On June 28, shareholders in the cancer therapeutics company Exelixis (NASDAQ: EXEL) got a nasty shock: Its stock price plunged by more than 23% after it delivered worse-than-expected data from a phase 3 clinical trial. The company's flagship renal cell carcinoma drug, Cabometyx, was being investigated as part of a combination therapy for advanced hepatocellular carcinoma. But the trial failed to conclusively prove that Cabometyx improved patients' overall survival prospects, per an interim analysis.
What's more, Exelixis doesn't expect that these results will change when it conducts a final analysis after the trial concludes next year.
As a result, it's unlikely that Cabometyx will get regulatory approval for the new indication, and the other ongoing trials involving the drug will have even higher stakes now that its efficacy has been called into question. After such a setback, investors are right to be skittish about Exelixis' revenue growth prospects -- but there's no reason for them to be running for the hills.
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After Plummeting More Than 23%, Is Exelixis a Buy?