Biotech Beat: Analysts Weigh in on Exelixis, Inc. (EXEL) and Avalanche Biotechnologies Inc (AAVL)

Cowen & Co healthcare analysts provide updates following successful phase three trial for Exelixis, Inc.’s (NASDAQ:EXEL) drug, Cabozantinib, and Avalanche Biotechnologies Inc’s (NASDAQ:AAVL) acquisition of a private gene therapy developer.

Exelixis, Inc.

Cowen and Company analyst Eric Schmidt reiterates an Outperform rating, though he does not provide a price target, for Exelixis after a successful phase 3 trial of Cabozantinib in patients with advanced RCC (Renal Cell Carcinoma). Following the successful trial, Schmidt continues, “Cabozantinib becomes the first and only therapy in second-line advanced RCC to have demonstrated a benefit on [overall survival], [progression-free survival] and [objective response rate].”

Moving forward, Exelixis’s Cabozantinib will have to compete with BMY’s already approved Nivolumab. The drug is used to treat advanced RCC and is currently capturing >50% share of new patients. However, the analyst believes that Cabozantinib has an upper hand because Nivolumab is not associated with a PFS benefit. Schmidt continues, “Exelixis’s market research confirms that [a PFS] benefit is important to physicians and patients alike.” Further, Nivolumab does not work for every RCC patient, therefore Cabozantinib could be a strong alternative treatment.

Schmidt concludes that the RCC market can be valued at $1B in worldwide sales and the “market will grow substantially with the advent of newer therapeutic options that provide longer duration of therapy.” Looking forward, “Cabo has over $400MM potential in this indication.”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Eric Schmidt has a yearly average return of 16.3% and a 36% success rate. Schmidt is ranked #186 out of 3698 analysts.


Avalanche Biotechnologies Inc

Avalanche Biotechnologies successfully added four new preclinical gene therapy candidates and a team of experienced management to their arsenal after the acquisition of privately held Annapurna Therapeutics. With the addition of new gene therapies, Cowen and Company’s Phil Nadeau expects that the “combined pipeline will produce three clinical candidates by 2018.”

The four gene therapies acquired include ANN-001, ANN-002, ANN-003, and ANN-004. ANN-001, a treatment for a gene deficiency that causes respiratory and liver disease, is the most advanced pipeline candidate out of the four and is expected to enter clinical development during 2016. The remaining three drugs are expected to follow after ANN-001 reaches the clinical development stage.

With the merger, Avalanche will issue 17.6 MM new shares to Annapurna holders, valuing Annapurna at $106MM after Avalanche’s close at $6 on Friday. Avalanche shareholders will hold 62.5% of the combined company and Annapurna shareholders will own the remaining 37.5% of the shares. Avalanche expects the merger to close during Q2 of 2016.

Nadeau has suspended coverage and does not provide a price target for Avalanche Biotechnologies.

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Phil Nadeau has a yearly average return of 0.1% and a 39% success rate. Nadeau is ranked #1924 out of 3698 analysts. One other analyst polled by TipRanks is bullish on the stock with a $15 price target, marking over a 200% potential upside from current levels.

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