Exelixis Still Has Massive Upside Potential

Exelixis (EXEL) has had a great 2016 as the stock has jumped to five-year highs on the back of strong financials. In Q1FY16, Exelixis reported earnings per share of $-0.27, $-0.02 less than the estimates. However, the company’s revenue came in at $15.43 million, $6.32 million better than the estimates. Moreover, that figure also signifies a surge of 64.3 percent in revenue year over year.

The company detailed that it has reached a perilous inflection point and is almost prepared to take things to the next level as it approaches in the direction of second quarter.
Moreover, the company partnered with Ipsen for the ex-U.S, ex-Japan, and ex-Canada rights for cabozantinib in which it achieved an expert and fervent partner as well as $200 million upfront payment.

On the other hand, the company’s viable launch of newly sanctioned advanced kidney cancer drug Cabometyx has gotten off to a blazing start, generating $17.6 million in net revenue in only two months since the launch date. The success of Cabometyx has fortified Exelixis stockholders as well as analysts who were worried that Bristol-Myers Squibb’s rival treatment Opdivo would inhibit Cabometyx’s release for this indication.

Despite the massive concern, it is highly likely that the robust start of Cabometyx could lead Exelixis to become cash flow positive by next year.
Exelixis Still Has Massive Upside Potential
Image by Ann_San / Pixabay
Furthermore, with an increasing cash position that should reach $400 million before the end of this year, the company looks to be on the brink of taking the next step in its development by chasing value creating acquisitions or licensing deals to expand its clinical pipeline.

Apart from this, additional expansion of Cabometyx into other cancers will also have an extensive effect on the company’s future sales. Moreover, Exelixis anticipates completing its Celestial clinical trial, testing Cabometyx in liver cancer in 2017.

However, the company will show a glance of its experiment to stockholders in two phases, because the clinical trial has two short-term analyses built-in, one when it reaches 50 percent and other at 75 percent of the deaths indicated to end the clinical trial.


Although Exelixis’ valuation may look a bit stretched right now, the company is on track to become cash flow positive. Given the fast revenue growth and improving fundamentals, it still looks like Exelixis has a lot of upside potential left to offer. As a result, I think investors should consider buying the stock despite it being near record high levels.
Published on Sep 22, 2016
By Akshansh Gandhi

Copyrighted 2020. Content published with author's permission.

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