Exelixis' Patent Decision In Line With Expectations, But Analysts Say Stock Overhang Could Continue

Exelixis Inc EXEL announced that the U.S. District Court for the District of Delaware ruled in its favor, rejecting MSN Laboratories Private Limited's challenge to the cabozantinib compound patent.
The District Court's decision follows an earlier Stipulation and Order of October 1, 2021, that MSN's proposed generic cabozantinib product infringes the patent.
Additionally, the District Court ruled that MSN's proposed generic marketing application product does not infringe Exelixis' N-2 polymorph patent, which expires on October 8, 2030.
William Blair says the mixed ruling is within expectations given that the outcome aligns with previous commentary made by the judge last May.
The analyst says that the ongoing patent litigation will continue to be an overhang or "x factor" on the stock until clarity is achieved.
William Blair says outcome prediction is challenging but is bullish on a favorable ruling for the scenario.
JMP Securities says that the first decision, despite the mixed outcome, is in line with expectations and will reduce uncertainty around the stock as the focus shifts to the next case.
The analyst maintained the Market Outperform rating and $24 DCF-derived price target.
The analyst continues to see the stock as a good option in the current environment as EXEL delivers continued top-line and FCF growth, supported by an approved franchise that excludes risks from binary catalysts.
Price Action: EXEL shares are up 1.33% at $16.75 on the last check Friday.

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