Personal Finance

Exelixis, Inc. Rides Cabometyx's Coattails to Big Gains in May

Biotech Drug Rd Lab Getty

Biotech Drug Rd Lab Getty

What: Shares of Exelixis (NASDAQ: EXEL) , a biotechnology company focused on the development of therapies to treat cancer, soared 41% in May, according to data from S&P Global Market Intelligence . The reason behind the surge can be solely traced to excitement surrounding Exelixis' lead drug, Cabometyx.

Image source: Exelixis.

So what: Following the approval of Cabometyx (scientific name cabozantinib) for the treatment of second-line advanced renal cell carcinoma (RCC) in late April, Exelixis' shares really soared after the company announced encouraging results from its midstage CABOSUN trial testing Cabometyx as a first-line therapy for advanced RCC.

CABOSUN, which featured a head-to-head against Pfizer 's Sutent, showed that Cabometyx delivered a statistically significant improvement in progression-free survival in treatment-naïve patients compared to Sutent. The next step for Exelixis is to meet with the Food and Drug Administration, most likely to design a Phase 3 study for Cabometyx as a first-line therapy.

Mind you, this trial news comes after Exelixis recently announced that Cabometyx is the only drug approved to treat advanced RCC that hit the "trifecta" of a statistically significant improvement in overall survival, progression-free survival, and overall response rate. The hope, based on CABOSUN, is that more label expansions may be in Cabometyx's future.

Now what: Things are starting to get exciting for Exelixis , and shareholders could absolutely argue that there's some bias in that assertion.

Image source: Bristol-Myers Squibb.

Even with Bristol-Myers Squibb 's cancer immunotherapy Opdivo treating the lion's share of second-line advanced RCC patients, Exelixis will still have plenty of opportunity to pick up market share in RCC.

My contention has always been that a fairly safe market-share estimate for Cabometyx, considering the aforementioned "trifecta," is about a 10% share of second-line RCC. This alone gives Cabometyx $250 million to $400 million in peak annual sales potential by the end of the decade.

If Cabometyx can also gain first-line approval within a few years, we could be looking at north of three-quarter of a billion dollars in peak annual sales from just RCC. And of course, don't forget that Bristol-Myers and Exelixis are exploring a phase 1b study that combines Opdivo with Cabometyx. If this duo works better than each medicine separately, Exelixis' share and revenue could shoot even higher.

Over the intermediate term, the next big catalyst is CELESTIAL, a pivotal Phase 3 study of Cabometyx in patients with advanced hepatocellular carcinoma, a type of liver cancer. This is a smaller market than RCC; but if approved, Cabometyx would likely tack on $100 million-plus in additional peak annual sales.

My suggestion? Get Exelixis on your radar.

A secret billion-dollar stock opportunity

The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Personal Finance Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More