Source: Bristol-Myers Squibb.
If treated early enough, kidney cancer patients have a five-year survival rate that is better than many other cancers. Unfortunately, though, treatment options are more limited, and survival rates less optimistic, for the 17,000 Americans who have failed to respond to first-line therapy or whose disease returns.
Although the prognosis for metastatic kidney cancer is disheartening, encouraging late-stage trial data for kidney cancer drugs under development at Exelixis (NASDAQ: EXEL) and Bristol-Myers Squibb (NYSE: BMY) could soon change that, boosting financial results for these companies in the process.
Source: Exelixis.
A much-needed win
Exelixis is a small-cap biotechnology company that markets Cometriq, a drug used to treat medullary thyroid cancer, or MTC. Cometriq secured approval for use in this indication in 2012, but the small addressable patient population of this disease has meant that Cometriq's revenue has been more a trickle than a flood. Last year, Cometriq sales totaled just $25 million.While Cometriq's lackluster sales rate isn't anything to write home about, Exelixis has long believed that Cometriq's commercial success would ultimately be tied to its use in other cancers, such as prostate and kidney cancer, than to its use in MTC.
However, Cometriq's label took a hit when a late-stage trial failure threw cold water on its use in prostate cancer, imperiling shares and raising the stakes for the company's ongoing kidney cancer studies.
Fortunately, Cometriq appears to work better as a second-line kidney cancer drug than it does in prostate cancer.
According to Exelixis, Cometriq improved progression-free survival for metastatic kidney cancer patients by 42% versus Novartis' Affinitor -- a widely used second-line therapy. That 42% improvement is nothing to sneeze at, but results would have been even more encouraging if Exelixis could have reported a benefit in overall survival, too. Unfortunately, we won't know whether a trend toward improving overall survival is statistically significant until 2016.
A better drug?
Enthusiasm over Exelixis' kidney cancer results could be short-lived following Bristol-Myers reporting kidney cancer data for its Opdivo that suggests it may work better than Cometriq.
After reviewing interim data, independent monitors chose to make Opdivo more widely available by halting a trial in second-line kidney cancer patients. Independent monitors made their decision because Opdivo delivered the coveted overall survival benefit versus Affinitor that Cometriq has yet to achieve.
Because of Opdivo's overall survival benefit, a label expansion for Opdivo beyond its current use in non-small cell lung cancer and melanoma could give it an edge against Cometriq in the second-line setting -- depending on Cometriq's pending overall survival data.
Looking ahead
Exelixis investors are right to be pleased with Cometriq's showing, but if Bristol-Myers' Opdivo nets approval in the same indication as Cometriq, it could significantly reduce Cometriq's overall market opportunity.
If so, then Exelixis' financial position could weigh on its share price. The company had $113 million in cash and short-term investments and $368 million in debt exiting the first quarter, which isn't very encouraging given Exelixis' expenses. In the first quarter, Exelixis' R&D spending totaled $22 million, and its SG&A spending totaled $9.5 million, leading Exelixis to forecast total operating expenses of between $70 million and $80 million during the first six months of this year.
Because Exelixis is more reliant on success in this indication than Bristol-Myers and Exelixis' spending could lead to additional dilutive stock offerings, investors may want to approach Exelixis shares more cautiously than they do shares of Bristol-Myers. Regardless, the advances reported by these companies are a big win for patients.
