It has been about a month since the last earnings report for Exelixis (EXEL). Shares have added about 12.1% 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 Earnings & Revenues Beat Estimates in Q4
The company reported earnings of 37 cents, easily beating the Zacks Consensus Estimate of 25 cents. The bottom line was also up from 12 cents in the year-ago quarter.
Net revenues came in at $228.6 million, up from $120.1 million in the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate of $195.7 million.
Quarter in Detail
Net product revenues came in at $176.2 million, up 84% from the year-ago quarter, driven by continued growth of Cabometyx in the United States for the treatment of advanced renal cell carcinoma (RCC).
In April 2016, the FDA approved a tablet formulation of cabozantinib, (distinct from the capsule form) under the brand name Cabometyx, for the treatment of advanced RCC in patients who have received prior anti-angiogenic therapy. The FDA also expanded the drug’s label for the treatment of previously untreated advanced RCC in December 2017.
Cabometyx generated $171.6 million net product revenues. Demand grew 8.4% sequentially.
Cometriq (cabozantinib capsules), for the treatment of medullary thyroid cancer, generated $4.6 million in net product revenues.
Total collaboration revenues were $52.4 million compared with $24.4 million in the year-ago quarter.
In the reported quarter, research and development expenses increased 77.9% to $57.3 million, stemming from higher personnel expenses and clinical trial costs. Selling, general and administrative expenses were $52.4 million, up 13.2% year over year, driven by increases in personnel expenses and stock-based compensation.
In October 2018, Exelixis initiated a phase III trial (COSMIC-311) of single-agent cabozantinib in patients with radioiodine-refractory differentiated thyroid cancer (DTC) who have progressed up to two prior vascular endothelial growth factor receptor (VEGFR)-targeted therapies. The co-primary endpoints for the trial are progression-free survival and objective response rate.
In November 2018, Exelixis and partner Ipsen obtained European Commission’s approval for Cabometyx as a monotherapy for the treatment of hepatocellular carcinoma (HCC), a form of liver cancer in adults who have previously been treated with Nexavar. Per the agreement with Ipsen, Exelixis received a milestone payment of $40.0 million for this approval in January 2019. The approval was based on results from the CELESTIAL trial. The FDA also approved Cabometyx for the treatment of patients with HCC in January 2019.
In December 2018, Exelixis and Ipsen initiated a pivotal phase III study — COSMIC-312 — to evaluate a Cabometyx combination therapy in treatment-naïve advanced HCC. Moreover, an exploratory arm will also evaluate Cabometyx monotherapy in the first-line setting for similar patients.
Exelixis inked deals with Bristol-Myers and Roche to develop cabozantinib in combination with immunotherapy agents. Earlier, Exelixis announced encouraging results from the dose-escalation stage of the phase Ib COSMIC-021 study on Cabometyx in combination with Tecentriq in previously untreated advanced RCC. The combination was well tolerated and showed promising anti-tumor activity.
In January 2019, partner Daiichi Sankyo announced that Minnebro (esaxerenone) tablets were approved by the Japanese Ministry of Health, Labour and Welfare as a treatment for patients with hypertension. The compound was identified during the prior research collaboration between Exelixis and Daiichi Sankyo, which the companies entered into in March 2006, and has been subsequently developed by Daiichi Sankyo. Consequently, Exelixis will receive a $20.0-million milestone payment upon the first commercial sale of Minnebro in Japan. The company is also eligible for additional commercialization milestone payments and low-double-digit royalties on sales of Minnebro.
In September 2018, Exelixis announced that the National Comprehensive Cancer Network (NCCN) has updated its Clinical Practice Guidelines to include new recommendations for Cabometyx. As a result of the update, Cabometyx is now recommended by the NCCN for the treatment of advanced RCC, regardless of patient risk status (favorable-, intermediate- and poor-risk).
Revenues came in at $853.8 million, up from $452.5 million in 2017. Also, revenues surpassed the Zacks Consensus Estimate of $819.4 million. Earnings per share came in at $1.43, up from 49 cents in 2017. The top line also comfortably beat the Zacks Consensus Estimate of $1.30.
R&D expenses are expected to be between $285 million and $315 million. Selling, general and administrative (SG&A) expenses are expected to be between $220 million and $240 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -10.45% due to these changes.
Currently, Exelixis has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Exelixis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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