Following Exelixis (EXEL) press release, which announced that it has
regained full rights from Bristol-Myers Squibb (BMY) to its cancer drug
XL184, the firm’s stock plummeted. In the press release, Exelixis stated
that BMS’ priorities made it difficult for BMS to align on the scope,
breadth and pace of the ongoing clinical development of XL184 as agreed
upon in the original agreement. Those who instigated the sell-off did
not buy Exelixis’ explanation and were more comfortable with the notion
that BMS decided to walk away from XL184, probably because of bad news
about the drug. Their reasoning was that a giant pharmaceutical company
like BMS, which focuses on building an impressive advanced oncology
pipeline would not let a promising multi-targeted cancer drug in late
phase trials slip from its hands without a significant reason. BMS did
not allude to any bad reason or any reason at all for its decision. It
did not comment on Exelixis’ explanation and did not deny it.
investors’ speculation and their spontaneous response, instigating the
selling of the stock, are not irrational, they were not supported by
evidence-based knowledge, or facts. Their best speculation was that if
BMS doubts the drug’s promises the least of what they can do is the same
as BMS did, i.e., abandoning investing in Exelixis. The sell-off was
triggered by a pyramid of suppositions that have no concrete proof.
that the acute fear has subsided and Exelixis stock price bottomed,
other investors and, probably, some of those who sold the stock, might
like to take a deep breath and reexamine the whole situation in a more
professional and rational way. It is not unreasonable for investors to
try to find out good investment opportunities in bottomed stocks.
find out whether the stock selling based on the sellers’ reading of
BMS’ mind is correct, or a mistake, we resorted to history, which tells
that many large pharmaceutical firms have abandoned the development of
drugs that have become best sellers when other firms continued
developing them. Looking at the drug itself and the history of its
performance in clinical trials, we see XL184 as not only the most
advanced product in Exelixis pipeline, but is also the most advanced MET
inhibitor. MET pathway has long been recognized as a master switch and
drug target in cancer progression. MET is mutationally activated in
hereditary and sporadic papillary renal cell carcinoma and some head and
neck cancers. It is either over-expressed or activated in the absence
of mutation in glioblastomas, breast carcinomas, gastric cancers and
other solid tumors. MET amplification has been demonstrated in some
XL184 also targets and inhibits VEGFR2, which leads to
starving the tumors of oxygen through the antiangiogenic effect.
Expression of VEGF occurs in various cancers and has been associated
with prognostic significance. Targeting the VEGF receptor has already
demonstrated efficacy as anti-cancer strategy in multiple tumors. Dual
targeting of MET and VEGFR2 blocks two of the major mechanisms tumors
use to overcome hypoxia.
In addition, XL184 inhibits RET, which
is identified in multiple endocrine tumors and familial medullary
thyroid carcinoma. Activated RET is involved in regulating cell
proliferation, migration, differentiation, and survival. It is activated
in papillary thyroid cancer (PTC) and in both familial and sporadic
forms of medullary thyroid cancer (MTC).
These unique combination
of actions makes XL184 capable of causing antiangiogenic,
antiproliferative, and antiinvasive effects in tumors – all have been
confirmed in preclinical cancer models and in some clinical trial
At ASCO 2010 Annual Meeting, the developers reported
that in phase 1 trials on patients with medullary thyroid cancer, XL184
demonstrated a 29% response rate, with a median duration of response
that had not yet been reached, with a range of 4 to 35+ months. They
also reported that in a phase 2 clinical trial on patients with the
nasty glioblastoma, XL184 demonstrated a 30% response rate when dosed at
125 mg daily, with a median duration of response of 5.1 months. Data
were presented showing that the drug demonstrated objective responses in
patients with refractory melanoma, non-small cell lung cancer (NSCLC)
(both as a single agent and in combination with erlotinib),
hepatocellular carcinoma, prostate and ovarian cancers in an ongoing
adaptive randomized discontinuation trial (RDT).
results were announced by the developing firms prior to their divorce.
They are encouraging. Do we have any concrete reason to doubt them? We
personally don’t. All what we see now is a unique drug that targets
three very important pathways of a multitude of cancers. About future
plans, the drug will be in the hands of the FDA for approval of its
first indication, thyroid cancer, in 2011. Exelixis expects to initiate a
phase 3 pivotal trial in recurrent glioblastoma in the year-end 2010
time frame and to prioritize tumor types from the RDT in 2011 to add
more cancers to the drug indications.
This is how we see the story. More...