Total	$	150,064	$	150,122	$	179,758	$	179,744

5. Inventories

We generally have two categories of inventory: work-in-process and finished goods. As of June 30, 2017, the carrying value of all of our product inventory, which consisted only of the Rubraca API, was categorized as work-in-process. The costs related to our finished goods on-hand as of June 30, 2017 were expensed as incurred prior to the commercialization of Rubraca on December 19, 2016. The carrying value of our inventory as of December 31, 2016 was zero.

At June 30, 2017, other assets on the Consolidated Balance Sheets includes a cash deposit of $31.8 million made to a manufacturer for the purchase of inventory which we do not expect to be commercially consumed within the next twelve months.

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6. Other Current Assets

Other current assets were comprised of the following (in thousands):


	June 30,		December 31,		June 30,		December 31,
	2016		2015		2017		2016
Receivable from partners	$	2,749	$	3,241	$	52	$	2,882
Prepaid expenses- other		1,779		1,023
Prepaid insurance						817		1,234
Prepaid expenses - other						3,012		2,109
Receivable - other		1,035		889		2,750		364
Prepaid insurance		764		1,231
Receivable from landlord		122		1,153
Other		110		199		135		90
Total	$	6,559	$	7,736	$	6,766	$	6,679

7. Intangible Assets and Goodwill

~~IPR&D~~

Intangible assets related to capitalized milestones under license agreements consisted of the following (in thousands):


	June 30,		December 31,
	2017		2016
Intangible asset - milestones	$	21,100	$	21,100
Accumulated amortization		(796)		(53)
Total intangible asset, net	$	20,304	$	21,047

The estimated useful lives of these intangible assets are based on the estimated remaining patent life of Rubraca and extend through 2031.

We recorded amortization expense of $0.4 million and $0.8 million related to capitalized milestone payments during the three and six months ended June 30, 2017, respectively, included in cost of sales – intangible asset amortization at the Consolidated Statements of Operations and Comprehensive Loss. There was no amortization expense during the three and six months ended June 30, 2016.

Estimated future amortization expense associated with intangibles is expected to be as follows (in thousands):


2017 (remaining)	$	743
2018		1,486
2019		1,486
2020		1,486
2021		1,486
Thereafter		13,617
	$	20,304

The change in goodwill ~~were~~ established as part of the purchase accounting of EOS ~~(see Note 3) and~~in November 2013 consisted of the following (in thousands):

June 30,

December 31,

2016

2015

IPR&D intangible assets:

Balance at beginning of period

$
101,500

$
212,900

Impairment of intangible asset (a)

(104,517
)

(89,557
)
Change in foreign currency gains (losses)

3,017

(21,843
)
Balance at end of period

$
—

$
101,500

Goodwill:

Balance at beginning of period

$
59,327

$
66,055

Change in foreign currency gains (losses)

1,279

(6,728
)
Balance at end of period

$
60,606

$
59,327


Balance at December 31, 2016	$	57,192
Change in foreign currency gains and losses		4,826
Balance at June 30, 2017	$	62,018

~~(a)~~

During the fourth quarter of 2015, the Company recorded an $89.6 million impairment charge due to the Company’s and its development partner’s decision to discontinue the development of lucitanib for lung cancer, as well as updates to the probability-weighted discounted cash flow assumptions for the breast cancer indication.

IPR&D intangible assets are evaluated for impairment at least annually in the fourth quarter or more frequently if impairment indicators exist and any reduction in fair value is recorded as impairment of intangible asset on the Consolidated Statements of Operations.

As part of the acquisition of EOS, the Company recorded a deferred tax liability to recognize the difference between the book and tax basis of the assets and liabilities acquired. During the first quarter of 2016, the Company updated the annual effective tax rate to reflect a reduction in the statutory rate of the foreign jurisdiction, resulting in the recognition of a $3.6 million income tax benefit.

~~During the second quarter of 2016, the Company recognized a $29.2 million deferred tax benefit associated with the impairment of the IPR&D intangible asset.~~

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8. Other Accrued Expenses

Other accrued expenses were comprised of the following (in thousands):


	June 30,		December 31,		June 30,		December 31,
	2016		2015		2017		2016
Accrued personnel costs	$	8,081	$	8,250	$	11,928	$	15,850
Accrued interest payable		2,096		2,096		2,097		2,096
Income tax payable						662		556
Accrued corporate legal fees and professional services						1,072		589
Accrued royalties						2,551		—
Accrued sales deductions						1,003		—
Accrued expenses - other		1,334		959		2,535		396
Total	$	11,511	$	11,305	$	21,848	$	19,487

9. Convertible Senior Notes

On September 9, 2014, we completed a private placement of $287.5 million aggregate principal amount of 2.5% convertible senior notes due 2021 (the “Notes”) resulting in net proceeds ~~to the Company~~ of $278.3 million after deducting offering expenses. In accordance with the accounting guidance, the conversion feature did not meet the criteria for bifurcation, and the entire principal amount was recorded as a long-term liability on the Consolidated Balance Sheets.

The Notes are governed by the terms of the indenture between the Company, as issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee. The Notes are senior unsecured obligations and bear interest at a rate of 2.5% per year, payable semi-annually in arrears on March 15 and September 15 of each year. The Notes will mature on September 15, 2021, unless earlier converted, redeemed or repurchased.

Holders may convert all or any portion of the Notes at any time prior to the close of business on the business day immediately preceding the maturity date. Upon conversion, the holders will receive shares of our common stock at an initial conversion rate of 16.1616 shares per $1,000 in principal amount of Notes, equivalent to a conversion price of approximately $61.88 per share. The conversion rate is subject to adjustment upon the occurrence of certain events described in the indenture, but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or upon our issuance of a notice of redemption, we will increase the conversion rate for holders who elect to convert the Notes in connection with such a corporate event or during the related redemption period in certain circumstances.

On or after September 15, 2018, we may redeem the Notes, at our option, in whole or in part, if the last reported sale price of our common stock has been at least 150% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending not more than two trading days preceding the date on which we provide written notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes.

If we undergo a fundamental change, as defined in the indenture, prior to the maturity date of the Notes, holders may require us to repurchase for cash all or any portion of the Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Notes rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to all of our liabilities that are not so subordinated; effectively junior in right of payment to any secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.

In connection with the issuance of the Notes, ~~the Company~~we incurred $9.2 million of debt issuance costs. The debt issuance costs are presented as a deduction from convertible senior notes on the Consolidated Balance Sheets and are amortized as interest expense over the expected life of the Notes using the effective interest method. ~~The Company~~We determined the expected

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life of the debt was equal to the seven-year term of the Notes. As of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the balance of unamortized debt issuance costs was ~~$7.0~~$5.7 million and ~~$7.6~~$6.4 million, respectively.

The following table sets forth total interest expense recognized ~~related to the Notes~~ during the three and six months ended June 30, ~~2016~~2017 and ~~2015~~2016 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Contractual interest expense	$	1,797	$	1,797	$	3,594	$	3,574	$	1,797	$	1,797	$	3,594	$	3,594
Accretion of interest on milestone liability										483		—		949		—
Amortization of debt issuance costs		309		300		616		598		318		309		635		616
Total interest expense	$	2,106	$	2,097	$	4,210	$	4,172	$	2,598	$	2,106	$	5,178	$	4,210

10. Stockholders’ Equity

Common Stock

The holders of common stock are entitled to one vote per share on all matters to be voted upon by our stockholders. Subject to the preferences that may be applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by our Board of Directors.

Accumulated Other Comprehensive ~~Income (Loss)~~Loss

Accumulated other comprehensive ~~income (loss)~~loss consists of changes in foreign currency translation adjustments, which includes changes in a subsidiary’s functional currency, and unrealized gains and losses on available-for-sale securities.

The changes in accumulated balances related to each component of other comprehensive income (loss) are summarized for the three months ended June 30, 2017 and 2016 as follows (in thousands):

Total

Foreign

Accumulated

Currency

Unrealized

Other

Translation

Gains

Comprehensive

Adjustments

(Losses)

Income (Loss)

Balance December 31, 2014

$
(24,448
)

$
—

$
(24,448
)
Period change

(22,629
)

(383
)

(23,012
)
Balance December 31, 2015

(47,077
)

(383
)

(47,460
)
Period change

3,410

441

3,851

Income tax expense

(1,278
)

(163
)

(1,441
)
Balance June 30, 2016

$
(44,945
)

$
(105
)

$
(45,050
)


	Foreign Currency				Unrealized				Total Accumulated
	Translation Adjustments				(Losses) Gains				Other Comprehensive Loss
	2017		2016		2017		2016		2017		2016
Balance at April 1,	$	(46,967)	$	(43,564)	$	(151)	$	(153)	$	(47,118)	$	(43,717)
Other comprehensive income (loss)		4,451		(2,170)		(3)		76		4,448		(2,094)
Total before tax		(42,516)		(45,734)		(154)		(77)		(42,670)		(45,811)
Tax effect		(1,639)		789		3		(28)		(1,636)		761
Balance at June 30,	$	(44,155)	$	(44,945)	$	(151)	$	(105)	$	(44,306)	$	(45,050)

The changes in accumulated balances related to each component of other comprehensive income (loss) are summarized for the six months ended June 30, 2017 and 2016 as follows (in thousands):


	Foreign Currency				Unrealized				Total Accumulated
	Translation Adjustments				(Losses) Gains				Other Comprehensive Loss
	2017		2016		2017		2016		2017		2016
Balance at December 31,	$	(47,434)	$	(47,077)	$	(146)	$	(383)	$	(47,580)	$	(47,460)
Other comprehensive income (loss)		5,186		3,410		(8)		441		5,178		3,851
Total before tax		(42,248)		(43,667)		(154)		58		(42,402)		(43,609)
Tax effect		(1,907)		(1,278)		3		(163)		(1,904)		(1,441)
Balance at June 30,	$	(44,155)	$	(44,945)	$	(151)	$	(105)	$	(44,306)	$	(45,050)

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The period change ~~between June 30, 2016 and December 31, 2015~~in each of the periods presented was primarily due to the currency translation of the ~~IPR&D intangible assets,~~ goodwill and deferred income taxes associated with the acquisition of EOS ~~(see Note 3~~in November 2013. There were no reclassifications out of accumulated other comprehensive loss in each of the three and ~~Note 7).~~six months ended June 30, 2017 and 2016.

11. Share-Based Compensation

Share-based compensation expense for all equity based programs, including stock options, restricted stock units and the employee stock purchase plan, for the three and six months ended June 30, ~~2016~~2017 and ~~2015~~2016 was recognized in the accompanying Consolidated Statements of Operations as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Research and development	$	6,615	$	5,355	$	13,924	$	10,759	$	4,825	$	6,615	$	8,991	$	13,924
General and administrative		2,962		3,015		6,618		6,293
Selling, general and administrative										5,792		2,962		10,572		6,618
Total share-based compensation expense	$	9,577	$	8,370	$	20,542	$	17,052	$	10,617	$	9,577	$	19,563	$	20,542

~~The Company~~We did not recognize a tax benefit related to share-based compensation expense during the three and six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, as ~~the Company maintains~~we maintain net operating loss carryforwards and ~~has~~have established a valuation allowance against the entire net deferred tax asset as of June 30, ~~2016.~~2017.

Stock Options

The following table summarizes the activity relating to ~~the Company’s~~our options to purchase common stock for the six months ended June 30, ~~2016:~~2017:

Number of Options

Weighted-
Average
Exercise
Price

Weighted-
Average
Remaining
Contractual
Term (Years)

Aggregate
Intrinsic
Value (Thousands)

Outstanding at December 31, 2015

5,360,257

$
51.53

Granted

768,265

20.61

Exercised

(62,710
)

6.50

Forfeited

(840,077
)

59.50

Outstanding at June 30, 2016 (a)

5,225,735

$
46.25

7.2

$
4,177

Vested and expected to vest at June 30, 2016

4,958,823

$
45.84

7.1

$
4,177

Exercisable at June 30, 2016

2,874,047

$
39.26

5.9

$
4,177

~~(a)~~

Includes 42,500 performance-based stock options granted to executives of the Company in the first quarter of 2015, which vest contingent on approval by the U.S. Food and Drug Administration (“FDA”) to commercially distribute, sell or market rucaparib. Stock compensation expense will be recognized when the condition for vesting is probable of being met.


				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
	Number of	Exercise		Contractual	Value
	Options	Price		Term (Years)	(Thousands)
Outstanding at December 31, 2016	5,520,482	$	42.00
Granted	778,700
Exercised	(372,464)
Forfeited	(199,985)
Outstanding at June 30, 2017	5,726,733	$	45.43	7.6	$	276,451
Vested and expected to vest at June 30, 2017	5,364,276	$	45.30	7.4	$	259,650
Vested and exercisable at June 30, 2017	2,935,211	$	44.63	6.2	$	143,983

The aggregate intrinsic value in the table above represents the pretax intrinsic value, based on our closing stock price of ~~$13.72~~$93.63 as of June 30, ~~2016,~~2017, which would have been received by the option holders had all option holders with in-the-money options exercised their options as of that date.

The following table summarizes information about our stock options as of and for the three and six months ended June 30, 2017 and 2016 ~~and 2015:~~(in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Weighted-average grant date fair value per share	$	11.01	$	55.35	$	14.65	$	51.49	$	44.94	$	11.01	$	46.53	$	14.65
Intrinsic value of options exercised	$	578,525	$	4,966,707	$	624,925	$	10,053,841	$	4,759	$	578,525	$	14,284	$	624,925
Cash received from stock option exercises	$	352,423	$	1,387,060	$	407,523	$	2,580,350	$	5,439	$	352,423	$	11,113	$	407,523

As of June 30, ~~2016,~~2017, the unrecognized share-based compensation expense related to unvested options, adjusted for expected forfeitures, was ~~$82.2~~$83.4 million and the estimated weighted-average remaining vesting period was ~~2.3~~2.6 years.

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Restricted Stock

During ~~the first quarter of~~ 2016, ~~the Company~~we issued restricted stock units (“RSUs”) to certain employees under the 2011 Stock Incentive Plan. The RSUs vest either (i) over ~~either a two-year period~~two years, with 50% vesting one year from the date of grant and the remaining 50% vesting two years from the date of grant or (ii) 25% vest one year from the date of grant with the remaining RSUs vesting ratably each subsequent quarter over ~~a four-year period and~~the following three years, as defined in the grant agreement. Vested RSUs are payable in shares of ~~the Company’s~~our common stock at the end of the vesting period. RSUs are measured based on the fair value of the underlying stock on the grant date. ~~Shares issued on the vesting dates are net of the~~The minimum statutory tax on the value of common stock shares issued to beemployees upon vesting are paid by us through the ~~Company on behalf~~sale of ~~its employees. As a result, the actual number~~registered shares of ~~shares issued will be lower than the actual number of RSUs vested.~~our common stock.

The following table summarizes the activity relating to ~~the Company’s~~our unvested RSUs for the six months ended June 30, ~~2016:~~

2017:

Number of Units

Weighted-
Average
Grant Date
Fair Value

Unvested as of December 31, 2015

—

$
—

Granted

146,503

19.37

Vested (a)

(2,625
)

19.37

Forfeited

(18,080
)

19.37

Unvested as of June 30, 2016

125,798

$
19.37

Expected to vest after June 30, 2016

109,009

$
19.37

~~(a)~~

~~During the second quarter of 2016, the Company accelerated the vesting of RSUs for certain employees.~~



		Weighted
		Average
	Number of	Grant Date
	Units	Fair Value
Unvested at December 31, 2016	562,458	$	24.70
Granted	214,984		61.67
Vested	(44,443)		19.37
Forfeited	(27,177)		24.08
Unvested as of June 30, 2017	705,822	$	36.32
Expected to vest after June 30, 2017	604,394	$	35.81

As of June 30, ~~2016,~~2017, the unrecognized share-based compensation expense related to unvested RSUs, adjusted for expected forfeitures, was ~~$2.0~~$18.5 million and the estimated weighted-average remaining vesting period was ~~2.3~~3.4 years.

12. License Agreements

~~Rucaparib~~

In June 2011, ~~the Company~~we entered into a worldwide license agreement with Pfizer, Inc. to ~~acquire~~obtain exclusive ~~development and commercialization~~global rights to ~~rucaparib. This drug candidate is~~develop and commercialize rucaparib, a small molecule inhibitor of poly (ADP-ribose) polymerase ~~(PARP)~~(“PARP”), ~~which the Company is developing~~used for the treatment of selected solid tumors. ~~Under~~The exclusive rights are exclusive even as to Pfizer and include the right to grant sublicenses. Pursuant to the terms of the license agreement, ~~the Company~~we made a $7.0 million upfront payment to ~~Pfizer.~~Pfizer and are required to make additional payments to Pfizer for the achievement of certain development and regulatory and sales milestones and royalties on sales as required by the license agreement. Prior to the FDA approval of rucaparib, discussed below, we made milestone payments of $1.4 million, which were recognized as acquired in-process research and development expense.

On August 30, 2016, we entered into a first amendment to the worldwide license agreement with Pfizer, which amends the June 2011 existing worldwide license agreement to permit us to defer payment of the milestone payments payable upon (i) FDA approval of an NDA for 1st Indication in US and (ii) EMA approval of an MAA for 1st Indication in EU, to a date that is 18 months after the date of achievement of such milestones. In ~~April 2014,~~ the ~~Company initiated a pivotal registration study~~event that we defer such milestone payments, we have agreed to certain higher payments related to the achievement of such milestones.

On December 19, 2016, the FDA approved Rubraca(rucaparib) tablets as monotherapy for ~~rucaparib, which~~the treatment of patients with deleterious BRCA mutation (germline and/or somatic) associated advanced ovarian cancer who have been treated with two or more chemotherapies, and selected for therapy based on an FDA-approved companion diagnostic for Rubraca. The FDA approval resulted in a ~~$0.4~~$0.75 million milestone payment to Pfizer as required by the license ~~agreement. This~~agreement, which was made in the first quarter of 2017. The FDA approval also resulted in the obligation to pay a $20.0 million milestone payment, ~~was~~for which we have exercised the option to defer payment by agreeing to pay $23.0 million within 18 months after the date of the FDA approval. These payments were recognized as ~~acquired in-process research~~intangible assets and ~~development expense.~~will be amortized over the estimated remaining useful life of Rubraca.

~~The Company is~~

We are obligated under the license agreement to use commercially reasonable efforts to develop and commercialize rucaparib and we are responsible for all remaining development and commercialization costs offor rucaparib. ~~When and if commercial sales~~We are required to make regulatory milestone payments to Pfizer of ~~rucaparib begin, we will pay Pfizer tiered royalties on our net sales. In addition, Pfizer is eligible to receive~~ up to ~~$258.5~~an additional $69.75 million ~~of further payments,~~ in aggregate if ~~certain development,~~specified clinical study objectives and regulatory filings, acceptances and ~~sales milestones~~approvals are achieved, including $21.25 million associated with the first filing and approval of a New Drug Application (“NDA”) by the FDA. During the second quarter of 2016, we completed the submission of our NDA with the FDA for potential accelerated approval of rucaparib in the U.S.

~~Lucitanib~~

In connection with its acquisition of EOS (see Note 3), the Company gained rights to develop and commercialize lucitanib, an oral, selective tyrosine kinase inhibitor. As further described below, EOS licensed the worldwide rights, excluding China, to develop and commercialize lucitanib from Advenchen Laboratories LLC (“Advenchen”). Subsequently, rights to develop and commercialize lucitanib in markets outside the U.S. and Japan were sublicensed by EOS to Les Laboratoires Servier (“Servier”) in exchange for upfront milestone fees, royalties on sales of lucitanib in the sublicensed territories and research and development funding commitments.

In October 2008, EOS entered into an exclusive license agreement with Advenchen to develop and commercialize lucitanib on a global basis, excluding China. The Company is obligated to pay Advenchen royalties on net sales of lucitanib based on the volume of annual net sales achieved. In addition, ~~the Company is~~we are obligated to pay to Advenchen 25% of any consideration, excluding royalties, received pursuant to any sublicense agreements for lucitanib, including the agreement with Servier. In the first quarter of 2014, the Company recognized acquired in-process research and development expense of $3.4 million, which represents 25% of the sublicense agreement consideration of $13.6 million received from Servier upon the end of opposition and appeal of the lucitanib patent by the European Patent Office.

In September 2012, EOS entered into a collaboration and license agreement with Servier whereby EOS sublicensed to Servier exclusive rights to develop and commercialize lucitanib in all countries outside of the U.S., Japan and China. In exchange for these rights, EOS received an upfront payment of €45.0 million and is entitled to receive additional payments upon achievement of specified development, regulatory and commercial milestones up to €90.0 million in the aggregate. In addition, the Company is entitled to receivemake sales milestone payments to Pfizer if specified annual sales targets for ~~lucitanib~~rucaparib are

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met, the majority of which relate to annual sales targets of $500.0 million and above, which, in the aggregate, could amount to total ~~€250.0 million.~~milestone payments of $170.0 million, and tiered royalty payments at a mid-teen percentage rate on our net sales, with standard provisions for royalty offsets to the extent we need to obtain any rights from third parties to commercialize rucaparib.

In April 2012, we entered into a license agreement with AstraZeneca UK Limited to acquire exclusive rights associated with rucaparib under a family of patents and patent applications that claim methods of treating patients with PARP inhibitors in certain indications. The ~~Company is~~license enables the development and commercialization of rucaparib for the uses claimed by these patents. The FDA approval of rucaparib on December 19, 2016 resulted in a $0.35 million milestone obligation to AstraZeneca as required by the license agreement, which was paid in the first quarter of 2017. This payment was recognized in intangible assets and will be amortized over the estimated remaining useful life of rucaparib. AstraZeneca will also ~~entitled to~~ receive royalties on any net sales of rucaparib.

We are party to other product license agreements for our other drug candidates, lucitanib ~~by Servier.~~

~~The development, regulatory~~ and ~~commercial milestones represent non-refundable amounts that would be paid by~~rociletinib (see our 2016 Form 10-K for additional details). We and Les Laboratories Servier to the Company if certain milestones are achieved in the future. These milestones, if achieved, are substantive as they relate solely to past performance, are commensurate with estimated enhancement of value associated with the achievement of each milestone as a result of the Company's performance, which are reasonable relative to the other deliverables and terms of the arrangement, and are unrelated to the delivery of any further elements under the arrangement.

~~The Company and Servier~~(“Servier”) are developing lucitanib pursuant to a global development plan agreed to between the ~~parties~~.parties. Servier is responsible for all of the ~~initial~~ global development costs ~~under the agreed upon plan~~for lucitanib up to €80.0 million. Cumulative global development costs ~~if any,~~ in excess of €80.0 million, if any, will be shared equally between ~~the Company~~us and Servier. Based on current estimates, we expect that Servier’s €80.0 million funding commitment will be fulfilled in early 2017, and thereafter, we will share with Servier in future development costs pursuant to a mutually agreed upon global development plan. Reimbursements are recorded as a reduction to research and development expense on the Consolidated Statements of Operations.

~~The Company~~We recorded a ~~$2.7~~$0.1 million and ~~$3.2~~$1.3 million receivable at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, for the reimbursable development costs incurred under the global development plan, which is included in other current assets on the Consolidated Balance Sheets. For the three months ending June 30, ~~2016~~2017 and ~~2015,~~2016, we incurred ~~$2.6~~$0.0 million and ~~$4.2~~$2.6 million, respectively, in research and development costs and recorded reductions in research and development expense of ~~$2.8~~$0.1 million and ~~$3.9~~$2.8 million, respectively, for reimbursable development costs due from Servier. For the six months ending June 30, ~~2016~~2017 and ~~2015, respectively,~~2016, we incurred ~~$6.2~~$0.9 million and ~~$7.8~~$6.2 million, respectively, in research and development costs and recorded reductions in research and development expense of ~~$6.4~~$1.0 million and ~~$6.6~~$6.4 million, respectively, for reimbursable development costs due from Servier.

~~Rociletinib~~

In May 2010, we entered into an exclusive worldwide license agreement with Avila Therapeutics, Inc. (now Celgene Avilomics Research, Inc., part of Celgene Corporation (“Celgene”)) to discover, develop and commercialize a covalent inhibitor of mutant forms of the epidermal growth factor receptor gene product. Rociletinib was identified as the lead inhibitor candidate under the license agreement. We are responsible for all non-clinical, clinical, regulatory and other activities necessary to develop and commercialize rociletinib.

We made an upfront payment of $2.0 million upon execution of the license agreement, a $4.0 million milestone payment in the first quarter of 2012 upon acceptance by the FDA of our Investigational New Drug application for rociletinib and a $5.0 million milestone payment in the first quarter of 2014 upon initiation of the Phase II study for rociletinib. In the third quarter of 2015, we made milestone payments totaling $12.0 million upon acceptance of the NDA and Marketing Authorization Application (“MAA”) for rociletinib by the FDA and European Medicines Agency (“EMA”), respectively. We recognized all payments as acquired in-process research and development expense.

During the second quarter of 2016, we and Servier agreed to discontinue the ~~Company received~~development of lucitanib for breast cancer and lung cancer and are continuing to evaluate, what, if any, further development of lucitanib will be pursued. Based on current estimates, we expect to complete the committed on-going development activities in 2017 and expect full reimbursement of our development costs from Servier. Reimbursements are recorded as a ~~Complete Response Letter (“CRL”) from the FDA for the rociletinib NDA. The FDA issues a CRL~~reduction to ~~indicate that their review of an application is complete~~research and that the application is not ready for approval. In anticipation of receiving the CRL, the Company terminated enrollment in all ongoing sponsored clinical studies, although it continues to provide drug to patients whose clinicians recommend continuing rociletinib therapy. In addition, the Company withdrew its MAA for rociletinib on file with the EMA. The Company is continuing analyses of rociletinib data to determine whether certain populations of patients may represent an opportunity for a partner committed to investing in further clinical development.

~~We are obligated to pay royalties on net sales of rociletinib based~~development expense on the ~~volume~~Consolidated Statements of annual net sales achieved. The Company is required to pay up to an additional aggregate of $98.0 million in development and regulatory milestone payments if certain clinical study objectives and regulatory filings, acceptances and approvals are achieved. In addition, the Company is required to pay up to an aggregate of $120.0 million in sales milestone payments if certain annual sales targets are achieved.Operations.

13. Net Loss Per Common Share

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common share equivalents outstanding using the treasury-stock method for the stock options and RSUs and the if-converted method for the Notes. As a result of our net losses for the periods presented, all potentially dilutive common share equivalents were considered anti-dilutive and were excluded from the computation of diluted net loss per share.

The shares outstanding at the end of the respective periods presented in the table below were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect (in thousands):

	Three and Six Months Ended June 30,
	2016		2015		Three and Six months ended June 30,
					2017	2016
Common shares under option					6,373	455
Convertible senior notes		4,646		4,646	4,646	4,646
Common shares under option		455		4,898
Total potential dilutive shares		5,101		9,544	11,019	5,101

14. Commitments and Contingencies

Royalty and License Fee Commitments

~~The Company has~~

We have entered into certain license agreements, as identified in Note 12,License Agreements, with third parties that include the payment of development and regulatory milestones, as well as royalty payments, upon the achievement of pre-established development, regulatory and commercial targets. ~~The Company’s~~Our payment obligation related to these license

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agreements is contingent upon the successful development, regulatory approval and commercialization of the licensed products. Due to the nature of these arrangements, the future potential payments are inherently uncertain, and accordingly, ~~no amounts have been~~we only recognize payment obligations which are probable and estimable as of the balance sheet date. Milestone liabilities of $21.0 million and $20.1 million are recorded on ~~the Company’s~~our Consolidated Balance Sheets at June 30, ~~2016~~2017 and December 31, ~~2015.~~2016, respectively, and relate to milestone payments for the licensing of our rucaparib product, which was approved by the FDA on December 19, 2016.

~~Development~~

Manufacture and ~~Manufacturing~~Services Agreement Commitments

~~In February 2013, the Company~~

On October 3, 2016, we entered into a ~~development~~Manufacturing and ~~manufacturing agreement~~Services Agreement (the “Agreement”) with a non-exclusive third-party supplier for the production of the active ingredient for ~~rucaparib.~~Rubraca. Under the ~~Development and Manufacturing~~terms of the Agreement, ~~the Company~~we will provide the third-party supplier a rolling ~~24-month~~ forecast for the supply of the active ingredient in Rubraca that will be updated by ~~the Company~~us on a quarterly basis. ~~The Company is~~We are obligated to order ~~the~~material sufficient to satisfy an initial quantity specified in ~~the first 12 months of~~ any forecast. In addition, the third-party supplier will construct, in its existing facility, a production train that will be exclusively dedicated to the manufacture of the Rubraca active ingredient. We are obligated to make scheduled capital program fee payments toward capital equipment and other costs associated with the construction of the dedicated production train. Further, once the facility is operational, we are obligated to pay a fixed facility fee each quarter for the duration of the Agreement, which expires on December 31, 2025, unless extended by mutual consent of the parties. As of June 30, ~~2016, $16.5~~2017, $183.6 million of purchase commitments exist under ~~this agreement.~~the Agreement.

Legal Proceedings

~~The Company~~

We and certain of ~~its~~our officers ~~and directors~~ were named as defendants in several lawsuits, as described below. We cannot reasonably predict the outcome of these legal proceedings, nor can we estimate the amount of loss or range of loss, if any, that may result. An adverse outcome in these proceedings could have a material adverse effect on our results of operations, cash flows or financial condition.

On November 19, 2015, ~~Steve Kimbro,~~Sonny P. Medina, a purported Clovis shareholder, filed a purported shareholder ~~of Clovis, filed a purported~~ class action complaint ~~(the “Kimbro Complaint”) against Clovis and certain of its officers~~ in the United States District Court for the District of ~~Colorado.~~Colorado (the “Medina Complaint”). The ~~Kimbro~~Medina Complaint ~~purports~~purported to be asserted on behalf of a class of persons who purchased Clovis stock between ~~October 31, 2013~~May 20, 2014 and November ~~15, 2015. The Kimbro Complaint~~13, 2015, and it generally ~~alleges~~alleged that Clovis and certain of its officers violated federal securities laws by making allegedly false and misleading statements regarding the progress toward FDA approval and the potential for market success of rociletinib. ~~The Kimbro Complaint seeks unspecified damages.~~

~~Also on~~

Throughout November ~~19,~~and December 2015, ~~a second~~three other purported ~~shareholder~~shareholders filed similar purported class action complaint was filed by Sonny P. Medina, another purported Clovis shareholder, containing similar allegations to those set forth in the Kimbro Complaint, also in the United States District Court for the District of Colorado (the “Medina Complaint”). The Medina Complaint purports to be asserted on behalf of a class of persons who purchased Clovis stock between May 20, 2014 and November 13, 2015. On November 20, 2015, a third complaint was filed by John Moran in the United States District Court for the Northern District of California (the “Moran Complaint”). The Moran Complaint contains similar allegations to those asserted in the Kimbro and Medina Complaints and purports to be asserted on behalf of a plaintiff class who purchased Clovis stock between October 31, 2013 and November 13, 2015.

On December 14, 2015, Ralph P. Rocco, a fourth purported shareholder of Clovis, filed a complaint in the United States District Court for the District of Colorado (the “Rocco Complaint”). The Rocco Complaint contains similar allegations to those set forth in the previous complaints and purports to be asserted on behalf of a plaintiff class who purchased Clovis stock between October 31, 2013 and November 15, 2015.

actions concerning alleged misstatements about rociletinib. On January 19, 2016, a number of motions were filed ~~in both the District of Colorado and the Northern District of California~~ seeking to consolidate the shareholder class actions into one matter and for appointment of a lead plaintiff. ~~All lead plaintiff movants other than~~On February 18, 2016, the Medina Court consolidated the various actions into a single proceeding and appointed M. Arkin (1999) LTD and Arkin Communications LTD (the “Arkin Plaintiffs”) ~~subsequently filed notices of non-opposition to the Arkin Plaintiffs’ application.~~

On February 2, 2016, the Arkin Plaintiffs filed a motion to transfer the Moran Complaint to the District of Colorado (the “Motion to Transfer”). Also on February 2, 2016, the defendants filed a statement in the Northern District of California supporting the consolidation of all actions in a single court, the District of Colorado. On February 3, 2016, the Northern District of California court denied without prejudice the lead plaintiff motions filed in that court pending a decision on the Motion to Transfer.

On February 16, 2016, the defendants filed a memorandum in support of the Motion to Transfer, and plaintiff Moran filed a notice of non-opposition to the Motion to Transfer. On February 17, 2016, the Northern District of California court granted the Motion to Transfer.

On February 18, 2016, the Medina court issued an opinion and order addressing the various motions for consolidation and appointment of lead plaintiff and lead counsel in the District of Colorado actions. By this ruling, the court consolidated the Medina, Kimbro and Rocco actions into a single proceeding. The court also appointed the Arkin Plaintiffs as the lead plaintiffs and Bernstein Litowitz Berger & ~~Grossman~~Grossmann LLP as lead counsel for the putative class.

On April 1, 2016, the Arkin Plaintiffs and the defendants filed a stipulated motion to set the schedule for the filing of a consolidated complaint in the Medina, Kimbro and Rocco actions (the “Consolidated Complaint”) and the responses thereto, including the defendants’ motion to dismiss the Consolidated Complaint (the “Motion to Dismiss”), and to stay discovery and related proceedings until the District of Colorado issues a decision on the Motion to Dismiss.

The ~~stipulated motion was entered by the District of Colorado on April 4, 2016. Subject to further agreed-upon extensions by the parties, the~~ Arkin Plaintiffs filed a ~~Consolidated Complaint~~consolidated complaint on May 6, ~~2016.~~

2016 (the “Consolidated Complaint”). The Consolidated Complaint ~~names~~named as defendants the Company and certain of its current and former officers (the “Clovis Defendants”), certain underwriters (the “Underwriter Defendants”) for a Company follow-on offering conducted in July 2015 (the “July 2015 Offering”), and certain Company venture capital investors (the “Venture Capital Defendants”). The Consolidated Complaint ~~alleges~~alleged that defendants violated particular sections of the Securities Exchange Act of 1934 (the “Exchange Act”) and the Securities Act of 1933 (the “Securities Act”). The purported misrepresentations and omissions ~~concern~~concerned allegedly misleading statements about rociletinib. The ~~putative class~~consolidated action iswas purportedly brought on behalf of investors who purchased the Company’s securities between May 31, 2014 and April 7, 2016 (with respect to the Exchange Act claims) and investors who purchased the Company’s securities pursuant or traceable to the July 2015 Offering (with respect to the Securities Act claims). The Consolidated Complaint ~~seeks~~sought unspecified compensatory and recessionary damages.

~~On May 23, 2016, the Medina, Kimbro, Rocco and Moran actions were consolidated for all purposes in a single proceeding in the District of Colorado.~~

The Clovis Defendants, ~~along with~~ the Underwriter Defendants and the Venture Capital Defendants filed ~~a Motion~~motions to ~~Dismiss~~dismiss on July 27, ~~2016;~~2016. On February 9, 2017, the Medina Court issued an opinion and order granting in part and denying in part the Clovis Defendants’ motion to dismiss, granting in part and denying in part the Underwriter Defendants’ motion to dismiss, and granting the Venture Capital Defendants’ motion to dismiss. On February 22, 2017, the Arkin ~~Plaintiff’s opposition is due on September 23, 2016;~~Plaintiffs

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filed an amended consolidated class action complaint, directed solely at repleading its Section 12(a) claims against the Underwriter Defendants.

On March 14, 2017, the Clovis Defendants and the ~~defendants’ replies are due on October 14, 2016.~~Arkin Plaintiffs participated in a mediation, which did not result in a settlement.

~~The~~

On June 18, 2017, the Clovis Defendants ~~intend~~entered into a stipulation and agreement of settlement with the Arkin Plaintiffs whereby Clovis will issue to ~~vigorously defend against~~ the ~~allegations contained~~plaintiffs and participating class members a total consideration comprised of $25.0 million in cash and the issuance of a to be determined number of shares of Clovis common stock (the “Settlement Shares”) equal to $117.0 million divided by the volume weighted average price of Clovis common stock over the 10 trading days immediately preceding the date of the hearing set by the Medina Court to consider the final approval of the settlement. The cash portion of the consideration is expected to be funded by Clovis’ insurance carriers. At June 30, 2017, the liability for the issuance of the shares and cash, including the amount to be reimbursed through insurance proceeds, was recorded to accrued liability for legal settlement on the Consolidated Balance Sheets in the ~~Kimbro,~~amount of approximately $142.0 million and a receivable of approximately $25.0 million from the insurance carriers on the Consolidated Balance Sheets. Clovis will issue the Settlement Shares no later than 5 business days after the date the judgment is entered by the Medina ~~Moran~~Court approving the settlement whereby the issuance of the shares will be recorded in common stock and ~~Rocco Complaints, but there can~~additional paid-in capital and the accrued liability for legal settlement will be ~~no assurance~~cleared.

As the settlement agreement is in response to the alleged violation of securities laws by certain of our officers, we have determined that the ~~defense will~~resulting loss does not relate to activities that are in the normal course of our operations and therefore, should not be ~~successful.~~recognized in operating losses for the period. Accordingly, we have recognized the entire expense associated to the settlement agreement in legal settlement loss within the other income (expense), net of insurance receivable on the Consolidated Statements of Operations and Comprehensive Loss.

On ~~December 30, 2015, Jamie McCall, a purported shareholder of Clovis, filed a shareholder derivative complaint (the “McCall Complaint”) against certain officers and directors of Clovis in~~July 14, 2017, the ~~Colorado District~~Medina Court ~~County of Boulder. The McCall Complaint generally alleged that~~issued an order preliminarily approving the ~~defendants breached their fiduciary duties owed~~settlement. A final hearing to ~~Clovis by participating in misrepresentation of~~determine whether the ~~Company’s business operations and prospects. The McCall Complaint also alleged claims~~settlement should be approved is scheduled for abuse of control, gross mismanagement and unjust enrichment. The McCall Complaint sought, among other things, an award of money damages, declaratory and injunctive relief concerning the alleged fiduciary breaches and other forms of equitable relief. On March 17, 2016, the plaintiff filed a notice of voluntary dismissal of the McCall Complaint and the action was terminated by the Court.October 26, 2017.

On January 22, 2016, the Electrical Workers Local #357 Pension and Health & Welfare Trusts, a purported shareholder of Clovis, filed a purported class action complaint (the “Electrical Workers Complaint”) against Clovis and certain of its officers, directors, investors and underwriters in the Superior Court of the State of California, County of San Mateo. The Electrical Workers Complaint purports to be asserted on behalf of a class of persons who purchased stock in ~~Clovis’~~the July 8, 2015 ~~follow-on offering.~~Offering. The Electrical Workers Complaint generally alleges that the defendants violated the Securities Act because the offering documents for the July 8, 2015 ~~follow-on offering~~Offering contained allegedly false and misleading statements regarding the progress toward FDA approval and the potential for market success of rociletinib. The Electrical Workers Complaint seeks unspecified damages.

On February 25, 2016, the defendants removed the case to the United States District Court for the Northern District of California and thereafter moved to transfer the case to the District of Colorado (“Motion to Transfer”). On March 2, 2016, the plaintiff filed a motion to remand the case to San Mateo County Superior Court (“Motion to Remand”). Following briefing on the Motion to Transfer and the Motion to Remand, the Northern District of California held a hearing on April 18, 2016 concerning the Motion to Remand, at the conclusion of which the court granted to the Motion to Remand. On May 5, 2016, the Northern District of California issued a written decision and order granting the Motion to Remand the case to the Superior Court, County of San Mateo and denying the Motion to Transfer as moot.

While the case was pending in the United States District Court for the Northern District of California, the parties entered into a stipulation extending the defendants’ time to respond to the Electrical Workers Complaint for 30 days following the filing of an amended complaint by plaintiff or the designation by plaintiff of the Electrical Workers Complaint as the operative complaint. Following remand, Superior Court of the State of California, County of San Mateo so-ordered the stipulation on June 22, 2016.

On June 30, 2016, the Electrical Workers Plaintiffs filed an amended ~~Complaint~~complaint asserting substantially similar claims (the ~~“Amended~~“Electrical Workers Amended Complaint”). The Amended Complaint names as defendants the Company and certain of its current and former officers and directors, certain underwriters for the July 2015 Offering and certain Company venture capital investors. The Amended Complaint purports to assert claims under the Securities Act based upon alleged misstatements in Clovis’ offering documents for the July 2015 Offering. The Amended Complaint includes new allegations about the Company’s rociletinib disclosures. The Amended Complaint seeks unspecified damages.

On ~~July 28,~~September 23, 2016, ~~the court ordered the~~ following briefing ~~schedule:~~and after hearing oral argument, the Electrical Workers Court granted defendants’ motion to stay ~~the Electrical Workers action~~proceedings pending resolution of the Medina ~~Kimbro, Moran and Rocco actions in~~action. Per the ~~District of Colorado (“Motion~~order to ~~Stay”) and demurrer~~stay proceedings, the parties’ first status report as to the ~~Amended Complaint are due~~progress of the Medina action was filed on ~~August 15, 2016; plaintiff’s oppositions are due on August 31, 2016; and the defendants’ reply briefs are~~March 23, 2017. The parties’ second status report is due on September ~~15, 2016. A hearing on both motions is scheduled for September 23, 2016.~~ 21, 2017.

The Company intends to vigorously defend against the allegations ~~contained~~ in the Electrical Workers Amended Complaint, but there can be no assurance that the defense will be successful.

On November 10, 2016, Antipodean Domestic Partners (“Antipodean”) filed a complaint (the “Antipodean Complaint”) against Clovis and certain of its officers, directors and underwriters in New York Supreme Court, County of New York. The Antipodean Complaint alleges that the defendants violated certain sections of the Securities Act by making allegedly false statements to Antipodean and in the Offering Materials for the July 2015 Offering relating to the efficacy of rociletinib, its safety profile, and its prospects for market success. In addition to the Securities Act claims, the Antipodean Complaint also asserts Colorado state law claims and common law claims. Both the state law and common law claims are based on allegedly false and misleading statements regarding rociletinib’s progress toward FDA approval. The Antipodean Complaint seeks compensatory, recessionary, and punitive damages.

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On December 15, 2016, the Antipodean Plaintiffs filed an amended complaint (the “Antipodean Amended Complaint”) asserting substantially the same claims against the same defendants and purporting to correct certain details in the original Antipodean Complaint.

On January 31, 2017, Defendants filed a motion to stay the Antipodean action pending resolution of the Medina action in the District of Colorado. Defendants also filed a motion to dismiss the Antipodean Amended Complaint on March 29, 2017. A hearing on both motions is scheduled for August 8, 2017.

On March 14, 2017, the Clovis Defendants and Antipodean participated in a mediation, which did not result in a settlement. The Company intends to vigorously defend against the allegations in the Antipodean Amended Complaint. However, there can be no assurance that the defense will be successful.

Clovis received a letter dated May 31, 2016 from an alleged owner of its common stock, which purports to set forth a demand for inspection of certain of our books and records pursuant to 8 Del. C. § 220 (the “Macalinao Demand Letter”). Clovis also received a letter dated December 15, 2016 from a second alleged owner of Clovis common stock, which purports to set forth a similar demand for inspection of the Company’s books and records pursuant to 8 Del. C. § 220 (the “McKenry Demand Letter”). Both the Macalinao and McKenry Demand Letters were purportedly made for the purposes of investigating alleged misconduct at the Company relating to rociletinib. Clovis submitted a response to the Macalinao Demand Letter on June 24, 2016, and likewise submitted a response to the McKenry Demand Letter on January 4, 2017. The Company produced certain books and records in response to the Macalinao and McKenry Demand Letters in January and February ~~19, 2016, Maris Sanchez,~~2017, respectively.

In March 2017, Macalinao and McKenry (the “Derivative Plaintiffs”) filed shareholder derivative complaints against certain directors and officers of the Company in the Court of Chancery of the State of Delaware. On May 4, 2017, the Macalinao and McKenry actions were consolidated for all purposes in a single proceeding under the caption In re Clovis Oncology, Inc. Derivative Litigation, Case No, 2017-0222 (the “Consolidated Derivative Action”).

On May 18, 2017, the Derivative Plaintiffs filed the Consolidated Verified Shareholder Derivative Complaint (the “Consolidated Derivative Complaint”). The Consolidated Derivative Complaint generally alleged that the defendants breached their fiduciary duties owed to the Company by allegedly causing or allowing misrepresentations of the Company’s business operations and prospects, failing to ensure that the TIGER-X clinical trial was being conducted in accordance with applicable rules, regulations and protocols, and engaging in insider trading. The Consolidated Derivative Complaint purported to rely on documents produced by the Company in response to the Macalinao and McKenry Demand Letters. The Consolidated Derivative Complaint sought, among other things, an award of money damages.

On July 13, 2017, the court ordered the following briefing schedule with respect to the defendants’ forthcoming motion to dismiss the Consolidated Derivative Complaint: Defendants’ motion to dismiss was due, and was filed, on July 31, 2017; Plaintiffs’ opposition is due on August 30, 2017; and Defendants’ reply is due on September 14, 2017.

The Company intends to vigorously defend against the allegations in the Consolidated Derivative Complaint, but there can be no assurance that the defense will be successful.

On May 10, 2017, John Solak, a purported shareholder of ~~Clovis,~~the Company, filed a shareholder derivative complaint in the Court of Chancery of the State of Delaware (the “Solak Complaint”) against certain directors and an officer of the Company. The Solak Complaint generally alleged that the defendants breached their fiduciary duties owed to the Company by adopting a compensation plan that overcompensated the non-employee director defendants, in relation to companies of comparable market capitalization and size. The Solak Complaint also alleged claims of waste of corporate assets and unjust enrichment due to this allegedly wrongful compensation plan. The Solak Complaint sought, among other things, an award of money damages and the imposition of corporate governance reforms.

On June 12, 2017, the parties in the Solak action entered into a stipulation extending the defendants’ time to respond to the Solak Complaint until August 11, 2017, which was entered by the Court on June 20, 2017.

The Company intends to vigorously defend against the allegations in the Solak Complaint, but there can be no assurance that the defense will be successful.

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On March 20, 2017, a purported shareholder of the Company, filed a shareholder derivative complaint (the ~~“Sanchez~~“Guo Complaint”) against certain officers and directors of ~~Clovis~~the Company in the United States District Court for the District of Colorado. The ~~Sanchez~~Guo Complaint generally alleged that the defendants breached their fiduciary duties owed to ~~Clovis~~the Company by ~~participating in misrepresentation~~either recklessly or with gross negligence approving or permitting misrepresentations of the Company’s business operations and prospects. The ~~Sanchez~~Guo Complaint also alleged claims for ~~abuse~~waste of ~~control~~corporate assets and ~~gross mismanagement.~~unjust enrichment. Finally, the Guo Complaint alleged that certain of the individual defendants violated Section 14(a) of the Securities Exchange Act, by allegedly negligently issuing, causing to be issued, and participating in the issuance of materially misleading statements to stockholders in the Company’s Proxy Statement on Schedule DEF 14A in connection with the 2015 Annual Meeting of Stockholders, held on June 11, 2015. The ~~Sanchez~~Guo Complaint sought, among other things, an award of money damages.

On ~~March 11, 2016,~~June 19, 2017, the ~~plaintiff~~parties filed a ~~notice of voluntary dismissal~~joint motion to stay the Guo action pending resolution of the ~~Sanchez Complaint without prejudice.~~motion to dismiss the Consolidated Derivative Complaint. On ~~March 14, 2016,~~June 20, 2017, the ~~Sanchez action was terminated by~~court granted the ~~District of Colorado.~~motion to stay.

The Company intends to vigorously defend against the allegations in the Guo Complaint, but there can be no assurance that the defense will be successful.

In addition, the Company has received inquiries and requests for information from governmental agencies, including the U.S. Securities and Exchange Commission and the U.S. Department of Justice, relating to the Company’s regulatory update announcement in November 2015 that the FDA requested additional clinical data on the efficacy and safety of rociletinib. The Company is ~~cooperating~~continuing to cooperate with ~~the inquiries.~~

these agencies with respect to their investigations. The ~~Company received a letter dated May 31, 2016 from an alleged owner~~proposed settlement of the ~~Company’s common stock, which purports to set forth a demand for inspection of certain of the Company’s books~~Medina action does not resolve these inquiries and ~~records pursuant to~~ ~~8 Del. C.~~ ~~§ 220 (the “Demand Letter”). The Demand Letter was purportedly made for the purpose of investigating alleged misconduct at~~ the Company ~~relating to rociletinib. On June 24, 2016, the Company submitted a response to the Demand Letter. The Company believes that the Demand Letter fails to establish an entitlement to any~~cannot predict their timing or outcome.

Table of ~~the requested documents, but there can be no assurance about the likelihood of an adverse outcome.~~Contents

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~15. Subsequent Events~~

~~The Company evaluated events up to the filing date of these interim financial statements and determined that no subsequent activity required disclosure.~~Forward-Looking Information

~~ITEM 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Forward-Looking Information~~

This Quarterly Report on Form 10-Q and the information incorporated herein by reference includes statements that are, or may be deemed, “forward-looking statements.” In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “could,” “might,” “will,” “should,” “approximately” or, in each case, their negative or other variations thereon or comparable terminology, although not all forward-looking statements contain these words. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things, our ongoing and planned non-clinical studies and clinical trials, the timing of and our ability to make regulatory filings and obtain and maintain regulatory approvals for our product candidates, the degree of clinical utility of our products, particularly in specific patient populations, expectations regarding clinical trial data, our results of operations, financial condition, liquidity, prospects, growth and strategies, the industry in which we operate and the trends that may affect the industry or us.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics and industry change and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity and the development of the industry in which we operate may differ materially from the forward-looking statements contained herein.

Any forward-looking statements that we make in this Quarterly Report on Form 10-Q speak only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

You should also read carefully the factors described in the “Risk Factors” ~~section of this Quarterly~~in Part I, Item 1A in our most recent Annual Report on Form ~~10-Q~~10-K filed with the U.S. Securities and Exchange Commission (“SEC”), as updated from time to time in our subsequent SEC filings, to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. ~~You are advised, however, to consult any further disclosures we make on related subjects in our other reports filed with the SEC and on our website.~~

Overview

We are a biopharmaceutical company focused on acquiring, developing and commercializing ~~cancer treatments~~innovative anti-cancer agents in the United States, Europe and ~~other~~additional international markets. ~~Our product~~We target our development programs ~~generally target~~for the treatment of specific subsets of cancer populations, and ~~we seek to~~ simultaneously develop, with partners, ~~companion diagnostics that~~diagnostic tools intended to direct ~~our product candidates~~a compound in development to the ~~patients~~population that is most likely to benefit from its use.

Our commercial product Rubraca® (rucaparib) is the first and only oral, small molecule poly ADP-ribose polymerase, or PARP, inhibitor of PARP1, PARP2 and PARP3 approved in the United States by the FDA as monotherapy for the treatment of patients with deleterious BRCA (human genes associated with the repair of damaged DNA) mutation (germline and/or somatic) associated advanced ovarian cancer who have been treated with two or more chemotherapies, and selected for therapy based on an FDA-approved companion diagnostic for Rubraca.

Our MAA for rucaparib that was submitted to the EMA for an ovarian cancer treatment indication comparable to what was approved by the FDA is currently under review. We anticipate an opinion from the CHMP in late 2017, and, pending a favorable opinion from the CHMP, a potential approval would follow during the first quarter of 2018. Following a potential approval for the treatment indication, we intend to submit a supplemental application for the second-line or later maintenance treatment indication, for which we anticipate a potential approval during the third quarter of 2018. Additionally, rucaparib is being studied as a potential maintenance therapy for ovarian cancer patients in the ARIEL3 trial. On June 19, 2017, we announced that the ARIEL3 trial successfully achieved the primary endpoint of improved progression-free survival (PFS) by investigator review in each of the three populations studied. PFS was also improved in the rucaparib group compared with placebo by blinded independent central review (BICR), a key secondary endpoint. Based on these findings, we plan to submit a supplemental New Drug Application (sNDA) before the end of

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October 2017 for a second-line and later maintenance treatment indication for all women with platinum-sensitive ovarian cancer who have responded to their ~~use. We are currently developing two product candidates:~~most recent platinum therapy. Rucaparib is also being developed in patients with mutant BRCA tumors and other DNA repair deficiencies beyond BRCA – commonly referred to as homologous recombination deficiencies. Studies open for enrollment or under consideration include prostate, breast, pancreatic, gastroesophageal, bladder and lung cancers.

~~Rucaparib~~, an oral inhibitor of poly (ADP-ribose) polymerase (PARP) currently in advanced clinical development for the treatment of ovarian cancer. During the second quarter of 2016, we completed the submission of our New Drug Application (“NDA”) with the U.S. Food and Drug Administration (“FDA”) for potential accelerated approval of rucaparib in the U.S. We intend to submit our first E.U. regulatory application in the fourth quarter of 2016.

~~Lucitanib~~, an oral inhibitor of the tyrosine kinase activity of vascular endothelial growth factor receptors (VEGFR) 1-3, platelet-derived growth factor receptors (PDGFR) alpha and beta and fibroblast growth factor receptors (FGFR) 1-3.

We hold ~~global~~worldwide rights for rucaparib. In June 2011, we obtained an exclusive, worldwide license from Pfizer to develop and commercialize rucaparib. U.S. Patent 6,495,541, and its equivalent counterparts issued in dozens of countries, directed to the rucaparib composition of matter, expire in 2020 and are potentially eligible for up to five years patent term extension in various jurisdictions. We believe that patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, or Hatch-Waxman Act, could be available to extend our patent exclusivity for rucaparib to the fourth quarter of 2023 in the United States. In Europe, we believe that patent term extension under a supplementary protection certificate could be available for an additional five years to at least 2025. In April 2012, we obtained an exclusive license from AstraZeneca under a family of patents and patent applications to permit the development and commercialization ~~rights~~of rucaparib for ~~rucaparib. For lucitanib, we hold development~~certain methods of treating patients with PARP inhibitors. Additionally, other patents and ~~commercialization rights~~patent applications are directed to methods of making, methods of using, dosing regimens, various salt and polymorphic forms and formulations and have expiration dates ranging from 2020 through potentially 2035, including the camsylate salt/polymorph patent family licensed from Pfizer, which expires in 2031 and a patent application directed to high dosage strength rucaparib tablets that, if issued, will expire in 2035. We are aware of a number of cases where salt and polymorph patents have been challenged. Two oppositions were filed in the ~~U.S.~~granted European counterpart of the rucaparib camsylate salt/polymorph patent on June 20, 2017. European oppositions are commonly filed against patents related to pharmaceutical products. The grounds of opposition related to Rubraca were lack of novelty and ~~Japan~~lack of inventive step. The novelty and ~~have sublicensed rights~~inventive step challenges are based on prior art references (or closely related disclosures) that were previously raised by the European patent examiner during prosecution of the application. The claims of the granted patent were found to ~~Europe~~be patentable over this prior art. While the ultimate results of patent challenges can be difficult to predict, we believe a number of factors, including a constellation of unexpected properties, support the novelty and ~~rest~~non-obviousness of ~~world markets, excluding China, to Les Laboratoires Servier (“Servier”).~~our rucaparib camsylate salt/polymorph composition of matter patent. Based on these factors, we believe a successful challenge of that patent would be difficult.

In addition, we have ~~a third~~two other product ~~candidate,~~candidates: lucitanib, an oral inhibitor of the tyrosine kinase activity of vascular endothelial growth factor receptors (VEGFR) 1-3, platelet-derived growth factor receptors (PDGFR) alpha and beta and fibroblast growth factor receptors (FGFR) 1-3, and rociletinib, an oral mutant-selective inhibitor of epidermal growth factor receptor ~~(“EGFR”)~~(EGFR). During the second quarter of 2016, the Company received a Complete Response Letter (“CRL”) from the FDA for the rociletinib NDA, which was submitted during the third quarter of 2015. The FDA issues a CRL to indicate that their review of an application is complete and that the application is not ready for approval. In anticipation of receiving the CRL, the Company terminatedWhile we have stopped enrollment in ~~all~~ ongoing ~~sponsored clinical studies, although it continues~~trials for each of these candidates, we continue to provide ~~drug~~drugs to patients whose clinicians recommend continuing ~~rociletinib~~ therapy. ~~In addition, the Company withdrew its Marketing Authorization Application (“MAA”)~~We maintain certain development and commercialization rights for rociletinib on file with the European Medicines Agency (“EMA”). The Company is continuing analyses of rociletinib data to determine whether certain populations of patients may represent an opportunity for a partner committed to investing in further clinical development. We holdlucitanib and global development and commercialization rights for rociletinib.

We commenced operations in April 2009. To date, we have devoted substantially all of our resources to identifying and in-licensing product candidates, performing development activities with respect to those product candidates and the general and administrative support of these operations. ~~To date,~~Through June 30, 2017, we have generated $13.6 million in license and milestone revenue ~~but~~related to our collaboration and license agreement with Servier and have generated no$21.7 million net product ~~revenues.~~revenue related to sales of Rubraca, which we began to commercialize on December 19, 2016. We have principally funded our operations using the net proceeds from the sale of convertible preferred stock, the issuance of convertible promissory notes, public offerings of our common stock and our convertible senior notes offering.

We have never been profitable and, as of June 30, ~~2016,~~2017, we had an accumulated deficit of ~~$994.6~~$1,364.9 million. We incurred net losses of $233.8 million and $212.7 million for the six months ended June 30, 2017 and 2016, respectively. The net loss for the six months ended June 30, 2017 included a charge of $117.0 million related to a legal settlement. The net loss for the six months ended June 30, 2016 included a charge of $104.5 million for the impairment of intangible asset and a gain of $24.9 million from a reduction in fair value of contingent purchase consideration. We had cash, cash equivalents and available-for-sale securities totaling $671.5 million at June 30, 2017.

We expect to incur significant losses for the foreseeable future, as we ~~advance~~incur costs related to commercial activities associated with Rubraca. In January 2017, we sold 5,750,000 shares of our ~~product candidates through clinical development~~common stock in a public offering at $41.00 per share. The net proceeds from the offering were $221.2 million, after deducting underwriting discounts and commissions and offering expenses. In June 2017, we sold 3,920,454 shares of our common stock in a public offering at $88.00 per share. The net proceeds from the offering were $324.9 million, after deducting underwriting discounts and

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commissions and offering expenses. We intend to ~~seek regulatory approval~~use the net proceeds of the offerings for general corporate purposes, including sales and marketing expenses associated with Rubraca in the United States and, if approved ~~commercialize such~~by the EMA, in Europe, funding of our development programs, selling, general and administrative expenses, acquisition or licensing of additional product ~~candidates.~~candidates or businesses and working capital. Based on our current estimates, we believe that our cash, cash equivalents and available-for-sale securities ~~as of June 30, 2016~~ will allow us to fund activities through at least the next 12 months. WeUntil we can generate a sufficient amount of revenue from Rubraca, we expect to finance ~~future cash needs~~our operations in part through ~~a combination of~~additional public or private equity or debt offerings ~~collaborations,~~and may seek additional capital through arrangements with strategic ~~alliances~~partners or from other ~~similar licensing arrangements.~~sources. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We will need to generate significant revenues to achieve profitability, and we may never do so.

Product License Agreements

~~Rucaparib~~

In June 2011, we entered into a worldwide license agreement with Pfizer, Inc. to ~~acquire~~obtain exclusive global ~~development and commercialization~~ rights to ~~rucaparib.~~develop and commercialize rucaparib, a small molecule inhibitor of poly (ADP-ribose) polymerase (“PARP”), used for the treatment of selected solid tumors. The exclusive rights are exclusive even as to Pfizer and include the right to grant sublicenses. Pursuant to the terms of the license agreement, we made a $7.0 million upfront payment to ~~Pfizer.~~Pfizer and are required to make additional payments to Pfizer for the achievement of certain development and regulatory and sales milestones and royalties on sales as required by the license agreement. Prior to the FDA approval of rucaparib, discussed below, we made milestone payments of $1.4 million, which were recognized as acquired in-process research and development expense.

We are responsible for all development and commercialization costs of rucaparib. When and if commercial sales of rucaparib begin, we will pay Pfizer tiered royalties on our net sales. In addition, Pfizer is eligible to receive up to $258.5 million of further payments, in aggregate, if certain development, regulatory and sales milestones are achieved, including $21.25 million associated with the first filing and approval of an NDA by the FDA.

~~Lucitanib~~

On November 19, 2013, the Company acquired all of the issued and outstanding capital stock of Ethical Oncology Science, S.p.A. (“EOS”) (now known as Clovis Oncology Italy S.r.l.) and gained rights to develop and commercialize lucitanib, an oral, selective tyrosine kinase inhibitor. As further described below, EOS licensed the worldwide rights, excluding China, to develop and commercialize lucitanib from Advenchen Laboratories LLC (“Advenchen”). Subsequently, rights to develop and commercialize lucitanib in markets outside the U.S. and Japan were sublicensed by EOS to Servier in exchange for upfront milestone fees, royalties on sales of lucitanib in the sublicensed territories and research and development funding commitments.

In October 2008, EOS entered into an exclusive license agreement with Advenchen to develop and commercialize lucitanib on a global basis, excluding China. The Company is obligated to pay Advenchen royalties on net sales of lucitanib, based on the volume of annual net sales achieved. In addition, the Company is obligated to pay to Advenchen 25% of any consideration, excluding royalties, received pursuant to any sublicense agreements for lucitanib, including the agreement with Servier. In the first quarter of 2014, the Company recognized acquired in-process research and development expense of $3.4 million, which represents 25% of the sublicense agreement consideration of $13.6 million received from Servier upon the end of opposition and appeal of the lucitanib patent by the European Patent Office.

In September 2012, EOS entered into a collaboration and license agreement with Servier whereby EOS sublicensed to Servier exclusive rights to develop and commercialize lucitanib in all countries outside of the U.S., Japan and China. In exchange for these rights, EOS received an upfront payment of €45.0 million. We are entitled to receive additional payments upon achievement of specified development, regulatory and commercial milestones up to an additional €90.0 million in the aggregate. In addition, the Company is entitled to receive sales milestone payments if specified annual sales targets for lucitanib are met, which, in the aggregate, could total €250.0 million. The Company is also entitled to receive royalties on net sales of lucitanib by Servier.

The Company and Servier are developing lucitanib pursuant to a development plan agreed to between the parties. Servier is responsible for the initial €80.0 million in global development costs under the agreed upon plan. Cumulative global development costs in excess of €80.0 million, if any, will be shared equally between the Company and Servier. Based on current estimates, we expect that Servier’s €80.0 million funding commitment will be fulfilled in early 2017, and thereafter, we will share with Servier in future development costs pursuant to a mutually agreed upon global development plan. During the second quarter of 2016, the Company and Servier agreed to discontinue the development of lucitanib for breast cancer. The Company and Servier are continuing to evaluate what, if any, further development of lucitanib will be pursued.

~~Rociletinib~~

In May 2010, we entered into an exclusive worldwide license agreement with Avila Therapeutics, Inc. (now Celgene Avilomics Research, Inc., part of Celgene Corporation (“Celgene”)) to discover, develop and commercialize a covalent inhibitor of mutant forms of the EGFR gene product. Rociletinib was identified as the lead inhibitor candidate under the license agreement. We are responsible for all non-clinical, clinical, regulatory and other activities necessary to develop and commercialize rociletinib.

We made ~~an upfront payment of $2.0 million upon execution of the license agreement, a $4.0 million milestone payment~~ in the first quarter of ~~2012 upon acceptance by~~2017. The FDA approval also resulted in the ~~FDA of our Investigational New Drug application for rociletinib and~~obligation to pay a ~~$5.0~~$20.0 million milestone payment, infor which we have exercised the ~~first quarter of 2014 upon~~option to defer payment by agreeing to pay $23.0 million within 18 months after the ~~initiation~~date of the ~~Phase II study for rociletinib. In~~FDA approval. These payments were recognized as intangible assets and will be amortized over the ~~third quarter~~estimated remaining useful life of 2015, we made milestone payments totaling $12.0 million upon acceptance of the NDA and MAA for rociletinib by the FDA and EMA, respectively. We recognized all payments as acquired in-process research and development expense.Rubraca.

We are obligated under the license agreement to ~~pay royalties on net sales of rociletinib based on the volume of annual net sales achieved. The Company is~~use commercially reasonable efforts to develop and commercialize rucaparib and we are responsible for all remaining development and commercialization costs for rucaparib. We are required to ~~pay~~make regulatory milestone payments to Pfizer of up to an additional ~~aggregate of $98.0~~$69.75 million in ~~development and regulatory milestone payments~~aggregate if ~~certain~~specified clinical study objectives and regulatory filings, acceptances and approvals are achieved. In addition, ~~the Company is required~~we are obligated to ~~pay up to an aggregate of $120.0 million in~~make sales milestone payments to Pfizer if ~~certain~~specified annual sales targets for rucaparib are ~~achieved.~~met, the majority of which relate to annual sales targets of $500.0 million and above, which, in the aggregate, could amount to total milestone payments of $170.0 million, and tiered royalty payments at a mid-teen percentage rate on our net sales, with standard provisions for royalty offsets to the extent we need to obtain any rights from third parties to commercialize rucaparib.

In April 2012, we entered into a license agreement with AstraZeneca UK Limited to acquire exclusive rights associated with rucaparib under a family of patents and patent applications that claim methods of treating patients with PARP inhibitors in certain indications. The license enables the development and commercialization of rucaparib for the uses claimed by these patents. The FDA approval of rucaparib on December 19, 2016 resulted in a $0.35 million milestone obligation to AstraZeneca as required by the license agreement, which was paid in the first quarter of 2017. This payment was recognized in intangible assets and will be amortized over the estimated remaining useful life of rucaparib. AstraZeneca will also receive royalties on any net sales of rucaparib.

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We are party to other product license agreements for our other drug candidates, lucitanib and rociletinib (see our 2016 Form 10-K for additional details).

Financial Operations Overview

Revenue

~~To date,~~

Product revenue is derived from sales of our product, Rubraca, in the United States. We distribute our product in the U.S. principally through a limited number of specialty distributor and specialty pharmacy providers, collectively, our customers. Our customers subsequently resell our products to patients and healthcare providers. Separately, we have ~~generated $13.6 million in license~~arrangements with certain payors and ~~milestone revenue related to our collaboration~~other third parties that provide for government-mandated and ~~license agreement with Servier. In the future, we may generate revenue from the sales~~privately-negotiated rebates, chargebacks and other discounts. Revenue is recorded net of ~~product candidates that are under development by the Company,~~estimated rebates, chargebacks, discounts and other deductions as well as ~~from milestone payments~~estimated product returns (collectively, “sales deductions”). We only recognize revenue on product sales once the product is resold to the patient or ~~royalties pursuant~~healthcare provider by the specialty distributor or specialty pharmacy provider, therefore reducing the significance of estimates made for product returns.

Sales Deductions

Estimating sales deductions requires significant judgments about future events and uncertainties, and requires us to ~~our sublicense agreement with Servier.~~rely heavily on assumptions, as well as historical experience. Estimated sales deductions are provided for the following:

Rebates. Rebates include mandated discounts under the Medicaid Drug Rebate Program and the Medicare coverage gap program. Rebates are amounts owed after the final dispensing of products to a benefit plan participant and are based upon contractual agreements or legal requirements with the public sector benefit providers. The accrual for rebates is based on statutory discount rates and known sales to specialty pharmacy patients, or expected utilization for specialty distributor sales to healthcare providers. As we gain more historical experience, the accrual will be based solely on the expected utilization from historical data we have accumulated since Rubraca product launch. Rebates are generally invoiced and paid quarterly in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known or estimated prior quarters’ unpaid rebates. If actual future rebates vary from estimates, we may need to adjust balances of such rebates to reflect our actual expenditures with respect to these programs, which would affect revenue in the period of adjustment.

Chargebacks. Chargebacks are discounts that occur when contracted customers, which currently consist primarily of group purchasing organizations, Public Health Service organizations and federal government entities purchasing via the Federal Supply Schedule, purchase directly from our specialty distributors at a discounted price. The specialty distributor, in turn, charges back the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by the healthcare provider. The accrual for specialty distributor chargebacks is estimated based on known chargeback rates and known sales to specialty distributors adjusted for the estimated utilization by healthcare providers.

Discounts. Specialty distributors and specialty pharmacies are offered various forms of consideration, including service fees and prompt pay discounts for payment within a specified period. We expect these customers will earn prompt pay discounts and therefore, we deduct the full amount of these discounts from product sales when revenue is recognized. Service fees are recorded as a selling expense when product sales occur.

Co-pay assistance. Patients who have commercial insurance and meet certain eligibility requirements may receive co-pay assistance. The intent of this program is to reduce the patient’s out of pocket costs. Liabilities for co-pay assistance are based on actual program participation and estimates of program redemption using data provided by third-party administrators.

Returns. Sales of our products are not subject to a general right of return at the point we recognize revenue, which is the point the product is sold to the patient or healthcare provider. To date, we have not had any product returns and, we currently do not have an accrual for product returns. We will continue to assess our estimate for product returns as we gain additional historical experience.

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In the three and six months ended June 30, 2017, we ~~fail~~recorded net product revenue of $14.6 million and $21.7 million, respectively, related to ~~successfully complete the regulatory review~~sales of Rubraca, which we began to commercialize on December 19, 2016. Our ability to generate revenue and ~~development of our product candidates and, together with our partners, companion diagnostics or obtain regulatory approval for them,~~become profitable depends upon our ability to successfully commercialize products. Any inability on our part to successfully commercialize Rubraca in the United States and any foreign territories where it may be approved, or any significant delay in such approvals, could have a material adverse impact on our ability to execute upon our business strategy and, ultimately, to generate ~~future~~sufficient revenues from Rubraca to reach or maintain profitability or sustain our anticipated levels of operations.

Cost of Sales – Product

We recorded product cost of sales from sales of Rubraca in the three and six months ended June 30, 2017. Product cost of sales consists primarily of materials, third-party manufacturing costs as well as freight and royalties owed to our licensing partners for Rubraca sales. Based on our policy to expense costs associated with the manufacture of our products prior to regulatory approval, certain of the manufacturing costs of Rubraca units recognized as revenue during the three and six months ended June 30, 2017 were expensed prior to the December 19, 2016 FDA approval, and therefore are not included in costs of sales during the current period. We expect cost of sales to increase in relation to product revenues as we deplete these inventories and we expect to use the remaining pre-commercialization inventory for product sales through the third quarter of 2017.

Cost of Sales – Intangible Asset Amortization

Cost of sales for intangible asset amortization consists of the amortization of capitalized milestone payments made to our ~~results~~licensing partners upon FDA approval of ~~operations and financial position will be adversely affected.~~Rubraca. Milestone payments are amortized on a straight-line basis over the estimated remaining patent life of Rubraca.

Research and Development Expenses

Research and development expenses consist of costs incurred for the development of our product candidates and companion diagnostics, which include:

license fees and milestone payments related to the acquisition of in-licensed products, which are reported on our Consolidated Statements of Operations as acquired in-process research and development;

employee-related expenses, including salaries, benefits, travel and share-based compensation expense;

expenses incurred under agreements with contract research organizations and investigative sites that conduct our clinical trials;

the cost of acquiring, developing and manufacturing clinical trial materials;

costs associated with non-clinical activities and regulatory operations;

market research, disease education and other commercial product planning activities, including the hiring of a U.S. sales and marketing and medical affairs organization in preparation for ~~potential~~the commercial launch of rucaparib; and

activities associated with the development of companion diagnostics for our product candidates.

Research and development costs are expensed as incurred. License fees and milestone payments related to in-licensed products and technology are expensed if it is determined that they have no alternative future use. Costs for certain development activities, such as clinical trials and manufacturing of clinical supply, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors.

~~Product candidates~~As a result of the FDA approval of Rubraca and the discontinuation of enrollment in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later stage clinical trials. We expectrociletinib, our research and development expenses decreased in ~~2016~~both the three and six months ended June 30, 2017 compared to ~~increase over 2015.~~the same periods in the prior year and are expected to decrease for the remainder of 2017 compared to prior year as we continue to commercialize Rubraca and commercialization related expenses are classified as selling, general and administrative expenses and not research and development costs.

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The following table identifies research and development and acquired in-process research and development costs on a program-specific basis for our products under development. Personnel-related costs, depreciation and share-based compensation are not allocated to specific programs, as they are deployed across multiple projects under development and, as such, are separately classified as personnel and other expenses in the table ~~below.~~below (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,					Three months ended June 30,				Six months ended June 30,
	2016			2015		2016			2015		2017		2016		2017		2016
	(in thousands)										(in thousands)
Rucaparib Expenses
Research and development	$	24,379		$	11,527	$	48,936		$	23,823	$	16,980	$	24,379	$	31,490	$	48,936
Acquired in-process research and development		300			—		300			—				300		—		300
Rucaparib Total		24,679			11,527		49,236			23,823		16,980		24,679		31,490		49,236
Lucitanib Expenses
Research and development (a)		(194	)		308		(214	)		1,243		(13)		(194)		(99)		(214)
Lucitanib Total		(194	)		308		(214	)		1,243		(13)		(194)		(99)		(214)
Rociletinib Expenses
Research and development		16,821			31,149		37,415			59,994	$	1,528	$	16,821		4,719		37,415
Rociletinib Total		16,821			31,149		37,415			59,994		1,528		16,821		4,719		37,415
Personnel and other expenses		26,723			17,384		56,200			32,058		14,613		26,723		29,445		56,200
Total	$	68,029		$	60,368	$	142,637		$	117,118	$	33,108	$	68,029	$	65,555	$	142,637

~~(a)~~

This amount reflects actual costs incurred less amounts due from Servier for reimbursable development expenses pursuant to the collaboration and license agreement described in Note 12 to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.

(a)This amount reflects actual costs incurred less amounts due from Servier for reimbursable development expenses pursuant to the collaboration and license agreement described in Note 12, License Agreements to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.

Selling, General and Administrative Expenses

~~General~~

Selling, general and administrative expenses consist principally of salaries and related costs for personnel in executive, commercial, finance, legal, investor relations, human resources, and information technology functions. Other selling, general and administrative expenses include facilities expenses, communication expenses, information technology costs, corporate insurance and professional fees for legal, consulting and accounting services.

~~Effective May 9,~~ With the FDA approval of Rubraca on December 19, 2016, ~~at Mr. Mahaffy’s request,~~all sales and marketing expenses associated with Rubraca are included in selling, general and administrative expenses. We anticipate that our selling, general and administrative expenses will continue to increase in the ~~Compensation Committee~~future in support of the Board of Directors approved his waiver of any annual base salary in excess of $1.00, plus the cost of the employee portion of any premiums to be paid pursuant to any health and welfare benefit plans maintained by the Company and any tax withholdingsour commercial activities related to health and welfare benefits. Such waiver shall continue in effect until the earliest to occur of (i) the Company entering into a definitive agreement with respect to a transaction that if consummated would constitute a Change in Control (as defined in his Employment Agreement) or the public announcement of a proposal or transaction that if consummated would constitute a Change of Control, (ii) approval by the FDA to commercially distribute, sell or market rucaparib, and (iii) termination of his employment by the Company without Just Cause or by Mr. Mahaffy for Good Reason (each as defined in his Employment Agreement).Rubraca.

Acquired In-Process Research and Development Expenses

Acquired in-process research and development expenses consist of upfront payments to acquire a new drug compound, as well as subsequent milestone payments. Acquired in-process research and development payments are immediately expensed provided that the drug has not achieved regulatory approval for marketing and, absent obtaining such approval, has no alternative future use.

~~Impairment~~ Once regulatory approval is received, payments to acquire rights, and the related milestone payments, are capitalized and the amortization of ~~Intangible Asset~~

~~In connection with the acquisition of EOS, we~~such assets recorded ~~intangible assets~~ to reflect the fair value of acquired in-process research and development (“IPR&D”) as of the acquisition date. The fair value was established based upon discounted cash flow models using assumptions related to the timing of development, probability of development and regulatory success, sales and commercialization factors and estimated product life. During the second quarter of 2016, the Company recorded a $104.5 million impairment charge due to the Company’s and its development partner’s decision to discontinue the development of lucitanib for breast cancer. At June 30, 2016, the IPR&D intangible asset ~~recorded on the Consolidated Balance Sheets was zero.~~amortization cost of sales.

The IPR&D intangible assets are treated as indefinite-lived intangible assets and are not amortized. IPR&D intangible assets are evaluated for impairment at least annually or more frequently if impairment indicators exist and any reduction in fair value is recorded as impairment of intangible asset on the Consolidated Statements of Operations.

Change in Fair Value of Contingent Purchase Consideration

In connection with the acquisition of EOS in November 2013, we also recorded a purchase consideration liability equal to the estimated fair value of future payments that are contingent upon the achievement of various regulatory and sales milestones. Subsequent to the acquisition date, we re-measure contingent consideration arrangements at fair value each reporting period and record changes ~~in fair value to change~~ in fair value of contingent purchase consideration and foreign currency gains (losses) for changes in the foreign currency translation rate on the Consolidated Statements of Operations. Changes in fair value are primarily attributed to new information about the likelihood of achieving such milestones and the passage of time. In the absence of new information, changes toin fair value reflect only the passage of time as we progress towards the achievement of future milestones. During the second quarter of 2016, ~~the Company~~we recorded a $25.5 million reduction in the fair value of the contingent purchase consideration liability due to ~~the Company’s~~our and ~~its~~our development partner’s decision to discontinue the development of lucitanib for breast cancer. At June 30, ~~2016,~~2017, the contingent purchase consideration

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liability recorded on the Consolidated Balance Sheets was zero due to the uncertainty of achieving any of the lucitanib regulatory milestones.

Other Income and Expense

Other income and expense is primarily comprised of foreign currency gains and losses resulting from transactions with contract research organizations (“CROs”), investigational sites and contract manufacturers where payments are made in currencies other than the U.S. dollar. In addition, a significant portion of the contingent purchase consideration liability will be settled in Euro-denominated payments if certain future milestones are achieved and is subject to fluctuations in foreign currency rates. Other expense also includes interest expense recognized related to ~~the Company’s~~our convertible senior notes.

Critical Accounting Policies and Significant Judgments and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses and revenue and related disclosures. On an ongoing basis, we evaluate our estimates and judgments, including those related to contingent purchase consideration, the allocation of purchase consideration, intangible asset impairment, clinical trial accruals and share-based compensation. We base our estimates on historical experience, known trends and events and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For a description of our critical accounting policies, please see Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2015.~~2016. There have not been any material changes to our critical accounting policies since December 31, ~~2015.~~2016.

~~Recently Issued~~New Accounting Standards

~~In March 2016,~~

From time to time, the Financial Accounting Standards Board ~~issued~~(“FASB”) or other standards-setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards ~~Update (“ASU”) No. 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” ASU No. 2016-09 requires all income tax effects~~Codification are communicated through the issuance of ~~awards~~an Accounting Standards Update. Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be ~~recognized~~adopted in the ~~income statement when~~future, is not expected to have a material impact on our Consolidated Financial Statements upon adoption.

To understand the ~~awards vest~~impact of recently issued guidance, whether adopted or ~~are settled. The guidance also requires~~to be adopted, please review the ~~presentation~~information provided in Note 2, Summary of ~~excess tax benefits as an operating activity on~~Significant Accounting Policies, in the statement of cash flows rather than as a financing activity. This update is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted. ~~Amendments related~~Notes to the ~~timing~~Unaudited Consolidated Financial Statements included in Part I, Item 1 of ~~when excess tax benefits are recognized should be applied using a modified retrospective transition method. An entity may elect to apply the amendments related to the presentation~~this Form 10-Q.

Table of ~~excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method.~~ ~~The Company is currently evaluating its planned method of adoption and the impact the standard may have on its consolidated financial statements and related disclosures.~~Contents

Results of Operations

Comparison of Three Months Ended June 30, ~~2016~~2017 and ~~2015:~~2016:

The following table summarizes the results of our operations for the three months ended June ~~31,~~30, 2017 and 2016 ~~and 2015~~ (in thousands):

	Three Months Ended June 30,						Change 2016 vs. 2015
	2016			2015			$			%							Change
													Three months ended June 30,				Favorable/(Unfavorable)
													2017		2016		$		%

Product revenue, net													$	14,620	$	—	$	14,620		n/a
Operating expenses:
Cost of sales - product														2,730		—		(2,730)		n/a
Cost of sales - intangible asset amortization														372		—		(372)		n/a
Research and development	$	67,729		$	60,368		$	7,361			12	%		33,108		67,729		34,621		51	%
General and administrative		9,552			7,204			2,348			33	%
Selling, general and administrative														36,149		9,552		(26,597)		(278)	%
Acquired in-process research and development		300			—			300		n/a				—		300		300		n/a
Impairment of intangible asset		104,517			—			104,517		n/a				—		104,517		104,517		n/a
Change in fair value of contingent purchase consideration		(25,452	)		764			(26,216	)		(3,431	%)		—		(25,452)		(25,452)		n/a
Total expenses		156,646			68,336			88,310			129	%		72,359		156,646		84,287		54	%
Operating loss		(156,646	)		(68,336	)		(88,310	)		129	%		(57,739)		(156,646)		98,907		63	%
Other income (expense):
Interest expense		(2,106	)		(2,097	)		(9	)		0	%		(2,598)		(2,106)		(492)		(23)	%
Foreign currency gains (losses)		183			(1,142	)		1,325			(116	%)
Foreign currencygains (losses)														76		183		(107)		58	%
Legal settlement loss														(117,000)		—		(117,000)		n/a
Other income		196			62			134			216	%		594		196		398		(203)	%
Other income (expense), net		(1,727	)		(3,177	)		1,450			(46	%)		(118,928)		(1,727)		(117,201)		(6,786)	%
Loss before income taxes		(158,373	)		(71,513	)		(86,860	)		121	%		(176,667)		(158,373)		(18,294)		(12)	%
Income tax benefit (expense)		29,059			(18	)		29,077			(161,539	%)
Income tax benefit														1,281		29,059		(27,778)		96	%
Net loss	$	(129,314	)	$	(71,531	)	$	(57,783	)		81	%	$	(175,386)	$	(129,314)	$	(46,072)		(36)	%

Product Revenue, Net. Product revenue for the three months endedJune 30, 2017 was due to the recognition of $14.6 million of net product revenue from the sale of our first commercial product, Rubraca, which was approved for sale in the United States markets and we began shipping on December 19, 2016. Revenue is recorded net of sales deductions comprised of rebates, chargebacks and other discounts. Sales deductions represented approximately 7.9% of the gross product revenue recognized in the three months ended June 30, 2017 and are summarized as follows:


	Three months ended
	June 30, 2017
	$		% of Gross Sales
	(in thousands)

Gross product revenue	$	15,876		100.0%
Sales deductions:
Government rebates and chargebacks		635		4.0%
Discounts and fees		621		3.9%
Total sales deductions		1,256		7.9%
Product revenue, net	$	14,620		92.1%

Cost of Sales – Product. Product cost of sales for the three months ended June 30, 2017 of $2.7 million relate to freight and royalties costs associated with Rubraca sales in the period. Manufacturing costs associated with sales in the quarter were expensed as incurred based on our policy to expense costs associated with the manufacture of our products prior to regulatory approval, and therefore, were not included in product cost of sales for the three months ended June

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30, 2017. We expect cost of sales to increase in relation to product revenues once we deplete these inventories in the third quarter 2017.

Cost of Sales – Intangible Asset Amortization. In the three months ended June 30, 2017, we recognized cost of sales of $0.4 million associated with the amortization of capitalized milestone payments related to the FDA approval of Rubraca. Prior to the FDA approval on December 16, 2016, all acquired license and milestone payments were expensed as incurred.

Research and Development Expenses. Research and development expenses ~~increased~~decreased during the three months ended June 30, ~~2016~~2017 compared to the same period in the prior year primarily due to ~~increased~~lower research and development ~~activities~~costs for rucaparib and rociletinib and classification of commercialization related expenses associated with Rubraca in selling, general and administrative expenses rather than research and development expenses. In the ~~rucaparib program~~three months ended June 30, 2017, Rubraca commercialization costs included in selling, general and ~~higher salaries, share-based compensation and other personnel-related costs, partially offset by lower~~administrative expenses ~~related to the rociletinib program.~~were $26.9 million.

Clinical trial costs for rucaparib were ~~$5.2 million higher than~~relatively flat compared to the same quarter ~~in the prior~~a year ~~primarily due to~~ago as higher costs from enrollment in ARIEL4, our confirmatory ovarian cancer trials, and enrollment in our TRITON2 and TRITON3 studies for prostate cancer were largely offset by lower costs for the ARIEL2 and ARIEL3 studies, in ovarian cancer. Market research, disease education and other commercial product planning activities were $4.2 million higher than the same quarter in the prior year due to the preparation for the potential regulatory approval and commercial launch of rucaparib. In addition, clinicalwhich have completed enrollment. Clinical supply and related manufacturing development costs were ~~$2.1~~$3.5 million ~~higher~~lower than the second quarter of ~~2015, as we increased production~~2016 due to ~~support~~ the ~~expanded clinical studies.~~capitalization of these costs subsequent to the FDA approval of rucaparib.

Salaries, share-based compensation expense and other personnel-related costs were $9.3 million higher in the second quarter of 2016 driven by increased headcount to support our expanded development and commercial planning activities. During the third quarter of 2015, we completed the hiring of our U.S. sales and marketing and medical affairs organizations in preparation for the potential regulatory approval and commercial launch of rucaparib.

Clinical trial costs for rociletinib were ~~$9.8~~$8.2 million lower than the second quarter ~~in 2015~~of 2016 primarily due to the completion of patient enrollment for all of the ~~TIGER-1, TIGER-2 and TIGER-X~~TIGER studies in non-small cell lung cancer. ~~This decrease was partially offset by higher clinical trial costs for the TIGER-3 study, which began enrolling patients during the second quarter of 2015.~~ Market research, disease education and other commercial product planning activities were $3.7 million lower than the same quarter in the prior year. The Company incurred higher costs during the second quarter of 2015 due to the preparation for the potential regulatory approval and commercial launch of rociletinib.~~In addition, clinical~~Clinical supply and related manufacturing development costs were ~~$1.2~~$4.3 million lower than the second quarter ~~in 2015~~of 2016 driven by timing of production to support our clinical studies.

Selling, General and Administrative Expenses. ~~General~~Selling, general and administrative expenses increased during the three months ended June 30, ~~2016~~2017 compared to the same period in the prior year primarily due to ~~$1.7 million higher legal expense and $0.3 million higher personnel costs.~~

~~Impairment~~classification of ~~Intangible Asset~~.~~During the second quarter of 2016, the Company recorded a $104.5 million impairment chargeto the IPR&D intangible asset relating to our lucitanib product candidate.This reduction in the estimated fair value of lucitanib was the result of the Company’s and its development partner’s decision to discontinue the development of lucitanib for breast cancer.~~

~~Change in Fair Value of Contingent Purchase Consideration~~.Change in fair value of contingent purchase consideration totaled ($25.5) million for the three months ended June 30, 2016 compared to $0.8 million for the same period in the prior year. During the second quarter of 2016, the Company recorded a $25.5 million reduction in the fair value of the contingent purchase consideration liability due to the Company’s and its development partner’s decision to discontinue the development of lucitanib for breast cancer.

~~Other Income (Expense), net.~~ Other expense decreased during the three months ended June 30, 2016 compared to the same period in the prior year. During the second quarter of 2016, the Company recognized $0.2 million of foreign currency gains compared with $1.1 million of foreign currency losses during the same period in 2015. The change in the foreign currency gains and losses was driven by fluctuations in the foreign currency rate utilized to translate our Euro-denominated contingent purchase consideration liability into U.S. dollars.

~~Income Tax Benefit (Expense).~~ ~~During the second quarter of 2016, the Company recognized a $29.2 million deferred tax benefit~~commercialization related expenses associated with ~~the impairment~~Rubraca in selling, general and administrative expenses rather than research and development expenses.

Table of ~~the IPR&D intangible asset.~~Contents

Comparison of Six Months Ended June 30, ~~2016~~2017 and ~~2015:~~2016:

The following table summarizes the results of our operations for the six months ended June ~~31,~~30, 2017 and 2016 ~~and 2015~~ (in thousands):

	Six Months Ended June 30,						Change 2016 vs. 2015
	2016			2015			$			%							Change
													Six months ended June 30,				Favorable/(Unfavorable)
													2017		2016		$		%

Product revenue, net													$	21,665	$	—	$	21,665		n/a
Operating expenses:
Cost of sales - product														3,893		—		(3,893)		n/a
Cost of sales - intangible asset amortization														743		—		(743)		n/a	%
Research and development	$	142,337		$	117,118		$	25,219			22	%		65,555		142,337		76,782		54	%
General and administrative		19,379			13,955			5,424			39	%
Selling, general and administrative														65,373		19,379		(45,994)		(237)	%
Acquired in-process research and development		300			—			300		n/a				—		300		300		n/a
Impairment of intangible asset		104,517			—			104,517		n/a				—		104,517		104,517		n/a
Change in fair value of contingent purchase consideration		(24,936	)		1,488			(26,424	)		(1,776	%)		—		(24,936)		(24,936)		n/a
Total expenses		241,597			132,561			109,036			82	%		135,564		241,597		106,033		44	%
Operating loss		(241,597	)		(132,561	)		(109,036	)		82	%		(113,899)		(241,597)		127,698		52.86	%
Other income (expense):
Interest expense		(4,210	)		(4,172	)		(38	)		1	%		(5,178)		(4,210)		(968)		(22.99)	%
Foreign currency gains (losses)		(368	)		2,105			(2,473	)		(117	%)		(83)		(368)		285		77.45	%
Legal settlement loss														(117,000)		—		(117,000)		n/a
Other income		221			73			148			203	%		946		221		725		328	%
Other expense, net		(4,357	)		(1,994	)		(2,363	)		119	%
Other income (expense), net														(121,315)		(4,357)		(116,958)		(2,684.37)	%
Loss before income taxes		(245,954	)		(134,555	)		(111,399	)		83	%		(235,214)		(245,954)		10,740		4.37	%
Income tax benefit (expense)		33,240			(120	)		33,360			(27,800	%)
Income tax benefit														1,365		33,240		(31,875)		(96)	%
Net loss	$	(212,714	)	$	(134,675	)	$	(78,039	)		58	%	$	(233,849)	$	(212,714)	$	(21,135)		(10)	%

Product Revenue, Net. Product revenue for the six months endedJune 30, 2017 was due to the recognition of $21.7 million of net product revenue from the sale of our first commercial product, Rubraca, which was approved for sale in the United States markets and we began shipping on December 19, 2016. Revenue is recorded net of sales deductions comprised of rebates, chargebacks and other discounts. Sales deductions represented approximately 8.9% of the gross product revenue recognized in the six months ended June 30, 2017 and are summarized as follows:


	Six months ended
	June 30, 2017
	$		% of Gross Sales
	(in thousands)

Gross product revenue	$	23,778		100.0%
Sales deductions:
Government rebates and chargebacks		1,072		4.5%
Discounts and fees		1,041		4.4%
Total sales deductions		2,113		8.9%
Product revenue, net	$	21,665		91.1%

Cost of Sales – Product. Product cost of sales for the six months ended June 30, 2017 of $3.9 million relate to freight and royalties costs associated with Rubraca sales in the period. Manufacturing costs associated with sales in the quarter were expensed as incurred based on our policy to expense costs associated with the manufacture of our products prior to regulatory approval, and therefore, were not included in product cost of sales for the six months ended June 30, 2017. We expect cost of sales to increase in relation to product revenues once we deplete these inventories in the third quarter of 2017.

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Cost of Sales – Intangible Asset Amortization. In the six months ended June 30, 2017, we recognized cost of sales of $0.7 million associated with the amortization of capitalized milestone payments related to the FDA approval of Rubraca. Prior to the FDA approval on December 19, 2016, all acquired license and milestone payments were expensed as incurred.

Research and Development Expenses. Research and development expenses ~~increased~~decreased during the six months ended June 30, ~~2016~~2017 compared to the same period in the prior year primarily due to ~~increased~~lower research and development ~~activities~~costs for rucaparib and rociletinib and classification of commercialization related expenses associated with Rubraca in selling, general and administrative expenses rather than research and development expenses. In the ~~rucaparib program~~six months ended June 30, 2017, Rubraca commercialization costs included in selling, general and ~~higher salaries, share-based compensation and other personnel-related costs, partially offset by lower~~administrative expenses ~~related to the rociletinib program.~~were $47.0 million.

Clinical trial costs for rucaparib were ~~$10.5 million higher than~~relatively flat compared to the same period ~~in the prior~~a year ~~primarily due to~~ago as higher costs from enrollment in ARIEL4, our confirmatory ovarian cancer trials, and enrollment in our TRITON2 and TRITON3 studies for prostate cancer were largely offset by lower costs for the ARIEL2 and ARIEL3 studies, ~~in ovarian cancer. Market research, disease education and other commercial product planning activities~~which have completed enrollment. Diagnostic development costs were ~~$7.0~~$6.1 million ~~higher than the same period in~~lower compared to the prior year ~~due to~~as the ~~preparation for~~prior year included the ~~potential regulatory approval and commercial launch of rucaparib. Diagnostic development~~ costs ~~for rucaparib were $3.5 million higher than 2015 due to the advancement of~~associated with our collaboration with Foundation Medicine, Inc. to develop a novel companion diagnostic test to identify patients most likely to respond to rucaparib. ~~In addition,~~Finally, clinical supply and related manufacturing development costs were ~~$2.9~~$7.0 million ~~higher~~lower than ~~2015, as we increased production~~2016 due to ~~support~~ the ~~expanded clinical studies.~~capitalization of these costs subsequent to the FDA approval of rucaparib.

Salaries, share-based compensation expense and other personnel-related costs were $23.8 million higher in 2016 driven by increased headcount to support our expanded development and commercial planning activities. During the third quarter of 2015, we completed the hiring of our U.S. sales and marketing and medical affairs organizations in preparation for the potential regulatory approval and commercial launch of rucaparib.

Clinical trial costs for rociletinib were ~~$13.6~~$18.5 million lower than ~~2015~~2016 primarily due to the completion of patient enrollment infor all of the ~~TIGER-1, TIGER-2 and TIGER-X~~TIGER studies in non-small cell lung cancer. ~~This decrease was partially offset by higher clinical trial costs for the TIGER-3 study, which began enrolling patients during the second quarter of 2015.~~ Clinical supply and related manufacturing development costs were ~~$6.3~~$7.2 million lower than ~~2015~~2016 driven by timing of production to support our clinical studies. In addition, market research, disease education and other commercial product planning activities were $4.6 million lower than the prior year. The Company incurred higher costs during 2015 due to the preparation for the potential regulatory approval and commercial launch of rociletinib.

Selling, General and Administrative Expenses. ~~General~~Selling, general and administrative expenses increased during the six months ended June 30, ~~2016~~2017 compared to the same period in the prior year primarily due mainly to ~~$3.2 million higher legal expense, $0.7 million higher personnel costs and $0.5 million higher consulting fees.~~

~~Change in Fair Value of Contingent Purchase Consideration~~.Change in fair value of contingent purchase consideration totaled ($24.9) million for the six months ended June 30, 2016 compared to $1.5 million for the same period in the prior year. During the second quarter of 2016, the Company recorded a $25.5 million reduction in the fair value of the contingent purchase consideration liability due to the Company’s and its development partner’s decision to discontinue the development of lucitanib for breast cancer.

~~Other Income (Expense), net.~~ Other expense increased during the six months ended June 30, 2016 compared to the same period in the prior year. During the first half of 2016, the Company recognized $0.4 million of foreign currency losses compared with $2.1 million of foreign currency gains during the same period in 2015. The change in the foreign currency gains and losses was driven by fluctuations in the foreign currency rate utilized to translate our Euro-denominated contingent purchase consideration liability into U.S. dollars.

~~Income Tax Benefit (Expense).~~ ~~During the six months ended June 30, 2016, the Company recognized a $29.2 million deferred tax benefit~~commercialization related expenses associated with ~~the impairment of the IPR&D intangible asset recorded~~Rubraca in the second quarter of 2016. In addition, during the first quarter of 2016, the Company recognized a $3.6 million deferred tax benefit due to a reduction in the enacted corporate tax rate of a foreign jurisdiction in which the Company operates.selling, general and administrative expenses rather than research and development expenses.

Liquidity and Capital Resources

To date, we have funded our operations through the public offering of our common stock and the private placement of convertible debt securities and preferred stock. In January 2017, we sold 5,750,000 shares of our common stock in a public offering at $41.00 per share. The net proceeds from the offering were $221.2 million, after deducting underwriting discounts and commissions and offering expenses. In June 2017, we sold 3,920,454 shares of our common stock in a public offering at $88.00 per share. The net proceeds from the offering were $324.9 million, after deducting underwriting discounts and commissions and offering expenses. At June 30, ~~2016,~~2017, we had cash, cash equivalents and available-for-sale securities totaling ~~$378.5~~$671.5 million.

The following table sets forth the primary sources and uses of cash for the six months ended ~~June 30,~~March 31, 2017 and 2016 ~~and 2015:~~(in thousands):


	Six Months Ended June 30,						Six months ended June 30,
	2016			2015			2017		2016
	(in thousands)
Net cash used in operating activities	$	(151,670	)	$	(105,631	)	$	(149,541)	$	(151,670)
Net cash provided by (used in) investing activities		99,244			(143,222	)
Net cash (used in) provided by investing activities								(133,864)		99,244
Net cash provided by financing activities		1,943			3,073			558,440		1,943
Effect of exchange rate changes on cash and cash equivalents		106			(636	)		565		106
Net decrease in cash and cash equivalents	$	(50,377	)	$	(246,416	)
Net increase (decrease) in cash and cash equivalents							$	275,600	$	(50,377)

Operating Activities

Net cash used in operating activities for all periods resulted primarily from our net losses adjusted for non-cash ~~charges~~items and changes in components of working capital. Net cash used in operating activities ~~increased $46.0 million~~was lower during the six months ended June 30, ~~2016~~2017 compared to the same period in the prior year ~~driven~~due to a lower net loss as adjusted for non-

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cash items, partially offset by ~~higher rucaparib research and development costs associated with~~increases in the ~~expansion of the clinical trials and the preparation for the potential commercial launch and higher salaries, benefits and personnel-related costs resulting from higher headcount~~operating assets needed to support the ~~expanded development activities and commercial planning. These costs were partially offset by lower expenditures~~commercialization of Rubraca, most notably related to ~~development activities for rociletinib.~~inventory.

Investing Activities

~~Net cash provided by investing activities for the six months ended June 30, 2016 includes $100.0 million in maturities of available-for-sale securities.~~

Net cash used in investing activities for the six months ended June 30, ~~2015~~2017 includes ~~$142.2 million in~~ purchases of available-for-sale ~~securities.~~securities of $180.0 million offset by cash from maturities of available-for-sale securities of $50.0 million. Net cash provided by investing activities in the same period in the prior year was mainly the result of maturities of available-for-sale securities of $100.0 million in that period.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2017 and 2016 ~~and 2015~~ includes ~~$1.9~~$12.3 million and ~~$3.1~~$1.9 million, respectively, received from employee stock option ~~exercises and~~exercises. In addition, we completed the sale of $546.2 million of common stock, ~~purchases under~~net of issuance costs, during the ~~employee stock purchase plan.~~six months ended June 30, 2017.

Operating Capital Requirements

Assuming we successfully complete clinical trials and obtain requisite regulatory approvals, we do not anticipate commercializing any of our product candidates until at least the fourth quarter of 2016. As such, we anticipate that we will continue

We expect to ~~generate~~incur significant losses for the foreseeable future, as we ~~incur expenses to complete our development activities for our programs, prepare for the potential commercial launch of our products~~commercialize Rubraca and expand our selling, general and administrative functions to support the growth in our ~~research~~commercial organization. Additionally, our operating plan for the next 12 months includes a significant investment in inventory to meet the projected commercial requirements for Rubraca. We receive the active pharmaceutical ingredient in Rubraca from one supplier and ~~development~~we experience long lead times associated with its production. Accordingly, we expect to experience a decrease in our liquidity at the beginning of a production cycle and ~~commercial organizations.~~an increase as the inventory produced is sold through.

As of June 30, ~~2016,~~2017, we had cash, cash equivalents and available-for-sale securities totaling ~~$378.5~~$671.5 million and total current liabilities of ~~$72.9~~$219.4 million. In January 2017, we sold 5,750,000 shares of our common stock in a public offering at $41.00 per share. The net proceeds from the offering were $221.2 million, after deducting underwriting discounts and commissions and offering expenses. In June 2017, we sold 3,920,454 shares of our common stock in a public offering at $88.00 per share. The net proceeds from the offering were $324.9 million, after deducting underwriting discounts and commissions and offering expenses. We intend to use the net proceeds of the offerings for general corporate purposes, including commercial planning and sales and marketing expenses associated with the launch of Rubraca in the United States and, if approved by the EMA, in Europe, funding of our development programs, selling, general and administrative expenses, acquisition or licensing of additional product candidates or businesses and working capital. Based on current estimates, we believe that our existing cash, cash equivalents and available-for-sale securities ~~as of June 30, 2016~~ will allow us to fund our operating plan through at least the next 12 months. We expect to finance future cash flow needs through the public or private sale of equity or debt securities, collaborations, strategic alliances or other similar licensing arrangements. We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates. The sale of additional equity and debt securities may result in additional dilution to our shareholders.

In addition, if we raise additional funds through the issuance of debt securities or preferred stock, these securities may have rights senior to those of our common stock and could contain covenants that would restrict our operations. Furthermore, any such required additional capital may not be available on reasonable terms, if at all. If we were unable to obtain additional financing, we may be required to reduce the scope of, delay or eliminate some or all of our planned development and commercialization activities, which could harm our business.

Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amounts of our working capital requirements. Our future funding requirements will depend on many factors, including but not limited to:

the number and characteristics of the product candidates, companion diagnostics and indications we pursue;

the achievement of various development, regulatory and commercial milestones resulting in required payments to partners pursuant to the terms of our license agreements;

the scope, progress, results and costs of researching and developing our product candidates and related companion diagnostics and conducting clinical and non-clinical trials;

the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates and companion diagnostics;

the cost of commercialization activities, ~~if any, assuming our product candidates are approved for sale,~~ including marketing and distribution costs;

the cost of manufacturing any of our product candidates we successfully commercialize;

the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and ~~the~~ outcome of such litigation; and

the timing, receipt and amount of sales, if any, of our product candidates.

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Contractual Obligations and Commitments

For a discussion of our contractual obligations, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2015~~2016 Annual Report on Form 10-K. There have not been any material changes to such contractual obligations or potential milestone payments since December 31, ~~2015.~~2016. For further information regarding ~~the Company’s~~our contractual obligations and commitments, see Note 14,Commitments and Contingencies to our unaudited consolidated financial statements included elsewhere in this report.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

We are exposed to market risk related to changes in interest rates. As of June 30, ~~2016,~~2017, we had cash, cash equivalents and available-for-sale securities of ~~$378.5~~$671.5 million, consisting of bank demand deposits, money market funds and U.S. treasury securities. The primary objectives of our investment policy are to preserve principal and maintain proper liquidity to meet operating needs. Our investment policy specifies credit quality standards for our investments and limits the amount of credit exposure to any single issue, issuer or type of investment. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments are in short-term securities. Our available-for-sale securities are subject to interest rate risk and will decline in value if market interest rates increase. Due to the short-term duration of our investment portfolio and the low risk profile of our investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair value of our portfolio.

We contract with contract research organizations, investigational sites and contract manufacturers globally where payments are made in currencies other than the U.S. dollar. In addition, on October 3, 2016, we entered into a ~~significant portion~~Manufacturing and Services Agreement with a Swiss company for the production and supply of the ~~contingent purchase consideration liability~~active ingredient for Rubraca. Under the terms of this agreement, payments for the supply of the active ingredient in Rubraca as well as scheduled capital program fee payment toward capital equipment and other costs associated with the construction of a dedicated production train will be ~~settled with Euro-denominated payments~~made in Swiss francs. Once the production facility is operational, we are obligated to pay a fixed facility fee each quarter for the duration of the agreement, which expires on December 31, 2025.

As of June 30, 2017, $183.6 million of purchase commitments exist under the Swiss Manufacturing and Services Agreement and we are required to remit amounts due in Swiss francs. Due to other variables that may exist, it is difficult to quantify the impact of a particular change in exchange rates. However, we estimate that if ~~certain future milestones are achieved. We may be subject~~the value of the US dollar was to ~~fluctuations in foreign currency rates in connection with these agreements~~strengthen by 10% compared to the value of Swiss franc as of June 30, 2017, it would decrease the total US dollar purchase commitment under the Swiss Manufacturing and ~~future contingent payments.~~ Services Agreement by approximately $16.7 million. Similarly, a 10% weakening of the US dollar compared to the Swiss franc would increase the total US dollar purchase commitment by approximately $20.4 million.

While we periodically hold foreign currencies, primarily Euro and ~~pounds sterling,~~Pound Sterling, we do not use other financial instruments to hedge our foreign exchange risk. Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise. As of both June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, approximately ~~2% and 3%, respectively,~~1% of our total liabilities were denominated in currencies other than the functional currency.

~~ITEM 4.~~

ITEM 4.CONTROLS AND PROCEDURES

~~CONTROLS AND PROCEDURES~~

Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Principal Financial and Accounting Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective. With the participation of our Chief Executive Officer and Principal Financial and Accounting Officer, management performed an evaluation as of June 30, ~~2016~~2017 of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on this evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer

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concluded that, as of June 30, ~~2016,~~2017, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, ~~2016~~2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. ~~OTHE~~ROTHER INFORMATION

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

ITEM 1.LEGAL PROCEEDINGS

Throughout November and December 2015, three other purported shareholders filed similar purported class actions concerning alleged misstatements about rociletinib. ~~The Kimbro Complaint seeks unspecified damages.~~

Also on November 19, 2015, a second purported shareholder class action complaint was filed by Sonny P. Medina, another purported Clovis shareholder, containing similar allegations to those set forth in the Kimbro Complaint, also in the United States District Court for the District of Colorado (the “Medina Complaint”). The Medina Complaint purports to be asserted on behalf of a class of persons who purchased Clovis stock between May 20, 2014 and November 13, 2015. On November 20, 2015, a third complaint was filed by John Moran in the United States District Court for the Northern District of California (the “Moran Complaint”). The Moran Complaint contains similar allegations to those asserted in the Kimbro and Medina Complaints and purports to be asserted on behalf of a plaintiff class who purchased Clovis stock between October 31, 2013 and November 13, 2015.

On January 19, 2016, a number of motions were filed ~~in both the District of Colorado and the Northern District of California~~ seeking to consolidate the shareholder class actions into one matter and for appointment of a lead plaintiff. ~~All lead plaintiff movants other than~~On February 18, 2016, the Medina Court consolidated the various actions into a single proceeding and appointed M. Arkin (1999) LTD and Arkin Communications LTD (the “Arkin Plaintiffs”) ~~subsequently filed notices of non-opposition to the Arkin Plaintiffs’ application.~~

2016 (the “Consolidated Complaint”). The Consolidated Complaint ~~names~~named as defendants the Company and certain of its current and former officers (the “Clovis Defendants”), certain underwriters (the “Underwriter Defendants”) for a Company follow-on offering conducted in July 2015 (the “July 2015 Offering”), and certain Company venture capital investors (the “Venture Capital Defendants”). The Consolidated Complaint ~~alleges~~alleged that defendants violated particular sections of the Securities Exchange Act of 1934 (the “Exchange Act”) and the Securities Act of 1933 (the “Securities Act”). The purported misrepresentations and omissions ~~concern~~concerned allegedly misleading statements about rociletinib. The consolidated action iswas purportedly brought on behalf of investors who purchased the Company’s securities between May 31, 2014 and April 7, 2016 (with respect to the Exchange Act claims) and investors who purchased the Company’s securities pursuant or traceable to the July 2015 Offering (with respect to the Securities Act claims). The Consolidated Complaint ~~seeks~~sought unspecified compensatory and recessionary damages.

~~On May 23, 2016, the Medina, Kimbro, Rocco, and Moran actions were consolidated for all purposes in a single proceeding in the District of Colorado.~~

The Clovis Defendants, the Underwriter Defendants and the Venture Capital Defendants ~~each~~ filed ~~a Motion~~motions to ~~Dismiss~~dismiss on July 27, ~~2016;~~2016. On February 9, 2017, the Medina Court issued an opinion and order granting in part and denying in part the Clovis Defendants’ motion to dismiss, granting in part and denying in part the Underwriter Defendants’ motion to dismiss, and granting the Venture Capital Defendants’ motion to dismiss. On February 22, 2017, the Arkin ~~Plaintiff’s opposition is due on September 23, 2016;~~Plaintiffs filed an amended consolidated class action complaint, directed solely at repleading its Section 12(a) claims against the Underwriter Defendants.

On March 14, 2017, the Clovis Defendants and the ~~defendants’ replies are due on October 14, 2016.~~Arkin Plaintiffs participated in a mediation, which did not result in a settlement.

~~The~~

On June 18, 2017, the Clovis Defendants ~~intend~~entered into a stipulation and agreement of settlement with the Arkin Plaintiffs whereby Clovis will issue to ~~vigorously defend against~~ the ~~allegations contained~~plaintiffs and participating class members total consideration comprised of $25.0 million in cash and the issuance of a to be determined number of shares of Clovis common stock (the “Settlement Shares”) equal to $117.0 million divided by the volume weighted average price of Clovis common stock over the 10 trading days immediately preceding the date of the hearing set by the Medina Court to consider the final approval of the settlement. The cash portion of the consideration is expected to be funded by Clovis’ insurance carriers. At June 30, 2017, the liability for the issuance of the shares and cash, including the amount to be reimbursed through insurance proceeds, was recorded to accrued liability for legal settlement on the Consolidated Balance Sheets in the ~~Kimbro,~~amount of approximately $142.0 million and a receivable of approximately $25.0 million from the insurance carriers on the Consolidated Balance Sheets. Clovis will issue the Settlement Shares no later than 5 business days after the date the judgment is entered by the Medina ~~Moran and Rocco Complaints, but there can be no assurance that~~Court approving the ~~defense~~settlement whereby the issuance of the shares will be ~~successful.~~recorded in common stock and additional paid-in capital and the accrued liability for legal settlement will be cleared.

On ~~December 30, 2015, Jamie McCall, a purported shareholder~~July 14, 2017, the Medina Court issued an order preliminarily approving the settlement. A final hearing to determine whether the settlement should be approved is scheduled for October 26, 2017.

Table of Clovis, filed a shareholder derivative complaint (the “McCall Complaint”) against certain officers and directors of Clovis in the Colorado District Court, County of Boulder. The McCall Complaint generally alleged that the defendants breached their fiduciary duties owed to Clovis by participating in misrepresentation of the Company’s business operations and prospects. The McCall Complaint also alleged claims for abuse of control, gross mismanagement and unjust enrichment. The McCall Complaint sought, among other things, an award of money damages, declaratory and injunctive relief concerning the alleged fiduciary breaches and other forms of equitable relief. On March 17, 2016, the plaintiff filed a notice of voluntary dismissal of the McCall Complaint and the action was terminated by the Court.Contents

The Company intends to vigorously defend against the allegations ~~contained~~ in the Electrical Workers Amended Complaint, but there can be no assurance that the defense will be successful.

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Company’s business operations and prospects, failing to ensure that the TIGER-X clinical trial was being conducted in accordance with applicable rules, regulations and protocols, and engaging in insider trading. The Consolidated Derivative Complaint purported to rely on documents produced by the Company in response to the Macalinao and McKenry Demand Letters. The Consolidated Derivative Complaint sought, among other things, an award of money damages.

The Company intends to vigorously defend against the allegations in the Consolidated Derivative Complaint, but there can be no assurance that the defense will be successful.

The Company intends to vigorously defend against the allegations in the Solak Complaint, but there can be no assurance that the defense will be successful.

The Company intends to vigorously defend against the allegations in the Guo Complaint, but there can be no assurance that the defense will be successful.

these agencies with respect to their investigations. The ~~Company received a letter dated May 31, 2016 from an alleged owner~~proposed settlement of the ~~Company’s common stock, which purports to set forth a demand for inspection of certain of the Company’s books~~Medina action does not resolve these inquiries and ~~records pursuant to~~ ~~8 Del. C.~~ ~~§ 220 (the “Demand Letter”). The Demand Letter was purportedly made for the purposes of investigating alleged misconduct at~~ the Company relating to rociletinib. On June 24, 2016, the Company submitted a response to the Demand Letter. The Company believes that the Demand Letter fails to establish an entitlement to any of the requested documents, but there can be no assurance about the likelihood of an adversecannot predict their timing or outcome.

~~ITEM 1A.~~

ITEM 1A.RISK FACTORS

~~RISK FACTORS~~

Our business faces significant risks and uncertainties. Certain factors may have a material adverse effect on our business prospects, financial condition and results of operations, and you should carefully consider them. Accordingly, in evaluating our business, we encourage you to consider the risk factors described under the heading “Risk Factors” in Part I, Item 1A of our ~~Quarterly~~most recent Annual Report on Form ~~10-Q for the quarter ended March 31, 2016,~~10-K, in addition to other information contained in or

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incorporated by reference into this Quarterly Report on Form 10-Q and our other public filings with the SEC. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations.

There have been no material changes to the risk factors included in our previously filed ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~March~~December 31, 2016. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial also may negatively impact our business.

~~ITEM 2.~~

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

None.

~~ITEM 3.~~

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

~~DEFAULTS UPON SENIOR SECURITIES~~

None.

~~ITEM 4.~~

ITEM 4.MINE SAFETY DISCLOSURES

~~MINE SAFETY DISCLOSURES~~

Not Applicable.

~~ITEM 5.~~

~~OTHER INFORMATION~~

~~None.~~

ITEM 5.OTHER INFORMATION

None.

~~ITEM 6.~~

~~EXHIBITS~~

ITEM 6.EXHIBITS

INDEX TO EXHIBITS

~~Exhibit~~ ~~Number~~o
Exhibit
Number	Exhibit Description

3.1(5)		Amended and Restated Certificate of Incorporation of Clovis Oncology, Inc.

3.2(5)		Amended and Restated Bylaws of Clovis Oncology, Inc.

4.1(3)		Form of Common Stock Certificate of Clovis Oncology, Inc.

4.2(8)		Indenture dated as of September 9, 2014, by and between Clovis Oncology, Inc. and The Bank of New York Mellon Trust Company, N.A.

10.1*(4)		Amended and Restated Strategic License Agreement, dated as of June 16, 2011, by and between Clovis Oncology, Inc. and Avila Therapeutics, Inc.

10.2*(4)		License Agreement, dated as of June 2, 2011, by and between Clovis Oncology, Inc. and Pfizer Inc.

10.3+(1)		Clovis Oncology, Inc. 2009 Equity Incentive Plan.

10.4+(4)		Clovis Oncology, Inc. 2011 Stock Incentive Plan.

10.5+(1)		Form of Clovis Oncology, Inc. 2009 Equity Incentive Plan Stock Option Agreement.

10.6+(4)		Form of Clovis Oncology, Inc. 2011 Stock Incentive Plan Stock Option Agreement.

10.7+(3)		Employment Agreement, dated as of August 24, 2011, between Clovis Oncology, Inc. and Patrick J. Mahaffy.

10.8+(3)		Employment Agreement, dated as of August 24, 2011, between Clovis Oncology, Inc. and Erle T. Mast.

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10.9+(3)		Employment Agreement, dated as of August 24, 2011, between Clovis Oncology, Inc. and Gillian C. Ivers-Read.

10.10+~~(3)~~		~~Employment Agreement, dated as of August 24, 2011, between Clovis Oncology, Inc. and Andrew R. Allen.~~

~~10.11+~~(1)		Indemnification Agreement, dated as of May 15, 2009, between Clovis Oncology, Inc. and Paul Klingenstein.

~~10.12+~~10.11+(1)		Indemnification Agreement, dated as of May 15, 2009, between Clovis Oncology, Inc. and James C. Blair.

~~10.13+~~10.12+(1)		Indemnification Agreement, dated as of May 15, 2009, between Clovis Oncology, Inc. and Edward J. McKinley.

~~10.14+~~10.13+(1)		Indemnification Agreement, dated as of May 15, 2009, between Clovis Oncology, Inc. and Thorlef Spickschen.

~~10.15+~~10.14+(1)		Indemnification Agreement, dated as of May 15, 2009, between Clovis Oncology, Inc. and M. James Barrett.

~~10.16+~~10.15+(1)		Indemnification Agreement, dated as of May 15, 2009, between Clovis Oncology, Inc. and Brian G. Atwood.

~~10.17+~~10.16+(1)		Indemnification Agreement, dated as of May 12, 2009, between Clovis Oncology, Inc. and Patrick J. Mahaffy.

~~10.18+~~10.17+(1)		Indemnification Agreement, dated as of May 12, 2009, between Clovis Oncology, Inc. and Erle T. Mast.

~~10.19+~~10.18+(1)		Indemnification Agreement, dated as of May 12, 2009, between Clovis Oncology, Inc. and Gillian C. Ivers-Read.

~~10.20+~~10.19+(1)		Indemnification Agreement, dated as of May ~~13,~~12, 2009, between Clovis Oncology, Inc. and Andrew R. Allen.

~~10.21+~~10.20+(4)		Clovis Oncology, Inc. 2011 Employee Stock Purchase Plan.

~~10.22+~~10.21+(4)		Clovis Oncology, Inc. 2011 Cash Bonus Plan.

~~10.23+~~10.22+(6)		~~Employment~~Indemnification Agreement, dated as of March 22, 2012, ~~by and~~ between Clovis Oncology, Inc. and Steven L. Hoerter.

~~10.24+(6)~~		~~Indemnification Agreement, dated as of March 22, 2012, by and between Clovis Oncology, Inc. and Steven L. Hoerter.~~

~~10.25+~~10.23+(2)		Indemnification Agreement, dated as of June 13, 2013, between Clovis Oncology, Inc. and Ginger L. Graham.

~~10.26+~~10.24+(2)		Indemnification Agreement, dated as of June 13, 2013, between Clovis Oncology, Inc. and Keith Flaherty.

~~10.27(7)~~	10.25(7)	Stock Purchase Agreement, dated as of November 19, 2013, by and among the Company, EOS, the Sellers listed on Exhibit A thereto and Sofinnova Capital V FCPR, acting in its capacity as the Sellers’ Representative.

10.2810.26(7)		Development and Commercialization Agreement, dated as of October 24, 2008, by and between Advenchen Laboratories LLC and Ethical Oncology Science S.p.A., as amended by the First Amendment, dated as of April 13, 2010 and the Second Amendment, dated as of July 30, 2012.

10.2910.27(7)		Collaboration and License Agreement, dated as of September 28, 2012, by and between Ethical Oncology Science S.p.A. and Les Laboratoires Servier and Institut de Recherches Internationales Servier.

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~~10.30(9)~~		~~Consulting Agreement, dated August 6, 2015, by and between Andrew Allen and Clovis Oncology, Inc.~~

~~10.31+(10)~~	10.28+(12)	Indemnification Agreement, dated as of January 29, 2016, by and between Clovis Oncology, Inc. and Lindsey Rolfe.

~~10.32+(10)~~	10.29+(12)	Employment Agreement, dated as of February 25, 2016, by and between Clovis Oncology, Inc. and Lindsey Rolfe.

~~10.33+(10)~~	10.30+(12)	Indemnification Agreement, dated as of January 26, 2016, by and between Clovis Oncology, Inc. and Dale Hooks.

~~10.34+(10)~~	10.31+(12)	Employment Agreement, dated as of January 26, 2016, by and between Clovis Oncology, Inc. and Dale Hooks.

~~10.35+(11)~~	10.32+(9)	Indemnification Agreement, dated as of February 17, 2016, by and between Clovis Oncology, Inc. and Daniel W. Muehl.

~~10.36+(12)~~10.33+(15)		~~Offer Letter,~~Employment Agreement, dated as of ~~May 27, 2015,~~July 6, 2017, by and between Clovis Oncology, Inc. and Daniel W. Muehl.

~~10.37+(12)~~	10.34+(10)	Salary Waiver Letter, dated as of May 9, 2016, by and between Clovis Oncology, Inc. and Patrick J. Mahaffy.

10.35*(11)	First Amendment to License Agreement, by and between Clovis Oncology, Inc. and Pfizer Inc., dated as of August 30, 2016.

10.36+(13)	Form of Clovis Oncology, Inc. 2011 Stock Incentive Plan RSU Agreement.

10.37*(13)	Manufacturing Services Agreement, by and between Clovis Oncology, Inc. and Lonza Ltd, dated as of October 3, 2016.

10.38*(14)	Strata Trial Collaboration Agreement, by and between Clovis Oncology, Inc. and Strata Oncology, Inc., dated as of January 30, 2017

21.1	List of Subsidiaries of Clovis Oncology, Inc.

31.1		Certification of principal executive officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2		Certification of principal financial officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1		Certification of principal executive officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of principal financial officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following materials from Clovis Oncology, Inc.’s Quarterly Report on Form 10-Q for the period ended June 30, ~~2016,~~2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations ~~(ii) the Consolidated Statements of~~and Comprehensive Loss, ~~(iii)~~(ii) the Consolidated Balance Sheets, ~~(iv)~~(iii) the Consolidated Statements of Cash Flows and ~~(v)~~(iv) Notes to Unaudited Consolidated Financial Statements.

(1)

Filed as an exhibit with the Registrant’s Registration Statement on Form S-1 (File No. 333-175080) on June 23, 2011.

(2)

Filed as an exhibit with the Registrant’s Current Report on Form 8-K (File No. 001-35347) on June 14, 2013.

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(3)

Filed as an exhibit with Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-175080) on August 31, 2011.

(4)

Filed as an exhibit with Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-175080) on October 31, 2011.

(5)

Filed as an exhibit with the Registrant’s Annual Report on Form 10-K on March 15, 2012.

(6)

Filed as an exhibit with the Registrant’s Registration Statement on Form S-1 (File No. 333-180293) on March 23, 2012.

(7)

Filed as an exhibit with the Registrant’s Current Report on Form 8-K (File No. 001-35347) on November 19, 2013.

(8)

Filed as an exhibit with the Registrant’s Current Report on Form 8-K (File No. 001-35347) on September 9, 2014.

(9)

~~Filed as an exhibit with the Registrant’s Current Report on Form 8-K (File No. 001-35347) on August 12, 2015.~~

~~(10)~~

~~Filed as an exhibit with the Registrant’s Annual Report on Form 10-K on February 29, 2016.~~

~~(11)~~

Filed as an exhibit with the Registrant’s Current Report on Form 8-K (File No. 001-35347) on April 1, 2016.

~~(12)~~

(10)

Filed as an exhibit with the Registrant’s Quarterly Report on Form 10-Q on May 9, 2016.

~~Indicates management contract or compensatory plan.~~(11)

Filed as an exhibit with the Registrant’s Quarterly Report on Form 10-Q on November 4, 2016.

~~Confidential treatment has been granted with respect to portions of this~~(12)

Filed as an exhibit ~~which portions have been omitted and filed separately~~ with the ~~Securities and Exchange Commission.~~Registrant’s Annual Report on Form 10-K on February 29, 2016.

(13)

Filed as an exhibit with the Registrant’s Annual Report on Form 10-K on February 23, 2017.

(14)

Filed as an exhibit with the Registrant’s Quarterly Report on Form 10-Q on May 4, 2017.

(15)

Filed as an exhibit with the Registrant’s Current Report on Form 8-K (File No. 001-35347) on July 7, 2017.

+ Indicates management contract or compensatory plan.

* Confidential treatment has been granted with respect to portions of this exhibit, which portions have been omitted and filed separately with the Securities and Exchange Commission.

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SIGNATURES

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: August ~~9, 2016~~3, 2017	CLOVIS ONCOLOGY, INC.

	By:	/s/ PATRICK J. MAHAFFY
		Patrick J. Mahaffy
		President and Chief Executive Officer; Director

	By:	/s/ DANIEL W. MUEHL
		Daniel W. Muehl
		Senior Vice President of Finance and Principal Financial and Accounting Officer

3642

	For the Six
	Months Ended
	June 30, 2016
Liabilities:
Balance at beginning of period	$	24,661
Change in fair value (a)		(24,936	)
Change in foreign currency gains and losses		275
Balance at end of period	$	—

							Total
	Foreign						Accumulated
	Currency			Unrealized			Other
	Translation			Gains			Comprehensive
	Adjustments			(Losses)			Income (Loss)
Balance December 31, 2014	$	(24,448	)	$	—		$	(24,448	)
Period change		(22,629	)		(383	)		(23,012	)
Balance December 31, 2015		(47,077	)		(383	)		(47,460	)
Period change		3,410			441			3,851
Income tax expense		(1,278	)		(163	)		(1,441	)
Balance June 30, 2016	$	(44,945	)	$	(105	)	$	(45,050	)

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (Thousands)
Outstanding at December 31, 2015		5,360,257		$	51.53
Granted		768,265			20.61
Exercised		(62,710	)		6.50
Forfeited		(840,077	)		59.50
Outstanding at June 30, 2016 (a)		5,225,735		$	46.25		7.2	$	4,177
Vested and expected to vest at June 30, 2016		4,958,823		$	45.84		7.1	$	4,177
Exercisable at June 30, 2016		2,874,047		$	39.26		5.9	$	4,177

	Number of Units			Weighted- Average Grant Date Fair Value
Unvested as of December 31, 2015		—		$	—
Granted		146,503			19.37
Vested (a)		(2,625	)		19.37
Forfeited		(18,080	)		19.37
Unvested as of June 30, 2016		125,798		$	19.37
Expected to vest after June 30, 2016		109,009		$	19.37