Exelixis: Substantial Unlocked Value In The Cabozantinib Franchises

Jun. 06, 2017 7:55 AM ETExelixis, Inc. (EXEL)JAZZ, PLX41 Comments


  • By inhibiting multiple targets simultaneously, the anti-cancer molecule cabozantinib is showing stellar efficacy and safety in treating various cancer types.
  • While procuring meaningful revenues, the development of cabozantinib for a vast number of cancer indications ensures strong future sales growth.
  • Most of the clinical trials studying cabozantinib will highly likely post positive future results.
  • Despite the recent run-up in share price, there are substantial values to be unlocked in the aforesaid tyrosine kinases inhibitor.

As part of the biotech bull run that commenced in late 2016, Exelixis, Inc. (NASDAQ:EXEL) rewarded shareholders with more than four-folds appreciation in share price for the past year. Based in San Francisco, California, the firm is focusing on the development and commercialization of molecules to improve the outcome and care for patients afflicted by cancers. While it is seemingly the market sentiment that share price is trading at a premium, our analytical research proved otherwise. There is substantial unlocked value in the cabozantinib franchises that, in and of itself, ensures aggressive future sales growth. And, despite that the company has a highly enriched pipeline, we shall evaluate the prospects of cabozantinib alone in this research.

Source: Google Finance

In 2012, cabozantinib received its first U.S. FDA approval for the treatment of progressive, metastatic medullary thyroid cancer under the brand Cometriq®. Moreover, the said molecule gained further approval as Cabometyx® on April 25, 2016, to manage patients afflicted with advanced renal cell carcinoma, who had undergone prior (angiogenic) treatment.

Cabozantinib's Mechanism of Action

Usually, a patient who is put on the cancer treatment coined chemotherapy would show improved responses and only be disappointed when their cancer comes back due to drug resistance. Among the various anti-cancer drugs, cabozantinib strongly differentiates itself due to having the specialized mechanism of action. Instead of attacking a single target (like a monoclonal antibody), the said drug works by simultaneously inhibiting different kinases (MET, AXL, VEGF receptors, and RET) involved in the disease processes (including oncogenesis, metastasis, tumor angiogenesis, drug resistance, and the maintenance of tumor environment).

Research proved that the inhibition of multiple targets (as well as the application of combination therapies) is better at preventing cancer relapses than conventional treatment alone. In addition, the aforementioned approach ensures the optimized efficacy and safety due to drug-target specificity. With

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