Exelixis shares slide as CEO cheers a mid-stage prostate cancer success

Not long after Mike Morrissey took the helm at Exelixis ($EXEL) in the summer of 2010 he decided to restructure and go all in on cabozantinib, the biotech's promising cancer drug that had already been abandoned by its deep-pocket collaborator, Bristol-Myers Squibb. Rather than take aim at survival rates--the coin of the realm in this field--the biotech had taken an unusual research tack: Tracking the drug's effect on bone lesions, a telltale sign of the savage physical destruction wrought by the disease at an advanced stage.

That strategy was put to the test at ASCO, where Morrissey championed updated Phase II data that demonstrated full or partial clearance of the lesions among 76 percent of patients. Erasing lesions also relieved much of the intense pain associated with bone destruction. Exelixis now says it can launch a pivotal, late-stage trial of the treatment later this year. And Morrissey is vowing to stick with his strategic gamble all the way through Phase III in a make or break effort to garner a blockbuster success.

"For the first time, we have enough patients on the drug, long enough, to say ‘Wow, cabo resolves bone scans for almost 80 percent of patients, and you can see clinical benefit,'" Exelixis CEO Mike Morrissey said with his trademark passion, according to a report in Xconomy. "We have a lot of support from investigators, especially in prostate cancer. When metastatic prostate cancer goes to the bone, it drives pain, complications, fractures, spinal cord compression, anemia. Everything combined really puts the patient in a bad place. We have investigators who (have been) doing this for several decades who have never seen this level of activity in the bone. They are incredibly enthusiastic."

Right or wrong, Morrissey's razor sharp focus on cabo has been able to talk up the share price in recent months. And on Monday investors took their profits in what TheStreet's Adam Feuerstein--a close student of all things related to cabo--called "typical post-ASCO selling" possibly complicated by concerns about trial design. The stock dropped about 18 percent. For the AP and Reuters, the sudden plunge was linked to Exelixis's weekend report of six patient deaths during a clinical trial, with fresh questions about the prostate cancer field as Bayer and Algeta reported success with their treatment.

Analysts, however, weren't spooked by the deaths in an advanced cancer setting. Cowen & Co analyst Eric Schmidt told Reuters the report was "no different from what we have seen for every other Phase I and II trial here at ASCO."

- read the Reuters report
- and here's the story from Xconomy
- see TheStreet's report

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