Thursday, February 19, 2015

Biotech Investing: Exelixis (EXEL) strong run may continue

Exelixis (EXEL) is up over 70% YTD and there's a few good reasons the stock could continue to climb. After disappointing Phase 3 Prostate results last year sent the stock plummeting from from highs of $8 in early 2014 to a low of $1.29 at the end of the year, the stock has come back strong over this past month and currently sits at $2.82. Why? The company has two major catalysts within the next six months including today's announcement that the FDA has assigned a priority review PDUFA date of August 11th for it's compound co-developed with Roche to treat skin cancer.  The results of the Phase 3 study of Cobimetinib  in combination with vemurafenib vs. vemurafenib alone met its primary endpoint of Progression Free Survival with a hazard rate of .51 (aka doubled the PFS vs. the control arm).  These results are impressive and can't imagine the FDA won't approve the drug (though anything can happen with the FDA).  The second major catalysts is the expected Phase 3 pivotal trial resultsof it's lead compound Cabozantinib in kidney cancer.  After the drug failed in Prostate cancer, the company was punished as everyone left the lead compound for dead.  But the drug is definitely active which is highlighted by the secondary endpoint in the Prostate cancer trial of PFS which showed a doubled benefit versus the control arm (.5 hazard ratio) AND the prior approval in thyroid cancer which was approved based on impressive PFS benefits.  And guess what the primary endpoint is for the kidney cancer trial?  That's right, Progression Free Survival.  I would be shocked if primary endpoint isn't met in the kidney trial based on the PFS performance in both the prostate and thyroid pivotal trials.  And yes, the FDA has approved six of the last seven kidney cancer drugs based on PFS so its the standard primary endpoint for approval.

Two major catalysts, a share price near it's all-time historic low, and a market cap of only $550 make the call but I'm a believer which is why I've got and plan to hold 23k shares through these two catalysts.

As always, do your research and good luck to my fellow Biotech Investors!

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