Exelixis Inc. (NASDAQ:EXEL) shares fell materially on Monday after Merck disclosed clinical trial results showing its combination therapy outperformed Exelixis' Cabometyx as a treatment for advanced renal cell carcinoma.
According to the company statement, Merck's LITESPARK-011 trial evaluated a fully oral regimen pairing WELIREG (belzutifan) with LENVIMA (lenvatinib) in patients with advanced renal cell carcinoma. The combination produced a statistically significant improvement in progression-free survival, lowering the risk of disease progression or death by 30% when compared with Cabometyx (cabozantinib).
The market reaction was swift. Exelixis shares dropped 6.6% on Monday, and at one point slumped as much as 9.9% intraday, the largest single-day decline for the stock since October. The move reflects investor concern about how the trial data could alter the competitive landscape in second-line renal cell carcinoma.
Analyst reactions
- Ashwani Verma, UBS - Maintaining a neutral rating, Verma said that the Welireg/Lenvima competitive data came in above expectations and could present more immediate downside for Exelixis if Merck's filing is accepted. He described the data as promising and suggested the combination could potentially replace Cabo in the second-line setting.
- Leonid Timashev, RBC Capital Markets - With a sector perform rating, Timashev characterized the trial efficacy for Merck's combination as compelling relative to Cabometyx. He noted that emerging data appears to support a role for belzutifan in the second-line setting, which could pressure Exelixis' key Cabo franchise. RBC lowered its price target on Exelixis to $43 from $46.
- Stephen D. Willey, Stifel - Remaining at a hold rating, Willey said the clear superiority of Merck's belzutifan/lenvatinib combination versus cabozantinib is likely to drive some attrition in cabozantinib's second-line market share. He added that the trial results further complicate the clear cell renal cell carcinoma treatment algorithm and reduce visibility into both cabozantinib sales and registrational programs involving belzutifan/zanzalintinib.
Market and product implications
The trial's outcome, as presented, changes the competitive signal for second-line renal cell carcinoma therapies by presenting a combination regimen with a statistically significant progression-free survival benefit versus a leading monotherapy. For Exelixis, the immediate consequence was a marked share price decline and downward pressure on near-term revenue visibility for the Cabometyx franchise. For Merck, the data supports advancement of the belzutifan/lenvatinib combination toward regulatory submission and positioning in the second-line setting.
Summary
Merck's LITESPARK-011 combination showed a 30% reduction in the risk of disease progression or death versus Cabometyx, prompting a sell-off in Exelixis shares that reached as much as a 9.9% intraday decline and closed down 6.6% on Monday. Analysts from UBS, RBC and Stifel highlighted the competitive implications, with RBC reducing its price target on Exelixis.