Leerink Partners Says Exelixis (EXEL) Sell-Off on ESMO Abstracts 'Overdone'
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Leerink Partners analyst Michael Schmidt is out in defense of Exelixis (NASDAQ: EXEL) amid today's sell-off following publication of ESMO poster abstracts. Specifically, abstract (773PD) includes updated data from a previously presented Phase Ib trial evaluating the combination of axitinib (Inlyta) with pembrolizumab showing a 67% response rate in 1L RCC which appears to have sparked competitive concerns for EXEL. In addition, preliminary data from the dose escalation part of EXEL's CaboNivo Ph I trial in patients with refractory metastatic urothelial carcinoma (mUC) and other genitourinary (GU) tumors look very preliminary to us (774PD). Lastly, a Phase II trial of cabozantinib (787P) indicates single agent activity of Cabo in relapsed/refractory metastatic urothelial carcinoma (mUC).
Schmidt commented, "While the Ph I response rate of axitinib + pembro in abstract 773PD looks promising, we think it's highly premature to draw conclusions at this point on Cabometyx' market opportunity or potential in RCC. Our current Cabometyx estimates and EXEL PT reflect sales assumptions for Cabo in 2L and 3L RCC (the currently approved indications) with only modest contribution in poor-risk 1L RCC patients based on results from CABOSUN (to be presented at ESMO), (LINK). Reiterating OP rating based on our thesis that Cabometyx is well positioned to capture market share in the treatment of RCC, while Street expectations for Cotellic (approved in BRAF+ melanoma) are still only modest and could drive significant value long-term. 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 further upside not yet reflected in the stock."
The firm maintained an Outperform and price target of $15.00
Shares of Exelixis closed at $15.48 yesterday.
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