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Exelixis, Inc. Message Board

  • erniewerner erniewerner Nov 29, 2012 9:54 PM Flag

    It's all good

    I see two things holding the stock back; skepticism about the side effect profile of the drug and the owners of the $225 million convertibles. It needs to be remembered that this trial was conducted using a 140 mg dose. This trial was initiated very early in the clinical development cycle and it was subsequently realized in other indications that the drug retained efficacy at much lower doses. The pivotal CRPC trials are using a 60mg dose reducible to 40 if necessary. In the EXAM study, 80% of patients needed at least one dose reduction. The EXAM study had high rates of SAE’s. The CRPC experience at 100, 60, and 40mg dosages drastically reduced the SAE rates without sacrificing appreciable efficacy. Cabo is a toxic drug, but an inappropriately high dose in the first pivotal trial magnified the effect. Fortunately the drug proved so effective in this indication that it earned approval despite the high SAE rate.
    The $225 mill in convertibles have a conversion price of $5.31. Owners of the converts can sell into any rally and essentially derisk their investment.

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    • You forgot the most obvious thing holding the stock back: credibility!

      That comes from the CEO and there the company falls so short in terms of track record, management, and compensation

      A shame or sham for patients and employees

    • I hope that they (convert holders) all do. If this puppy ever pops big, it takes away the market selling momentum later from a conversion of the converts at maturity.

    • The $225 mill in convertibles have a conversion price of $5.31. Owners of the converts can sell into any rally and essentially derisk their investment

      With all due respect...how do I derisk my investment if I sell under the conversion price of $5.31...Makes no sense...By your logic, $5.31 should be the floor, not the ceiling!

      • 1 Reply to jcaputo68
      • There is logic to not shorting at the convert price. Convert interest rates are typically below market rates due to the potential to gain upside in the appreciation of the stock above the conversion price. If they lock in by shorting at the convert price, they are locking it in without the extra yield provided by the conversion feature to get to the appropriate credit spread for this speculative company. They would really only do this when they have reached a targeted (risk adjusted return) gain, and then lock that in. If they want to hedge though, they can short at some point, but the shares don't convert under $5.31. Also, I haven't done the math to determine how many shares relative to the conversion would cover the bonds in a default/bankruptcy scenario to see if shorting an amount equal to the converts would cover the bond principle.

    • The upsides for holding in 2013 are:

      1) Take out by another company / partnership
      2) Better than expected revenue from off label usage based on Phase 2 data.
      3) Surprise results about OS getting an early termination of the COMET-1 trials from exceptional results.
      4) Surprise results from the GDC-0973 trial.

      The downsides of holding in 2013:

      1) Nothing happens and EXEL just burns cash. Could be dead money until 2014 when top line results show.
      2) No OS results from EXAM (making people fret about COMET).

      I think 1) from my list of downsides is more likely than any other single choice, but 1) from the list of upsides is good too, especially by Roche or BMY whose Brivanib isn't looking so good anymore.

      The Cometriq prescribing information pdf is a wealth of info. A pair of interesting tidbits:

      "What should I avoid while taking COMETRIQ?:

      You should not drink grapefruit juice, eat grapefruit or any foods or supplements
      that contain these products, during treatment with COMETRIQ. They may increase
      the amount of COMETRIQ in your blood.

      OVERDOSAGE:

      One case of overdosage was reported in a patient who inadvertently took twice the intended dose
      (200 mg daily) for nine days. The patient suffered Grade 3 memory impairment, Grade 3 mental
      status changes, Grade 3 cognitive disturbance, Grade 2 weight loss, and Grade 1 increase in
      BUN. The extent of recovery was not documented."

      Grapefruit. Huh. I just added an entry to the wikipages of MTC and Cabo. I might add this this little tidbit too.

      Sentiment: Hold

    • $225 Million in notes, don't want to convert when stock price is high and they get there shares at $5.31, so they convert the notes when the stock $20+ right?what am I missing?

      Sentiment: Strong Buy

 
EXEL
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