What happened

Shares of Exelixis (NASDAQ:EXEL), a biotech company focused on the development of therapies to treat cancer, plunged 17% during the month of September, according to data from S&P Global Market Intelligence. Two factors, including new clinical data from a rival and analyst chatter, were the prime catalysts behind its poor showing.

So what

The glaring issue for Exelixis came from rival Bristol-Myers Squibb (NYSE:BMY), which reported surprisingly positive data for its combination of cancer immunotherapies Opdivo and Yervoy in the CheckMate-214 trial in treatment-naive renal cell carcinoma (RCC) patients. The data showed a 37% reduction in the risk of death for intermediate- and poor-risk RCC patients compared to the current standard of care, Sutent, which is developed by Pfizer (NYSE:PFE). The combination therapy also achieved a greater than 15-percentage-point improvement in overall response rate over Pfizer's Sutent. 

Two biotech lab researchers holding a vial of liquid and making notes on a clipboard.

Image source: Getty Images.

The concern is that Exelixis also recently filed a supplemental new drug application to expand Cabometyx's label, its lead drug, to first-line RCC from second-line following positive data in the phase 2 Cabosun trial. In effect, Wall Street is clearly worried about Bristol-Myers Squibb eating into first-line RCC market share.

The other downside catalyst was an untimely downgrade from investment firm Leerink Swann just days after Bristol-Myers Squibb released this data, and filings with the Securities and Exchange Commission disclosed that its CEO and CFO had sold some of their stock. Leerink Swann cutting Exelixis to "market perform" from "outperform" made some investors deeply question Exelixis' current valuation.

Now what

As a long-term Exelixis shareholder, I can attest that while its weak September performance was no fun to sit through, both of these downside catalysts aren't major concerns.

To begin with, analyst chatter tends to have a very short-term impact on a stock's share price, and rarely does it actually impact your investment thesis. None of Leerink Swann's commentary changed Exelixis' outlook.

A doctor giving the thumbs-up sign while holding a clipboard.

Image source: Getty Images.

More importantly, Cabometyx has been every bit as good, if not better, than Opdivo in treating RCC patients. Cabometyx hit the all-important trifecta in second-line RCC by providing a statistically significant increase in overall response, median overall survival, and progression-free survival, and in first-line RCC, it reduced the rate of progression or death by 52% compared to Sutent. It should be just fine, even if the Opdivo-Yervoy combo gets the green light from the Food and Drug Administration.

The next major catalyst for Exelixis is the top-line data release for Celestial, its phase 3 trial involving Cabometyx as a treatment for advanced hepatocellular carcinoma. If Cabometyx finds the mark once again (the primary endpoint is a statistically significant improvement in median overall survival), the sky could be the limit.