Leerink Reiterates Outperform on Exelixis, Inc. (EXEL) Following Conversion Subordinated Notes Exchange Offer

On August 19th, Exelixis, Inc. (NASDAQ:EXEL) entered into additional, privately negotiated exchange agreements with certain holders of the company’s 4.25% Convertible Senior Subordinated Notes due 2019.

Leerink analyst Michael Schmidt accordingly adjusted his new estimates to factor “for reduced cash burn in the form of interest expense savings of an additional incremental $5.1M/ year through August 2019 and an increase in outstanding shares by 23M, assuming all holders will convert into common stock.”

The latest filing indicated holders agreed to swap an added aggregate principal amount of $71.3 million for 13.4 million of common stock, with transactions anticipated to close August 25th. Moreover, $48.1 million in principal amount had been designated to remain outstanding.

Exelixis announced August 24th the decision to call for redemption of the remaining $48.1 million of 4.25%. The aforementioned Notes by November can be redeemed in cash, equivalent to 100% of the principal amount, or can be converted into common stock shares.

Additionally, EXEL recently received FDA approval for its lead pipeline renal cell carcinoma (RCC)-treating drug Cabometyx (Cabo). In light of this approval, finds the drug maker to be in an excellent position to take hold of RCC’s market share.

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Schmidt reiterates an Outperform rating on shares of EXEL with a price target of $12, which represents a nearly 10% increase from where the stock is currently trading.

According to TipRanks, five-star analyst Michael Schmidt is ranked #244 out of 4,127 analysts. Schmidt has a 57% success rate and realizes 11.8% in his annual returns. When recommending EXEL, Schmidt earns 81.3% in average profits on the stock.

TipRanks analytics demonstrate 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 consensus price target stands at $10.67, marking a 2% downside from where the shares last closed.


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