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Waiting for Exelixis, Inc.'s Meteor to Land

By Brian Orelli, PhD - May 1, 2015 at 1:49PM

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Data from the biotech's kidney cancer trial won't be available until late in the second quarter or potentially even later.

Exelixis' (EXEL 4.17%) painful year-long wait just got a little longer.

In March 2014, after the company's drug Cometriq failed to help prostate cancer patients, the biotech hung its hat on its Meteor trial testing Cometriq in patients with kidney cancer. The company had guided for the trial to read out in the second quarter, but on its first quarter conference call, management extended its timeline to "late Q2 with the possibility it might extend, if necessary, into early Q3."

Like most cancer clinical trials, Meteor is an events driven trial. The trial will end after 259 of the first 375 patients enrolled in the trial have a progression free survival, or PFS, event -- their tumors start to grow or the patient dies. The delay in Exelixis stopping the trial and releasing the results comes from a slowdown in the number of PFS events over the last few months.

That could be a good thing
The 259 events can come from patients in either the group that was treated with Cometriq or the control group that received Novartis' Afinitor. Best case scenario, the patients that received Cometriq aren't seeing disease progression as fast as expected, pushing out the time it takes to reach the 259th PFS event.

When designing the trial, Exelixis assumed a median PFS of 5 months for the Afinitor group and 7.5 months for the Cometriq group would show a statistically significant increase in PFS, but the latter is just a wild guess. Cometriq was tested in a phase 1 trial in kidney cancer patients where most had failed multiple treatments -- Meteor patients only had to fail a single treatment. In that trial, the drug produced a median PFS of 12.9 months. That bodes well for the Cometriq-is-helping-patients-progress-slower theory, but the trial only enrolled 25 patients and didn't have a control group, so caution is needed in extending assumptions to a larger trial -- and this is likely the reason Exelixis went with a conservative 7.5 month assumption.

Or maybe not
The other obvious possibility is that the group that got Afinitor is progressing slower than expected. There's more data on Afinitor's use, but the median PFS is still determined by the makeup of the patients in the trial. If Exelixis somehow managed to enroll healthier patients, you'd expect the Afinitor group to have a PFS above 5 months.

The other problem with trial assumptions is that cancer care is steadily improving. That becomes more of an issue when comparing drug candidates to a placebo group where patients get the "best supportive care," which can vary widely, but it's certainly possible that improving care could affect the Afinitor group.

Déjà vu
There's a third possibility that investors who have followed the company long enough will recall. When Cometriq was tested in thyroid cancer, the trial data was delayed, but the median PFS in both the Cometriq and the placebo turned out to be lower than expected. Outliers, as explained here, can affect the time it takes to reach the number of PFS events required to stop the trial without increasing the median PFS since the median is just the middle-most patient.

For the record
Since this was an earnings call, it would be remiss to not include Exelixis' first quarter numbers even though they have very little bearing on the future of the company. Management would seem to agree since the numbers didn't show up until the 11th paragraph of the press release!

Exelixis sold $9.4 million worth of Cometriq in the first quarter, which is a 91% year-over-year increase, although that number is a little misleading because it includes a one-time addition of $2.6 million due to an accounting change. Backing out that addition, Cometriq sales grew 39% year over year, which isn't too shabby but is still kind of irrelevant given how low the sales number is.

The biotech lost $0.18 per share and, most importantly, ended the quarter with just shy of $200 million in the bank, which management thinks is enough to get the company through the first quarter of next year. If Meteor is a success, Exelixis' value will rise substantially, allowing it to potentially raise additional capital through a secondary offering.

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Exelixis, Inc. Stock Quote
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$22.22 (4.17%) $0.89
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