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Why Is Exelixis (EXEL) Up 3.4% Since Last Earnings Report?

It has been about a month since the last earnings report for Exelixis (EXEL). Shares have added about 3.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Exelixis due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Exelixis Q4 Earnings Surpass Estimates, Sales Miss

Exelixis reported earnings of 9 cents per share in the fourth quarter of 2020, beating the Zacks Consensus Estimate of 3 cents. The bottom-line figure declined from the year-ago quarter’s earnings of 22 cents per share due to higher R&D expenses.

Net revenues came in at $270 million, which increased from $240.3 million reported in the year-ago quarter but missed the Zacks Consensus Estimate by 0.46%.

Quarter in Detail

Net product revenues came in at $200.4 million, up from $194.9 reported in the year-ago quarter.

Cabometyx generated $196.3 million of revenues. Cabometyx (cabozantinib) tablets are approved for advanced renal cell carcinoma (RCC) and previously treated hepatocellular carcinoma (HCC). Cometriq (cabozantinib capsules) for the treatment of medullary thyroid cancer generated $4 million in net product revenues. Exelixis earned $23.3 million in royalty revenues on the basis of cabozantinib-related revenues generated by its partner, Ipsen.   

Collaboration revenues, comprising license revenues anxd collaboration services revenues, were $69.7 million in the quarter under review compared with $45.4 million in the year-ago quarter. The increases in collaboration revenues were primarily related to increases in milestone related revenues and development cost reimbursements earned, along with higher royalty revenues for the sales of cabozantinib outside of the United States generated by Exelixis’ collaboration partners, Ipsen Pharma and Takeda Pharmaceutical Company Limited. 

In the reported quarter, research and development expenses increased to $154.3 million from the year-ago quarter’s $94.3 million due to a rise in clinical trial costs. Selling, general and administrative (SG&A) expenses were $82.4 million, up from $58 million in the year-ago quarter.

Pipeline Update

In January 2021, Exelixis obtained FDA approval for its supplemental New Drug Application (sNDA) for Cabometyx in combination with Opdivo as a first-line treatment of patients with advanced RCC.

In October 2020, the first patient was enrolled into the dose-escalation cohort of the combination arm of the phase I study evaluating the safety, tolerability, PK and preliminary anti-tumor activity of XL092, both alone and in combination with Tecentriq in patients with advanced solid tumors.

2020 Results

Revenues came in at $987.5 million, which grew from $967.8 million in 2019 but missed the Zacks Consensus Estimate of $988.8 million. Earnings per share of $0.61 were down from $1.16 in 2019.

2021 Guidance

Revenues are projected at $1,150-$1,250 million while product revenues are estimated in the range of $950-$1,050 million.  
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -11.54% due to these changes.

VGM Scores

At this time, Exelixis has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Exelixis has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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