We stayed with Exelixis (EXEL) In spite of the negative articles that made this firm look as if planting seeds in the ocean. Investors acted as if condemning the firm’s efforts, its small molecule drug design technology and its investigational oncology products. We remained fans in spite of the complete paralysis of the stock for a long time. We always believed that all the negatives about this firm measure little compared to its positives.
Finally, on Monday, results from Phase 3 trials with Exelixis MEK inhibitor investigational drug cobimetinib in combination with Roche’s approved and marketed drug vemurafenib for advanced melanoma met the primary endpoint. The combination delivered a statistically significant increase in progression-free survival (PFS) as compared to Roche’s drug alone. Adverse events were consistent with those observed in a previous study of the combination.
This is much more than just good news. The current products, including Roche’s product vemurafenib used in combination with Exelixis product cobimetinib have not provided hope to tients having advanced, or metastatic melanoma. These drugs cause cancer resistance to quickly emerge.
The successful outcome has undoubtedly surprised the skeptics. It was a song of hope for patients with advanced melanoma, for their physicians, for Exelixis scientists and its shareholders. Following the news, the stock rallied to then give back half of its gains to profit taking. We were not among the sellers. Most of the sellers, we believe, would not have sold their stock following the great news if not for the critics who were fast intensifying their classical negative campaigns usually used against the development-stage firms, i.e., bringing up the same old story about financial results, including the incurred losses and the lack of income. They tried to mislead investors into believing their negative reports describe the firm’s future, when in reality they described a past that the firm’s melanoma drug results will make it history.
Genentech plans to present the data from the trial at an upcoming medical meeting and initiate regulatory filings before year-end.
For Exelixis, this trial is the first of four anticipated phase 3 pivotal trial read-outs for its compounds in 2014. That’s what Michael M. Morrissey, Ph.D., president and chief executive officer of Exelixis reminded shareholders of in the press release announcing the news. Mr. Morrissey added, “Despite recent therapeutic innovations, BRAFV600 mutation-positive advanced melanoma can be difficult to treat due to the emergence of resistance. We look forward to the full presentation of the data later this year. If ultimately approved, we will execute on our collaborative U.S. co-promotion effort with Genentech and work alongside our partner to bring this important new therapeutic option to melanoma patients in need.”
Combining Exelixis Cobimetinib, which is a selective inhibitor of MEK, with Roche’s approved drug vemurafenib, a BRAF inhibitor, is a genius approach that yielded successful results in the life-threatening skin cancer. The target MEK is a protein kinase that is part of a key pathway (RAS-RAF-MEK-ERK pathway) that promotes cell division and survival. This pathway is frequently activated in human cancers where mutation of one of its components (BRAF) causes abnormal activation in about 50% of tumors. Treating cancers having the BRAF mutations with BRAF inhibitors alone, leads to cancer resistance and subsequent progress.
In preclinical melanoma models, co-treatment with vemurafenib and cobimetinib demonstrate the combination may delay the emergence of resistant tumors.
Cobimetinib is being tested for other cancers, including non-small cell lung cancer and colorectal cancer. The successful outcome of phase 3 advanced melanoma trials with the combination has, indeed, offered proof of concept of Exelixis’ cobimetinib action and possible superiority over other drugs and combinations.
Prohost observations and convictions: We see Exelixis as an oncology firm having solid scientific fundamentals and a rich product pipeline of small-molecule oncology drugs discovered in house. Exelixis designed and produced its drug cobimetinib and advanced it to investigational new drug (IND) status. In late 2006, the firm entered into a worldwide co-development agreement with Genentech, where Exelixis has received initial upfront payment and promised milestone payments in the hundreds of millions of dollars. Exelixis took responsibility for development of cobimetinib combination through the end of phase 1, Genentech exercised its task to further develop the compound then after.
In November 2013, Exelixis decided to co-promote cobimetinib in the U.S. If and when the drug is approved in the United States, Exelixis would be entitled to an initial equal share of U.S. profits and losses, which will decrease as sales increase, and would share equally in the U.S. marketing and commercialization costs. Outside the U.S., Exelixis would receive double-digit royalties on the combination drugs’ sales.
Accomplishments before the end of 2014
- - Results from pivotal phase 3 studies COMET-1 (overall survival endpoint) and COMET-2 (pain palliation endpoint) of cabozantinib in metastatic castration-resistant prostate cancer;
- - Results from the overall survival analysis of EXAM, the phase 3 pivotal trial of cabozantinib in progressive, metastatic medullary thyroid cancer; and
- - Completing the enrollment in METEOR -- the phase 3 pivotal trial of cabozantinib in metastatic renal cell cancer.
A Final Word: We believe the results of the melanoma drug will transform the way investors and analysts are evaluating EXEL from now on. This does not mean that negative analysts will stop exaggerating any setbacks and underestimating good news the firm will have, but they will be careful as investors will become more resistant to accept getting the dark side of the good news without a fair evaluation to positive accomplishments.
We expect the melanoma combination drugs to be granted approval around mid next year unless the FDA decides to accelerate the combination drug approval based on the excellent trial results.
Exelixis is one of Prohost oncology picks.
To read the entire announcement click HERE
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