Morningstar | EXEL Updated Forecasts and Estimates from 19 Mar 2019
Exelixis is best known for its prowess in discovering targeted cancer drugs, which left a legacy of oncology drug partnerships with multiple Big Pharma players. Its priorities evolved to focus on its lead drug cabozantinib, which gained approval in the small medullary thyroid cancer, or MTC, market in 2012; the larger renal cell carcinoma, or RCC, market in 2016; and the complex hepatocellular carcinoma, or HCC, market in 2019. We are optimistic for the future of the cabozantinib franchise but believe the firm’s long-term outlook remains uncertain, given the competitive oncology market and Exelixis’ prioritization of its lead drug at the expense of its early-stage pipeline. Cabozantinib--marketed as Cometriq in MTC and Cabometyx in RCC--has shown remarkable efficacy and the potential to play a key role in oncologic combo regimens. The launch of Cometriq introduced a limited stream of sales given the limited number of MTC patients. Cabometyx has quickly gained traction in the RCC, but a slew of combination trials, with and without Cabometyx, is in the pipeline. Competition has thickened in HCC, with approvals of Lenvima (front line) and Keytruda (second line). A plethora of investigator-sponsored trials are testing cabozantinib in other indications, which require minimal up-front cost from Exelixis, but the direction and timing are largely out of the firm’s control. After Bristol returned its rights to cabozantinib to Exelixis in 2010, Exelixis shifted its resources to bring the drug to market. While necessary, we believe this strategy limited the company’s early-stage pipeline. The firm’s partnered drug with Roche, Cotellic (in combo with Zelboraf) for the treatment of melanoma, launched in 2015 but has struggled to gain traction in the crowded indication. Larger opportunities lie in the melanoma market in combo with Roche’s immuno-oncology drug Tecentriq. Exelixis has other partnerships with Daiichi Sankyo and Sanofi, in addition to several very early-stage candidates with Merck and Bristol. Partnerships limit the cost of development for Exelixis, but the firm cedes a portion of the profit and control.Exelixis is an oncology-focused biotechnology company that involved in the discovery, development and commercialization of new medicines for cancers. The company's marketd products are: CABOMETYX? (cabozantinib) tablets for renal cell carcinoma and previously treated hepatocellular carcinoma; and COMETRIQ? (cabozantinib) capsules for progressive, metastatic medullary thyroid cancer. The company's products resulting from its discovery efforts are: COTELLIC? (cobimetinib), an inhibitor of MEK approved as part of a combination regimen to treat melanoma; and MINNEBRO? (esaxerenone), an oral, non-steroidal, selective blocker of the mineralocorticoid receptor approved for the treatment of hypertension in Japan.
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