Decent is not good enough in the biotech world, where a drug needs to meet an exacting standard in order to cut the mustard. Which is the story of the latest results for Exelixis’ (EXEL) advanced liver cancer candidate.
Shares tanked by 23% in Monday’s session after the company released interim data from the Phase 3 pivotal COSMIC-312 study for cabo+Tecentriq (cabometyx and atezolizumab) in 1L HCC (first-line hepatocellular carcinoma).
While the combo treatment lowered the risk of the disease progressing by 37%, it looks like it’s unable to improve overall survival rates in a statistically significant manner.
“With findings unlikely to change at final analysis (likely early ’22),” said Cowen’s Yaron Werber, “We believe this data in 1L HCC, along with the recent disappointing COSMIC-021 update in mCRPC, jeopardize the long-term growth oppurtunity for cabo…”
Werber calls the HCC market “highly competitive” and believes that in order for the trial to be considered a success it needed to improve on Roche’s combination of Avastin+Tecentriq. However, while Avastin+Tecentriq met both primary end points of progression free survival (PFS) and overall survival (OS), the fact cabo+Tecentriq missed on OS does not bode well for the treatment and could put the “regulatory filing at risk.”
Exelixis will meet with the regulators to talk through the results and the drug could still gain U.S. approval based on PFS, although Werber believes this is “less likely in the EU.”
That said, even if the treatment does make it past the regulators, from a commercial perspective, OS is “important” and the the results already put cabo+Tecentriq at a disadvantage when compared to Avastin+Tecentriq.
With cabo facing new competition from Merck, and a lack of “meaningful near-term catalysts,” Werber thinks the stock “is now more of a FY22 story for data updates from the early pipeline.”
As such, while Werber sticks to an Outperform (i.e. Buy) rating, the 5-star analyst lowered the price target from $27 to $24. That said, the figure still implies shares will gain ~32% over the coming months. (To watch Werber’s track record, click here)
Looking at the consensus breakdown, the disappointing results have not dampened most analysts’ enthusiasm for this name. Based on 8 Buys, 2 Holds and 1 Sell, EXEL stock qualifies with a Moderate Buy consensus rating. The average price target remains a bullish one; at $29.22, shares are anticipated to add ~60% of muscle in the year ahead. (See EXEL stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
