Shares of Exelixis, Inc. EXEL have rallied 22.4% in the year so far, outperforming 14.6% growth registered by the industry.
The company received a major boost with the approval of a tablet formulation of cabozantinib, Cabometyx, which was approved in the United States in April 2016 for the treatment of patients with advanced renal cell carcinoma (RCC), who have received prior anti-angiogenic therapy.
Since the drug is now approved for first-line RCC as well, Exelixis can now target the entire patient population suffering from the disease in the United States. Cabometyx continues to maintain its market leading position in RCC. The drug held 34% market share at the end of the fourth quarter, driven by its broad label for advanced RCC and the recent NCCN update as the preferred TKI for the majority of both previously untreated and refractory RCC patients. The company experienced a 10% increase in Cabometyx’s prescriber base compared with that in the third quarter.
Exelixis is evaluating cabozantinib in a broad development program, comprising more than 45 clinical studies across multiple indications. In January 2019, the FDA also approved Cabometyx for hepatocellular carcinoma (HCC). Per estimates, more than 40,000 patients are diagnosed with liver cancer, resulting in approximately 29,000 deaths each year in the United States. Sales should get a boost from this label expansion, given the market potential.
Exelixis also has collaboration agreements with Bristol-Myers Squibb BMY and Roche RHHBY to evaluate cabozantinib in combination with immunotherapy agents.
While the RCC market holds immense potential, competition is stiff. The approval of Opdivo and Yervoy for the treatment of poor and intermediate risk first-line RCC has increased competition for Cabometyx.
The FDA recently granted priority review to Merck’s MRK sBLA for Keytruda in combination with Inlyta for the first-line treatment of patients with advanced RCC, based on the results of KEYNOTE-426. The agency has set a target action date of Jun 20, 2019.
Hence, we expect investors to focus on Cabometyx’s performance in 2019, which is expected to be backed by a broad label.
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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