It's not easy to keep momentum going.
Exelixis (EXEL 4.17%) certainly had strong momentum last year, with the biotech's share price more than doubling in 2017. However, so far in 2018, it's been more down than up for the stock. And after Exelixis reported its Q4 results on Monday, the downtrend could continue. Although the company met Wall Street estimates, there were some concerns raised about slowing quarter-over-quarter growth for Exelixis' crown jewel, cancer drug Cabometyx.
But the future is always more important for investors than the past or even the present. Here are five things Exelixis management wants you to know about what's on the way for the biotech.
1. We're encouraged about prospects for Cabometyx in first-line kidney cancer
Senior Vice President P.J. Haley pointed out some encouraging early data from the launch of Cabometyx as a first-line treatment of renal cell carcinoma (RCC), the most common form of kidney cancer. Haley stated that, based on IMS prescription trends, Cabometyx has increased its overall RCC market share from 20% in Q4 of 2017 to 24% so far in the first quarter of 2018. This increase in market share appears to be coming at the expense of all three of the other leading tyrosine kinase inhibitors -- Pfizer's Inlyta and Sutent and Novartis' Votrient.
Haley said Exelixis has also seen the number of prescriptions for Cabometyx by top prescribers double, in addition to acceleration of new prescriber adoption of the drug in treating RCC. These early results appears to bode well for the launch of Cabometyx in the first-line setting.
2. We know competition is coming
While the early signs for Cabometyx in the first-line RCC indication are promising, Haley acknowledged that Exelixis recognizes that "RCC is a fiercely competitive market." He also noted that the biotech anticipates more competition is on the way.
Bristol-Myers Squibb (BMY 1.64%) hopes to win FDA approval for its Opdivo-Yervoy combo in the first-line RCC indication by April 16. Roche (RHHBY 4.07%) recently announced late-stage results for its Tecentriq-Avastin combo in treating the indication as well and plans to seek regulatory approval.
Peter Lamb, Exelixis' chief scientific Oofficer, said that while the Opdivo-Yervoy combo could be beneficial for RCC patients, "some sub-groups" in the pivotal study for the combo "aren't as compelling as others." He thinks that Cabometyx's broad label will help the drug succeed in the first-line setting.
3. We're ready to embark on the second wave for Cabometyx late-stage trials
Exelixis' main rivals are also its key partners. CEO Michael Morrissey stated that the biotech is "now ready to embark on a second wave" of late-stage clinical trials for Cabometyx. Those studies include collaborations with both Bristol-Myers Squibb and Roche.
BMS and Exelixis are partnering on a late-stage study evaluating a combination of Cabometyx and Opdivo as a first-line treatment of RCC. Exelixis is also conducting a phase 2 trial on its own of Cabometyx in combination with Tecentriq in the first-line RCC setting. In addition, Morrissey said Exelixis intends to initiate more pivotal studies of Cabometyx in 2018 and 2019, with the company sharing details of the studies "at the appropriate time."
4. News is on the way for Cotellic-Tecentriq combo
Speaking of late-stage studies, Roche has three of them under way evaluating a combination of Cotellic in combination with one or more of its drugs. Lamb noted that Roche expects to announce data from a Cotellic-Tecentriq combo as a third-line treatment for colorectal cancer in the first half of 2018.
Roche already markets a combination of Cotellic and Zelboraf in treating advanced melanoma. Exelixis hasn't made much money from the drug so far, though. For 2017, the biotech recorded revenue of only $6.4 million from royalties on sales of the Cotellic combo.
5. We plan to rebuild our pipeline
Morrissey stated that one of Exelixis' top priorities for 2018 was to rebuild its pipeline. Exactly how the biotech will do that remains mysterious. Morrissey would only say that internal discovery projects were moving forward but that Exelixis is "keeping [them] under wraps for now."
He also noted that additional oncology-related acquisitions could be on the way this year. Again, though, all Morrissey would say about potential deals was that more details would come later.
My colleague Cory Renauer thinks that Exelixis could be "a gold mine for growth investors." I suspect he's right.
My view is that the commercial launch of Cabometyx in the first-line RCC setting will be successful. I also expect Exelixis will win approval for the drug in treating hepatocellular carcinoma. (The biotech plans to submit for FDA approval in the indication by the end of the first quarter.) And while Cabometyx could face some stiff competition in the first-line RCC setting, there should be room for all therapies to be successful.
Exelixis might have lost some momentum for now. However, I think this biotech should continue to be a winner over the long run.