In my previous series, I had explained at length my hypothesis for believing in the blockbuster potential of Cabometyx and its implications for Exelixis. While the drug has not yet hit the $1.0 billion revenue mark, it is rapidly inching closer to this goal. And Exelixis has already become a profitable commercial organization, thanks to rapid uptake of Cabometyx in second line renal cell carcinoma or RCC indication.
Times have changed for the better for Exelixis and the stock is up by 111.7% from what it was on November 08, 2016. However, the expanding label of the Cabozantinib franchise, which includes capsule formulation, Cometriq, and tablet formulation, Cabometyx, more than justifies this growth. It should be remembered that there are few alternatives available for patients suffering with advanced RCC or hepatocellular carcinoma, indications for which Cabometyx has shown promising results in clinical trials.
I believe that the stock can easily reach the 12-month Wall Street consensus estimate of $32.71, which would imply a return of investment of about 32%. In this series, I will explain the key drivers of Exelixis stock and the factors that make the company a buy opportunity in 2017.
Cabometyx is a solid growth driver for Exelixis in the near term future.
Approved in USA in April 2016 and in Europe in September 2016, Cabometyx is slowly emerging as a force to reckon in the second line plus RCC indication. By end of Q3 2017, the drug had already acquired 38% of the new patient market share in USA. Buoyed by almost 20% (linked above) increase in prescriber base ordering the drug through specialty pharmacy channel as well as 10% (linked above) rise in ordering accounts through specialty distributor channel, Cabometyx has seen almost 9% (linked above) rise in overall customer demand in Q3 2017. Exelixis’ strategy to target the relatively smaller number of
