Exelixis, Inc. EXEL continues to be one of the outperformers in the choppy biotech industry in 2023. Shares of the company have gained 30.9% year to date against the industry’s decline of 22.5%.
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This oncology-focused drug company recently reported third-quarter results, which missed earnings and sales estimates as higher R&D expenses impacted the bottom line.
While revenues were marginally short of the consensus estimate, Cabometyx maintained its status as the leading tyrosine kinase inhibitor (TKI) for the treatment of renal cell carcinoma (RCC). This was driven by its use in combination with Bristol Myers’ BMY Opdivo in the first-line setting.
The drug also maintained growth in the hepatocellular carcinoma.
Cabometyx prescription volume grew 8% year over year in the third quarter. Management stated that the business remains strong both in terms of demand and new patient starts. The first line RCC market is extremely competitive and this reported quarter was the fourth full quarter in which Cabometyx plus Opdivo was the number one prescribed TKI plus immuno-oncology combination in first line RCC.
Exelixis, Inc. Price and Consensus
Exelixis, Inc. price-consensus-chart | Exelixis, Inc. Quote
BMY’s Opdivo is one of the leading revenue generators for the company and is approved for various oncology indications.
In addition, the pipeline progress has been impressive as EXEL strives to expand Cabometyx’s label and concurrently develop its portfolio beyond its lead drug with promising candidates - next-generation TKI zanzalintnib, XB002, XL102 and CBX-12.
Exelixis’ efforts to develop its oncology pipeline took another step forward when it entered into an exclusive license agreement with clinical-stage biotechnology company, Insilico Medicine, in September 2023.
Per the terms, Exelixis obtained global rights to develop and commercialize ISM3091, a potentially best-in-class small molecule inhibitor of USP1. In exchange, Insilico received an upfront payment of $80 million. Insilico will also receive future development, commercial and sales-based milestone payments as well as tiered royalties on net sales.
In April 2023, FDA cleared Insilico’s investigational new drug application for ISM3091 in patients with solid tumors.
The company recently announced initial results from an expansion cohort of STELLAR-001 evaluating single-agent zanzalintinib in patients with previously clear cell renal cell carcinoma. Results demonstrated an objective response rate of 38% and a disease control rate of 88%.
The anti-tumor activity observed in the monotherapy expansion cohort suggests that zanzalintinib may be an effective therapy, following disease progression after prior treatments. The candidate had earlier shown promising activity in the dose-escalation stage.
Zanzalintinib is currently being developed for the treatment of advanced solid tumors including genitourinary, colorectal, and head and neck cancers.
Earlier, EXEL and partner Ipsen announced that the late-stage CONTACT-02 study achieved one of the two primary endpoints. The study is evaluating cabozantinib in combination with Tecentriq (atezolizumab) for the treatment of patients with metastatic castration-resistant prostate cancer (mCRPC) who have a measurable visceral disease or measurable extra pelvic adenopathy and have been previously treated with one novel hormonal therapy.
Data from the study showed cabozantinib in combination with Tecentriq demonstrated a statistically significant reduction in the risk of disease progression or death compared with a second novel hormonal therapy in mCRPC patients.
Exelixis also settled its patent litigation with Teva Pharmaceuticals TEVA. The patent litigation was brought in by EXEL, in response to Teva’s abbreviated new drug application seeking approval to market a generic version of Cabometyx prior to the expiration of the applicable patents.
Per the settlement terms, Exelixis will grant Teva a license to market its generic version of the drug in the United States beginning on Jan 1, 2031, upon FDA’s approval. Consequently, both companies will terminate the ongoing litigation. This is a definite positive for Exelixis.
Separately, EXEL’s efforts to return value to shareholders are commendable. Shares also soared in March after management announced a share repurchase program of $550 million. The program will be completed before the end of 2023.
The successful development of additional drugs will broaden its portfolio and reduce its dependence on the lead drug, Cabometyx.
However, capturing additional market share in the RCC will be a daunting task for Exelixis, given the competition.
Exelixis currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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