The Food and Drug Administration canceled the advisory committee meeting for Exelixis' (Nasdaq: EXEL) cancer treatment cabozantinib this week, which is either a really good sign or a really bad one.

The FDA holds advisory committee meetings to get feedback from outside experts about whether they think a drug should be approved. The agency must have canceled the meeting for cabozantinib because it doesn't see a need to get outside input. Or, put another way: The reviewers have basically already made up their minds.

It's impossible to know for certain which way the FDA is strongly leaning, but when it cancels an advisory committee meeting, I take it as a sign that the majority hypothesis is probably right. If it seems like the drug is going to get approved, it probably will. Alternatively, if the data was questionable to begin with, it's probably a sign that the FDA doesn't need an advisory committee to confirm that the drug isn't worth approving.

For example, Bristol-Myers Squibb's (NYSE: BMY) Yervoy had pretty strong efficacy data, the FDA canceled the advisory committee meeting, and the agency subsequently approved the drug. On the flip side, the FDA canceled the advisory committee meeting for Repligen's pancreatic imaging diagnostic, RG1068, and at the same time, the company said it expected to receive a rejection letter from the agency. A few months later, the FDA did just that.

The data for cabozantinib looked pretty good -- and Exelixis certainly didn't say that it expected to receive a rejection -- so my guess is that an approval is fairly likely at this point. Obviously, that guess makes some assumptions about a relatively opaque FDA that can be hard to read sometimes. Clues are usually all you get, and you just have to take your best guess.

In the big scheme of things, though, it doesn't matter that much whether cabozantinib is approved for use in medullary thyroid cancer. The indication is fairly small, and cabozantinib will likely be used after AstraZeneca's (NYSE: AZN) Caprelsa or, at the very least, have to compete with it.

If cabozantinib works in prostate cancer, it'll have more competition -- Johnson & Johnson's (NYSE: JNJ) Zytiga, Dendreon's (Nasdaq: DNDN) Provenge, and likely Medivation's MDV3100 -- but the market is also substantially larger. A positive clinical trial in prostate cancer patients is likely to have a bigger effect on the stock price than an approval in thyroid cancer.

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