Exelixis Grabs Its Share of the Kidney-Cancer Treatment Market

Worries over competition for Exelixis' (EXEL 0.32%) Cabometyx appear to be a little overblown after the biotech posted another solid quarter of growth as the drug expands into first-line renal cell carcinoma, the most common form of kidney cancer, and continues to take market share from the second-line players in the space.

Exelixis results: The raw numbers

Data source: Exelixis. YOY = year over year.

What happened with Exelixis this quarter?

• Product sales, which mostly come from sales of Cabometyx, increased 69% year over year and 12% quarter over quarter. Sequentially, almost half the growth came from increase in patient demand, but there was also an increase in inventory and a price increase that helped drive the quarter-over-quarter sales growth.
• Cabometyx continues to take market share from other tyrosine kinase inhibitors that are approved to treat kidney cancer. The company estimates that Cabometyx's share of new prescriptions increased by 3 percentage points from the second quarter to the third quarter, coming in at 32% of the market.
• The Committee for Medicinal Products for Human Use -- the EU's regulatory body -- issued a positive opinion for Cabometyx in patients with hepatocellular carcinoma, the most common form of liver cancer, and Canadian regulators approved Cabometyx in kidney cancer, which triggered a combined $41.9 million in milestone payments from partner Ipsen.
• Royalties from Ipsen and Roche's Genentech unit, which sells Exelixis' Cotellic, contributed another $11.7 million combined.

Image source: Getty Images.

What management had to say

While much of the focus is on the U.S., where Exelixis sells Cabometyx, CFO Christopher Senner pointed out the growing input from partners: "As is evidenced this quarter, collaboration revenues continue to be an increasing component of our total revenue growth as Cabometyx gains traction on a global scale. It's important to note that the majority of these revenues flowed directly through to our bottom line and significantly enhance our cash position, allowing us increasing flexibility as we look to the next wave of Cabo trials, research, and business development opportunities."

On the potential for business development opportunities, CEO Michael Morrissey said that he wants to be smart about using the cash flow to restock the pipeline:

We don't want to do a suboptimal deal just to do a deal, but it has to really fit our criteria. And we have a pretty high bar when it comes to the science and the numbers relative to commercial and the financial side. So, we're going to continue to be aggressive in looking at opportunities, and we've got a pretty broad net out there across the continuum of assets. And when we find something that we like, that makes sense to us, both scientifically, commercially, and financially, then we will move forward.

Looking forward

Management still isn't giving revenue guidance, but it did note that September produced substantial growth over August, suggesting there may be an acceleration of sales growth, potentially from the first wave of patients coming off of immuno-oncology drugs.

Looking into next year, Cabometyx is up for approval in liver cancer in the U.S., with the Food and Drug Administration expected to make its decision on or before Jan. 14. As a late-line therapy, sales of Cabometyx in liver cancer will only increase sales incrementally, but oncologists treating kidney cancer and liver cancer largely overlap, so there should be some economies of scale with a minimal increase in costs associated with the new indication.