3 Things to Watch With Exelixis

On the surface, at least, Exelixis (NASDAQ: EXEL  ) might look like somewhat of a boring biotech stock. After all, shares are up only by a single-digit percentage so far this year, while many other biotechs have soared. Exelixis' one product on the market, Cometriq, brought in an unimpressive $4.8 million in revenue last quarter. Bigger things could be in store for the company, though. Here are three things to watch with Exelixis.

1. Commercialization
It's still somewhat early in the process for commercialization of Cometriq. The drug only went on the market in the U.S. in January for the medullary thyroid cancer, or MTC, indication. Exelixis hopes to hear good news soon from the European Committee for Medicinal Products for Human Use, or CHMP. The company has been working with its partner, Sobi, to prepare for a possible European approval.

On this side of the Atlantic, Exelixis has worked to promote Cometriq to oncologists. Doing so hasn't been too terribly difficult. Executive VP Scott Garland said that brand awareness for the drug now stands at 80% -- higher than AstraZeneca's (NYSE: AZN  ) Caprelsa. That's not bad considering that Caprelsa gained regulatory approval in the U.S. back in 2011.

Using Caprelsa as a comparator, though, shows the challenges for Exelixis if Cometriq is limited to the MTC market. AstraZeneca racked up less than $30 million in sales for the drug last year, although Caprelsa wasn't sold in Europe for the full year. Nonetheless, Exelixis' progress in commercializing Cometriq remains an important factor for investors to watch, particularly as the company seeks to expand approved indications for the drug.

2. Comets
Speaking of expanding indications, Exelexis has two late-stage clinical studies under way -- COMET-1 and COMET-2 -- looking at use of the drug in treating castration-resistant prostate cancer, or CRPC.

COMET-1 is comparing Cometriq against prednisone in treating CRPC, while COMET-2 will compare Cometriq against a combination of mitoxantrone and prednisone. Exelixis expects overall survival data from the COMET-1 study and pain palliation data from the COMET-2 study in 2014.

Success with these studies could vault Exelixis into orbit. A quick glance at the success of other CRPC drugs explains why. Sales for Johnson & Johnson's (NYSE: JNJ  ) Zytiga topped $1.2 billion in the first nine months of 2013. Peak annual sales for Zytiga are expected to reach $1.8 billion.

Medivation (NASDAQ: MDVN  ) is nipping at J&J's heels. The company made nearly $158 million in sales from Xtandi in the first half of this year in the U.S. alone. Xtandi went on sale in the U.S. in September 2012 and gained European approval in June. Analysts project that Xtandi could reach peak annual sales of $2.2 billion.

3. Other "astronomical" results
Exelixis has other "astronomical" results on the way farther down the road with a couple of other clinical studies. The METEOR study is a phase 3 clinical trial exploring the efficacy and safety of Cometriq in treating metastatic renal cell carcinoma. Results are expected in 2015 and 2016. The company also is enrolling patients in a phase 3 study of Cometriq in treating liver cancer.

Another drug from Exelixis could also see success in the not-too-distant future. The company licensed cobimetinib to Roche (NASDAQOTH: RHHBY  ) in 2006. Roche expects to announce top-line results from a late-stage study combining its Zelboraf with cobimetinib next year.

Looking ahead
It's too early to know how things will unfold. Some level of success is already priced into Exelixis' stock already, since the company's market cap exceeds $900 million with small sales numbers.

If the prostate cancer studies go very well, Exelixis could skyrocket. If not, well, at least no one will be able to say the stock is boring. My view is to watch the COMET-1 results especially closely. That could signal if more excitement is on the way for this biotech.

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