Shares of Exelixis (NASDAQ: EXEL) , a biopharmaceutical company focused on the development of drugs to fight cancer, continued an amazing two-year run by advancing another 12% during the month of December, according to data from S&P Global Market Intelligence . The reason behind Exelixis' solid performance can be traced to a favorable decision from the Food and Drug Administration regarding its lead cancer drug Cabometyx on Dec. 19.
According to a press release from Exelixis, the FDA approved an expansion of Cabometyx's label for treatment-naive patients with advanced renal cell carcinoma (RCC). Cabometyx is already approved as a treatment for second-line advanced RCC. The expanded label was a result of strong clinical data from the phase 2 Cabosun trial, which demonstrated a statistically significant and clinically meaningful improvement in progression-free survival when compared to Pfizer 's (NYSE: PFE) Sutent, the current standard-of-care in first-line advanced RCC.
To be more specific, Cabometyx reduced the rate of disease progression or death by an impressive 52%, and it led to an improvement in progression-free survival of 3.3 months (8.6 months versus 5.3 months for Sutent).
It's worth pointing out that this approval comes just two months after Exelixis' development partner in most ex-U.S. countries, Ipsen , announced that the global phase 3 Celestial study in patients with advanced hepatocellular carcinoma (HCC) had also met its primary endpoint of a statistically significant and clinically meaningful improvement in median overall survival compared to patients taking a placebo.
In other words, Exelixis has been racking up clinical victories of late.
The big question now is just how successful Cabometyx can be when going up against Pfizer's Sutent . As the Cabosun study demonstrated, Cabometyx shouldn't have any issues on the basis of efficacy. However, Sutent is an established therapy in first-line RCC, and it can be tough to break into a new indication when you're facing a deep-pocketed goliath like Pfizer and an insurance industry that's become accustomed to Sutent as the go-to choice. Nonetheless, I am expecting Cabometyx to continually strip market share away from Sutent with each passing quarter in the intermediate term.
I'm expecting the FDA to approve a label expansion for advanced HCC as well. While nothing is a given with the FDA, the regulatory agency has a good bead on the safety profile of Cabometyx, and it easily met the mark of statistical significance in the Celestial study.
At this point, Exelixis has an opportunity to cross $1 billion in annual sales by perhaps as early as 2019. It'll depend on how quickly the drug pulls market share from Sutent, as well as how quickly it grows as a treatment for advanced HCC; but Exelixis has made a habit of trouncing Wall Street's projections in recent quarters.
As a longtime shareholder, I see no red flags, and would suggest that modest upside may still be had.
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