Given the competition, if Cometriq wants a large share of this market it needs to exceed or beat existing efficacy and safety benchmarks when its phase 3 data is released in 2014.
A possible liver and kidney cancer drug, too
Cometriq is also in phase 3 trials as a treatment for both hepatocellular carcinoma — or HCC, the most common form of liver cancer — and renal cell carcinoma — or RCC, the most common form of kidney cancer.
Patients diagnosed with these cancers would applaud new treatment options. HCC has a high mortality rate, particularly abroad, and cases have tripled in the U.S. from 1975 to 2005.
The incidence rate of kidney and renal cancer is 15.3 cases per 100,000 people, and five-year survival is 71.8%, according to the National Cancer Institute.
The size and significant need makes these indications worth billions.
Currently, HCC patients are treated with Nexavar, co-developed by Bayer and Onyx Pharmaceuticals. Nexavar generated $900 million in sales across all its indications last year, prompting Amgen to spend $10 billion acquiring Onyx in August.
In kidney cancer, Exelixis, Inc. (NASDAQ:EXEL) would compete against Pfizer Inc. (NYSE:PFE)‘s Inlyta, which was approved as an RCC treatment in 2012. Inlyta generated sales of $71 million in Q2 and $63 million in Q1, giving it 26% share of the second-line market. In phase 3 trails, Inlyta patients saw progression-free survival of 6.7 months versus 4.7 months for patients treated with Nexavar.
Cometriq would also compete against Genentech’s blockbuster Avastin and Novartis’ Afinitor, which brought in $797 million in revenue during 2012.
Collaborations hint at potential suitors
Cometriq has a lot of irons in the fire, and a larger player may find the drug interesting, particularly if phase 3 trials go as hoped. Some of these big companies are already collaborating with Exelixis, Inc. (NASDAQ:EXEL) on a variety of compounds.
In January, Genentech announced that it’s entering phase 3 trials for a combo drug incorporating Exelixis’ GDC-0973 alongside its Zelboraf as a treatment for malignant melanoma. The two companies have been partners since 2006, and if successful, Exelixis will make 50% of eventual sales up to $400 million and 30% of sales above that level.
The company has also worked with Bristol-Myers Squibb for years on various drug development projects and is collaborating with GlaxoSmithKline plc (ADR) (NYSE:GSK), Merck & Co., Inc. (NYSE:MRK), and Sanofi.
Cash burn and valuation are big risks
Exelixis is betting big money can build a franchise around Cometriq. In a bond and share offering last year, the company raised $416 million to pay for ongoing trials. However, it’s going through that cash quickly. The company’s stockpile dropped from $634 million at the end of 2012 to $567 million in the first quarter and $524 million in the second quarter.
Spending has increased everywhere, including $49 million on research and development in the second quarter, up from $33 million a year ago. Selling, general, and administrative costs jumped to $13.2 million from $6.8 million last year. And interest expense popped to $10.9 million last quarter from $3.8 million last year thanks to the bond offering. At current burn rates, Exelixis expects to finish the year with $400 million.
That should be enough money to advance its current phase 3 trials. If prostate data next year is strong, Cometriq could see new indications added to its label in 2015. If so, Cometriq could grow from niche status to a franchise worth hundreds of millions.
