Exelixis (EXEL) Stock: Climbing On Exclusive Licensing Agreement!

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Exelixis, Inc. (NASDAQ: EXEL)

Exelixis is having an incredible day in the market today, and for good reason. The company announced that it has reached an exclusive licensing agreement for the commercialization and development of the company’s lead drug. Today, we’ll talk about the licensing agreement, how the market reacted to the news, and what we can expect to see from EXEL moving forward. So, let’s get right to it.

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EXEL Enters An Exclusive Licensing Agreement

As mentioned above, it was announced by Exelixis that the company has reached an exclusive licensing agreement for the commercialization and further development of cabozantinib, its lead oncology drug. According to the new agreement, Ipsen will have exclusive rights to commercialize cabozantinib in indications outside of the United States, Canada, and Japan. The rights also include COMETRIQ, a treatment for adult patients with progressive, unresectable, locally advanced or metastatic medullary thyroid cancer, which is currently approved in the European Union.

Under the agreement, EXEL will receive an upfront payment in the amount of $200 million from Ipsen and will be eligible to collect regulatory milestones. The milestones include a $60-million milestone for the approval of cabozantinib in Europe for renal cell carcinoma. Also, there is a $50-million milestone for the filing and approval of cabozantinib in Europe for advanced hepatocellular carcinoma, as well as other additional milestones. Also, EXEL will receive up to $545 million in potential commercial milestones as well as tiered royalties of up to 26%. In a statement, Michael M. Morrissey, Ph.D., CEO and President at EXEL, had the following to say with regard to the agreement:

In Ipsen, Exelixis has an ideal partner to maximize the potential for cabozantinib to have a positive impact on the treatment of cancer on a global basis. Ipsen’s established international oncology marketing presence, late-stage clinical development expertise, and shared vision with Exelixis for the franchise potential of cabozantinib will accelerate cabozantinib’s commercialization in its territories while Exelixis remains focused on our launch in the United States. While our immediate priorty will be on advanced renal cell carcinoma, Exelixis and Ipsen are committed to exploring and potentially developing cabozantinib in a variety of cancer settings.”

How The Market Reacted To The News

As investors we know that the news moves the market. When there is positive news with regard to a publicly-traded company, we can expect to see gains in the stock associated with that news. Adversely, when there is negative news, we expect to see declines. In the case of EXEL, we’re seeing incredibly positive movement on the stock, and for good reason. The company’s partnership with Ipsen offers a large upfront payment as well as a huge potential for future revenue. Currently (11:50), EXEL is trading at $3.84 per share after a gain of $0.20 per share or 5.49% thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from EXEL. The reality is that the new partnership with Ipsen has the ability to drive massive amounts of revenues. Also, I’m impressed with the company’s decision to retain rights to marketing in the world’s largest economy – the United States. Ultimately, the agreement will lead to strong revenue that will fund a big US commercialization push here in the states and then some. All in all, things are looking good for EXEL.

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What Do You Think?

Where do you think EXEL is headed moving forward and why? Let us know your opinion in the comments below!

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