Yahoo Finance Exelixis (EXEL) Down 6.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Exelixis (EXEL). Shares have lost about 6.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Exelixis due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Exelixis Q1 Earnings Miss, Cabometyx Sales Fall Short
Exelixis reported lower-than-expected results for the first quarter. The company recorded earnings of 17 cents per share, which missed the Zacks Consensus Estimate of 28 cents. The company registered adjusted earnings of 16 cents per share in the first quarter of 2023.
Including stock-based compensation expense, EPS was 12 cents, flat year over year.
Net revenues were $425.2 million, which lagged the Zacks Consensus Estimate of $468 million. The top line, however, increased 4% year over year.
Quarter in Detail
Net product revenues came in at $378.5 million, up 4.1% year over year. The uptick in net product revenues can be attributed to a rise in sales volume, partially offset by a decline in average net selling price.
Cabometyx (cabozantinib) generated revenues of $376.4 million, which missed the Zacks Consensus Estimate and our model estimate of $427 million and $413.4 million, respectively. The drug is approved for advanced renal cell carcinoma (RCC) and previously treated hepatocellular carcinoma. Cometriq (cabozantinib capsules) generated $2.1 million in net product revenues to treat medullary thyroid cancer.
Collaboration revenues, comprising license revenues and collaboration services revenues, totaled $46.7 million compared with $45.4 million in the year-ago quarter.
Research and development expenses amounted to $227.7 million, down 2.7% year over year. This decrease was primarily related to a drop in license and other collaboration costs, partially offset by an increase in clinical trial costs.
Selling, general and administrative expenses totaled $114 million, down 13.2% year over year. The downside was due to a decline in corporate expenses and legal and advisory fees.
As of Mar 31, 2024, Exelixis had repurchased $190.7 million of the company’s common stock. In January 2024, EXEL announced that its board authorized the repurchase of up to an additional $450 million of the company’s common stock before the end of 2024. The company completed its previously announced (March 2023) repurchase of 26.2 million shares of its common stock for a total of $550 million in 2023.
Restructuring Update
Earlier in 2024, Exelixis announced that it would undertake a corporate restructuring program to prioritize the advancement of its deep pipeline of clinical and near-clinical programs. As a result, EXEL is set to reduce its headcount by approximately 175 or 13%. Restructuring expenses in the first quarter totaled $32.8 million.
Pipeline Updates
Management is focused on the label expansion of its lead drug, Cabometyx, in 2024. A regulatory filing for cabozantinib in advanced neuroendocrine tumors (NET), based on positive results from the pivotal phase III CABINET study evaluating cabozantinib versus placebo in patients with either advanced pancreatic NET or extra-pancreatic NET, is expected in the coming months.
The company is evaluating the combination of cabozantinib and Tecentriq (atezolizumab) versus a second novel hormonal therapy (NHT) in patients with metastatic castration-resistant prostate cancer (mCRPC) and measurable extra pelvic soft tissue disease who have been previously treated with one NHT. A filing for this indication in the United States is also targeted in 2024.
Exelixis plans to accelerate the development of zanzalintinib, XB002 and XL309 in 2024.
Zanzalintinib, a third-generation tyrosine kinase inhibitor (TKI), is being evaluated in three ongoing pivotal trials, STELLAR-303, -304 and -305, in the forms of colorectal cancer, non-clear cell RCC and squamous cell carcinoma of the head and neck, respectively.
EXEL targets to file an investigational new drug application for XB010, XB628 and XL495 in 2024.
2024 Guidance Reaffirmed
Management reiterated its previously provided guidance for 2024. Total revenues are projected to be between $1.825 billion and $1.925 billion, while product revenues are estimated in the $1.65-$1.75 billion range. Research and development expenses are estimated to be in the band of $925-$975 million. Selling, general and administrative expenses are projected to be in the range of $425-$475 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Exelixis has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Exelixis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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