Shares of Exelixis, Inc. (EXEL – Free Report) have surged 50% in a year against the industry’s decline of 16.1%. The stock has also outperformed the sector and the S&P 500 Index in this timeframe.
The company’s stellar performance can be attributed to the strong growth of its lead drug, Cabometyx, raised guidance and encouraging pipeline progress.
EXEL Outperforms Industry, Sector & S&P 500
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Cabometyx Boosts EXEL
Cabometyx maintained its status as the leading tyrosine kinase inhibitor (TKI) for the treatment of renal cell carcinoma (RCC) in 2024. This was mainly due to its use in combination with Bristol Myers’ (BMY – Free Report) Opdivo in the first-line setting. The drug also maintained growth in the hepatocellular carcinoma indication.
BMY’s Opdivo is one of the leading immuno-oncology drugs, approved for various oncology indications.
Management is also focused on the label expansion of Cabometyx. The FDA accepted EXEL’s supplemental new drug application (sNDA) for cabozantinib for patients with previously treated advanced pancreatic neuroendocrine tumors (pNET) and those with previously treated advanced extra-pancreatic NET (epNET). The FDA assigned a standard review with a target action date of April 3, 2025. The FDA also granted the orphan drug designation to cabozantinib for the treatment of pNET.
The FDA recently notified the company that the sNDA for cabozantinib for the treatment of adults with previously treated advanced pNET and advanced epNET will be discussed at an Oncologic Drugs Advisory Committee meeting in March 2025.
A potential label expansion should further propel its growth prospects.
Exelixis also intends to submit an sNDA with the FDA for cabozantinib, in combination with Tecentriq (atezolizumab), for metastatic castration-resistant prostate cancer.
EXEL Raises 2024 Revenue Guidance
While reporting third-quarter results in October 2024, the company raised its annual revenue gudiance. Total revenues are projected to be between $2.150 billion and $2.2 billion (previous guidance: $1.975-$2.075 billion). Product revenues are estimated to be in the band of $1.775-$1.825 billion (previous guidance: $1.65-$1.75 billion).
EXEL Strives to Develop Other Pipeline Candidates
The pipeline progress has also been impressive as Exelixis looks to expand its oncology portfolio beyond Cabometyx.
Another promising candidate in Exelixis’ pipeline is zanzalintinib, a next-generation oral TKI. Enrollment has been completed in the late-stage STELLAR-303 study evaluating zanzalintinib, in combination with Tecentriq, compared with regorafenib in patients with metastatic refractory colorectal cancer that is not microsatellite instability-high or mismatch repair-deficient. Preliminary results from the study are expected in 2025.
Exelixis recently collaborated with pharma giant Merck (MRK – Free Report) to evaluate zanzalintinib in combination with Merck’s blockbuster anti-PD-1 therapy Keytruda (pembrolizumab) in a late-stage study for treating patients with head and neck squamous cell carcinoma (HNSCC).
The companies will also evaluate zanzalintinib with Merck’s oral hypoxia-inducible factor-2 alpha (HIF-2α) inhibitor Welireg (belzutifan) in a phase I/II study and two phase III studies for the treatment of patients with RCC.
Per the terms of the agreement, Merck will supply Keytruda for the ongoing, Exelixis-sponsored phase III STELLAR-305 study in previously untreated PD-L1 positive recurrent or metastatic HNSCC.
The successful development of additional drugs should broaden its portfolio and reduce its dependence on its lead drug, Cabometyx.
Exelixis’ Efforts to Boost Shareholder Value
The company is also making efforts to increase shareholder value through repurchases. In August 2024, EXEL’s board of directors authorized the repurchase of up to $500 million of the company’s common stock through the end of 2025. This is the third stock repurchase program undertaken by Exelixis since March 2023. Under this program, as of Sept. 30, 2024, Exelixis repurchased $12.4 million of the company’s common stock, at an average price of $25.61 per share.
Valuation & Estimates
Going by the price/sales ratio, EXEL’s shares currently trade at 4.45x forward sales, higher than its mean of 3.64x and the biotech industry’s 1.69x.
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The Zacks Consensus Estimate for 2024 earnings per share (EPS) has increased to $1.93 from $1.92 over the past 60 days. EPS estimates for 2025 have inched up a cent to $2 in this timeframe.
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Conclusion
Large biotech companies are generally considered safe havens for investors interested in this sector. EXEL is a good stock to buy now, considering its good fundamentals and growth prospects.
The stock has put up a phenemneol performance in 2024 with more room to grow. Potential label expansion of Cabometyx should boost its growth. The company’s efforts to expand its portfolio are also encouraging. The successful development of additional drugs should broaden its portfolio and reduce its dependence on its lead drug, Cabometyx.
Zacks Rank
EXEL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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