Exelixis' (EXEL) Q4 Earnings Surpass Estimates, Sales Miss

Exelixis (NASDAQ:EXEL), Inc. EXEL reported earnings of 9 cents per share in the fourth quarter of 2020, beating the Zacks Consensus Estimate of 3 cents. The bottom-line figure declined from the year-ago quarter’s earnings of 22 cents per share due to higher R&D expenses.

Net revenues came in at $270 million, which increased from $240.3 million reported in the year-ago quarter but missed the Zacks Consensus Estimate by 0.46%.

Quarter in Detail

Net product revenues came in at $200.4 million, up from $194.9 reported in the year-ago quarter.

Cabometyx generated $196.3 million of revenues. Cabometyx (cabozantinib) tablets are approved for advanced renal cell carcinoma (RCC) and previously treated hepatocellular carcinoma (HCC). Cometriq (cabozantinib capsules) for the treatment of medullary thyroid cancer generated $4 million in net product revenues. Exelixis earned $23.3 million in royalty revenues on the basis of cabozantinib-related revenues generated by its partner, Ipsen.

Collaboration revenues, comprising license revenues anxd collaboration services revenues, were $69.7 million in the quarter under review compared with $45.4 million in the year-ago quarter. The increases in collaboration revenues were primarily related to increases in milestone related revenues and development cost reimbursements earned, along with higher royalty revenues for the sales of cabozantinib outside of the United States generated by Exelixis’ collaboration partners, Ipsen Pharma and Takeda Pharmaceutical Company (NYSE:TAK) Limited.

In the reported quarter, research and development expenses increased to $154.3 million from the year-ago quarter’s $94.3 million due to a rise in clinical trial costs. Selling, general and administrative (SG&A) expenses were $82.4 million, up from $58 million in the year-ago quarter.

Pipeline Update

In January 2021, Exelixis obtained FDA approval for its supplemental New Drug Application (sNDA) for Cabometyx in combination with Bristol Myers’ BMY Opdivo as a first-line treatment of patients with advanced RCC.

In October 2020, the first patient was enrolled into the dose-escalation cohort of the combination arm of the phase I study evaluating the safety, tolerability, PK and preliminary anti-tumor activity of XL092, both alone and in combination with Roche’s RHHBY (OTC:RHHBY) Tecentriq in patients with advanced solid tumors.

2020 Results

Revenues came in at $987.5 million, which grew from $967.8 million in 2019 but missed the Zacks Consensus Estimate of $988.8 million. Earnings per share of $0.61 were down from $1.16 in 2019.

2021 Guidance

Revenues are projected at $1,150-$1,250 million while product revenues are estimated in the range of $950-$1,050 million.

Our Take

Exelixis’ fourth-quarter results were mixed as earnings beat estimates but revenues missed the same. The pipeline progress has been impressive and the approval of Cabometyx in combination with immuno-oncology drug, Opdivo, for advanced RCC should boost sales, given the market potential.

Exelixis’ shares have gained 18.8% in the past year compared with the industry’s growth of 14.6%.

However, competition is stiff from the recently-approved combination therapies. Merck’s MRK Keytruda in combination with Inlyta is also approved for the first-line treatment of patients with advanced RCC.

Exelixis currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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