After a disappointing fourth quarter, Exelixis (NASDAQ:EXEL) reaccelerated growth in the first quarter, bolstered by a new approval for Cabometyx in previously untreated advanced renal cell carcinoma (RCC), also known as kidney cancer.

Exelixis results: The raw numbers


Q1 2018

Q1 2017

Year-Over-Year Change


$212.3 million

$80.9 million


Income from operations

$116.3 million

$20.2 million


Earnings per share




Data source: Exelixis.

What happened with Exelixis this quarter?

  • Compared to the fourth quarter, product sales increased 40%, mostly due to patients being treated with Cabometyx, but an increase in inventory also helped the quarter-over-quarter comparison.
  • The revenue line also benefited from an increase in collaboration revenue, including $45.8 million from a milestone payment from Ipsen for the approval of Cabometyx for the first-line treatment of advanced RCC in Europe and a $20 million milestone from Daiichi Sankyo for the submission of a regulatory application in Japan for esaxerenone as a treatment for patients with essential hypertension.
  • The marketing application for Cabometyx in patients with hepatocellular carcinoma, the most common form of liver cancer, based on the success of the Celestial trial was completed in March.
  • Exelixis' quest to rebuild its pipeline continues with a new drug discovery deal with privately held Invenra announced in conjunction with the earnings release. It's a rather cheap deal up front with Exelixis paying just $2 million plus $2 million for each discovery project the companies start, although it's on the hook for up to $131.5 million in milestone payments on products as they work their way through development. There are also potential milestone and royalty payments due to Invenra if the drugs make it to market.
Young female doctor talking to older male patient

Image source: Getty Images.

What management had to say

President and CEO Michael Morrissey pointed to the deal with Invenra as the kind of model it wants to use for business development (BD), saying, "It also reflects our current BD approach to working with early stage innovative biotechs in a low-risk financial manner through small upfronts and modest success-based milestones that allow us to advance new assets aggressively while discharging scientific and downstream clinical risk."

The company isn't breaking down Cabometyx's market share in the distinct lines of RCC therapy for competitive reasons, but P.J. Haley, Exelixis' senior vice president of commercial, pointed out that the clinical trial results that got it approved as a first-line therapy are likely helping Cabometyx compete with other tyrosine kinase inhibitors (TKIs) in later-line treatments where it was originally approved: "Interestingly, the first-line data demonstrating superiority over Sutent reinforces the growing physician impression that Cabometyx is the TKI of choice in RCC, and this in turn strengthens our position in later lines of therapy. As a result, we saw increased new patient starts in the second- and third-line setting in Q1, as well."

Looking forward

Exelixis is off to a good start for the year. Management isn't giving guidance, but with Cabometyx getting more competition in first-line RCC, it's safe to assume investors shouldn't expect 40% quarter-over-quarter growth to continue. An approval in liver cancer should give another boost, although it'll be approved for late-line use, resulting in a relatively smaller patient population.

The next waves of approvals for Cabometyx are likely to be from combination treatments with immuno-oncology drugs, such as the ongoing phase 3 CheckMate 9ER trial testing Cabometyx in combination with Bristol-Myers Squibb's (NYSE:BMY) Opdivo, which is still enrolling patients, so is likely a year or more away from reading out.

And finally, there's Cotellic, which doesn't get much mention because Exelixis doesn't break out the presumably low profits from its marketing agreement with Genentech, but data expected in the first half of this year from a new trial called IMblaze370, testing the combination of Cotellic and Genentech's Tecentriq in colorectal cancer, could help boost income from the Genentech partnership.

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