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January 14th, the FDA approved cabozantinib (CABOMETYX) for the treatment of hepatocellular carcinoma (HCC) in patients previously treated with sorafenib (Nexavar). The drugs sponsor and developer Exelixis (Nasdaq: EXEL) saw a 5% jump in its share price after hours. Approval was based on data from EXEL’s phase 3 CELESTIAL study reported in July of 2018. Investigators saw an improvement in overall survival of 2.2 months compared to a placebo. Collectively treatment with cabozantinib translated to a 24% reduction in the risk of death (p<.0049). A 2.2 month increase in life expectancy may not sound like much but it is an impressive achievement when battling an advanced cancer with limited treatment options.
EXEL is not the first pharmaceutical company to get an approved therapy for this indication. Bristol-Myer Squibbs (NYSE: BMY) rising star a biologic compound, OPDIVO (nivolumab), was the first PD-1 inhibitor approved for patients with HCC previously treated with sorafenib.
In August of 2018 Eisai Incs. (OTCMKTS: ESALF) and Mercks (NYSE: MRK) kinase inhibitor LENVIMA® (lenvatinib) was approved as a first line treatment for patients with unresectable HCC. Yet, an important observation is that when compared to patients treated with sorafenib OS only increased 1.3 months. Additionally, MRKs KEYTRUDA is an approved treatment for HCC.
In April of 2017 the FDA approved Bayers (OTCMKTS: BAYZF) Stivarga® (regorafenib) as a second-line treatment for HCC. At the time this was the first new HCC treatment to be approved in a decade. Approval came after Bayers successful phase 3 study ‘RESOURCE’. Compared to a placebo regorafenib increased OS by 2.8 months (i.e a 37% reduction in the risk of death).
Another thing to consider is that among 7 of the big pharma companies; Merck, Abbvie, Roche, Bristol-Myers, Celgene, Amgen, and Novartis they have between 3 and 21 recruiting, active, or completed clinical trials investigating combination and monotherapies for HCC.
For a list of drugs approved for treating liver cancer click here.
HCC Market Value
The liver cancer drug market is expected to reach ~1.5 billion by 2022 according to a grandview research report. Growth should be driven by the development of novel treatment options (such as cabozantinib), improved screening practices, and an increase in the prevalence other live-disease such as Non-Alcoholic SteatoHepatitis (NASH) and alcohol derived cirrhosis manifesting into liver cancer. HCC is really only a speck in the larger cancer therapy market which is poised to reach a $172.6 billion global valuation by 2022. Bottomline line is the HCC market consists of several top players with similarly efficacious compounds; albeit not all are for the exact same indication.
EXEL Financial Overview
Based on EXEL latest form 10-Q their financial condition seems to be improving markedly. Their cash and cash equivalents position nearly doubled from December 31st, 2017 to September 30th, 2018 from $183,164,000 to $353,623,000. Furthermore, total liabilities decreased 21%. Looking at revenues and income the positive trends continue. Over the same nine-month period net-product revenues increased a staggering 75%. Considering that total revenues and and net income grew 88% and 185% respectfully signals EXEL has a competitive efficacious product portfolio, and competent management and sales force capable of executing EXELs business and marketing strategies. With financial figures like these MS Money Moves is very excited to see what Q4 earnings. More importantly, their financial condition makes us less concerned from an investment perspective about cabozantinib entering a semi-crowded and competitive marketplace.
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