Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Exelixis Inc. Stock Is Surging Today

By Cory Renauer – Nov 2, 2018 at 11:26AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A third-quarter earnings beat suggests Exelixis really can compete with big pharma.

What happened

Shares of Exelixis Inc. (EXEL -1.01%), 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 -0.86%) 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.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Exelixis. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Exelixis, Inc. Stock Quote
Exelixis, Inc.
$15.68 (-1.01%) $0.16
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
$86.12 (-0.60%) $0.52
Bristol Myers Squibb Company Stock Quote
Bristol Myers Squibb Company
$71.09 (-0.86%) $0.62
Pfizer Inc. Stock Quote
Pfizer Inc.
$43.76 (-0.91%) $0.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.