Exelixis wiped out after Comet-1 crash lands
Exelixis’s decision to pursue Cometriq in prostate cancer was always a high-risk move, and the company’s employees are paying the price for this bet. The scrapping of the project as a result of the failed Comet-1 study means around 160 employees are losing their jobs – a huge cull affecting 70% of the workforce.
Shares in the company tanked almost as much percentage-wise this morning – dropping 52% to a record low and erasing $420m from its market value. Exelixis has little else to offer investors aside from distant data readouts and a big pile of debt, but the extent of its fall today is surprising given the warning signals earlier this year when the trial was not stopped early as many had hoped.
Comet-1 recruited men with metastatic castration-resistant prostate cancer (mCRPC) whose disease progressed after treatment with docetaxel as well as Zytiga and/or Xtandi. The primary endpoint was overall survival and on this measure Cometriq failed to show any statistical benefit over prednisone, with a median OS of 11 months versus 9.8 months (p= 0.212).
The project did show an improvement in progression-free survival – median PFS was 5.5 months versus 2.8 months for the prednisone arm (p=<0.0001) – a finding that is all but irrelevant in these end-of-life patients.
On a conference call today executives said they could not yet explain this finding, but pointed out that PFS was not necessarily predictive of OS in prostate cancer, adding that subsequent therapies could have played a role.
Either way, all other work in prostate cancer has been halted, including Comet-2, the controversial pain palliation endpoint study that the company had insisted on running in the face of FDA scepticism (Exelixis' need for speed worries investors, November 2, 2011). And investors are now effectively being asked to wait for the readout of two other pivotal studies with Cometriq.
In reality, however, the next readout holds little real commercial impact. The Meteor trial is being run in advanced renal cell carcinoma, a hugely competitive area with six small molecules already competing for patients (Vantage Point - Swelling TKI field prompts calls for new approaches in kidney cancer, June 7, 2011). Results are due towards the end of 2015, clinicaltrials.gov suggests.
Another ongoing phase III trial, called Celestial, in advanced hepatocellular carcinoma holds more promise, but data are not due until 2017.
It is understandable that investors are showing little desire to sit tight. Cometriq is on the market, but in thyroid cancer, where sales are minimal and forecast to reach only $25m this year, according to EvaluatePharma consensus data.
The company's financial position is not helping. Exelixis executives stressed today that there was enough cash in the bank to see the company through the release of Meteor data, but this guidance is nothing new. The same thing was said at the second-quarter results, so in the wake of the drastic restructuring this “cash runway” is likely to be extended.
This will come as cold comfort given the hefty debt repayment schedule the company must stick to in the meantime. Exelixis has previously guided to $47m in interest payments this year, implying that it is paying about 10% interest on its debt. The company is carrying $349m of debt on its balance sheet, although the face value of the various notes and bank loans is closer to $472m.
The first tranche due is $104m of secured convertible notes in June 2015. Should Exelixis chose to extend the maturity to July 2018 the annual interest rate will jump to a hefty 15%
It could choose to repay this, of course, as it does have a healthy cash pile – this stood at $352m in June – though it seems not to be planning to do so. While Exelixis is not in immediate financial stickiness, it will need every last penny to reach the data readouts.