Analyst Sees Exelixis At Inflection Point Despite Mixed Trial Results

In its second-quarter earnings release, Exelixis, Inc. EXEL announced that the final overall survival (OS) analysis for the phase 3 CONTACT-02 trial has been completed.

This study evaluates cabozantinib in combination with atezolizumab compared with a second novel hormonal therapy (NHT) in patients with metastatic castration-resistant prostate cancer (mCRPC) and measurable soft-tissue disease who have progressed after treatment with one prior NHT.

Also Read: Bristol Myers, Exelixis Reveal 4-Year Follow-Up Results From Cancer Treatment Study.

As previously reported, the CONTACT-02 study met one of its two primary endpoints, demonstrating a statistically significant benefit in progression-free survival (PFS) (hazard ratio: 0.65; p=0.0007) in the predefined PFS intent-to-treat population (i.e., the first 400 randomized patients).

While the final OS continued to favor the combination of cabozantinib and atezolizumab, it did not achieve statistical significance.

The safety profile of the combination regimen was reflective of the known safety profiles for each single agent and was consistent with the known tolerability profile of approved immune checkpoint inhibitor-tyrosine kinase inhibitor combinations in advanced solid tumors. 

Despite the trial update, the company intends to submit a supplemental marketing application to the FDA in 2024.

Exelixis reported second-quarter adjusted EPS of $0.84, higher than $0.31 a year ago, beating the consensus of $0.30.

The sales increased to $637.2 million, beating the consensus of $465 million, up from $469.8 million a year ago, primarily due to increased sales volume and average net selling price.

Guidance: Exelixis sees 2024 revenues of $1.975 billion—$2.075 billion versus a consensus of $1.88 billion and prior guidance of $1.825 billion—$1.925 billion.

William Blair writes that Exelixis has entered 2024 at an inflection point. The growth of its flagship Cabometyx franchise is stabilizing, while pipeline programs, especially zanzalintinib, are increasingly responsible for offsetting Cabometyx's market exclusivity expiry in 2031.

In the midterm, NETs and mCRPC could emerge as material growth opportunities for the franchise.

“Ultimately, given the cash flow generation and EPS positivity, we believe Exelixis provides investors with a highly defensive investment profile,” the analyst adds.

The analyst reiterates the Outperform rating on Exelixis shares.

Price Action: EXEL stock is up 13% at $26.49 at last check Wednesday.

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