Top Analyst Pounds the Table on Exelixis, Inc. (EXEL)

Cowen's Eric Schmidt sees an extra several hundred million dollars in sales for EXEL in HCC market.


Exelixis, Inc. (NASDAQ:EXEL) shares are rising 18%, having shot past a new high just under $30, on back of a late-stage pivotal liver cancer trial that hit statistically significant prolonging survival results out of the park. When measured up against a median overall survival (OS) for a placebo in patients who had before failed past sorafenib treatment, Exelixis’ drug cabozantinib¬†revealed an impressive stride in clinical improvement.

With positive data under its belt, the drug maker’s pivotal CELESTIAL trial read-out in refractory advanced hepatocellular carcinoma (HCC) has everyone on the Street excited today, including top analyst Eric Schmidt at Cowen- one of Wall Street’s best performing analysts.

Additionally, Exelixis’s cabozantinib¬†earned the drug priority review from the FDA on back of impressive CABOSUN data in first line intermediate- and high-risk renal cell carcinoma (RCC), assigning a PDUFA date with destiny for February 15, 2018.

In reaction to a day full of excitement for the drug maker, the analyst maintains an Outperform rating on EXEL stock without listing a price target.

Anticipating full data to be showcased at the American Society of Clinical Oncology Gastrointestinal Cancer Symposium in January with a supplemental new drug application (sNDA) to be filed for cabometyx in the first quarter of next year, the analyst sees tremendous opportunity ahead for Exelixis’ lead asset: “HCC is a large, under-served indication that could add several hundred million dollars’ worth of sales to what we view as Cabo’s $1B potential in RCC.”

Schmidt notes, “The outcome of CELESTIAL was widely viewed as a coin toss. Hence although detailed data are lacking, we expect EXEL shares to trade up substantially today as investors gain confidence in HCC as a second opportunity for Cabometyx and analysts look to include the indication in their models.”

Looking ahead at a market that before now has yet to be a “particularly lucrative market for pharmaceuticals,” the analyst concludes offering some context: “Factors that have limited the HCC opportunity include the rapid progressive nature of the disease, the lack of good treatment options, and tolerability issues in a patient population with compromised liver function. We are optimistic that new treatment options like Cabometyx and Opdivo will meaningfully expand the HCC market.”

Even if Exelixis’ cabometyx captures 20% share of the domestic refractory HCC market with an average of 3 months treatment duration, the analyst sees sales potential in HCC circling $275 million.

Eric Schmidt has a very good TipRanks score with a 67% success rate and a high ranking of #22 out of 4,697 analysts. Schmidt garners 44.7% in his annual returns. When recommending EXEL, Schmidt yields 200.9% in average profits on the stock.

Wall Street is predominantly backing this biotech player, as TipRanks analytics demonstrate EXEL as a Buy. Based on 9 analysts polled by TipRanks in the last 3 months, 6 rate a Buy on Exelixis stock while 3 maintain a Hold. The 12-month average price target stands at $30.43, marking a 2% downside from where the stock is currently trading.