Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Exelixis Stock Is Dropping Today

By Cory Renauer - Jun 28, 2021 at 12:04PM

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

The company reported successful clinical trial results, but investors were still disappointed.

What happened

Shares of Exelixis (EXEL -1.02%), an oncology-focused biopharmaceutical company, started sliding Monday in response to a disappointing clinical trial readout. Investors responding to results that weren't quite good enough have shaved 20.1% from the stock's price as of 11:30 a.m. EDT. 

So what 

Along with collaboration partner Ipsen (IPSEY -1.49%), Exelixis announced top-line results from the Cosmic-312 trial, which evaluates the use of cabozantinib in previously untreated liver cancer patients. This kinase inhibitor is approved as Cabometyx to treat liver cancer patients who have already relapsed following standard treatment, and is the company's only source of revenue right now.

Investor watching a stock chart.

Image source: Getty Images.

Cabometyx is also approved to treat first-line kidney cancer patients, but sales aren't growing as fast as investors would like them to. Total first-quarter revenue rose 19% year over year to $270 million this year and increasing its addressable patient population to include new first-line liver cancer patients could lead to a significant revenue bump.

Treatment with Cabometyx plus Tecentriq from Roche reduced patients' risk of disease progression by 37% but the observed overall survival improvement fell short of statistical significance. The FDA could approve an expansion to the first-line setting with these results. Getting oncologists to actually prescribe it without proof of an overall survival benefit, though, would be an uphill battle.

Now what

Exelixis and Ipsen intend to keep running the Cosmic-312 study until completion, which will probably occur in 2022. It doesn't happen often, but there's still a chance that final overall survival results from this study will redeem Cabometyx plus Tecentriq as a first-line treatment option for liver cancer.

Exelixis shareholders should hang on tight and bargain shoppers might want to take a closer look. Following the recent beating, shares have been trading at just 7.5 times sales. This year, Exelixis expects sales and royalties from cabozantinib to reach between $1.15 billion and $1.25 billion. At the midpoint, that's 22% more than the company reported in 2020.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool 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.
EXEL
$19.31 (-1.02%) $0.20
Roche Holding AG Stock Quote
Roche Holding AG
RHHBY
$41.64 (0.17%) $0.07
Ipsen S.A. Stock Quote
Ipsen S.A.
IPSEY
$23.89 (-1.49%) $0.36

*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
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

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.