What: Shares of cancer-focused biotechnology firm Exelixis (NASDAQ:EXEL) skyrocketed by a whopping 57% in February, according to data from S&P Capital IQ, following the release of its fourth-quarter earnings results and updating the status of its new drug application for cobimetinib in combination with Roche's (NASDAQOTH:RHHBY) Zelboraf as a treatment for metastatic melanoma.
So what: Looking at this in hindsight, investors are clearly excited with the Feb. 19 update from Exelixis and partner Roche that the U.S. Food and Drug Administration had not only accepted its new drug application for cobimetinib plus Zelboraf for BRAF V600 mutation-harboring metastatic melanoma, but that it had also assigned the combo as a priority review. This means instead of a standard 10-month review process, the combo's PDUFA decision date is set for just six months away on Aug. 11, 2015. While a priority review is no guarantee of approval, it's often a good indicator that the FDA sees something special in a drug.
Exelixis reported its fourth-quarter earnings results after the market closed on Feb. 24. The top- and bottom-line figures showed revenue of $7.4 million, which was entirely from the sale of Cometriq for the treatment of metastatic medullary thyroid cancer, up from $4.3 million in the year-ago quarter, but below Wall Street's expectation of $7.8 million. Exelixis' net loss of $0.30 per share matched the consensus estimate.
Looking ahead, Exelixis announced that it expects to report top-line data from its METEOR trial involving Cometriq as a potential treatment for metastatic renal cell carcinoma (mRCC) in the second quarter of this year. It did not provide much in the way of an expense budget because the results from the METEOR study will dictate what happens with expenses for the remainder of the year. However, Exelixis did note it has a cash runway to make it through 2015.
Now what: I should warn readers now that since I am a shareholder of Exelixis, you're going to hear a little bit of a bullish bias.
The two key catalysts that investors have been waiting for are essentially one to five months away. First, we have the top-line data release from METEOR for patients with mRCC sometime in the next quarter. Obviously I would have liked to see Cometriq expand its label to metastatic prostate cancer given that it's such a larger patient pool opportunity, but the COMET trials showed decisively that's not going to happen.
However, what's different about METEOR compared to the COMET-1 study is that Cometriq's primary endpoint in the METEOR trial is a statistically significant improvement in progression-free survival, or PFS. In COMET-1, the primary endpoint was a statistically significant improvement in overall survival. This difference is crucial to METEOR's better chance of success; in both the medullary thyroid cancer study that led to its approval and in COMET-1, Cometriq handily met its PFS targets, leading me to believe there's a better than 50-50 shot at it meeting this primary endpoint in METEOR. Of course, investors should keep in mind that all cancers are different, so don't count your chickens just yet.
We also have results from cobimetinib upcoming in August, and based on the clinical data there, I believe there's also a better than 50-50 chance at approval. Exelixis may have had an ugly 2014, but I'm confident it's set up to be one of biotech's top performers in 2015!
Sean Williams owns shares of Exelixis, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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