Exelixis ahead of the EORTC meeting and long-term prospects.

Exelixis ahead of the EORTC meeting and long-term prospects.

Exelixis (Nasdaq: EXEL) plunged 40% last week after the company informed investors it’ll go ahead with its intention to run pivotal Phase III trials of cabozantinib (cabo) for castration-resistant prostate cancer (CRPC) despite not getting an agreement on a Special Protocol Assesment with the FDA. Exelixis announced very positive results from a Phase III clinical trial of cabo in medullary thyroid cancer the week before. Although it’s a small indication from a commercial standpoint, it provides a clinical validation of Exelixis’ main drug and sets it for a potential approval in 2012. Exelixis plans to initiate a rolling NDA submission for this indication this quarter. The filing will be completed in 1H 2012.

Exelixis will begin the 306 Phase III trial by the end of this year. The primary endpoint of this trial is alleviation of bone pain.Overall survival (OS) will be the secondary endpoint (see PR for a complete description of the trial). Also, it’ll begin the 307 Phase III trial that will have OS as the primary endpoint in early 2012 .

The main short term catalyst is the presentation of two posters at the AACR-NCI-EORTC meeting in San Francisco on Nov 12-16. In particular, Exelixis will present:

- “Efficacy and Tolerability of Cabozantinib at Lower Dose: A Dose Finding Study in Men with Castration-Resistant Prostate Cancer and Bone Metastases”. On Sunday, Nov 13 at 12:30-14:30 pm PT.

- Cabozantinib (XL184) reduces pain symptoms in patients (pts) with castration resistant prostate cancer (CRPC) and bone metastases: Results from a phase 2 non-randomized expansion cohort. On Monday, Nov 14 at 12:30-14:30pm PT.

The CEO explains why these studies are important for the future development of cabo, particularly for the 306 trial at the end of the Q3 results conference call

The competitive landscape for CRPC treatments is becoming more crowded as more drugs progress through late-stage clinical trials. A few examples: Medivation’s MDV3100, Millenium’s orteronel, Regeneron/Sanofi’s aflibercept, Algeta’s alpharadin or Amgen’s Xgeva[1]. Also, approved drugs such as Sanofi’s Jevtana, J&J’s abiraterone, Novartis’ Zometa or Dendreon’s Provenge are already in the market generating more or less sales. All these drugs have been approved on the basis of a survival benefit. In the case of the group that is being developed, only Alpharadin and Xgeva have an influence on skeletal-related events (SRE). Alpharadin is undergoing a Phase III trial to evaluate OS and safety. It reported positive interim results in September 2011 showing a survival benefit while delaying time to first SREs significantly. Of note, bone pain was less common in patients taking alpharadin (43%) than those taking placebo (58%). The company intends to get fast-track approval in 2012.

None of the approved drugs include pain reduction on their labels and Xgeva doesn’t prolong survival in PC patients. While alpharadin is the primary competitor for cabo and more importantly, it could be the first one to reach the market, I’d wait to have full data from both drugs to compare OS, bone pain and prevention of SREs.

Exelixis wants to demonstrate in two pivotal Phase III trials that cabo has a survival advantage, besides shrink or resolution of bone metatases, and bone pain improvement, which, according to its management, may bode well for approval in the US and Europe.

Prostate cancer has an estimated prevalence in the world’s major markets of 1.8m cases while mestastatic CRPC accounts for 30% of those cases. Taxotere based chemo is the first line treatment for CRPC although toxicity hinders administration for many patients. This is the niche Exelixis is pursuing with cabo. Sales of Taxotere for its main indications (breast, prostate and lung cancers) were to the tune of $3bn in 2010. The PC market is mainly dominated by AstraZeneca’s Casodex (its patent expired in 2009 and generics are already in the market) and Zoladex.

Conclusion: investors are nervous about the uncertainty that running a pivotal clinical trial without a SPA poses for the approval of cabo. Not of less importance, two Phase III clinical trials are costly and Exelixis will need to raise money to complete them. In the short run, investors are awaiting to see if a lower dose of 40mg of cabo produces significant efficacy results while lowering adverse events. Also, a partnership would be widely welcome.

If everything goes according to plan, Exelixis will have the first drug in the market with a survival advantage, pain alleviation and reduction of bone lesions on its label. This is a competitive advantage with respect to its competitors.

Disclosure: I’m long Exelixis.

[1] It’s approved for a number of indications including the prevention of skeletal-related events in patients with bone metastases. A sBLA to extend its use to include reduction of the risk of skeletal metastases in castrate-resistant prostate cancer patients with no previous bone metastases has a PDUFA date on April 26, 2012

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