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Exelixis (NASDAQ:EXEL) has made great progress in advancing its drug known as CABOMETYX for the treatment of several types of cancer. It has already been able to receive approval of this drug for the treatment of patients with kidney cancer, liver cancer and thyroid cancer. However, why I believe it is a good time to look into this biotech is because it achieved remarkable progress when it advanced this drug for the treatment of patients with advanced pancreatic cancer. Matter of fact, a phase 3 pivotal trial known as CABINET, was stopped early due to a huge improvement in efficacy noted in an interim analysis in two sets of cohorts targeting patients with advanced pancreatic cancer and extra-pancreatic neuroendocrine tumors. This finding is important, because there is no standard of care [SOC] which helps these patient populations who have already failed on prior therapies.
Why I believe that this finding may provide value for investors to look into is because this sets up two important catalysts that are going to happen in the 2nd half of 2023. The first catalyst is that the unblinded data is going to be presented at an upcoming medical conference. I believe that the release of these substantial results could cause the stock to trade higher. The second catalyst to come about from the stoppage of this phase 3 pivotal study at an interim analysis would be that this data will be discussed with the FDA. The significance of this is that the FDA may possibly allow Exelixis to file a New Drug Application [NDA] of CABOMETYX for the treatment of both of these patient populations thereafter. With the interim analysis causing the phase 3 pivotal study to be stopped early due to overwhelming efficacy, plus the ability to capitalize on two upcoming catalysts in the next several months, I believe that investors might be able to capitalize on any potential gains made.
Study Being Stopped Early Due To Overwhelming Efficacy Sets Up Major Catalysts
As I noted above, Exelixis announced that the pivotal phase 3 CABINET trial was stopped early due to overwhelming efficacy. The trial was stopped early, after an interim analysis done by the Alliance for Clinical Trials in Oncology independent Data and Safety Monitoring Board [DSMB], determined that there was a massive improvement in efficacy. I believe this is a good finding, because a board would typically not unanimously agree to stop a trial early unless there was substantial improvement for these patients. This late-stage study recruited a total of 290 patients into two separate cohorts. About 93 advanced pancreatic cancer patients were in one cohort, and then 197 advanced pancreatic neuroendocrine tumors [pNET] patients were in another cohort. The reason why is because one cohort dealt specifically with advanced pancreatic cancer patients and then the other cohort dealt with advanced neuroendocrine tumors.
One important thing to highlight is that these two different pancreatic cancer patient populations recruited are those who had already tried and failed on prior therapy. This is an important finding for this phase 3 CABINET study, because there is no SOC for these patients who have already failed prior therapy. Patients in this trial were randomized 2:1 to receive either cabozantinib or placebo if each of these respective cohorts noted above. The primary endpoint of this study was progression-free survival [PFS]. It was noted that patients in both cabozantinib cohorts were able to prolong the amount of time without disease progression or death compared to placebo.
Without SOC of patients who progress on prior systemic therapy, then there is a huge need for a drug like cabozantinib to be given to these patients. The market opportunity is huge, especially if only looking at the pancreatic cancer market. Even accounting for only a specific patient population who have failed on prior systemic therapies. The global pancreatic cancer market is expected to reach $7.91 billion by 2032. Well, Exelixis is only targeting the specific patient population noted directly above. Consider that most of the patients who receive first-line treatment ultimately progress, with the 1-year failure rate being between 60% and 80%. Thus, once these patients fail on 1st-line treatment, there is no SOC in place to help them. If cabozantinib is ultimately approved for these advanced pancreatic cancer patients, then they will finally have an option to take.
Financials
According to the 10-Q SEC Filing, Exelixis had $2.1 billion in cash, cash equivalents and investments as of June 30, 2023. The thing about this biotech is that it has already received FDA approval for its drug CABOMETYX and is selling well in the market. In the most recently reported earnings of Q2 2023, it noted that it total revenues of $469.85 million, which is a year-over-year increase of 12%. Not only that, but this number beat total revenue expectations by $25.02 million for the quarter as well. The company should be okay for the time being, because it believes that with, it will have enough to fund its operations for at least 12 months. It should probably start looking into possibly raising cash in the early part of 2024, but for now it is in good shape.
Risks To Business
There are several risks that investors should be aware of before investing in Exelixis. The first risk to consider would be with respect to the phase 3 CABINET study, which was stopped early due to overwhelming efficacy. That’s because the company wants to meet with the FDA to discuss these positive findings with the agency. There is no assurance that the FDA will either allow for the NDA filing of CABOMETYX for the two pancreatic cancer indications, nor that it will ultimately end up prevailing in obtaining FDA approval. A second risk to consider would be from another data readout from the phase 3 COSMIC-313 study, which is expected before the end of 2023.
This is going to be with respect to the triplet regimen of cabozantinib in combination with Opdivo [nivolumab] and ipilimumab for the treatment of patients with kidney cancer [renal cell carcinoma]. Specifically, the goal is to release the next overall survival analysis from this late-stage study. There is no assurance that results to be released from this study will end up being positive, nor that such data will cause the stock price to trade higher. The third and final risk to consider would be the financial position that this company is in. Even though it believes that it has enough cash on hand to fund its operations for at least the next 12 months, it is likely going to need to start looking to raise cash by at least early 2024 in my opinion.
Conclusion
Exelixis is already generating U.S. net sales with its drug CABOMETYX, which has already been approved to treat several types of cancer. Net product revenues generated for Q2 of 2023 were $409.6 million, compared to the same time period in the prior year, whereby it only generated $347 million. The reason to look into this biotech is because of the positive data it was able to generate from the phase 3 CABINET study, which used CABOMETYX for the treatment of patients with advanced pancreatic cancers. Again, this was achieved with respect to two different patient populations, which are advanced pancreatic cancer and advanced pancreatic neuroendocrine tumors [pNET] respectively. This recent development created two catalyst opportunities for investors to look forward to. The first of which involves the release of results from the phase 3 CABINET study at an upcoming medical meeting in 2023. The second catalyst to come about would be a meeting with the FDA to discuss potential regulatory pathway plans to advance the use of this drug for the treatment of both of these patient populations.
