Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of small-cap biopharma Exelixis (NASDAQ:EXEL) spiked by 18% this morning after announcing positive results from its pivotal late-stage trial for cobimetinib in combo with vemurafenib as a treatment for unresectable locally advanced or metastatic melanoma harboring a BRAF V600 mutation. The trial is known as coBRIM.

Per the press release, the drug combo met its primary endpoint of significantly increasing investigator-determined progression-free survival or PFS. Specifically, the combo of cobimetinib and vemurafenib resulted in a median PFS of 9.9 months, compared to only 6.2 months for vemurafenib alone (hazard ratio [HR]=0.51, 95 percent CI 0.39-0.68; p<0.0001). Exelixis reported that the safety profile of the combo was similar to that seen in previous studies. 

So what: Exelixis's partner Roche, and its subsidiary Genentech, have already filed for regulatory approval for this drug combo in Europe and plan to file for approval in the U.S. later this year. This positive trial data, and potential regulatory approval, could therefore end up being a life saver for this struggling biopharma.

Earlier this month, the failure of Exelixis' flagship drug cabozantinib to improve overall survival in men afflicted with metastatic castration-resistant prostate cancer caused shares to crater, triggering a massive workforce reduction as a cost-saving measure. Although Exelixis won't get a major windfall from a regulatory approval for cobimetinib, this positive news should help shares rebound, at least slightly, following their 75% downturn this year. 

Now what: I think the blockbuster potential of cabozantinib's prostate cancer trial caused an emotionally charged exodus in this stock. While Exelixis may not have another high dollar indication in the works at this point, the company does have other ongoing clinical trials for cabozantinib that should expand the drug's label beyond medullary thyroid cancer. All told, Exelixis shares look cheap to me in light of the company's clinical pipeline and today's positive news. 


George Budwell has no position in any stocks mentioned. The Motley Fool recommends Exelixis. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.