Why Is Exelixis (EXEL) Up 10.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Exelixis (EXEL). Shares have added about 10.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Exelixis due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Exelixis Q2 Earnings Top, Cabometyx Drives Growth
Exelixis reported earnings of 31 cents per share in the first quarter of 2023, which comfortably beat the Zacks Consensus Estimate of 22 cents and increased from 28 cents per share in the year-ago quarter.
Including stock-based compensation expense, earnings per share came in at 25 cents compared with 22 cents per share in the year-ago quarter due to an increased revenues.
Net revenues came in at $469.8 million, which beat the Zacks Consensus Estimate of $449 million. Revenues were up 12% year over year.
Quarter in Detail
Net product revenues came in at $409.6 million, up 18% year over year. The increases in net product revenues were primarily due to a rise in sales volume and the average net selling price.
Cabometyx (cabozantinib) generated revenues of $403.3 million and beat the Zacks Consensus Estimate and our model estimate of $392 million and $389.6 million, respectively. The drug is approved for advanced renal cell carcinoma (RCC) and previously treated hepatocellular carcinoma (HCC). Cometriq (cabozantinib capsules), for treating medullary thyroid cancer, generated $6.4 million in net product revenues.
Collaboration revenues, comprising license revenues and collaboration services revenues, were $60.2 million in the quarter compared with $72.4 million in the year-ago quarter.
In the reported quarter, research and development expenses were $232.6 million, up 16.6% year over year due to higher manufacturing costs. Selling, general and administrative expenses were $141.7 million, up 15.4% due to increased personnel expenses.
In March, Exelixis announced that its board authorized the repurchase of up to $550 million of the company’s common stock before the end of 2023. Under this program, Exelixis repurchased $127.0 million of the company’s common stock at an average price of $19.22 per share as of Jun 30.
Litigation Update
In July, Exelixis announced that it entered into a settlement and license agreement with Teva Pharmaceuticals. This settlement resolves patent litigation brought by Exelixis in response to Teva’s abbreviated new drug application seeking approval to market a generic version of Cabometyx prior to the expiration of the applicable patents. Per the settlement terms, Exelixis will grant Teva a license to market its generic version of the drug in the United States, beginning on Jan 1, 2031, upon the FDA’s approval.
Consequently, both companies will terminate the ongoing litigation.
Pipeline Updates
Exelixis completed enrollment in multiple expansion cohorts of the phase I STELLAR-001 study for zanzalintinib and progressed to the ongoing phase III studies.
The company also continued to advance the phase I JEWEL-101 study for XB002, selecting the single-agent dose from the dose-escalation stage of the study and initiating the cohort expansion stage to move the program into full development before year’s end.
2023 Guidance Reiterated
Revenues are projected between $1.775 billion and $1.875 billion, while product revenues are estimated in the range of $1.575-1.675 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 8.16% due to these changes.
VGM Scores
At this time, Exelixis has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Exelixis has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Exelixis is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Apellis Pharmaceuticals, Inc. (APLS), a stock from the same industry, has gained 69.5%. The company reported its results for the quarter ended June 2023 more than a month ago.
Apellis Pharmaceuticals, Inc. reported revenues of $94.97 million in the last reported quarter, representing a year-over-year change of +481.9%. EPS of -$1.02 for the same period compares with -$1.46 a year ago.
For the current quarter, Apellis Pharmaceuticals, Inc. is expected to post a loss of $1.18 per share, indicating a change of +32.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Apellis Pharmaceuticals, Inc. Also, the stock has a VGM Score of D.
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