Leerink top analyst Michael Schmidt provides insight on shares of Exelixis, Inc (NASDAQ:EXEL) after hosting the 2016 Leerink Partners Immuno-Oncology Roundtable Conference in New York City on September 29th. At the conference, Schmidt hosted a panel with three MEDACorp specialists in the areas of Immuno-Oncology (IO), Renal Cell Cancer (RCC), and Genitourinary (GU) cancers. Specifically, the conference delved into the therapeutic outlook in renal cell carcinoma (RCC) as well as the prospects of EXEL’s advanced kidney cancer pipeline drug Cabometyx (Cabo).
The key opinion leader (KOL) panel further bolstered the analyst’s bullish outlook for Cabometyx in RCC. Positive on the biotech’s pipeline drug future ahead, Schmidt reiterates an Outperform rating on EXEL with a $15, which represents a 17% increase from where the stock is currently trading.
First, Schmidt notes the CABOSUN Phase II trial results to be released at the European Society for Medical Oncology conference held this week could prove to place EXEL’s pipeline drug at an ideal advantage to be chosen to treat as much as half of first-line (1L) metastatic RCC patients.
Second, though Bristol-Myers Squibb’s drug combination of Opdivo and Yervoy are perceived to succeed in a one-two punch in 1L RCC as well as additional continuing Phase III trials, there is “little impact” anticipated to deter from Cabo’s bigger picture prospects.
Third, the combination of Pfizer’s axitinib (Inlyta) and Merck’s pembrolizumab (Keytruda) in treating 1L RCC has generated merely “low level enthusiasm.”
“EXEL shares traded down sharply following ESMO abstract release, although this selloff was not supported by a change in underlying fundamentals, in our view. Our panel discussion yesterday reinforced our investment thesis on the stock. In our view Cabometyx is very well positioned to capture significant market share in the treatment of RCC, while Street expectations for Cotellic, EXEL’s MEK inhibitor that is partnered with Roche, are only modest and could drive significant additional value. Potential label extension opportunities for Cabo — e.g., in liver cancer (HCC) where a Phase III trial is ongoing, or potentially in other cancer types — could drive additional upside not yet reflected in the stock,” Schmidt concludes.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Michael Schmidt has achieved a high ranking of #55 out of 4,197 analysts. Schmidt upholds a 63% success rate and garners 23.4% in his annual returns. When recommending EXEL, Schmidt earns 79.1% in average profits on the stock.
TipRanks analytics exhibit EXEL as a Strong Buy. Based on 4 analysts polled in the last 3 months, 3 rate a Buy on EXEL, while 1 maintains a Hold. The 12-month average price target stands at $11.50, marking a 10% downside from where the shares last closed.