What happened

Shares of Exelixis (NASDAQ:EXEL) were skyrocketing 25.5% as of 11:12 a.m. EDT on Monday. The big jump came after Exelixis and Bristol Myers Squibb (NYSE:BMY) announced positive top-line results from a late-stage clinical study evaluating a combination of Opdivo and Cabometyx in previously untreated renal cell carcinoma (RCC). 

So what

RCC is the most common type of kidney cancer in adults and causes more than 140,000 deaths each year across the world. The highest rates of the disease are in North America and Europe. This translates to a significant market opportunity for a safe and effective new treatment for RCC. Based on the phase 3 results announced today, the Opdivo-Cabometyx combo appears to check off both boxes. 

Boxing glove hitting a cancer cell

Image source: Getty Images.

Opdivo and Cabometyx met the primary endpoint of progression-free survival in a head-to-head comparison against Pfizer's Sutent. The combo also met secondary endpoints of overall survival at a pre-specified interim analysis and objective response rate, which is the percentage of patients with a reduction in tumor burden at a pre-defined level. The initial data also showed that a 40 mg dose of the Opdivo-Cabometyx combo demonstrated a favorable safety profile as well.

Exelixis has already achieved tremendous market success with Cabometyx in previously treated RCC and in previously treated hepatocellular carcinoma (HCC), the most common form of liver cancer. The company's growth strategy relies heavily on more regulatory approvals of the drug as part of a combination therapy. 

Now what

For now, regulatory approval is a major hurdle that remains to be jumped. Exelixis chief medical officer Gisela Schwab said, "We look forward to our continued collaboration with Bristol Myers Squibb as we work toward regulatory filings in the near future." The companies also plan to present detailed results from the late-stage study at an upcoming medical conference.

Today's news added fuel to the fire of Exelixis' comeback after the biotech stock dropped more than 30% in March from its highs set earlier this year. Although a potential regulatory approval of Opdivo and Cabometyx won't be in the cards until next year, Exelixis could maintain its momentum with data readouts from several other clinical studies on the way in 2020.