On August 11, 2015 Exelixis, Inc. (Nasdaq: EXEL) reported financial results for the second quarter of 2015 and provided an update on progress toward delivering upon its key 2015 corporate objectives and clinical development milestones (Press release, Exelixis, AUG 11, 2015, View Source;p=RssLanding&cat=news&id=2078887 [SID:1234507207]).
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Key Priorities and Corporate Updates
Exelixis is focused on expediting its regulatory submissions for cabozantinib in advanced renal cell carcinoma (RCC) based on the positive outcome from the METEOR pivotal trial and building its commercial infrastructure to support the launch of cabozantinib in advanced RCC in the United States, pending approval. In addition, Exelixis continues to support its partner Genentech, a member of the Roche Group, as it prepares for the potential worldwide commercialization of cobimetinib, a second Exelixis-discovered compound.
METEOR Trial Delivers Positive Top-Line Results in Advanced RCC. In July 2015, Exelixis announced that METEOR met its primary endpoint, demonstrating a statistically significant improvement in progression-free survival (PFS) for cabozantinib versus everolimus in a population of patients with advanced renal cell carcinoma who have experienced disease progression following treatment with at least one prior VEGFR tyrosine kinase inhibitor. The primary analysis was conducted on the first 375 patients enrolled, and the hazard ratio (HR) was 0.58 (95% CI 0.45-0.75, p<0.0001), equating to a 42% decrease in the risk of disease progression or death for the cabozantinib arm. As expected, data pertaining to overall survival (OS) for the entire 658-patient study population were not mature at the data cut-off, but a pre-planned interim analysis showed a trend favoring cabozantinib (HR=0.67, unadjusted 95 percent CI 0.51-0.89; p=0.005). At the time of the interim analysis, the pre-specified p-value of 0.0019 to achieve statistical significance was not reached. The trial will continue to the final OS analysis anticipated in 2016. The frequency of serious adverse events of any grade, regardless of causality, was approximately balanced between study arms, and the rate of discontinuations for adverse events was low (10%) in both arms.
U.S. and EU Regulatory Filings for Cabozantinib in Advanced RCC Planned for Early 2016. Having obtained positive top-line results for METEOR, Exelixis’ highest corporate priority is the completion of regulatory filings for cabozantinib in advanced RCC. Based on the data from the trial, the company intends to complete regulatory filings in the U.S. and European Union in early 2016. Earlier this year, cabozantinib received Fast Track designation by the U.S. Food and Drug Administration.
Recently Initiated Trial Combines Cabozantinib with Immunotherapies. In July 2015, Exelixis’ collaborators at the National Cancer Institute’s Cancer Therapy Evaluation Program (NCI-CTEP) initiated a phase 1 trial of cabozantinib in combination with nivolumab alone, or in combination with nivolumab plus ipilimumab, in patients with genitourinary tumors, including bladder cancer and RCC. The primary endpoint of the trial is the determination of dose-limiting toxicities, and a recommended phase 2 dose, for the combinations. Exelixis believes that there is a strong rationale for combining cabozantinib with immunotherapies, including clinical evidence of cabozantinib’s ability to create a more immune-permissive environment, as well as preclinical data suggesting cabozantinib increases T-cell infiltration into tumors. Data from this trial could have relevance in other disease settings, including non-small cell lung cancer (NSCLC).
Data at ASCO (Free ASCO Whitepaper) Underscore Potential of Cabozantinib in NSCLC. Oral presentations at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper)’s 2015 Annual Meeting, May 29 – June 2, highlighted positive data from two trials of cabozantinib in molecularly-defined subtypes of NSCLC. An investigator-sponsored phase 2 trial of cabozantinib in RET-rearranged NSCLC met its primary endpoint, exceeding the predefined number of objective responses. A second trial, conducted by the ECOG-ACRIN Cancer Research Group under Exelixis’ cooperative research and development agreement with NCI-CTEP, also met its primary endpoint, extending PFS for cabozantinib and the combination of cabozantinib and erlotinib versus erlotinib alone in EGFR wild-type NSCLC. Exelixis is committed to working with its collaborators at the NCI and at ECOG-ACRIN to explore further development of cabozantinib in lung cancer.
Cobimetinib Commercialization Planning Continues Ahead of Anticipated Regulatory Decisions. Also at ASCO (Free ASCO Whitepaper), investigators presented updated data from coBRIM, the phase 3 pivotal trial of cobimetinib in combination with vemurafenib in patients with advanced melanoma harboring a BRAF V600 mutation. coBRIM formed the basis for Genentech’s and Roche’s regulatory filings in the U.S. and EU, respectively, for which both companies anticipate decisions later this year. In the U.S., Genentech’s New Drug Application received priority review, and the Prescription Drug User Fee Act action date is now November 11, 2015. Cobimetinib, a selective MEK inhibitor discovered by Exelixis, is the subject of a worldwide collaboration agreement between Exelixis and Genentech. Pursuant to this agreement, Exelixis is entitled to an initial equal share of U.S. profits and losses, with Exelixis’ share decreasing as sales increase. The parties will share equally in the U.S. marketing and commercialization costs, and, if approved, Exelixis will co-promote the compound in the U.S. Outside the U.S., Exelixis is entitled to receive royalties on sales of cobimetinib.
Christopher J. Senner Joins Exelixis as EVP and Chief Financial Officer. In July 2015, Exelixis appointed Chris Senner to the role of Executive Vice President and Chief Financial Officer. Mr. Senner has nearly 25 years of experience in biopharmaceutical finance. He joined Exelixis following five years at Gilead Sciences, where he most recently served as Vice President, Corporate Finance. Prior to joining Gilead, Mr. Senner spent eighteen years at Wyeth in a variety of financial roles with increasing responsibility for many of the company’s divisions and regions.
Extension of Maturity Date of Indebtedness Under the Note Purchase Agreement with Deerfield. On July 1, 2015, Exelixis extended the maturity date of the Deerfield Notes from July 1, 2015 to July 1, 2018. The Deerfield Notes will bear interest on and after July 2, 2015, at the rate of 7.5% per annum to be paid in cash, quarterly in arrears, and 7.5% per annum to be paid in kind, quarterly in arrears, for a total interest rate of 15% per annum and will mature on July 1, 2018.
Public Offering of Stock Raises Net Proceeds of $146 Million. After the second quarter ended, Exelixis launched and completed a public offering of common stock. The company issued 28,750,000 shares, including 3,750,000 shares issued under the underwriters’ 30-day option to buy shares, at a price to the public of $5.40 per share, receiving approximately $146 million in net proceeds after deducting the underwriting discount and other estimated offering expenses payable by Exelixis. Exelixis currently expects to use the net proceeds from the offering for general corporate purposes, including for clinical trials, build-out of commercial infrastructure, research and development, capital expenditures and working capital.
"The second quarter, and the weeks following it, are some of the most significant in Exelixis history," said Michael M. Morrissey, Ph.D., President and Chief Executive Officer of the company. "As announced in July, cabozantinib delivered impressive results in the METEOR trial, including a statistically significant and clinically meaningful improvement in PFS, along with a strong trend toward improving overall survival, as compared to everolimus, a widely-used agent in the second and later lines of advanced RCC treatment. The data will serve as the foundation for regulatory filings in the U.S. and EU, which we intend to complete in early 2016."
Dr. Morrissey continued: "As we move into the third quarter with METEOR data in hand, all of us at Exelixis share an even greater sense of urgency and focus around maximizing the potential of our pipeline to help patients with cancer. This is illustrated by our recent activities, including the recruitment of a new chief financial officer with global commercial finance expertise, advancement of our discussions around a potential partnership for ex-U.S. rights to cabozantinib, and the initiation of a new trial evaluating cabozantinib in combination with immunotherapies. At the same time, alongside our partners Roche and Genentech, we have completed our commercial readiness for the potential U.S. regulatory approval of cobimetinib later this year."
COMETRIQ Product Revenue. Net product revenue from COMETRIQ (cabozantinib capsules) sales was $8.0 million for the second quarter of 2015.
2015 Financial Guidance. The company anticipates that operating expenses for the second six months of 2015 will be in a range of $80 million to $90 million, including approximately $10 million of incremental non-cash stock-based compensation expense related to the vesting of performance stock options tied to the read-out of METEOR top-line results.
Second Quarter 2015 Financial Results
Net revenues for the quarter ended June 30, 2015 were $8.0 million, compared to $6.6 million for the comparable period in 2014. Net revenues consisted entirely of product revenue related to the sale of COMETRIQ.
Research and development expenses for the quarter ended June 30, 2015 were $24.5 million, compared to $51.0 million for the comparable period in 2014. The decrease was primarily related to a net decrease in clinical trial costs, predominantly due to decreases in costs related to COMET-1 and COMET-2, the company’s phase 3 trials in metastatic castration-resistant prostate cancer, and decreases in personnel related expenses resulting from an overall reduction in headcount.
Selling, general and administrative expenses for the quarter ended June 30, 2015 were $12.8 million, compared to $16.5 million for the comparable period in 2014. The decrease was primarily related to a decrease in personnel and stock-based compensation expenses resulting from an overall reduction in headcount, consulting and outside services, and legal and patent costs. Those decreases were partially offset by higher marketing expenses, including expenses for cobimetinib under the company’s collaboration agreement with Genentech.
Restructuring charge for the quarter ended June 30, 2015 was $1.3 million. The restructuring charge was primarily related to the exit of certain facilities, the partial termination of one of Exelixis’ building leases and subleasing activities during the period.
Other income (expense), net for the quarter ended June 30, 2015 was a net expense of ($12.1) million compared to ($11.7) million for the comparable period in 2014. The net expense is comprised primarily of interest expense which includes $7.2 million of non-cash expense related to the accretion of the discounts on both the 4.25% Convertible Senior Subordinated Notes due 2019 and the company’s indebtedness under the Deerfield Notes for the quarter ended June 30, 2015, as compared to $7.3 million for the comparable period in 2014.
Net loss for the quarter ended June 30, 2015 was ($43.4) million, or ($0.22) per share, basic, compared to ($73.4) million, or ($0.38) per share, basic, for the comparable period in 2014. The decreased net loss for the quarter was primarily due to decreases in research and development expenses and selling, general and administrative expenses and an increase in product revenues.
Cash and cash equivalents, short- and long-term investments and short- and long-term restricted cash and investments totaled $167.0 million at June 30, 2015 compared to $242.8 million at December 31, 2014. The June 30, 2015 cash position was prior to the launch of the company’s public offering of stock on July 21, 2015, as noted above.