Clinical trial results
On June 20, Exelixis (EXEL) announced that the combination regimen of cobimetinib and atezolizumab failed to demonstrate a statistically significant improvement in terms of progression-free survival as compared to standard of care therapy, pembrolizumab, in the first-line BRAF V600 wild-type advanced melanoma indication in the Phase 3 IMspire170 trial. Roche Holdings’ (RHHBY) subsidiary Genentech is responsible for development programs of cobimetinib based on a collaboration agreement entered with Exelixis in December 2006.
While Exelixis was down 5.9% in after-hours trading after the announcement, the stock recovered the losses and closed at $21.14 yesterday, 0.81% higher than its previous close. Yesterday, Roche Holdings also closed at $35.76, 1.5% higher than the previous close. Based on this price performance, it seems that shareholders were not very confident about the trial and had already priced in the failure of the trial to the price of both companies.
This is not the first time that the cobimetinib and atezolizumab combination regimen has reported unfavorable results in a Phase 3 trial. On May 9, 2018, Roche Holdings announced that the combination regimen of cobimetinib and atezolizumab failed to demonstrate a statistically significant improvement in terms of overall survival as compared to regorafenib in difficult-to-treat, the locally advanced or metastatic CRC (colorectal cancer) indication, in Phase 3 IMblaze370 trial.
According to the first-quarter earnings conference call, Exelixis and Roche Holdings are also evaluating a triplet combination regimen of cobimetinib, vemurafenib, and atezolizumab in the first line BRAF mutation-positive melanoma indication in the IMspire150 trial.
Analysts’ recommendations for Exelixis
The consensus recommendation for Exelixis is a “buy.” Wall Street analysts expect an upside potential of 42.29% for Exelixis based on the company’s closing price on June 20. Analysts have reduced the company’s 12-month consensus target price from $31.00 in March and April to $30.08 in May and June. The highest and lowest target estimate is $45 and $22, respectively.
Out of the 13 analysts covering Exelixis, four recommend a “strong buy,” five recommend a “buy,” and four recommend a “hold.”