After releasing more clinical data on the angiogenic inhibitor cabozantinib (XL184) at ASCO 2012, shares of developer Exelixis, Inc. (EXEL) have moved significantly higher reflecting newfound faith in the drug's market prospects. I put out a buy recommendation on May 30th in anticipation of strong clinical data for cabozantinib, and the shares have moved 26% higher since. The question that lingers is whether or not EXEL will continue making big moves that traders can profit from.
While Exelixis happens to have a very large portfolio of compounds (including 9 out-licensed compounds and 8 "partnering" compounds), the real focus is on cabozantinib. Not only is it much further developed than anything else the company is associated with, but it has now completed Phase III trials for the treatment medullary thyroid cancer (MTC) which is an orphan disease (making cabozantinib an orphan drug). The NDA was submitted on May 30th, and may be granted fast-track designation, which would establish the PDUFA action date as November 30, 2012 rather than February 30, 2013. Exelixis should receive the official decision by July 30th based on the FDA's guidelines for NDA responses.
The Phase III data for cabozantinib in the treatment of MTC (the EXAM studies) were quite good. The primary endpoint of the study, which was the progression-free survival of the 330 patients, was met with a median PFS of 11.2 months in the cabozantinib arm relative to just 4.0 months in the placebo arm. Dr. Patrick Schöffsk, who presented the data at ASCO 2012 said the following:
"The data presented today are highly compelling and demonstrate that cabozantinib can provide a significant benefit to patients with advanced MTC. Taken as a whole, the results clearly show that cabozantinib is an important advance in the treatment of MTC and has the potential to improve the care and outcomes for MTC patients."
The most common adverse events were said to be in line with other drugs that inhibit the VEGF pathway (angiogenic inhibitors), which should look fine to the FDA later on. One unfortunate piece of data can be found in death statistics, with 5.6% (12 patients out of 214) in the cabozantinib arm dying of causes unrelated to progressive disease and 2.8% (3 patients out of 109) in the placebo arm. Exelixis claims that the differences in these patient death statistics are largely accounted for by typical VEGF-inhibition side effects (the most common of which, in this study, was hypertension). If the FDA deems this true, cabozantinib's safety profile should be quite solid.
While Exelixis already has substantial income from its partnerships, the potential arrival of cabozantinib into the oncology drug market is far more exciting and would be a major catalyst for share appreciation. In addition to its development for MTC, the company is actively recruiting patients in two Phase III trials for castration-resistant prostate cancer (COMET-1 and COMET-2) as well as a huge number of Phase II trials including a randomized study for the treatment of solid tumors.
While there will be an enormous influx of data in future years as cabozantinib moves onto Phase III trials for other treatments, but the real focus right now is on the aforementioned NDA for the treatment of MTC and the Phase III trials for prostate cancer. The COMET-1 and COMET-2 trials have estimated primary completion dates set all the way in 2014, so traders will have to focus just on the upcoming NDA decision. We will have clarity on the PDUFA action date by July 30th -- until then the stock will likely trade on technical indicators and sentiment more so than tangible implications of its clinical data.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.