A great near term opportunity - Exelixis (NASDAQ:EXEL) - novel treatment for medullary thyroid cancer

Exelixis, Inc. (Exelixis) is a biotechnology company engaged in developing small molecule therapies for the treatment of cancer. The Company is focusing its resources and development efforts on cabozantinib (XL184).

 

Cabozantinib is a potent inhibitor of MET, VEGFR2 and RET. RET is a receptor tyrosine kinase that is frequently activated by point mutation in medullary thyroid carcinomas.

The therapeutic role of cabozantinib is also currently being investigated across several tumor types.

MET Oncogene

MET is a proto-oncogene that encodes hepatocyte growth factor receptor protein. MET is upregulated in many tumor types, thus facilitating tumor cell escape by promoting the formation of more aggressive phenotypes, resulting in metastasis.

MET-driven metastasis may be further stimulated by hypoxic conditions in the tumor environment, which are often exacerbated by selective VEGF-pathway inhibitors.

Simultaneous inhibition of MET and VEGFRs by cabozantinib is desiged to provide broad spectrum anti-tumor acitivity, blockade of a key mechanism of evasinve resistance, and reduced metastatis and improved survival.

In preclinical studies, cabozantinib has shown powerful tumoricidal, antimetastatic and antiangiogenic effects, including:

• Extensive apoptosis of malignant cells
• Decreased tumor invasiveness and metastasis
• Decreased tumor and endothelial cell proliferation
• Blockade of metastatic bone lesion progression
• Disruption of tumor vasculature

Medullary thyroid carcinoma (MTC)

• MTC is a distinct thyroid carcinoma that originates in the parafollicular C cells of the thyroid gland. These C cells produce calcitonin.
• Medullary thyroid cancer (MTC) is usually diagnosed on physical examination as a solitary neck nodule, and early spread to regional lymph nodes is common.

• In addition to producing calcitonin, MTC cells can produce several other hormones, including corticotropin, serotonin, melanin, and prostaglandins; moreover, paraneoplastic syndromes (eg, carcinoid syndrome, Cushing syndrome) can occur in these patients.
• Medullary carcinoma of the thyroid (MTC) is prevalent in approximately 4% of all thyroid cancers in the United States. This figure translates into approximately 1000 diagnoses per year. Various clinical trials have shown promising results and tolerable toxicity. However, these studies are still in the early stages, and these therapies are not yet FDA approved. Surgery remains the standard treatment for medullary thyroid carcinoma (MTC)
• Patients with distant metastases have a median survival of ~2 years.
• Radiographically progressive MTC is an unmet medical need not previously studied in a phase 3 trial
• Hepatocyte growth factor receptor (MET) and vascular endothelial growth factor receptor 2 (VEGFR2) pathways have been implicated in the pathogenesis of MTC.

In June 2012, Exelixis reported data from the phase 3 pivotal trial of cabozantinib in patients with progressive, unresectable, locally advanced or metastatic medullary thyroid cancer (MTC).

Trial design:

Eligibility Criteria:

The trial met its primary endpoint of improving progression-free survival (PFS), with patients in the cabozantinib arm achieving a median PFS of 11.2 months compared with 4.0 months for patients in the placebo arm.

Overall response rate (ORR), a secondary endpoint, was 28% in the cabozantinib arm and 0% in the placebo arm. Estimated PFS at one year was 47.3% with cabozantinib vs. only 7.2% with placebo. Data for overall survival (OS), another secondary endpoint, are not yet mature. Patients on the cabozantinib arm of the trial received a dose of 140 mg (free base equivalent).

Adverse events were generally manageable allowing for treatment with cabozantinib for prolonged periods of time.  

 

On July 30, 2012 the FDA granted priority review for Cabozatinib in Medullary Thyroid Cancer with PDUFA date of November 29, 2012.

On August 06, 2012, Exelixis unveiled plans to offer 20 million shares and $225 million in debt to raise funds for clinical trials and other general corporate purposes. Exelixis, had said on the 6^th that it expected to raise about $105.6 million in net proceeds from the common stock offering, based on an assumed offering price of $5.58 a share.

On August 09, 2012, Exelixis Inc.'s (EXEL) upsized 30 million share offering priced at a 0.7% discount to Wednesday's close. The company said it anticipates its aggregate net proceeds from the concurrent offerings will be $361.9 million after deducting the underwriting discount and estimated offering expenses. 

Exelixis has said it could use the proceeds for research and development, capital expenditures and working capital, as well as to fund the escrow account to be used for the first six scheduled semi-annual interest payments.

With this raising off the table and enough cash thru the PDUFA, the stock price is likely to go up 20-30% as we near the November. Since Exelixis has a priority review, the result may come as soon as October 2012. The most recent example was Curis Pharmaceutical (NASDAQ:CRIS). The stock has taken a very bad hit in last week down almost 25%-30%. This may pose a great opportunity for small investor to take a position and get nice return on their investment. In the past, EXEL has been very volatile so keep in mind to not to take a large position now, try to scale in smaller positions and average down.

Disclosure: May initiate a position in next 72hours

Resources: Wall Street Journal, Exelixs Investor Presentation, Reuters, ASCO – Cabozantinib Presentation 2012