Exelixis, Inc. (EXEL - Free Report) delivered better-than-expected results for third-quarter 2019, wherein both earnings and revenues beat estimates on strong performance by Cabometyx.
The company’s shares have lost 11.7% in the year so far compared with the industry’s decline of 0.9%.
Exelixis reported earnings of 31 cents, easily beating the Zacks Consensus Estimate of 20 cents. However, the bottom line declined from 41 cents in the year-ago quarter.
Net revenues came in at $271.7 million, increasing from $225.4 million in the year-ago quarter and surpassing the Zacks Consensus Estimate of $228.38 million.
Quarter in Detail
Net product revenues came in at $191.8 million, up 17.7% from the year-ago quarter, driven by continued growth of Cabometyx in the United States for the treatment of advanced renal cell carcinoma (RCC).
Cabometyx received another FDA approval for the treatment of patients with hepatocellular carcinoma, who have been previously treated with sorafenib, in January. The label expansion of the drug for this indication in the United States also boosted sales.
The drug generated $187.4 million of revenues. Patient demand grew 14% year over year but declined 4% sequentially. Prescriber base grew by 40% year over year and 7% sequentially.
Cometriq (cabozantinib capsules), for the treatment of medullary thyroid cancer, generated $4.4 million in net product revenues.
Total collaboration revenues were $79.9 million, up from $62.5 million in the year-ago quarter, primarily owing to the recognition of a $50.0 million milestone from Exelixis’ collaboration with Ipsen Pharma SAS for the achievement of $250.0 million of net sales from cabozantinib in its territories over four consecutive fiscal quarters.
In the reported quarter, research and development expenses more than doubled to $97.3 million due to increases in clinical trial costs, license and other collaboration costs, and personnel expenses. Selling, general and administrative (SG&A) expenses were $51.3 million, up 6.6% year over year, driven by increase in personnel expenses and stock-based compensation.
The pipeline progress in the year so far has been encouraging.
In July, Exelixis announced an exclusive collaboration, option and license agreement with Aurigene, an India-based biotechnology company focused on oncology and inflammatory disorders, to in-license as many as six programs. Per the agreement, Exelixis made an upfront payment of $10.0 million for exclusive options to license three pre-existing programs from Aurigene. The companies selected three additional Aurigene-led drug discovery programs on mutually agreed upon targets, in exchange for supplemental option payments totaling $7.5 million.
In the same month, Exelixis amended the protocol for COSMIC-021, the phase Ib trial of cabozantinib in combination with Roche’s (RHHBY - Free Report) Tecentriq (atezolizumab) in patients with locally advanced or metastatic solid tumors. Based on preliminary encouraging activity and safety data, the original immunotherapy-refractory non-small cell lung cancer and metastatic castration-resistant prostate cancer (CRPC) cohorts were expanded to 80 patients each. Additionally, four new cohorts — two expansion and two exploratory — in metastatic CRPC settings were included in the trial.
In October, Ipsen announced Health Canada’s approval of Cabometyx for the first-line treatment of adults with advanced RCC. Hence, Exelixis is eligible to receive a milestone payment of $3.0 million, which will be recognized as revenues in the fourth quarter of 2019.
In October, the company filed a patent infringement lawsuit against MSN Pharmaceuticals, Inc, following the receipt of a Paragraph IV certification notice letter from the latter stating that it had filed an ANDA with the FDA requesting the approval to market a generic version of Cabometyx tablets, following the expiration of the Cabometyx composition of matter patent — U.S. Patent No. 7,579,473 — which expires on Aug 14, 2026. Per Exelixis, the effective date of any FDA approval for the ANDA would be a date not earlier than the expiration of U.S. Patent No. 8,877,776 on Oct 8, 2030.
R&D expenses are now expected around $350 million (previous guidance: between $330 million and $350 million) and SG&A expenses around $240 million (previous guidance: between $220 million and $240 million).
Exelixis’ earnings and sales beat estimates in the third quarter despite increasing competition from the recently approved combination therapies. Earlier this year, the FDA approved Merck’s (MRK - Free Report) Keytruda in combination with Pfizer’s (PFE - Free Report) Inlyta for the first-line treatment of patients with advanced RCC. Competition has further intensified with the FDA approval of a combination regimen of Bavencio (avelumab) and Inlyta for the same. Given the increasing use of these therapies, we expect investors to focus on the label expansions of cabozantinib in the ongoing combination trials.
Exelixis currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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