What's happening: Shares of Exelixis (NASDAQ:EXEL), a biopharma specializing in the development of cancer treatments, briefly rose by 10.4% on heavier-than-normal volume in early morning trading today. The stock's quick upswing was driven by the announcement that the Swiss licensing and supervisory authority approved Exelixis' drug cobimetinib for use in combination with Roche's Zelboraf as a treatment for patients with advanced melanoma. According to the press release, cobimetinib will be sold under the trade name "Cotellic" in Switzerland.
Why it's happening: While the commercial opportunity for this combo as an advanced melanoma treatment in Switzerland is arguably immaterial to the balance sheets of either company, the bigger takeaway is that this first regulatory approval may bode well for the combo during its upcoming Nov. 11 target review date with the U.S. Food and Drug Administration, and perhaps for its outstanding regulatory application with the European Medicines Agency as well. As a reminder, the FDA previously delayed the combo's regulatory target date from Aug. 11 to Nov. 11 in order to accommodate a supplemental data submission.
This delay, despite being triggered by a fairly standard supplemental data package, sparked concern among investors that there may be an unknown problem with the regulatory application, causing the drugmaker's shares to drop by over 10% in a single day. Although Exelixis' shares have more than regained this lost ground in the meantime, this issue has lingered in the minds of some investors.
Today's news should help to assuage any remaining fears that a so-called "black swan" may come into play for the combo's pivotal U.S. review, given that anything overly concerning about the therapy's late-stage trial probably would have set off alarm bells during the Swiss review.