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It has been about a month since the last earnings report for Exelixis (EXEL). Shares have lost about 14.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Exelixis due for a breakout? 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 drivers.
Exelixis' Q3 Loss Wider Than Expected, Revenues Beat
Exelixis reported a loss of 10 cents per share in the third quarter of 2020, wider than the Zacks Consensus Estimate of a loss of 5 cents. The bottom-line figure also declined from the year-ago quarter’s earnings of 31 cents per share due to higher R&D expenses and lower revenues.
Net revenues came in at $231.1 million, which declined from the $271.7 million reported in the year-ago quarter but beat the Zacks Consensus Estimate of $216 million.
Quarter in Detail
Net product revenues came in at $168.6 million, down from $191.8 reported in the year-ago quarter due to a decrease in sales volume stemming from lower prescriptions and reduced customer inventory.
Cabometyx generated $159.6 million of revenues. Cabometyx (cabozantinib) tablets are approved for advanced renal cell carcinoma (RCC) and previously treated hepatocellular carcinoma (HCC). Cometriq (cabozantinib capsules) for the treatment of medullary thyroid cancer generated $9 million in net product revenues. Exelixis earned $19.9 million in royalty revenues on the basis of cabozantinib-related revenues generated by its partner, Ipsen.
Collaboration revenues, comprising license revenues and collaboration services revenues, were $62.5 million in the quarter under review compared with $79.9 million. The downside in collaboration revenues was primarily related to a decrease in the recognition of milestone-related revenues.
In the reported quarter, research and development expenses increased to $176.8 million from the year-ago quarter’s $97.3 million due to a rise in clinical trial costs (COSMIC-312, COSMIC-313, CONTACT-02 and COSMIC-021). Selling, general and administrative (SG&A) expenses were $88.2 million, up from $51.3 million in the year-ago quarter.
In August 2020, Exelixis announced the submission of a supplemental New Drug Application (sNDA) to the FDA for cabozantinib in combination with Bristol-Myers’ Opdivo in patients with advanced RCC. The sNDA submission was based on the positive results of the phase III CheckMate -9ER study. In October 2020, Exelixis and Bristol-Myers announced that the FDA accepted Exelixis’ sNDA and Bristol-Myers’ supplemental Biologics License Application (sBLA), granted Priority Review to both applications and assigned a target action date of Feb 20, 2021.
In July 2020, Exelixis announced the initiation of CONTACT-03, a phase III study of cabozantinib in combination with Tecentriq in patients with inoperable, locally advanced or metastatic RCC who progressed during or following treatment with an immune checkpoint inhibitor as the immediate preceding therapy.
In October 2020, Exelixis announced the enrollment of the first patient in the dose-escalation cohort of the combination arm of the phase I study evaluating the safety, tolerability, PK and preliminary anti-tumor activity of XL092 alone and in combination with Tecentriq in patients with advanced solid tumors.
2020 Guidance Update
Revenues are projected at $900-$950 million (same as before), while product revenues are now estimated in the range of $700-$725 million (previous range: $725-$775 million) for 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -246.67% due to these changes.
Currently, Exelixis has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Exelixis has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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