Exelixis soars as a once-failed cancer drug comes through in Phase III

Exelixis ($EXEL) notched a crucial clinical success for its top oncology prospect, meeting its goals in a kidney cancer trial and clearing the way for a lucrative FDA nod.

The drug, cabozantinib, hit its primary endpoint of besting standard everolimus in extending the lives of patients with renal cell carcinoma already treated with a VEGF inhibitor. In top-line results, Exelixis' treatment charted a statistically significant increase in progression-free survival compared to everolimus, sold by Novartis ($NVS) as Afinitor, and reduced the relative risk of tumor growth or death by 42%.

Cabozantinib met its primary endpoint based on results from 375 of the study's 658 enrolled patients, as determined by the trial's independent radiology committee, but the company will have to wait for final data on the secondary goal of overall survival. At the interim analysis, overall survival trends are favoring cabozantinib over everolimus, Exelixis said, but the company will have to wait for 2016 to make any conclusions on the data.

In the meantime, the top-line success sent Exelixis' shares up as much as 50% early Monday morning, rekindling investor confidence that cabozantinib can finally become a profitable oncology treatment. But much of that excitement was short-lived, as within an hour of Exelixis' announcement, Bristol-Myers Squibb ($BMY) revealed that its star checkpoint inhibitor Opdivo had topped everolimus in overall survival, performing so well that investigators halted a Phase III trial ahead of schedule. That news put a damper on Exelixis' surge, but the biotech was still trading up about 33% by midmorning.

Cabozantinib won approval in 2012 to treat a rare form of thyroid cancer, the first step in what Exelixis hoped would be a string of regulatory successes that would expand its indications. But two years later, cabozantinib missed its primary endpoint in a big Phase III trial in prostate cancer, roughly halving Exelixis' market cap and leading the biotech to lay off about 70% of its workforce and shift its bets to kidney cancer.

Now Exelixis says it's on track to file the drug for a second approval early next year, taking advantage of the FDA's fast-track designation with eyes on a speedy review. If approved in kidney cancer, cabozantinib's indication would expand from medullary thyroid cancer, affecting just a few hundred patients a year, to a treatable kidney cancer population of 17,000 in the U.S. and 37,000 around the world, according to Exelixis.

Exelixis is working through another Phase III study testing cabozantinib's effect on liver cancer, with final data expected in 2017. And the biotech is awaiting final word from the FDA on a combination of its own a combination of cobimetinib with partner Roche's ($RHHBY) Zelboraf, expecting approval in November.

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