Guggenheim - EXEL: Analysis of Potential Cabo IP Outcomes Ahead of ANDA Bench Trial in May; Maintain | EXEL Message Board Posts


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Msg  28763 of 29067  at  4/3/2022 6:45:57 PM  by

JBWIN


Guggenheim - EXEL: Analysis of Potential Cabo IP Outcomes Ahead of ANDA Bench Trial in May; Maintain BUY on Valuation and Growth Opportunity (PT 29)

 

Key Message: We spoke with a patent attorney on possible outcomes for Cabometyx IP and generic entry ahead of the scheduled ANDA bench trial in May (see our previous IP consultation here), and we dialed in to the public case status hearing requested by MSN and held last Friday, March 18. Our key takeaways include: (1) 2019/2020 ANDA actions (focus of the May trial) are centered around a relatively narrow polymorph patent (October 2030 expiration) that favors EXEL on invalidity but may be a challenging bar for EXEL to demonstrate infringement, (2) 2022 ANDA action patents (January 2030 expiration) are broader and may provide a stronger defensive position on infringement (but not invalidity) for EXEL, (3) the presiding judge’s recent decision to move forward with the May trial (rather than combine with the 2022 ANDA patents in a later trial) represents a procedural “win” for EXEL that could clarify Cabo’s IP position as soon as this year, (4) although final IP outcomes may not be clear until the 2022 ANDA actions are resolved, a strong decision in the May trial on either infringement or invalidity could be relevant for other disputed Cabo patents (see below for details). Our base case ($29/shr valuation) assumes a settlement between EXEL and MSN resulting in generic Cabometyx launch between 2026 and 2033 (we assume late 2027), while possible bull cases include launches in mid-2030 ($36/shr valuation) or beyond (best-case of late 2032; $45/shr valuation). Our bear case ($17/shr; unlikely in our view) assumes a ruling of non-infringement or invalidation of all asserted Cabo patents, supporting generic launch in late 2026. Reiterating BUY rating on favorable risk/reward (-19%/+114%).

We are BUY rated on EXEL with a $29 PT, given our positive conviction into the Cabometyx franchise and the lineup of potential catalysts over the next 12 months. EXEL is a ~$6.8Bn fully-diluted market cap, $5.4Bn EV Biotech trading at a steep discount to Biopharma peers (2.9x vs. 6.5x 1-yr forward EV/S) primarily driven by investor concerns around Cabometyx IP position which has created a significant overhang on the stock. The company has provided 2022 net product sales guidance of $1,325M-1,425M in expectation of +23-33% YoY organic growth in approved markets for Cabometyx. In 2022/23, EXEL may be able to unlock addl. potential near-term growth opp'ties for Cabometyx, including topline results from Ph. III COSMIC-313 in 1L RCC (1H22; see our preview here), initial data from the Ph. III CONTACT-01 (NSCLC) and CONTACT-03 (2L RCC) studies in 2H22, as well as potential top-line results from CONTACT-02 in mCRPC in 2023. Potential resolution of Cabo’s IP litigation this year with the ANDA bench trial scheduled for May 16 may provide near-term clarity on Cabo's IP runway (i.e., 2026 vs. 2030-2033 loss of exclusivity) and EXEL will also provide visibility into longer-term sources of potential growth for the company with initial clinical data for several early development stage programs guided for 2022, including next gen multi-kinase inhibitor XL092, CDK7 inhibitor XL102, and next gen anti-tissue factor ADC XB002.



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Msg # Subject Author Recs Date Posted
28764 Re: Guggenheim - EXEL: Analysis of Potential Cabo IP Outcomes Ahead of ANDA Bench Trial in May; Maintain BUY on Valuation and Growth Opportunity (PT 29) TaiTienMuyBien 2 4/4/2022 1:58:40 PM




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