Exelixis following the prostate cancer failure

Yesterday, Exelixis (EXEL) announced Cometriq (cabozantinib) failed to improve overall survival in a pivotal study in prostate cancer. Cometriq is already approved for MTC (medullary thyroid cancer, a rare tumor type) and prostate cancer was viewed as the drug’s most significant opportunity given the large commercial opportunity ($1B+).

Following the failure in prostate cancer, investor focus moves to Exelixis’ MEK inhibitor (cobimetinib, partnered with Roche) and Cometriq in other indications. Although the news are obviously disappointing, Exelixis still has several irons in the fire, which will provide important catalysts over the next 12 months. I previously discussed these catalysts earlier this year. Cobimetinib data at ESMO

Roche will report phase III data for cobimetinib in BRAF+ melanoma at ESMO later this month (26-30 September). Roche already announced the trial, which evaluated cobi+Zelboraf vs. Zelboraf, had a positive outcome in terms of PFS (progression free survival). At ESMO, cobi’s performance will be analyzed in the context of GSK’s (GSK) MEK inhibitor, Mekinist, which was evaluated in a similar setting (BRAF+ melanoma in combination with a BRAF inhibitor).

Investors will compare 3 parameters: (i) magnitude of PFS benefit (ii) trend of improved overall survival (OS) (iii) safety profile.

Mekinist, when added to GSK’s BRAF inhibitor (Tafilnar) demonstrated a marginal PFS benefit (9.3 vs. 8.8 months, HR=0.75), which was viewed as clinically irrelevant and as a negative harbinger for the future of MEK inhibitors in general. Consequently, GSK had to withdraw its regulatory application in Europe. Since then, sentiment has changed based on a strong trend in overall survival (HR= 0.63) in favor of Mekinist + Tafinlar as well as another trial in which the combination demonstrated a statistically significant survival benefit over Zelboraf.

The PFS benchmark (a 2-week improvement) set by GSK should be easily met by the Roche’s/Exelixis’ combination but in order to differentiate cobimetinib from Mekinist the companies will have to present a 2-month difference. Some may claim that even a 2-month difference will not be sufficient for differentiation as the GSK combo demonstrated a 1.5 month PFS difference in a retrospective analysis that included patients who progressed without a confirming scan.

Down the road, the overall survival will be the more important metric (should be available next year).  The overall survival benefit seen with Mekinist bodes well for cobi’s likelihood of improving OS, especially if the latter has a superior PFS benefit. Roche started its phase III trial 6 months after the initiation of the two GSK trials, so one factor that plays against cobi is the growing availability of PD-1 antibodies that may have a confounding effect on overall survival.

Cobi’s safety profile will become important only if it has comparable efficacy to Mekinist. The drugs belong to the same class and will probably have overlapping toxicities. One potential differentiator is the frequency of chills/fever which appears to be unique to Mekinist. Severe chills have often led to dose interruptions with Mekinist and there is no way to identify in advance patients who are more susceptible to developing it. Therefore, if cobi maintains a clean safety profile, it should be regarded as a minor advantage.

Roche is conducting additional combination studies with cobimetinib, the most important of which is with its PD-L1 antibody. The trial appears to have reached the expansion stage and is now focusing on melanoma, lung cancer and KRAS-mutant colorectal cancer. Initial data from the trial may be available in 2015.

Cometriq – Opportunities beyond prostate cancer

Cometriq is being evaluated in over 30 clinical trials across a variety of tumor types. The most relevant indications with clear catalysts in the foreseeable future are MTC, NSCLC with rare gene-fusion mutations and renal cancer.

MTC – The drug is generating sales in the US ($6.6M in Q2) and may start to generate revenues in Europe next year. An overall survival update of the phase III study is expected later in 2014. Survival benefit in RET-mutated patients will be of particular interest.

RET+ lung cancer (and potentially additional mutations) – Cometriq generated preliminary signs of activity in a small study in RET+ NSCLC patients. No updates have been released since, so it is unclear whether activity was corroborated in additional patients. Interestingly, the clinical trial was recently expanded to include patients with other rare mutations (Trk, Ros1, Axl). It is unclear whether the decision to pursue additional subsets is a result of preclinical experiments or anecdotal signs of evidence in patients.

Renal cancer – A phase III vs. Afinitor will read out in 2015. Although there is no randomized phase II data set to support this program, good activity was observed in a single- arm study. In contrast to prostate cancer, where the activity was documented in an unvalidated endpoint (bone scan resolution), the renal cancer data set includes response rate and PFS as the major efficacy endpoints.

25 thoughts on “Exelixis following the prostate cancer failure

  1. Hi Ohad,
    Thank you for the update. The backlash is impressive, although there were signs of weakness in the prostate trial. I agree with you regarding the potential still existing for EXEL. What do you think a good entry would be now ?


  2. Hey Ohad
    what do you think Roche will do, there was speculation that because of positive cobi results Roche might have been interested in Excel. Now the amrket cap is low. But there is overhang from all that convertible debt…


  3. Hey Ohad
    what do you think Roche will do, there was speculation that because of positive cobi results Roche might have been interested in Excel. Now the market cap is low. But there is overhang from all that convertible debt…


  4. Hi Ohad,

    The stunning part is the ~10 median survival on the prednisone arm. There were many other trials post Abiraterone and Enzalutamide with active agents that only yielded ~7 months median survival. Perhaps Radium 223 usage in both arms was a confounding factor but as you’ve said, other drugs have overcome similar confounding challenges so there’s not much more to be said here.

    I noticed you didn’t mention HCC, which is the most open indication. ARQL’s tivantinib should readout first and we’ll see how the MET inhibition thesis pans out. I doubt we’ll see an independent EXEL for the HCC readout though; they can’t go it alone anymore and revenues from RCC would come in 2016 at earliest. HCC readout won’t be until 2016.

    Maybe they have enough cash for the RCC readout and they’ll be at $1B market cap if it’s positive, but we’ll probably see 20% more float by then.


  5. I have followed this company for years but not as in depth as you

    I always came back to “its small molecule technology” and I thought of mainframe computer manufacturers in the 1990’s

    Any chance you give these small molecule companies too much optimism as investment vehicles with good futures?


  6. dan – I don’t expect Roche to acquire EXEL for the following reasons:

    1- They typically don’t acquire their partners (Plexxikon, OSI)
    2 – Cabo is probably a burden to them as they tend to avoid multi-targeted kinases
    3 – Cobi needs to have additional markets beyond BRAF+ melanoma which is <$500M in the US.

    Agree about the debt overhang (although most is due 2018-2019), management must reconstruct at least some of it even at a price of dilution or giving away ex-US rights for cabo.

    Wildbiftek – I doubt subsequent Alpharadin treatment can explain the high survival rate in the control arm. Control arms tend to do better with time in oncology studies.
    With respect to th HCC trial , I view as a long shot, too far in terms of timelines. ARQL should have data before EXEL but they target only MET+ tumors.
    Agree about the need to raise funds, they'll have to do something sooner rather than later.

    Theo – I don't think small molecules are bad as a class of cancer drugs, just look at all the recent success stories (ALK, BRAF, MEK, CDK). Some small molecules fail but that's because of biology not due some inherent properties.

    alex – Agree, the debt overhang is something management must deal with, at least partially. EXEL expects to have enough cash to see the RCC readout but they should exploit any positive news with cobi or cabo (RET+) in order to raise funds via equity or outlicensing.



  7. Alex
    Yeah. I was just thinking of adding INFI, but too late now. Based on inbru, the PCYC drug, which had a great launch. Too bad. when you think that market cap for INFI and EXEL were very similar yesterday, but INFi’s IPI-145 has a much better outlook than Cabo… so INFI yesterday would have been a smart investment.


  8. Ohad,

    I take it you mean that as time goes on, more treatments are available for patients so the general patient survives longer due to a better standard of care?

    Also, I understand your reasons for suspecting that Roche won’t make a bid for Exelixis. However, they scuttled onartuzumab which failed despite their MET expression profiling. If they’re still interested in targeting the MET pathway, they might want look to something dirtier, and there’s some evidence Cabo is active in combination with their erlotinib. A bit of a long shot though.


  9. Alex/dan – Indeed an impressive deal, good for them!

    Wildbiftek – Yes it’s a combination of more available treatments and better supportive care.
    I wouldn’t count on Roche going after MET again, also don’t forget Tarceva is going off patent soon so they have no franchise to defend.

    andre – Agree, very favorable deal terms. Yes I am surprised it’s ABBV because ABT-199 goes after similar indications. ABBV look very motivated to add late stage programs and generously pay for them.



  10. Hey Ohad and everybody
    what is your sentiment on general market until teh end of the year? Will we see some downside? Am I wrong thinking that while the general market is at recod levels, there are still many biotech stocks that are way down from their highs? I can think of many stocks that are followed on this blog (STML, ARRY, CLDX, ARQL, EXEL of course, CRIS, INFI was very down until recently… Even INCY and CLVS) that are way down from their highs. So the question is, are some of the Biotechs affordable at the moment or are they still over-priced?


  11. Hi dan,

    My primary concern is what happens to these stocks during a broad market correction. So far, they have not been immune from general corrections in the market.
    I don’t have a definitive answer, as you know I hold a lot of those depressed stocks, it’s just very hard to predict the correlation between them and generak markets.



  12. Hi Ohad,

    Early results in RCC for Cabo looked good, and I think it will likely meet a PFS endpoint by the middle of next year, but the issue seems to be heavy competition in this space. How much do you think new PD-1 / L1 mabs (Ipilimumab too) as well as the many TKI’s available Sorafenib, Pazopanib, Axitinib, leave for Cabo? Any estimate of NPV for Cabo in RCC given this?


  13. Wildbiftek – In my opinion PD-1 will surely revolutionize RCC and will probably be used as 1st line but so far most patients relapse, even the deep responders so there is still a place for TKIs. There ‘ of course it will depend on cabo’s efficacy but if it comes any closer to the activity observed to date than it should be able to generate significant sales (200-300M conservatively).



  14. Hey Ohad
    NPSP down today on a tweet by A Feurestein… down 14% form the day highs. I guess everybody is nervous. The documents of the adcom will be released and AF seems to indicate there might be unpleasing things in them… Forteo is limited to 2 years use because its carcinogenic. So there’s a risk the doctors might put a similar restriction on Natpara? or at least a black box warning?


  15. Wildbiftek – It depends on what your assumptions are. If you assume $250M sales after 5 years, 30% probability of success and a 15% discount rate, a sales multiple of 5 gives you $186M in NPV for te RCC program.

    Dan – I have no idea. He assumes that there will be issues based on th company’s will to speak with journalists ahead of publication of briefing docs. Forteo is still a $1.2B drug so I guess carcinogenicity is not such an issue wit hhtis drug in humans.



  16. Hi Ohad,

    You mention above that the cobimetinib/PDL-1 combination trial “appears to have reached the expansion stage and is now focusing on melanoma, lung cancer and KRAS-mutant colorectal cancer. Initial data from the trial may be available in 2015.”

    Could you comment further on this? What leads you to believe the trial is in the expansion stage? Are you suggesting they saw encouraging initial results in melanoma, lung, and colorectal patients and are now enrolling more of those patients?

    There are some data that indicate cobi up regulates MHC Class I expression and may combine well with anti-PDL-1.


  17. kavbrian – I base this based on the data on clinicaltrials.gov although I can’t tell for sure. It doesn’t necessarily mean they saw encouraging signs of efficacy, but they probably reached a desirable dose that merits further evaluation. Indeed, they saw good activity for this combination and the rationale is there now it remains to be seen how the regimen performs in humans.



  18. Ohad, After Exel earnings & Phase 2 results on Cabo, what are your thoughts on EXEL now. I would appreciate your thoughts as to their way forward at this point. If Comet 2 has favorable results, how could EXEL monetize this? What are your thoughts on the Meteor trials? Do you have a price target in mind, both short & long term? Thank you very much for your time & consideration.


  19. Greg – I am still trying to make up my mind about owning EXEL going into the METEOR data in Q2. Given the fact that PFS is the primary endpoint and as there are multiple studies that show PFS improvement with cabo, there is a 30% likelihood for a positive outcome imo. Financials are still troubling, though, and it is unclear to me if they are pursuing RET+ NSCLC anymore.



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