I have been taking out the trash on this and other message boards for years. I get it. Someone said something that really makes you angry. You want to publicly take them to the woodshed. Here's the thing. You have to remember that this is a diverse group reading the message board. You have to find a way to publicly humiliate that "bad actor" without making yourself a target. If the best you can do is place that member in a regional area, a profession, a political party, an ethnicity, etc., that isn't going to cut it. Your doing surgery with a lawn mower instead of a scalpel. Your going to p.o. more people than the one individual you want to indict and turn the mb into a tit for tat battle ground that undermines the usefulness of the venue in general. Find some less than endearing trait to criticize that everyone, or many can agree on without alienating others. Including quotes or examples will help your cause. If you can't do that, then perhaps you should reexamine the justification for your initial anger.
Every now and then someone needs a bit of comeuppance. But let's not paint with so broad a brush next time. When you critique, remember that what you say may say more about yourself than your target.
"....will be subject to redemption at our option, in whole or in part, on or after August 15, 2016, but only if the last reported sale price of our common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the trading day prior to the date we provide the notice of redemption to holders exceeds 130% of the conversion price in effect on each such trading day...."
The first opportunity for the company to call the converts early will be at the end of the 3rd Q, ie Sep 30. $6.91 is the 130% threshold that needs to be maintained as defined above from the convert prospectus. Should this occur, it will likely be a non-cash transaction. The immediate effect would be the retirement of $287.5 million in debt and the issuance of 54 million new shares of EXEL common stock. The current number of outstanding shares is 228 million, so it would be a dilution factor of 28%. As I type the current sp is $6.57 giving EXEL a market cap of $1.5 B. Let's assume the conversion occurs in October and the share price is $7. EXEL's market cap would be about $2.0B wth 282 million shares outstanding and a very manageable debt level considerably less than cash on hand.
I am not predicting this will happen, but it certainly is a plausible outcome at some point in 2016 or 2017.
"On twitter, at "apolo_andrea" is stating that the triplet of Cabo+Nivo+Ipi is well tolerated. This bodes well for a shock and awe firstline offensive in firstline RCC and perhaps other tumors types."
Her initial focus is Urothelial Cancer. From an investor's viewpoint, I'm not sure I want to see Cabo/Nivo/Ipi in RCC. The upfront separate retail price of the combination is staggering. I think it likely, Cabo would have to be offered at a deep discount. As I project things out in RCC, I think it likely, Cabo will initially own the 2nd/3rd line space, eventually perhaps a chunk of frontline dollars and even further out settle in as the 2nd line SOC, importantly, all as monotherapy. As counterintuitive as it may sound, the revenue as monotherapy may be greater than moving up the treatment algorithm as part of an effective combination treatment.
Cabo currently has no piece of UC, so in that setting being a part of a successful combination would make sense and I could see the logic in a pivotal trial with cost sharing with BMY and shared discount pricing strategy agreed to beforehand.
From a medical viewpoint, the triplet in RCC might show great promise. If that is the circumstance, then the ph 3 funding may need to come from a source other than BMY and EXEL.
"Ernie, thanks for the info. If you dont mind me asking how do you view this current run?"
I would normally sell into a nice rally like we are seeing today, but I have not done so. I see a clean run to $6.90. From there I want to see how the stock moves. I see my position as more of a core that I want to hold onto and I probably will not trade until we see a reasonable pullback of some kind. The fundamentals are all very positive, but there is too much optimism surrounding the stock, so it could bounce back down again just to frustrate the faithful. So I'm jut waiting to see where it goes and ready to buy more on a correction.
$5.31 is an important level as it is the conversion price. $5.40 was the most recent secondary. I see those as permanently in the rearview mirror unless there is a serious setback of some kind. That leaves $6.91 and perhaps $8 at which level a secondary was consummated prior to the convert deal. I think the limiting factor on share price will just be the overall market cap as compared to projected revenue. Celestial has to play into that scenario. The end game is still an eventual sale of the company.
"So you are right about the amount of outstanding shares but the shorted convertible shares are already being traded so those would not dilute."
Not everyone understands, so let me explain. Company XYX has 1000 company issued shares outstanding and owned by various investors. Acme hedge fund shorts 100 shares. To do so they borrow John Smith's 100 shares and sell them to Mary Brown. XYZ still only has 1000 shares outstanding, but thanks to Acme, there are investors who own a total of 1100 shares. John still owns his 100 shares, but Acme borrowed them and sold them to Mary, who now also owns 100 shares. So even though the official share count is 1000, there are currently 1100 shares available for trade.
So for EXEL, post conversion, the share count will go up by 54 million, but the number of shares available for trade will go up by a lesser number, based on how many of the bondholders use those shares to close out a short position.
"To avoid a 28% dilution by issuing 54 million shares to pay the debt, could the company just pay out cash to retire a portion or all of the debt without having to dilute?"
If the bonds are called early, the share price will be close to or above $6.91, at least a 30% premium to the cash redemption value of the bonds based on the conversion rate. Those bondholders are entitled to and anticipate receiving 188 shares of stock instead of the 1000 dollar face value of the bond. On the secondary market, the bonds themselves trade for $1280 per $1000 face value bond.
"If there were 54 million new shares issued that erased this debt, I assume it would not translate to a 28% decrease in stock price as the funds were used to erase debt?"
No. It doesn't work like a stock split, because there is a corresponding benefit to the company in the form of the debt reduction. It will also be a anticipated event, so the share price should find an offsetting equilibrium point in advance of the transaction.
"She also mentioned that doublet results will be presented at ESMO 2016 in Copenhagen."
I mentioned earlier that ESMO is a likely venue for CaboSun. It could make ESMO more pivotal for EXEL than ASCO.
"So you should not be buying above $5.30."
I did not explain that well. I don't think we will see a share price as low #$%$30 again, ever, unless something really disastrous happens. So I don't think that opportunity will present itself. I think we are working toward a higher trading range, but I have no idea where it will stabilize. When it does stabilize I will look to buy more so that I have a position with which to trade. I will wait for a 5-10% correction and start buying. I'm not certain what the price level will be when that correction occurs, but my guess is that the stock may falter at the $6.90 level. We'll see.
"Please understand that EVERY potential customer for CABO is under a statistically measurable death sentence with no appeal."
Max we are lucky to have your perspective here on this message board about Exelixis. Please forgive my occasional insensitivity and have no doubt that I wish you well.
"i think 5.40 is very likely. Just because everyone thinks it won't fall that low again. Even you."
Even as I was typing my post I was thinking exactly the point you made. My technical analysis is very seat of the pants. What you call cup and handle, I attribute to deserved Karma for brash overconfidence. Regardless, despite the overabundance of enthusiasm, I don't think we make it back down to $5.40. If we do you are entitled to a "told ya so."
"Interesting, more are buying than selling, but I dont pay much attention to that, I prefer to look at what company insiders are doing, they been on a shopping spree on EXEL."
There are really only two open market transactions worth consideration. The rest of the activity you see there is option awards. Director Lance Willsey purchased 100,000 shares last December and Chief Scientific Officer Peter Lamb exercised a bunch of options and turned around and sold the stock on the open market last October. There is lots of Form 4 activity but the great majority of it is associated with option awards. In fairness, EXEL has a very aggressive option and stock award plan so all the senior executives and the BoD have considerable exposure to share price movement without going on the open market and purchasing more. But "they" have not been on a shopping spree.
"Have not seen a pivotal phase III trial with so few updates."
I assume you're referring to the dot gov website. The lack of information on this trial goes much further than updating the website. There have been no progress reports on enrolment. The only thing they have said is to expect topline results in 2017. When specifically asked if those were topline interim or final results, MMM just kind of grunted "yes" and quickly moved on. Even poor old Arqule with likely inferior drug Tivantinib was able to fully enroll their ph 3 in an overlapping indication. It's a really important situation that deserves attention. The lack of transparency is troubling and makes one consider how bad the actual situation might be if they won't even address it publicly.
Nice Find. It's on the dot Gov website. Very exciting! It's everything we were speculating abut last week actually coming to fruition. Phase 3, so it is filable and will likely get breakthrough.
From the exclusion criteria:
•After the approximate 5% cap for microsatellite (MSI)-high participants is reached, only MSI-stable patients will be eligible
•Once the 50% cap for wild-type RAS has been reached, only extended RAS-mutant participants will be eligible
MSI high equals mismatch repair deficient. So far the other PD1 drugs have only had success in this 15% subgroup. Roche is aiming at the other 85% that the other PD1 companies have not been able to address.
The trial is only enrolling 360 split into 3 arms. That indicates a very high degree of confidence in the efficacy of Cobi/Atezo. I predict the June 5 presentation of Cobi/Atezo ph 1/2 data will contribute to that perception.
"We already know of ernie's expressed wish to get another chance to buy the shares back he sold a few weeks ago and with ASCO just around the corner why not raise the level of #$%$.D.?"
I expect to make money trading EXEL by capitalizing when it gets overextended either positively or negatively. I don't have to create those opportunities, they happen all by themselves. Just a few days ago I made the point that the fundamentals for EXEL have not been this positive since pre-Comet. I post a lot. You don't have to read between the lines. I try to be both obvious and objective, pointing out both strengths and weaknesses as I see them. Some readers can handle realizing that this is a good story, but not flawless, some obviously cannot.
Would it be so unbelievable that EXEL and management have learned the benefit of UP/OD (under promise and over delver) ? It certainly worked with METEOR and CABOSUN, coBrim, and the Ipsen partnership. Once is an aberration, twice is a pattern, three and four times is a strategy."
This is progress. Your actually trying to make a fact based argument. Let's look at it. Does EXEL management under promise and over deliver? Look again at the initial Meteor press release from July 2015. The only missing statistics are the OS and PFS medians. Please recall that the phase 2 mPFS was 13 months and there were very optimistic predictions by many on this mb predicting 10+ months for Meteor. I worked hard to manage those expectations down to a more reasonable 8 months. I guess that was more FUD, eh? Look again at the CaboSun press release and the quote EXEL included from Dr. Choueiri. " “Based on these findings, cabozantinib may have the potential to become a new gold standard for previously untreated patients following their diagnosis with advanced kidney cancer.” If that's under promising, I wonder what form excessive optimism would take. Like always, the Devil will be in the details and we don't have those yet.
"What is your issue with this? Sorefinib shows a couple months of extended life at best. What should they use as a control?"
It is not a criticism of the trial design. It is intended as an explanation for slow enrolment. There is competition for available patients and in the 2nd line setting there are earlier phase open label trials that do not present the risk of getting placebo treatment.
The trial is defining a 3rd line indication following 2 regimens of chemo. 3rd line CRC is a very large indication and by making sure that KRAS wt and mutant and mismatch repair proficient and incompetent are represented, they are going after all defined subgroups within the indication. Another exciting aspect is possible applicability to other indications. So far the best PD1 results have been in indications with high mutation loading. Melanoma has its origins in ultraviolet light DNA damage. NSCLC and Urothelial cancers are largely tobacco mediated. Cancers with tobacco and sun exposure origin tend to have a higher accumulation of gene damage. CRC patients are often tested for microsatellite instability, as it guides the treatment algorithm away from drugs ineffective when cancercells are mismatch repair deficient. The association was made that PD1 monotherapy in CRC is only effective in the small mismatch deficient subgroup. The Cobi/Atezo activity in mismatch repair proficient patients is a first.
CRC is a worthy goal of its own, but the activity in this subgroup raises more questions. The specific test used is MSI (miscrosatellite instability) and it can be used for any solid tumor. So for indications for which Nivo and Keytruda are already approved, can MSI testing define subgroups who do not benefit? Will C/A be effective in MSI stable disease in idications other than CRC? Potentially big commercial implications to the answers. Will Merck and BMS be far behind with their own MEK/PD1 combinations? We'll see.
"Not printed on BATS NASDQ at $6.81 yet."
I think it got there on the ask, but did not fill. I show the 52 week high at 6.805 and today's current high at 6.80. Wondering what kind of barrier 6.91 will be, if any.
"CRC is a pretty big indication but mis-match proficient is a subset of eligible patients and Cobi is priced at a discount."
Subset yes, but it is an 85% subset and the trial includes enough of the other 15% to justify a 100% approval. As far as the pricing goes, the U.S. list price for the Z/C combo is $17K per month. The split is $11K for Zelboraf and $6K for Cotellic. Your guess is as good as mine on how Roche will split Cobi/Atezo.
"Do you have any estimates for annual revs should this trial succeed and this combo sews up the PD-(L)1 therapy revenue?
I'm not going to estimate revenue yet, but there are 134K new diagnoses per year and 49K mortalities per year. You can use any number of assumption to determine the size of the third line indication and duration of treatment, but regardless, we are not talking chump change any more as we are with melanoma. It would sew up 3rd line for a while, but the strategy with PD1 is to leapfrog ahead into an earlier phase in the treatment algorithm. Competitors would have to run a PD1 combo vs one of the frontline chemo triplets or doublets to get ahead. We need to see the June 5 update when they present the data.
This could happen very quickly. In its pivotal trial for Regorafenib, Bayer recruited 760 patients in a year. Roche only needs half that number and has the advantage of PD1 buzz. Regor's mOS was only 6.4 months so this will not be a long running trial. It could conceivably be over before Celestial.
The trial is set up with 3 arms. Cobi/Atezo, Atezo monotherapy and Regorafenib. Somewhere along the line the question needs to be asked as to whether this effect might have more to do with Cobi than Atezo. Is MEK a relevant target in CRC?