It has been about a month since the last earnings report for Exelixis (EXEL Quick QuoteEXEL - Free Report) . Shares have added about 8.4% in that time frame, outperforming the S&P 500.

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

Exelixis Q3 Earnings and Sales Miss, Annual View Updated

Exelixis reported earnings of 10 cents per share in the third quarter of 2023, missing the Zacks Consensus Estimate of 17 cents and down from 31 cents in the year-ago quarter.

Including stock-based compensation expense, earnings per share were breakeven compared with 23 cents per share in the year-ago quarter due to a significant increase in R&D expenses.

Net revenues came in at $471.9 million, marginally missing the Zacks Consensus Estimate of $476 million. Revenues were, however, up 14.6% year over year.   

Quarter in Detail

Net product revenues came in at $426.5 million, up 16.4% year over year. The increases in net product revenues were primarily due to a rise in sales volume and the average net selling price.

Cabometyx (cabozantinib) generated revenues of $422.2 million and beat the Zacks Consensus Estimate and our model estimate of $416 million and $417.6 million, respectively. The drug is approved for advanced renal cell carcinoma (“RCC”) and previously treated hepatocellular carcinoma (“HCC”). Cometriq generated $4.3 million in net product revenues (cabozantinib capsules) for treating medullary thyroid cancer. 

Collaboration revenues, comprising license revenues and collaboration services revenues, were $45.4 million in the quarter compared with $45.3 million in the year-ago quarter.  

In the reported quarter, research and development expenses were $332.6 million, up 67.2% year over year. The significant surge was primarily related to the $80 million up-front payment associated with the in-licensing of XL309, increases in license and other collaboration costs, personnel expenses and manufacturing costs to support development candidates. Selling, general and administrative expenses were $138.1 million, up 20% due to an increase in personnel expenses.

In March, Exelixis announced that its board authorized the repurchase of up to $550 million of the company’s common stock before the end of 2023. Under this program, Exelixis repurchased 16.943 million shares of the company’s common stock for a total of $344.8 million as of Sep 30. 

Litigation Update

In July, Exelixis announced that it entered into a settlement and license agreement with Teva Pharmaceuticals. This settlement resolves patent litigation brought by Exelixis 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 the FDA’s approval.

Consequently, both companies will terminate the ongoing litigation.

Pipeline Updates

In August, Exelixis and partner Ipsen announced that the phase III CONTACT-02 pivotal trial met one of two primary endpoints, demonstrating a statistically significant improvement in progression-free survival (“PFS”) at the primary analysis. The study is evaluating cabozantinib in combination with atezolizumab compared with a second novel hormonal therapy (“NHT”) in patients with metastatic castration-resistant prostate cancer and measurable soft-tissue disease who have been previously treated with one NHT. At a prespecified interim analysis for the primary endpoint of overall survival (“OS”), a trend toward improvement of OS was observed, but the data was immature and did not meet the threshold for statistical significance.
Therefore, the trial will continue to the next analysis of OS, as planned.

Exelixis plans to discuss a potential regulatory submission when the results of the next OS analysis are available based on feedback from the FDA.

Detailed results from the late-stage CABINET study evaluating cabozantinib in advanced pancreatic and extra-pancreatic neuroendocrine tumors demonstrated a statistically significant and clinically meaningful improvement in PFS in those patients treated with cabozantinib. Earlier, The Alliance for Clinical Trials in Oncology’s independent Data and Safety Monitoring Board unanimously recommended unblinding and stopping the trial early due to a dramatic improvement in efficacy observed at an interim analysis.

In September, Exelixis received global rights to develop and commercialize XL309 from Insilico. The candidate is a potentially best-in-class small-molecule inhibitor of USP1, which has emerged as a synthetic lethal target in the context of BRCA-mutated tumors. Under the terms of the agreement, Insilico granted Exelixis an exclusive, worldwide license to develop and commercialize XL309 and other USP1-targeting compounds in exchange for an upfront payment of $80 million and potential future development and commercial milestone payments, as well as tiered royalties on net sales.

2023 Guidance Updated

Revenues are now projected between $1.825 billion and $1.850 billion compared with the previous estimate of $1.775-$1.875 billion.

Product revenues are estimated in the range of $1.625-$1.650 billion compared with the earlier guidance of $1.575-1.675 billion.

R&D expenses are now projected between $1.050 billion and $1.075 billion, up from the previous guidance of $1.0-$1.050 billion.

 

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted 51.64% due to these changes.

VGM Scores

At this time, Exelixis has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, 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 broadly 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 belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, Deciphera Pharmaceuticals, Inc. (DCPH Quick QuoteDCPH - Free Report) , has gained 7.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

Deciphera Pharmaceuticals, Inc. reported revenues of $43.31 million in the last reported quarter, representing a year-over-year change of +20.4%. EPS of -$0.58 for the same period compares with -$0.55 a year ago.

Deciphera Pharmaceuticals, Inc. is expected to post a loss of $0.59 per share for the current quarter, representing a year-over-year change of +1.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.

Deciphera Pharmaceuticals, Inc. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.