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5 Reasons Why Investors Should Buy Exelixis (EXEL) in 2019

Exelixis Inc.’s EXEL lead drug, Cabometyx continues to perform well. The company’s efforts to develop cabozantinib for various other indications are encouraging.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Here are five reasons to invest in the stock.

Favorable Rank, Rising Shares Price and Estimates: Exelixis has a Zacks Rank #2 (Buy). Exelixis’ shares have outperformed the Medical - Biomedical And Genetic industry in the past six months. The stock has returned 12.8% in the said timeframe compared with the industry’s rise of 13.7%. The company’s outperformance was backed by decent quarterly results and positive news flow.

 

Impressive Performance of Cabometyx: Exelixis’ lead product, Cometriq, the capsule form of cabozantinib, was approved in the United States in 2012 for the treatment of progressive, metastatic medullary thyroid cancer (MTC). In April 2016, a tablet formulation of cabozantinib, Cabometyx was approved in the United States for the treatment of patients with advanced renal cell carcinoma (RCC) who have received prior anti-angiogenic therapy.

The approval for first-line RCC has increased the eligible patient population for Cabometyx in the United States by approximately 14,000 patients. Cabometyx is poised to grab market share from key drugs — Sutent and Afinitor — in the first-line RCC market. Exelixis’ European partner Ipsen also obtained approval for the drug in Europe for the first-line treatment of adults with intermediate- or poor-risk advanced RCC in the European Union. The approval will broaden the geographic reach of the drug as the market potential is significant for the first-line treatment of kidney cancer.

Developing Cabozantinib for Additional Indications: Exelixis is developing cabozantinib in a broad development program, comprising more than 45 clinical studies across multiple indications. The FDA has accepted the company’s supplemental New Drug Application (sNDA) for Cabometyx as a treatment for patients with previously treated advanced HCC (liver cancer) and is expected to provide a decision later today. A potential approval should further boost demand and diversify the franchise, given the huge market for liver cancer. The CHMP also gave a positive opinion on the same.

Separately, Exelixis has also initiated a phase Ib study (investigator-sponsored) on cabozantinib (in combination with Bristol-Myers Squibb’s BMY Opdivo (nivolumab) or Opdivo plus Yervoy) in patients suffering from genitourinary tumors, including bladder cancer and RCC. The trial has established the preliminary safety and tolerability, and recommended dose for this combination. A phase II trial evaluating safety and preliminary activity of the cabozantinib-Opdivo combination as compared to the cabozantinib, Opdivo and Yervoy combination in advance HCC completed enrollment earlier in 2018.

Collaborations with Leading Companies Exelixis has collaborations with several leading pharmaceuticals such as Bristol-Myers Squibb, Merck MRK and Daiichi Sankyo Company forvarious compounds and programs in its portfolio. These collaborations allow Exelixis to earn milestone payments and royalties that boost its top line. Exelixis also has an exclusive licensing agreement with Ipsen for the commercialization and further development of cabozantinib.

Exelixis recently announced encouraging results from the dose-escalation stage of the phase Ib COSMIC-021 study of Cabometyx in combination with Roche’s RHHBY Tecentriq, in previously untreated advanced RCC. The combination was well tolerated and showed promising anti-tumor activity. In October 2018, Exelixis initiated a phase III trial (COSMIC-311) of single-agent cabozantinib in patients with radioiodine-refractory differentiated thyroid cancer (DTC) who have progressed up to two prior vascular endothelial growth factor receptor (VEGFR)-targeted therapies.

Exelixis and Ipsen announced the initiation of a pivotal phase III study — COSMIC-312 — to evaluate a Cabometyx combination therapy in treatment-naïve advanced HCC patients. Moreover, an exploratory arm will also evaluate Cabometyx monotherapy in the first-line setting for similar patients.

Cotellic’s Label Expansion to Boost Top Line: Another drug in Exelixis’ portfolio, Cotellic, in combination with Zelboraf (vemurafenib), gained approval in the United States for the treatment of patients with BRAF V600 mutation-positive advanced melanoma in November 2015. The drug was also approved in the EU for the treatment of adult patients with unresectable or metastatic melanoma with a BRAF V600 mutation.

Cotellic is also being evaluated in combination with multiple agents for the treatment of various types of tumors, including an immunotherapy in several tumor types like non-small cell lung cancer, colorectal cancer, triple-negative breast cancer and melanoma.

The IMspire150 (TRILOGY) trial, which evaluates the combination of Cotellic, Tecentriq, and Xelboraf in first-line BRAF V600 mutation-positive metastatic or unresectable locally advanced melanoma, has completed enrollment. The IMspire170 study, evaluating the combination of Cotellic and Tecentriq versus Merck’s Keytruda in first-line BRAF wild-type metastatic or unresectable locally advanced melanoma, is ongoing

Exelixis faces its share of challenges in the form competition.

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