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 Exelixis (NASDAQ:EXEL), a biopharmaceutical company engaged in research to develop novel cancer drugs, surged 14% in intraday trading on Friday after announcing better-than-expected first-quarter earnings results.
So what: For the quarter, Exelixis produced revenue of $9.4 million from the sale of Cometriq as a treatment for metastatic medullary thyroid cancer, a 91% increase from its sales in Q1 2014.
On the flipside, expenses plunged as research and development costs dipped to $22.3 million from $54.8 million in the comparable period, and selling, general, and administrative expenses dropped by more than $5 million. Overall, Exelixis' net loss was $0.18 per share, considerably better than the $0.39 per share loss reported in the year-ago period. Comparably speaking, Wall Street was expecting revenue of closer to $8 million and a loss of $0.24 per share, so this was a sizable beat all around.
Exelixis announced it ended the quarter with $197.6 million in cash and cash equivalents, down from $242.8 million in the sequential fourth-quarter. The company anticipates operating expenses for the first-half of this year will total $70 million to $80 million.
Now what: Beyond the numbers there were also two intriguing tidbits in Exelixis' quarterly results.
First, the company's press release states that it'll be presenting 14 total posters at the American Society of Clinical Oncology's annual meeting, including eight posters on Cometriq and six of cobimetinib. It means we could be in line for a substantial data dump during ASCO, so it's something for shareholders, such as myself, to look forward to.
Most importantly, though, Exelixis updated its METEOR study readout to occur toward the end of the second quarter, or the early third quarter. A delay may not sound great on the surface, but it actually could be fantastic news (and even could be the primary reason for today's romp higher).
You see, the METEOR study, which is examining Cometriq as a treatment for advanced renal cell carcinoma, has a primary endpoint of a statistically significant improvement in progression-free survival (PFS) over the placebo. However, the following line in Exelixis' report, "because the rate at which events associated with the primary endpoint of PFS are accumulating has slowed..." implies the idea that individuals taking Cometriq are experience better-than-expected PFS. Personally, a success in METEOR wouldn't surprise me considering that Cometriq has been a PFS superstar in both its medullary thyroid cancer and COMET-1 study (metastatic castration-resistant prostate cancer).
As a shareholder I'm obviously biased, the delay could also be due to the control group experiencing better-than-expected PFS. But, with a potential approval of Exelixis' advanced melanoma combo of cobimetinib and Zelboraf, which was developed with the assistance of Roche, seeming likely, and a series of clinical catalysts upcoming within the next couple of months, I'm really excited for the future of Exelixis and believe it could have substantial upside.
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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