EXEL Chart

What: Shares of Exelixis (NASDAQ:EXEL), a small-cap biopharmaceutical company focused on developing therapies to fight cancer, roared higher in May by 23%, based on data from S&P Capital IQ, after the company reported its first-quarter earnings results.

So what: According to the press release, Exelixis recorded $9.4 million in Q1 revenue, up 91% year-over-year, although it did note a $2.6 million benefit derived from how it accounts for the sale of its only approved drug, Cometriq, for the treatment of advanced medullary thyroid cancer. Additionally, Exelixis' expenses plunged with the (now failed) COMET studies no longer in the mix for advanced prostate cancer. Research and development costs dropped by 60% to just $22.3 million, while SG&A costs also fell by more than $5 million. Higher revenue and lower costs translated into a net loss of $0.18 per share for Exelixis compared to the $0.39 per share the company lost in Q1 2014.

On a comparable basis, Wall Street had been looking for just $8 million in total revenue and a wider loss of $0.24 per share, meaning Exelixis crushed Wall Street's expectations.

But, the bigger news was a single sentence in Exelixis' press release. It read as follows,

"Because the rate at which events associated with the primary endpoint of PFS are accumulating has slowed, the company now anticipates top-line results will be available at the end of the second quarter or early in the third quarter of this year." 

Delays are usually bad news, but in this case it could imply that the reason it's taking longer for the METEOR study -- METEOR is examining Cometriq as a treatment for advanced renal carcinoma -- to reach its primary endpoint, which is a statistically significant improvement in progression-free survival, is that the intent-to-treat group is experiencing a longer period of stable disease than anticipated. Keep in mind it's also possible the placebo drug is having the same effect of extended stable disease, or we could just be seeing this effect in both arms.

However, if the intent-to-treat group is indeed experiencing delayed events (an event would be patient progression or death), it might mean Cometriq is working as designed for advanced renal cell carcinoma.

Cancer cells dividing. Source: National Institutes of Health via Facebook.

Now what: It should be noted that I'm currently a shareholder in Exelixis, so I naturally have some biases when it comes to my opinion of the company.

My suspicion is that the delay could relate to better than expected PFS in the intent-to-treat group, but I of course don't know that with any certainty. My belief rests upon the fact that Cometriq crushed the placebo in terms of PFS in both the study that led to its approval in treating medullary thyroid cancer (11.2 months versus four months), and in the COMET-1 study (5.5 months versus 2.8 months). All cancers react differently, but Cometriq has a pretty substantive history of hitting the mark on PFS, which is the goal of the METEOR study.

Add to that the prospect that it and Roche may soon have a combo on the market to treat metastatic melanoma (Roche's Zelboraf and Exelixis' cobimetinib) and there's a lot of reasons to be excited. A number of big catalysts are right around the corner for Exelixis, and I expect them to be positive.