Liver cancer loss piles the pressure on Exelixis

Having a “pipeline in a product” is all well and good, but only if that product keeps growing. A knock to label expansion plans for Exelixis's Cabometyx yesterday shows that this growth can be hard won. 

The setback came with the Cosmic-312 readout, which failed to find a survival benefit in a front-line liver cancer, effectively ruling out this setting for Cabometyx; last month a deteriorating dataset in prostate cancer raised concerns about expansion into that tumour type. The competitive threats are also rising in kidney cancer, the drug’s current stronghold – little wonder that Exelixis’s stock plunged 23% yesterday.

The drop took the shares to a 14-month low, and the company’s market cap to $5.6bn. This is a touch below the $5.8bn net present value of Cabometyx to Exelixis, according to Evaluate Omnium. This estimate is based on sellside consensus sales forecasts.

Considering that Exelixis has cash of around $1.6bn, and negligible debt, it seems that the market’s view of Cabometyx’s value is somewhat lower than the sellside’s.

The company’s early-stage pipeline is likely getting zero credit. This amounts to three projects, two of which only entered the clinic this year. 

As such, Cabometyx is the main driver for Exelixis, and the recent news flow has contained worrying signals.

Yesterday, the company and European partner Ipsen announced that that the first-line liver trial, Cosmic-312, showed a statistically significant benefit on PFS for Cabometyx and Tecentriq, reducing the risk of progression by 37% compared with Sutent (p=0.0012). The sting in the tail was the admission that an overall survival benefit is unlikely to develop.

This means that the combination will not be competitive, even if regulators grant approval. First-line liver cancer is, for now, the domain of Roche's Tecentriq plus Avastin, which won approval last year on the back of the Imbrave-150 trial. This showed a clear survival advantage over Nexavar, setting the bar that other projects must now beat.

Imminent read outs from two further trials will determine how this market looks in the future: Astrazeneca’s Himalaya study, looking at Imfinzi plus tremelimumab, and Merck’s Leap-002 trial of Keytruda plus Lenvima.

According to Stifel analysts, a win in first-line liver cancer could have added $350m to peak sales forecasts for Cabometyx. With that opportunity lost, trials in other tumour types need to deliver.

In search of expansion

In prostate cancer Exelixis hopes to seek accelerated approval later this year, in a metastatic, castrate resistant setting, based on early data from a phase 1b trial called Cosmic-021. The company heralded a 27% response rate at Asco this year, but this dropped to 18% when the data was adjudicated by blinded, independent reviewers.

This more rigorous handling of the data is what regulators want to see, and the final results on this basis are due mid-year. With a confirmatory phase 3 trial already ongoing, the FDA could well decide to tell Exelixis to come back with that in hand.

At least thyroid cancer looks to be in the bag, with a win in the Cosmic-311 trial and data already with the FDA. But this represents a very niche setting and the company needs larger cancer types to come through – lung cancer remains another possibility, with early data also due later this year.

Kidney cancer is currently the big use for Cabometyx, courtesy of a combination with Bristol Myers Squibb’s Opdivo and highly competitive data in the front line Checkmate-9ER study. However even here the threats are rising after Merck’s win with Keytruda plus Lenvima in the Clear/Keynote-581 study.

A more recent success in the adjuvant renal setting makes Merck look even more threatening.

For now, the sellside projects healthy growth for Cabometyx, with sales seen more than tripling to $2.5bn by 2026. The company certainly represents a rare small biotech success and even turns a profit. But that will be forgotten if all the cash it has ploughed into label expansion comes to nothing.

True, the company has also forged partnerships recently with biotechnology players, as well as putting XL092 and XL102 into the clinic, but these are all very early stage assets. If Cabometyx takes any further knocks, calls for Exelixis to spend its not insignificant cash pile on new growth prospects could grow louder.