From Alex To -- EXEL: Betting the House on XL-184
•At the re-strategized Exelixis, "the single focus is on XL-184". This was
the message from its annual R&D day yesterday. The following is our take:
•The positive attribute on XL-184 is the recently observed data from the randomized
discontinuation trials that the drug has efficacy signals in a number of solid tumors:
liver cancer, prostate cancer, ovarian cancer, breast cancer, melanoma, etc - the fact
that the company has just found out the drug has efficacy signals in these common cancers
after the drug has been in development for so many years is baffling, but we won't go
there. It is intriguing that XL-184 is particular good in reducing, and sometimes
completely wiping out, bone metastasis in prostate cancers. It makes some sense since met
oncogene plays a heavy role in bone metastasis growth and XL-184 is a met inhibitor.
Therefore, developing XL-184 for castration resistant prostate cancer (CRPC) is now the
new found focus within the single focus.
•The risk for the single horse bet is that one would have to be darn sure that the
horse you are betting on is a winner. We don't have a clear answer for the question and
are open minded about it. A potential source for worry is the side effects XL-184 has so
far exhibited. Recall in previous trials, 175 mg was an intolerable dose and there had to
be dose reductions. The current 100 mg in the new formulation is equivalent to the old
125 mg dose. There are still many side effects. There were 4 drug related death in the
randomized discontinuation trial: the causes were pulmonary embolism, respiratory
failure, hemorrhage, and GI-hemorrhage. While GI side effects are widely experienced
though potentially manageable, thrombosis, hypertension, stomatitis and increased liver
enzyme are meaningful concerns. While we tolerate a lot of side effects for cancer drugs,
especially if the drug is highly efficacious, one has to put XL-184 in the category of
the more toxic cancer drug candidates in development. That might partially be the reason
why both Glaxo (GSK) and Bristol (BMY) gave the drug back to EXEL. For CRPC, the patients
have relatively long life expectancy, compared to other more deadly cancers. Therefore,
the life threatening adverse effects will be a consideration.
•The other concern is manmade error. The management spoke about going into an initial
Phase 3 with a composite end point other than a survival end point. (It is premature to
speak of Phase 3 at any rate since the drug is effectively just entering Phase 2, but
anyway.) It might be possible if the company can convince the regulatory agencies that
XL-184 is a cancer supportive care drug, for the treatment of bone pain and bone
metastasis. In that case an end point other than survival could be acceptable. But
regulatory standards for cancer supportive agents consist of much higher hurdles on side
effect profile. As a direct cancer fighting agent, on the other side, an overall survival
end point would be the only safe bet, especially all the other recently approved or
likely to be approved drugs for treatment of CRPC (Jevtana, Provenge, and abiraterone)
are all based on overall survival.
•As for XL-184 in medullary thyroid cancer, there are so few patients it is not going
to be financially meaningful for the company. For the couple thousand patients with MTC,
there is also competition. Just yesterday, the FDA advisory panel recommended approval of
AstraZeneca's (AZN) Zictifa (vandetanib).
•So, for investors' sake, maybe some hedging on the single focus bet can be helpful.
EXEL has a number of early stage molecules from the days when the company had a more
diverse focus. Perhaps EXEL can spin those molecules into different companies, while
retain significant equity stakes. We suspect many of these molecules have not been fully
characterized and in the hands of some savvy venture capitalists and through different
management perspectives, something valuable may come out of it and generate value for
EXEL shareholders. This approach is different from out-licensing the molecules to drug
companies. In the out-licensing approach, the upfront and milestone payments will likely
be ploughed right into XL-184 development. If XL-184 turns out to be the wrong horse,
there will be nothing.
•Although EXEL is projecting to have $250 million cash by end of 2010, it only has
enough funding to get through 2011. The earliest timeline for XL-184 to be commercialized
for CRPC is 2016. Getting from point A to point B would require very patient investors
who are willing to put up with lots of dilutions.
Alex To, MD
