Exelixis, Inc. (EXEL - Free Report) delivered better-than-expected results for third-quarter 2018, wherein both earnings and revenues beat estimates on strong performance by Cabometyx.
Following the announcement of the results, shares of Exelixis gained 13.1% in the after-market trading session. However, Exelixis’ shares have lost 50.8% in the year so far, compared with the industry’s decline of 15.7%.
The company reported earnings of 41 cents, easily beating the Zacks Consensus Estimate of 19 cents. The bottom line was also up from 26 cents reported in the year-ago quarter.
Net revenues came in at $225.4 million, up from $152.5 million in the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate of $166.4 million.
Quarter in Detail
Net product revenues came in at $162.9 million, up 69% from the year-ago quarter, driven by continued growth of Cabometyx in the United States for the treatment of advanced renal cell carcinoma (RCC).
The FDA approved a tablet formulation of cabozantinib, (distinct from the capsule form) under the brand name Cabometyx in April 2016, for the treatment of advanced RCC in patients who have received prior anti-angiogenic therapy. The FDA also expanded the drug’s label for the treatment of previously untreated advanced RCC in December 2017.
Cabometyx generated $158.3 million net product revenues. Demand grew 5% sequentially.
Cometriq (cabozantinib capsules), for the treatment of medullary thyroid cancer, generated $4.7 million in net product revenues.
Total collaboration revenues were $62.5 million compared with $56.1 million in the year-ago quarter. The revenues included the recognition of milestone payments of $36.9 million and $5.0 million from the company’s collaboration with Ipsen Pharma SAS for the anticipated approval of Cabometyx for previously-treated HCC in the European Union and the approval of the drug in Canada for previously-treated RCC, respectively.
In the reported quarter, research and development expenses increased 56.8% to $44.7 million, stemming from higher personnel expenses, clinical trial costs, and consulting and outside services. Selling, general and administrative expenses were $48.1 million, up 26.3%, driven by increases in personnel expenses and stock-based compensation.
In September 2018, Exelixis announced that the National Comprehensive Cancer Network (NCCN) has updated its Clinical Practice Guidelines to include new recommendations for Cabometyx. As a result of the update, Cabometyx is now recommended by the NCCN for the treatment of advanced RCC, regardless of patient risk status (favorable-, intermediate- and poor-risk).
We remind investors that Exelixis has already submitted a supplemental New Drug Application (sNDA) to the FDA for advanced hepatocellular carcinoma (HCC). The EMA also accepted the company's application for the addition of HCC indication. The FDA accepted the company’s sNDA for Cabometyx as a treatment for patients with previously treated advanced HCC and set a target action date of Jan 14, 2019.
In addition, Exelixis and partner Ipsen received a positive opinion from the Committee for Medicinal Products for Human Use (CHMP), the scientific committee of the European Medicines Agency (EMA), for the label expansion of Cabometyx tablets as a monotherapy for the treatment of hepatocellular carcinoma (HCC) in adults, who have been previously treated with Nexavar (sorafenib).
Exelixis recently announced encouraging results from the dose-escalation stage of the phase Ib COSMIC-021 study of Cabometyx in combination with Tecentriq, in previously untreated advanced RCC. The combination was well tolerated and showed promising anti-tumor activity.
In October 2018, Exelixis initiated a phase III trial (COSMIC-311) of single-agent cabozantinib in patients with radioiodine-refractory differentiated thyroid cancer (DTC) who have progressed up to two prior vascular endothelial growth factor receptor (VEGFR)-targeted therapies. The co-primary endpoints for the trial are progression-free survival and objective response rate.
Meanwhile, Exelixis inked agreements with Bristol-Myers (BMY - Free Report) and Roche Holding (RHHBY - Free Report) to develop cabozantinib in combination with immunotherapy agents in 2017.The phase III CheckMate 9ER study is evaluating cabozantinib in combination with Opdivo versus Pfizer’s (PFE - Free Report) Sutent among treatment naive RCC patients.
The study is enrolling patients globally and being conducted by Bristol-Myers. The triplet combination of cabozantinib, Opdivo and Yervoy continues to be evaluated in the ongoing Phase 1b trial in patients with advanced genitourinary malignancies.
2018 Guidance Updated
Exelixis now expects total costs and operating expenses for 2018 to be $410- $420 million compared with the earlier projection of $430-$460 million. The range was updated due to timing of clinical trial expenses, primarily related to the planned and ongoing combination trials.
Exelixis’ third-quarter results were impressive amid stiff competition from Sutent, Votrient and Inlyta, among others. The approval of Opdivo and Yervoy for the treatment of poor and intermediate risk first-line RCC has further increased competition. The company experienced an 11% increase in Cabometyx’s prescriber base as compared to the second quarter.
We expect Cabometyx sales to grow as the drug is now approved for first-line RCC, which will expand the eligible patient population in the United States and also eat into the market share of two key drugs — Sutent and Votrient. We expect investors’ to focus on further label expansion of cabozantinib.
A potential approval for HCC (liver cancer) early next year should further boost demand and diversify the franchise, given the huge market for liver cancer.
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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