Ohad Hammer submits:
Exelixis (EXEL) came under a lot of pressure recently and the stock is now trading near its 52 week low following two unrelated events that took place last month. In late June, the company announced the resignation of its CEO, George Scangos, who was appointed as Biogen Idec’s (BIIB) CEO. Earlier that month, the company announced BMS (BMY) decided to give back rights for Exelixis’ flagship product, XL184. Adding to the pressure are interesting but not stellar clinical results for some of the company’s compounds at ASCO and potentially an additional partnership termination.
With respect to future development of XL184, Exelixis is in a delicate position. On the one hand, it would like the drug to have an aggressive development program, which requires a large partner. On the other, it might want to wait until it generates more data, due to the bad sentiment around a compound that has been abandoned twice by two large pharmas (BMS and GSK). XL184 faces some meaningful potential value creation events in the coming 12 months, including data that could support FDA approval in a niche indication. The company will therefore have to find the optimal point in time for a licensing deal that will not slow down the development process while enabling it to increase the value of the compound.
