UPDATED: Cabozantinib flops against prostate cancer, forcing big job cuts at Exelixis

Exelixis CEO Michael Morrissey

Late on Monday evening Exelixis put out the word that its crucial late-stage study of cabozantinib flunked a comparison study with prednisone for castration-resistant prostate cancer, triggering a restructuring that will eliminate 70% of the jobs at the biotech.

This study was the big one for cabozantinib, but it failed to achieve a statistically significant improvement in overall survival among treatment-resistant patients. The cabo arm averaged an 11.0-month median OS rate compared to 9.8 months for prednisone. The median progression-free survival rate was about twice the 2.8 months registered for prednisone.

Shares of Exelixis went into meltdown mode Tuesday morning, losing more than 50% of their value in premarket trading.

Faced with a major setback, the South San Francisco-based company ($EXEL) wasted no time announcing that it is terminating 160 jobs, leaving a core group of 70 to carry on. The company has a pair of additional late-stage studies for cabo underway for kidney and liver cancer. But the company slammed on the brakes for its prostate cancer effort, simultaneously shuttering another pivotal Phase III as well as a mid-stage study.

Signs of trouble for cabo appeared back in the spring, when a big group of investors were disappointed to learned that the Phase III could not be called early on the interim analysis.

Cabozantinib is a tyrosine kinase inhibitor which has been followed closely as it winds its way through the clinic. The biotech had circled its wagons around this program, with CEO Michael Morrissey betting that the biotech could break into the big CRPC market after scoring an approval for the small metastatic medullary thyroid cancer field. Now the company will take a $6 million to $8 million charge on the restructuring.

"We are very disappointed that COMET-1 did not meet its primary endpoint of extending overall survival in men with mCRPC," said Morrissey, president and chief executive officer of Exelixis. "We are grateful to the patients, physicians, nurses, caregivers, and other study team members who participated in the trial. We remain focused on the development program for cabozantinib beyond mCRPC, including the ongoing METEOR and CELESTIAL Phase III pivotal trials, from which we expect top-line data in 2015 and 2017, respectively."

- here's the release