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Cowen - EXEL: Q4 CABO REVS INLINE, GUIDANCE SHOWS OPTIMISM FOR CONTINUED SHARE GAIN IN 1L RCC (Outperform PT 24)Prelim Q4 report shows in-line product revs ($300M vs Cons $296M/Cowen $282M) and FY22 sales guidance of +23-32% y/y growth shows optimism for market share gains in 1L RCC. FY22 guidance is in line with consensus expectations (Cowen $1.38B and Cons $1.35B), and stock performance will pivot on data updates from COSMIC-313 and early pipeline, and outcome of ANDA court case in May. Our Take: Cabo Continues To Gain Share On Back of 9ER Momentum — Q4 Provided Key Read As First Full Quarter After Lenvima Approval Based on the preliminary Q4 earnings, cabo market share built on the momentum that We believe Q4 was an important barometer for cabo sales into FY22 as it represents the first full quarter after the approval for Merck’s Lenvima (approved in combination with Keytruda in 1L RCC in Aug. ’21). Thus, given the continued market share growth for Cabo in Q4, we believe concerns about Lenvima competition may have been overdone. Our KOLs have been impressed by the data for Lenvima + Keytruda in the CLEAR study and expected it to be a tough competitor in 1L, though they noted that toxicity concerns could hamper adoption. The outlook ahead will very much be determined by key data updates (both Cabo and early stage pipeline) and outcome of ANDA litigation now that the trial has been scheduled for May ’22. Exelixis Will Have Key Data Updates in FY22 We believe the next leg of where the 1L RCC market can go will depend on whether triple therapy has the best chance of optimizing survival. The COSMIC-313 trial is testing cabo/ Opdivo/Yervoy in 1L RCC and enrollment (n=840) was completed in March ‘21 with data expected in H1:22. The final Phase 1 expansion results for the triplet combo at ASCO GU ‘21 confirmed the activity seen in the dose escalation portion of the study and demonstrate a safety profile that was similar to the doublet combo of cabo/Opdivo. The lack of significant added toxicity with the addition of Yervoy in Phase 1 bodes well for COSMIC-313 as it will be key for the triplet to be tolerable enough to be used in community settings without significant dropouts. Our consultants expect the triplet to surpass the doublet on PFS, but key question is whether the magnitude of the difference will be sufficient to also drive an OS benefit (which is admittedly hard in 1L setting). This is important to justify moving all 3 drugs to be used together in 1L instead of sequencing the regimens to maximize outcomes. Our Investment Thesis After strong growth, Cabometyx (cabozantinib) is facing intense competition that may pressure sales. Positive Phase 3 data from CHECKMATE-9ER (Opdivo/cabo) in 1L RCC has re-accelerated growth. Over the long term, we see cabo being used across all RCC patients, thereby maintaining its value. We expect the pipeline to provide long-term growth and are optimistic for success. We think Exelixis could be an attractive takeout target due to (1) having several approved products; (2) offering tremendous growth prospects; (3) fully scaled out infrastructure; (4) with sustainable profitability; and (5) trading at attractive valuation. Forthcoming Catalysts ■ Potential sNDA filing for cabo in 1L HCC (Early '22) ■ Cabo data from COSMIC-313 in 1L RCC (H1:22) ■ Initiate Ph1 for XL114 in non-Hodgkin's lymphoma (H1:22) ■ Initial Ph1 data for XL102 in advanced solid tumors (2022) ■ Initial Ph1 data for XB002 in advanced solid tumors (2022) |
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Msg # | Subject | Author | Recs | Date Posted |
28542 | Re: Cowen - EXEL: Q4 CABO REVS INLINE, GUIDANCE SHOWS OPTIMISM FOR CONTINUED SHARE GAIN IN 1L RCC (Outperform PT 24) | TaiTienMuyBien | 4 | 1/16/2022 10:02:17 AM |