Clovis Oncology (CLVS) shares surged on Wednesday, closing nearly 22% higher. The rally in CLVS shares was sparked after TESARO (TSRO) announced positive results from a late-stage study of its PARP inhibitor, niraparib. CLVS is also developing a PARP inhibitor called rucaparib.

CLVS shares have struggled ever since the rociletinib setback. However, I have noted before, at current levels, the market is not assigning much value to rucaparib, which has significant potential. If approved, rucaparib has the potential to become a blockbuster drug. CLVS’s current valuation, despite the surge on Wednesday, does not reflect this.