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Why Is Exelixis (EXEL) Up 10.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Exelixis (EXEL - Free Report) . Shares have added about 10.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Exelixis due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Exelixis Q4 Earnings Beat on Lower R&D Spend, Sales Miss
Exelixis reported earnings of 33 cents per share in the fourth quarter of 2023, which beat the Zacks Consensus Estimate of 31 cents. The company posted a net loss of 3 cents per share in the fourth quarter of 2022.
Including stock-based compensation expenses, earnings per share were 27 cents against a loss of 9 cents in the year-ago quarter due to an increase in revenues and lower expenses.
Net revenues were $479.6 million, marginally missing the Zacks ConsensusEstimate of $481 million. Revenues increased 13.1% year over year.
Quarter in Detail
Net product revenues came in at $429.3 million, up 13.7% year over year. The increase was primarily due to a rise in sales volume and the average net selling price.
Cabometyx (cabozantinib) generated revenues of $427.7 million and beat the Zacks Consensus Estimate and our model estimate of $427 million and $426.7 million, respectively. The drug is approved for advanced renal cell carcinoma (“RCC”) and previously treated hepatocellular carcinoma. Cometriq (cabozantinib capsules) generated $1.6 million in net product revenues for treating medullary thyroid cancer.
Collaboration revenues, comprising license revenues and collaboration services revenues, were $50.3 million in the quarter compared with $46.5 million in the year-ago quarter.
In the reported quarter, research and development expenses were $244.7 million, down 27.3% year over year due to a decrease in license and other collaboration costs.
Selling, general and administrative expenses were $131.4 million, up 10.1% due to an increase in personnel expenses.
In January 2024, Exelixis announced that its board authorized the repurchase of up to an additional $450 million of the company’s common stock before the end of 2024. Exelixis completed its previously announced (March 2023) repurchase of 26.2 million shares of its common stock for a total of $550 million in 2023.
Restructuring Update
Last month, Exelixis announced that it will undertake a corporate restructuring program to prioritize the advancement of its deep pipeline of clinical and near-clinical programs. As a result, EXEL will reduce its headcount by approximately 175 employees or 13%. The firm expects to substantially complete the restructuring in the first quarter of 2024 and incur a restructuring charge of approximately $25 million.
Management will focus on the label expansion of its lead drug, Cabometyx, in 2024. A potential regulatory filing for cabozantinib in advanced neuroendocrine tumors (“NET”) based on positive results from the pivotal phase III CABINET study, which evaluates cabozantinib versus placebo in patients with either advanced pancreatic NET or extra-pancreatic NET, is targeted in 2024.
The company is evaluating the combination of cabozantinib and Tecentriq (atezolizumab) versus a second novel hormonal therapy (“NHT”) in patients with metastatic castration-resistant prostate cancer (“mCRPC”) and measurable extra pelvic soft tissue disease who have been previously treated with one NHT. A potential filing for this indication in the United States is also targeted in 2024.
Exelixis plans to accelerate the development of zanzalintinib, XB002 and XL309 in 2024.
Zanzalintinib, a third-generation tyrosine kinase inhibitor (“TKI”), is being evaluated in three ongoing pivotal trials, STELLAR-303, -304 and -305, in forms of colorectal cancer, non-clear cell RCC and squamous cell carcinoma of the head and neck, respectively.
XB002 is a next-generation tissue factor-targeting antibody-drug conjugate that is being evaluated as a monotherapy and in combination regimens. This year, Exelixis is focused on advancing JEWEL-101, the phase I study of XB002 alone and in combination with immunotherapy in a variety of solid tumor settings, with the goal of prioritizing sensitive tumor types for full development.
XL309, a potentially best-in-class small-molecule inhibitor of USP1, has emerged as a synthetic lethal target in the context of BRCA-mutated tumors. Exelixis’ clinical development priorities for XL309 include accelerating its development as a potential therapy for tumors that have become refractory to PARP inhibitor (“PARPi”) therapy, including forms of ovarian, breast and prostate cancers, pursuing potential PARPi combinations and moving beyond the PARPi market into new areas.
EXEL plans to file an investigational new drug application for XB010, XB628 and XL495 in 2024 if preclinical data continues to remain supportive.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -5.61% due to these changes.
VGM Scores
At this time, Exelixis has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Exelixis has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Exelixis is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Regeneron (REGN - Free Report) , a stock from the same industry, has gained 3.6%. The company reported its results for the quarter ended December 2023 more than a month ago.
Regeneron reported revenues of $3.43 billion in the last reported quarter, representing a year-over-year change of +0.6%. EPS of $11.86 for the same period compares with $12.56 a year ago.
Regeneron is expected to post earnings of $9.73 per share for the current quarter, representing a year-over-year change of -3.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.9%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Regeneron. Also, the stock has a VGM Score of D.
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Why Is Exelixis (EXEL) Up 10.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Exelixis (EXEL - Free Report) . Shares have added about 10.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Exelixis due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Exelixis Q4 Earnings Beat on Lower R&D Spend, Sales Miss
Exelixis reported earnings of 33 cents per share in the fourth quarter of 2023, which beat the Zacks Consensus Estimate of 31 cents. The company posted a net loss of 3 cents per share in the fourth quarter of 2022.
Including stock-based compensation expenses, earnings per share were 27 cents against a loss of 9 cents in the year-ago quarter due to an increase in revenues and lower expenses.
Net revenues were $479.6 million, marginally missing the Zacks ConsensusEstimate of $481 million. Revenues increased 13.1% year over year.
Quarter in Detail
Net product revenues came in at $429.3 million, up 13.7% year over year. The increase was primarily due to a rise in sales volume and the average net selling price.
Cabometyx (cabozantinib) generated revenues of $427.7 million and beat the Zacks Consensus Estimate and our model estimate of $427 million and $426.7 million, respectively. The drug is approved for advanced renal cell carcinoma (“RCC”) and previously treated hepatocellular carcinoma. Cometriq (cabozantinib capsules) generated $1.6 million in net product revenues for treating medullary thyroid cancer.
Collaboration revenues, comprising license revenues and collaboration services revenues, were $50.3 million in the quarter compared with $46.5 million in the year-ago quarter.
In the reported quarter, research and development expenses were $244.7 million, down 27.3% year over year due to a decrease in license and other collaboration costs.
Selling, general and administrative expenses were $131.4 million, up 10.1% due to an increase in personnel expenses.
In January 2024, Exelixis announced that its board authorized the repurchase of up to an additional $450 million of the company’s common stock before the end of 2024. Exelixis completed its previously announced (March 2023) repurchase of 26.2 million shares of its common stock for a total of $550 million in 2023.
Restructuring Update
Last month, Exelixis announced that it will undertake a corporate restructuring program to prioritize the advancement of its deep pipeline of clinical and near-clinical programs. As a result, EXEL will reduce its headcount by approximately 175 employees or 13%. The firm expects to substantially complete the restructuring in the first quarter of 2024 and incur a restructuring charge of approximately $25 million.
Management will focus on the label expansion of its lead drug, Cabometyx, in 2024. A potential regulatory filing for cabozantinib in advanced neuroendocrine tumors (“NET”) based on positive results from the pivotal phase III CABINET study, which evaluates cabozantinib versus placebo in patients with either advanced pancreatic NET or extra-pancreatic NET, is targeted in 2024.
The company is evaluating the combination of cabozantinib and Tecentriq (atezolizumab) versus a second novel hormonal therapy (“NHT”) in patients with metastatic castration-resistant prostate cancer (“mCRPC”) and measurable extra pelvic soft tissue disease who have been previously treated with one NHT. A potential filing for this indication in the United States is also targeted in 2024.
Exelixis plans to accelerate the development of zanzalintinib, XB002 and XL309 in 2024.
Zanzalintinib, a third-generation tyrosine kinase inhibitor (“TKI”), is being evaluated in three ongoing pivotal trials, STELLAR-303, -304 and -305, in forms of colorectal cancer, non-clear cell RCC and squamous cell carcinoma of the head and neck, respectively.
XB002 is a next-generation tissue factor-targeting antibody-drug conjugate that is being evaluated as a monotherapy and in combination regimens. This year, Exelixis is focused on advancing JEWEL-101, the phase I study of XB002 alone and in combination with immunotherapy in a variety of solid tumor settings, with the goal of prioritizing sensitive tumor types for full development.
XL309, a potentially best-in-class small-molecule inhibitor of USP1, has emerged as a synthetic lethal target in the context of BRCA-mutated tumors.
Exelixis’ clinical development priorities for XL309 include accelerating its development as a potential therapy for tumors that have become refractory to PARP inhibitor (“PARPi”) therapy, including forms of ovarian, breast and prostate cancers, pursuing potential PARPi combinations and moving beyond the PARPi market into new areas.
EXEL plans to file an investigational new drug application for XB010, XB628 and XL495 in 2024 if preclinical data continues to remain supportive.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -5.61% due to these changes.
VGM Scores
At this time, Exelixis has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Exelixis has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Exelixis is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Regeneron (REGN - Free Report) , a stock from the same industry, has gained 3.6%. The company reported its results for the quarter ended December 2023 more than a month ago.
Regeneron reported revenues of $3.43 billion in the last reported quarter, representing a year-over-year change of +0.6%. EPS of $11.86 for the same period compares with $12.56 a year ago.
Regeneron is expected to post earnings of $9.73 per share for the current quarter, representing a year-over-year change of -3.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.9%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Regeneron. Also, the stock has a VGM Score of D.