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Exelixis' (EXEL) Q2 Earnings and Revenues Surpass Estimates

Zacks Equity Research
·4 mins read

Exelixis, Inc. EXEL delivered better-than-expected results for second-quarter 2020, wherein earnings and revenues beat estimates.

The company reported earnings of 21 cents per share, beating the Zacks Consensus Estimate of 12 cents. The bottom-line figure, however, declined from the year-ago quarter’s 25 cents per share due to higher R&D expenses.

Net revenues came in at $259.5 million, increasing from the $240.3 million reported in the year-ago quarter. Revenues also beat the Zacks Consensus Estimate of $233 million.

Exelixis, Inc. Price, Consensus and EPS Surprise

 

Exelixis, Inc. Price, Consensus and EPS Surprise
Exelixis, Inc. Price, Consensus and EPS Surprise

Exelixis, Inc. price-consensus-eps-surprise-chart | Exelixis, Inc. Quote

Quarter in Detail

Net product revenues came in at $178.7 million, down from $193.7 reported in the year-ago quarter due to a decrease in sales volume.  Net product revenues in the second quarter of 2020 were negatively impacted by the COVID-19 pandemic and an inventory built by wholesalers and end customers in the first quarter of 2020, which generally reversed in the second quarter.

Lead drug, Cabometyx, is approved in the United States for the treatment of advanced renal cell carcinoma (RCC). The drug was also approved for the treatment of patients with hepatocellular carcinoma, who have been previously treated with sorafenib, in January 2019.

Cabometyx generated $173.6 million of revenues. Cometriq (cabozantinib capsules) for the treatment of medullary thyroid cancer generated $5.1 million in net product revenues. Exelixis earned $16.3 million in royalty revenues on the basis of cabozantinib-related revenues generated by its partner, Ipsen.    

In the reported quarter, research and development expenses increased to $114.9 million from  the year-ago figure of $81.9 million due to a rise in clinical trial costs (COSMIC-312, COSMIC-313, CONTACT-02 and COSMIC-021). and personnel expenses. Selling, general and administrative (SG&A) expenses were $59.8 million, up from $58.8 million in the year-ago quarter.

Pipeline Update

In April 2020,  Exelixis and Bristol-Myers BMY announced that CheckMate -9ER, the phase III study evaluating Opdivo in combination with Cabometyx compared to Sutent in previously untreated advanced or metastatic RCC, met its primary endpoint of progression-free survival at the final analysis as well as the secondary endpoints of overall survival at a pre-specified interim analysis and objective response rate. This preliminary analysis of data showed a favorable safety profile for the combination of a 40 mg dose of cabozantinib with Opdivo.

In June and July, Exelixis announced the initiation of CONTACT-01, CONTACT-02 and CONTACT-03, three global phase III studies of cabozantinib in combination with Roche’s RHHBY Tecentriq in patients with previously treated metastatic non-small cell lung cancer (NSCLC), castration-resistant prostate cancer (CRPC) and RCC, respectively.

2020 Guidance Updated

Revenues are now projected at $900-$950 million (previous guidance: $850-$900 million) while product revenues are estimated in the range of $725-$775 million for 2020.  

Our Take

Exelixis’ reported better-than-expected results for the second quarter. The pipeline progress too has been encouraging and positive results of CheckMate -9ER bodes well for Cabometyx, as a tentative approval for the combination will boost demand. However, competition has stiffened from the recently-approved combination therapies. Last year, the FDA approved Merck’s MRK Keytruda in combination with Inlyta for the first-line treatment of patients with advanced RCC. Given the increasing use of these therapies, we expect investors to focus on the label expansions of cabozantinib in the ongoing combination trials.

Shares of Exelixis have surged 29.4% in the year so far compared with the industry’s growth of 5.4%.

 

Zacks Rank

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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