Exelixis (NYSE: EXEL) is a drug discovery and development company that earns revenue from the out-licensing of potential therapies that it discovers to big pharma collaborators. In 2010, Bristol-Myers Squibb Company (BMY) returned the rights to develop cancer drug, Cabozantinib, back to Exelixis. Since acquiring full rights to Cabozantinib, Exelixis has focused much of its operations on the development of the compound.
The valuation of Exelixis depends significantly on the progress of the clinical trials that it is conducting for cabozantinib.
Revenue growth in 2010 was largely due to payments from collaborations with Sanofi-Aventis SA (SNY) and Bristol-Myers Squibb Company (BMY). In 2011, Exelixis expects revenues in the range of $145-160 million, with expenses of $190-220 million.
Exelixis is developing its lead compound, cabozantinib, to treat a variety of cancers:
To date, all of Exelixis's revenue has been earned from milestone and royalty payments paid by pharmaceutical partners. In order to make the full transition from a development-stage company to a fully commercial pharmaceutical company, Exelixis needs to obtain regulatory approval for cabozantinib. Exelixis is currently in the midst of phase III clinical trials, which are the final, but most costly and risky stage of clinical development. Exelixis expects to receive an FDA decision on the use of cabozantinib to treat medullary thyroid cancer by the end of 2012.
Exelixis is currently develop cabozantinib as a therapy for 13 different types of cancer. Each of these cancer types represents a new market and additional revenue for Exelixis down the road. Exelixis's ability to obtain FDA approval for these additional markets will impact its bottom line.