What happened

Shares of Exelixis Inc. (EXEL -1.36%), an oncology-driven biotechnology company, are on the rise after a surprisingly good earnings report released after the bell on Thursday. Investors pleased with third-quarter revenue that beat expectations have pushed the stock 18.4% higher as of 11:08 a.m. EDT on Friday.

So what 

Exelixis shares are bounding forward today because it looks like fear of competition from Bristol-Myers Squibb (BMY -1.83%) is somewhat overblown. In April, the FDA approved Bristol's combination of Opdivo plus Yervoy after it significantly improved overall survival versus the standard of care for newly diagnosed renal cell carcinoma (RCC) patients.

Growing pile of cash.

Image source: Getty Images.

First-line RCC patients have been driving sales forward for Exelixis' lead drug, Cabometyx, which did not produce a significant overall survival benefit for similar patients versus the same standard treatment. Third-quarter U.S. revenue came in at $166 million, which was 70% higher than the previous-year period and 11% higher than the previous quarter. Such a strong showing suggests Exelixis has what it takes to overcome a big-pharma competitor.

Now what

Exelixis isn't out of the woods yet. Earlier this year, a combination of Keytruda from Merck and Inlyta from Pfizer became the first treatment to show an improvement to both progression-free survival and overall survival. Merck is saving the details for an upcoming medical conference, so it's hard to say just how concerned investors should be right now.

Further down the road, we could see Exelixis beat Merck and Pfizer with combination studies of its own. Cabometyx is currently being combined with two drugs similar to Keytruda that could produce winning results in the years ahead.