What happened
Although share repurchase programs have their detractors, investors tend to like when their companies announce them. This was the dynamic behind biotech stock Exelixis' (EXEL 1.84%) more than 4% rise in price on Monday; by contrast, the S&P 500 index rose by "only" 0.9%.
So what
Before market open today, Exelixis announced that its board of directors has authorized new share buybacks. Up to $550 million has been allowed, in a program that will run until the end of this year.
As with most share repurchase programs, this one will see the biotech buy its own common stock from time to time, using a variety of methods. Exelixis also took pains to say that the arrangement does not obligate it to buy a particular amount of its shares, and that the initiative is subject to modification or suspension at any time.
Exelixis, which specializes in developing treatments for cancer, is best known for its Cabometyx. The drug, which was approved by the Food and Drug Administration (FDA) to treat renal cell carcinoma (a kidney cancer) and hepatocellular cancer (affecting the liver), is extremely successful. But the company has been heavily reliant on its sales.
Now what
In terms of its financials, Exelixis has enough in the tank to satisfy the obligations of the new share buyback program. At the end of last year, it had just over $1.3 billion in cash and short-term investments, more than enough to finance the full $550 million authorization, should it be reached.
