Exelixis (EXEL) Down 11.5% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Exelixis (EXEL). Shares have lost about 11.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Exelixis due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Exelixis Q1 Earnings and Revenues Surpass Estimates

Exelixis reported earnings of 15 cents per share, beating the Zacks Consensus Estimate of 13 cents. The bottom-line figure, however, declined from the year-ago quarter’s 24 cents per share due to higher R&D expenses.

Net revenues came in at $226.9 million, increasing from the $215.5 million reported in the year-ago quarter. Revenues also beat the Zacks Consensus Estimate of $212.5 million.

Quarter in Detail

Net product revenues came in at $193.9 million, up 7.9% from the year-ago quarter due to an increase in the average net selling price and sales volume.

Lead drug, Cabometyx, is approved in the United States for the treatment of advanced renal cell carcinoma (RCC). The drug was also approved for the treatment of patients with hepatocellular carcinoma, who have been previously treated with sorafenib, in January 2019. The label expansion of the drug into this indication in the United States also boosted product sales.

Cabometyx generated $189.2 million of revenues. Cometriq (cabozantinib capsules) for the treatment of medullary thyroid cancer generated $4.7 million in net product revenues. Exelixis earned $17.9 million in royalty revenues on the basis of cabozantinib-related revenues generated by its partner Ipsen in the first quarter of 2020.

Total collaboration revenues were $33 million, down from the $35.9 million recorded in the year-ago quarter.

In the reported quarter, research and development expenses increased significantly to $101.9 million from the $63.3 million due to a rise in clinical trial costs and personnel expenses. Selling, general and administrative (SG&A) expenses were $62.9 million, up from $60.1 million in the year-ago quarter.

Pipeline Update

In January 2020, Exelixis announced plans to further expand an existing metastatic castration-resistant prostate cancer (mCRPC) cohort (Cohort 6) of COSMIC-021, the phase Ib trial of cabozantinib in combination with Roche’s Tecentriq in patients with locally advanced or metastatic solid tumors.

Last month, Exelixis and Bristol-Myers announced that CheckMate -9ER, the phase III study evaluating Opdivo in combination with Cabometyx compared to Sutent in previously untreated advanced or metastatic RCC, met its primary endpoint of progression-free survival at the final analysis as well as the secondary endpoints of overall survival at a pre-specified interim analysis and objective response rate. This preliminary analysis of data showed a favorable safety profile for the combination of a 40 mg dose of cabozantinib with nivolumab, with a low frequency of treatment discontinuations due to adverse events.

2020 Guidance Reiterated

Revenues are projected at $850-$900 million, while product revenues are estimated in the range of $725-$775 million for 2020. Per the company, the COVID-19 pandemic has had a relatively modest impact on Exelixis’ business operations, particularly on the clinical studies and drug discovery activities.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted 6.67% due to these changes.

VGM Scores

At this time, Exelixis has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Exelixis has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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