Exelixis, Inc. (EXEL - Free Report) reported impressive results for the second-quarter on the back of increased Cabometyx sales. The company posted second-quarter 2017 earnings of 8 cents, beating the Zacks Consensus Estimate of 3 cents. Notably, the company had reported a loss of 15 cents per share in the year-ago quarter.
Net revenue came in at $99.0 million, significantly up from $36.2 million in the year-ago quarter. Revenues also surpassed the Zacks Consensus Estimate of $84.6 million. Revenues were boosted by the FDA approval of a tablet formulation of cabozantinib, (distinct from the capsule form) under the brand name Cabometyx in Apr 2016 for the treatment of advanced renal cell carcinoma (RCC) in patients who have received prior anti-angiogenic therapy.
Exelixis’ share price has increased 78.6% year to date compared with the industry’s gain of 9.9%.
Quarter in Detail
Total product revenue was $88.0 million, up from $31.6 million in the year-ago quarter. Cabometyx generated $80.9 million in net product revenue, up 29.6% sequentially driven by 25% growth in demand which was attributable to new patient starts, refills for patients already on therapy and continued expansion of the prescriber base. Cometriq (cabozantinib) capsules for the treatment of medullary thyroid cancer generated $7.1 million in net product revenue.
Total collaboration revenue was $11.0 million compared with $4.6 million in the year-ago quarter.
In the reported quarter, research and development expenses declined 22.7% to $28.2 million primarily a result of increases in clinical trial costs (costs related to CABOSUN, start-up costs associated with CheckMate 9ER and with phase Ib trial of cabozantinib and Tecentriq in locally advanced or metastatic solid tumors and were partially offset by a decrease in costs related to METEOR) and personnel expenses.
Selling, general and administrative expenses were $40.7 million, up 13.7% driven by an increase in headcount connected with the build-out and support of the commercial organization in the U.S, an increase in legal costs, and an increase in consulting and outside services to support marketing activities.
The company continues to focus on the commercialization of Cabometyx in the U.S. Exelixis plans to file a supplemental New Drug Application (sNDA) for cabozantinib as a treatment for previously-untreated patients with advanced RCC in third-quarter 2017 based on the positive data from the randomized phase II trial, CABOSUN. An independent radiology review committee has confirmed the primary efficacy endpoint results of investigator-assessed progression-free survival (PFS) in the CABOSUN trial. As per the analysis from the committee, Cabometyx demonstrated a clinically meaningful and statistically significant reduction in the rate of disease progression or death as measured by PFS.
During the first quarter, Exelixis inked agreements with The Bristol-Myers Squibb Company (BMY - Free Report) and Roche Holding AG (RHHBY - Free Report) to collaborate on the development of cabozantinib in combination with immunotherapy agents. Exelixis and Bristol-Myers initiated a phase III trial, CheckMate 9ER, in Jul 2017.
Exelixis has also initiated the dose-escalation stage of a phase Ib trial of cabozantinib in combination with Tecentriq. The drug will be evaluated in patients suffering from locally advanced or metastatic urothelial carcinoma (UC) or RCC.
In Mar 2017, the FDA granted cabozantinib orphan drug designation for the treatment of HCC. A phase III trial, CELESTIAL is currently ongoing in patients with advanced HCC. The company now expects completing the second intermin analysis at 75% of the events in the second half of 2017.
Meanwhile, Exelixis and Roche have agreed to revise the revenue and cost-sharing arrangement for commercialization of the other drug in the former’s portfolio, Cotellic in the U.S.
Roche also announced that IMspire150 TRILOGY, which evaluates the combination of Cotellic, Tecentriq, and Xelboraf in first-line BRAF V600 mutation-positive metastatic or unresectable locally advanced melanoma, enrolled its first patient in Jan 2017 while IMspire170, the trial evaluating the combination of Cotellic and Tecentriq versus Merck & Co., Inc.’s (MRK - Free Report) Keytruda in first-line BRAF wild-type metastatic or unresectable locally advanced melanoma, is likely to enroll its first patient in the third quarter of this year.
Exelixis expects total costs and operating expenses for 2017 in the range of $290–$310 million. This guidance includes about $25 million of non-cash costs and expenses related primarily to stock-based compensation expense. R&D expense is projected to increase in the second half of 2017 due to initiation of combination studies.
Exelixis’ second-quarter results were impressive where in both earnings and sales beat estimates. The sequential increase in Cabometyx sales is a positive for the company thereby underlying the increasing demand for the drug. Going forward, we expect investor on further label expansion of cabozantinib and Cotellic. A potential label expansion in first-line RCC will significantly boost the growth prospects.
Zacks Rank & Key Pick
Exelixis currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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