Cowen Bullish on Exelixis, Inc. (EXEL) In Light Of Early Cabometyx Launch Success

Ever since Exelixis, Inc. (NASDAQ:EXEL) gained approval from the FDA allowing its pipeline drug to be released for treatment of second-line advanced renal cell carcinoma (RCC), sales have shown the launch’s early stage to be starting strong. Exelixis’ Cabometyx, a kinase inhibitor treatment option for patients with advanced kidney cancer, has already hit $17.6MM in sales just in its first nine weeks on the market for renal cell carcinoma, strongly beating the Street’s estimate of $4.7MME. In light of this, Cowen analyst Eric Schmidt rates a Buy for the biotech company.

Even before the FDA gave official approval for Cabometyx, during Exelixis’ second-quarter, a rising number of RCC patients turned to Cometriq, cabozantinib capsules, marketed for medullary thyroid cancer, in the interim. Those sales have “held steady,” which would mean that $7 million of Cometriqu’s total of $14MM in sales second-quarter were in RCC. The analyst finds this shows that the RCC demand has held solidly at $17MM.

Schmidt contends, “We expect continued strong U.S. adoption, EMA approval (September), Phase I data in combination with BMY’s nivolumab (ESMO), data in 1st-line RCC (CABOSUN trial, likely at ESMO), and the anticipation of pivotal data in HCC (2017) to keep EXEL shares in favor.”  In reaction to signs of success in early stages of Cabometyx’s launch, Schmidt has raised sales estimates from $24MM to $51MM in 2016 and from $95MM to $145MM in 2017. Yet, the analyst leaves other year estimates unchanged to take into account “a still evolving competitive dynamic.”

In its second quarter, Exelixis brought in $36.3MM in revenue, outclassing the Street’s estimate of $16.8MME by a long shot. By the end of the quarter, the firm ended with $384MM in cash flow, albeit $469MM in debt, due sometime in 2018 to 2019. Where operating expense guidance was once $240MM to $270MM, Exelixis now adjusted the outlook to the range of $250MM to $270MM. Schmidt believes Exelixis has proven to be “an early player in the discovery and development of small molecule kinase inhibitors for cancer,” and has a bullish stance as he expects the pipeline drug to “perform well in this $1B market.”

According to TipRanks, Eric Schmidt is a top five-star rated analyst, rated #44 out of 4,101 analysts. Schmidt has reached a 57% success rate and realizes 24.2% in his average returns. When recommending EXEL, Schmidt earns a high 117% in average profits on the stock.

TipRanks analytics show EXEL is a Strong Buy. Based on 4 analysts polled in the last 3 months, 3 rate a Buy while only 1 maintains a Hold. The consensus price target stands at $10.67, marking a nearly 11% downside from where the shares last closed.

Recommended Article: Leerink Reiterates Positive Stance on Exelixis Heading Into 2Q Earnings

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