Exelixis Passes Key Test With Lead Drug; Stock Soars

Xconomy San Francisco — 

Exelixis shareholders have been waiting for months to see how the company’s lead drug would perform in a pivotal clinical trial, and today they got some gratification. The South San Francisco-based company said that cabozantinib was able to keep thyroid tumors from spreading for about seven months longer than a placebo in a study known as Exam.

The results were good enough that Exelixis said it plans to begin turning in parts of its new drug application for cabozantinib to the FDA, with a goal of completing the filing in the first half of 2012. If approved, it would be Exelixis’s first drug cleared for sale in the U.S. If Exelixis can win approval of the treatment for thyroid cancer, it will help provide financial support for ongoing studies in other patient groups where the drug is thought to have potential, like prostate cancer.

Shares of Exelixis climbed about 24 percent on the news, to $7.42 at 10:30 am Eastern time. Exelixis plans to discuss the results of the study in more detail at a medical meeting.

“The success of the EXAM trial is an important advance for medullary thyroid cancer (MTC) patients and for Exelixis,” said Mike Morrissey, the CEO of Exelixis, in a statement. “These data demonstrate cabozantinib’s profound anti-tumor activity in an indication that has seen little clinical progress over the past few decades.”

The study is designed to enroll 315 patients with inoperable thyroid cancer that has advanced beyond the local site of origin. Patients either got a once-daily dose of the new drug, or a placebo. The main goal is to see whether the Exelixis drug can offer at 75 percent improvement in keeping tumors from spreading, while a secondary goal will be to look at whether it can help people live 50 percent longer than those taking just the placebo. Data on the drug’s survival benefit isn’t available yet, as it will require more follow-up of patients.

About 48,000 people are estimated to get diagnosed with thyroid cancer in the U.S. each year, and about 1,740 die from it, according to the American Cancer Society. The thyroid cancer market for the Exelixis drug is likely to be small, with about 5-9 percent of patients having the type of malignancy that makes them eligible for the new drug, said Cory Kasimov, an analyst with JP Morgan, in a note to clients this morning. He rates the stock “neutral.”

“This is clearly a positive result, although not entirely unexpected,” Kasimov said. “Now we suspect investor focus will quickly shift to cabo’s much more important opportunity in prostate cancer.”