Exelixis Stock Falls as Oppenheimer Downgrades Rating to Perform

Shares of Exelixis EXEL were down 5.13% on Jan. 24, following a downgrade in rating by analysts at Oppenheimer.Oppenheimer downgraded EXEL to “Perform” from “Outperform” as the analysts were concerned about the potential differentiation of pipeline candidate zanzalintinib versus cabozantinib following the abstract for STELLAR-001 study at American Society of Clinical Oncology 2025 Gastrointestinal Cancers Symposium (ASCO GI).While Oppenheimer believes data from STELLAR-001 likely derisk the late-stage STELLAR-303 study in metastatic colorectal cancer (CRC), the firm does not necessarily see clear differentiation for zanzalintinib. Hence, it chooses to be on the sidelines for now while awaiting additional clarity.Shares of Exelixis have surged 47.9% in a year against the industry’s decline of 12.4%.Image Source: Zacks Investment ResearchExelixis More on EXEL’s STELLAR-303 studyOn Jan. 25, Exelixis announced results from an expansion cohort of the phase Ib/II STELLAR-001 study evaluating zanzalintinib alone or in combination with Tecentiq (atezolizumab) in patients with previously treated metastatic CRC at the ASCO GI.This cohort of the STELLAR-001 trial included 107 patients randomized equally to receive single-agent zanzalintinib or zanzalintinib in combination with atezolizumab. Patients had unresectable, locally advanced or metastatic RAS wild-type CRC that was non-microsatellite instability-high or non-mismatch repair-deficient.Both progression-free survival and overall survival (OS) were numerically improved by the addition of atezolizumab to zanzalintinib.We note that STELLAR-001 is a global, open-label phase Ib/II study of zanzalintinib as a single agent or in combination with atezolizumab in patients with inoperable locally advanced or metastatic solid tumors. The trial is divided into two parts — a dose-escalation stage and an expansion cohort stage.The expansion cohorts evaluating zanzalintinib (100 mg) as a single agent or in combination with atezolizumab also include patients with clear cell renal cell carcinoma (RCC), non-clear cell RCC, breast cancer that is hormone receptor-positive and HER-2 negative and castration-resistant prostate cancer.In the overall population arm, the data showed an objective response rate (ORR) of 7.4% for the combination arm and an ORR of 1.9% for zanzalintinib arm.In patients without liver metastasis (NLM), ORR was 18% for the combination arm and 5.9% for the standalone zanzalintinib arm.Oppenheimer cited that the data are overall positive and support the design of phase III STELLAR-303 in metastatic CRC with primary OS analysis in NLM patients. In addition, data from prior trials, including LEAP-017, suggest liver metastases may reduce the benefit of immunotherapy.However, per Oppenheimer, the data didn't particularly stand out from prior phase I/II studies of cabozantinib in combination with checkpoint inhibitors in similar settings. Consequently, Oppenheimer is concerned about the differentiations of zanzalintinib and whether it can replace cabozantinib in key indications.EXEL Announces CABINET Study Data at ASCO GIExelixis announced results from a subgroup analysis of the phase III CABINET pivotal study of patients with extra-pancreatic neuroendocrine tumors (epNET) arising in the gastrointestinal (GI) tract. The analysis showed that cabozantinib was associated with an improvement in progression-free survival compared with placebo in patients with advanced GI neuroendocrine tumors (NET), a subgroup of the epNET cohort.EXEL’s Focus on Cabometyx Label ExpansionEXEL’s lead drug, Cabometyx (cabozantinib), is a leading tyrosine kinase inhibitor (“TKI”) for the treatment of RCC. The use of the drug in combination with Bristol Myers’ BMY Opdivo in the first-line setting is boosting sales.BMY’s Opdivo is one of the leading immuno-oncology drugs, and it has been approved for various oncology indications.EXEL is looking to expand Cabometyx. The FDA accepted EXEL’s supplemental new drug application for cabozantinib for patients with previously treated advanced pancreatic neuroendocrine tumors (pNET) and those with previously treated advanced epNET. It assigned a standard review with a target action date of April 3, 2025. The FDA also granted the orphan drug designation to cabozantinib for the treatment of pNET.EXEL is looking to reduce its dependence on Cabometyx with the development of zanzalintinib, a next generation oral TKI.Another study, STELLAR-304, is evaluating zanzalintinib in combination with Opdivo versus sunitinib in previously untreated patients with advanced non-clear cell RCC.Exelixis recently collaborated with pharma giant Merck MRK to evaluate zanzalintinib in combination with its blockbuster anti-PD-1 therapy Keytruda (pembrolizumab) in a late-stage study for treating patients with head and neck squamous cell carcinoma (“HNSCC”).Per the agreement, Merck will supply Keytruda for the ongoing, Exelixis-sponsored phase III STELLAR-305 study in previously untreated PD-L1-positive recurrent or metastatic HNSCC.Data from the phase II portion is expected to be available in the second half of 2025.Exelixis also expects to initiate a late-stage study, STELLAR-311, in the first half of 2025 evaluating zanzalintinib compared with everolimus as a first oral therapy in patients with advanced NET, regardless of the site of origin.Per the collaboration with Merck, two RCC studies are also planned for 2025 and updates on the same will be provided later.EXEL’s Zacks Rank & A Key PickEXEL currently carries a Zacks Rank #3 (Hold). 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