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Why Is Exelixis (EXEL) Down 8.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for Exelixis (EXEL - Free Report) . Shares have lost about 8.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Exelixis due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Exelixis Q2 Earnings Beat, Cabometyx Maintains Growth

Exelixis reported earnings of 22 cents in the second quarter of 2022, beating the Zacks Consensus Estimate of 20 cents. In the year-ago quarter, EXEL reported earnings of 30 cents per share.

Excluding stock-based compensation expense, earnings per share came in at 28 cents, down from 37 cents in the year-ago quarter. The year-over-year decline in earnings was mainly due to higher operating expenses.

Net revenues came in at $419.4 million, which surpassed the Zacks Consensus Estimate of $391 and increased from $385.2 million reported in the year-ago quarter.

Quarter in Detail

Net product revenues came in at $347 million, up from $284.2 million in the year-ago quarter. The upside was primarily led by higher sales volume.

Cabometyx generated revenues of $339.2 million. It is approved for advanced renal cell carcinoma (RCC) and previously treated hepatocellular carcinoma (HCC).  Cometriq (cabozantinib capsules) for the treatment of medullary thyroid cancer generated $7.9 million of net product revenues.  EXEL earned $30.2 million of royalty revenues.

Collaboration revenues, comprising license revenues and collaboration services revenues, were $72.4 million in the quarter compared with $100.9 million in the year-ago quarter.   The decrease in collaboration revenues was primarily related to a decline in development cost reimbursements earned.
In the reported quarter, research and development expenses were $199.5 million, up from $148.8 million in the year-ago quarter.  The increases in research and development expenses were primarily related to the rise in personnel expenses, clinical trial costs, license and other collaboration costs, and consulting and outside services expenses. Selling, general and administrative expenses were $122.8 million, up from $98.5 million in the year-ago quarter.

Pipeline Update

In May 2022, Exelixis’ partner Ipsen secured approval from the European Commission for Cabometyx as a monotherapy to treat adult patients with locally advanced or metastatic differentiated thyroid cancer (DTC), refractory or not eligible to radioactive iodine (RAI) and who progressed during or after prior systemic therapy. Exelixis is entitled to receive $27.0 million in milestone payments from Ipsen, of which $25.7 million was recognized in license revenues and collaboration services revenues in the reported quarter.

COSMIC-313, a phase III study evaluating cabozantinib in combination with Opdivo (nivolumab) and Yervoy (ipilimumab) in previously untreated advanced RCC, met its primary endpoint, demonstrating significant improvement in progression-free survival (PFS) at the primary analysis. However, at a prespecified interim analysis for the secondary endpoint of overall survival (OS), the combination of cabozantinib, nivolumab and ipilimumab did not demonstrate a significant benefit versus the combination of nivolumab and ipilimumab. Exelixis intends to discuss the results with the FDA to determine the next steps toward a potential regulatory submission for the combination regimen for patients with previously untreated advanced intermediate- or poor-risk RCC.

In April 2022, Exelixis initiated the dose-escalation stage of the first-in-human phase I trial of XL114, a novel anti-cancer compound that inhibits the CARD11-BCL10-MALT1 complex as a monotherapy in patients with non-Hodgkin’s lymphoma (NHL) who received prior standard therapies.

2022 Guidance Reiterated

Revenues are projected within $1.525-$1.625 billion, while product revenues are estimated in the range of $1.325-$1.425 billion.


 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted -8.4% due to these changes.

VGM Scores

Currently, Exelixis has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Exelixis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Exelixis is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Blueprint Medicines (BPMC - Free Report) , a stock from the same industry, has gained 6.9%. The company reported its results for the quarter ended June 2022 more than a month ago.

Blueprint Medicines reported revenues of $36.55 million in the last reported quarter, representing a year-over-year change of +33.9%. EPS of -$2.68 for the same period compares with -$1.86 a year ago.

Blueprint Medicines is expected to post a loss of $2.43 per share for the current quarter, representing a year-over-year change of -21.5%. Over the last 30 days, the Zacks Consensus Estimate has changed 0%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Blueprint Medicines. Also, the stock has a VGM Score of D.


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