Why Exelixis, Inc.'s Stock Briefly Spiked Today

What's Happening: Shares of the cancer drug specialist Exelixis briefly jumped by double-digits this morning after the company released a clinical update for its ongoing midstage trial forcabozantinib in patients with advanced RET-rearranged lung cancers. What peaked investors' interest was the fact that the drug has already met its primary endpoint, with an objective response rate of 38% (6/16) and a median response duration of 8 months, in just the first-stage of the study. The second leg of the trial is now under way, where another nine patients will be enrolled.

Why It's Happening: While this early result in RET-rearranged lung cancers is certainly encouraging, the bigger issue is that it shows that cabozantinib does have potent anti-tumor properties, at least in some cases, and may yet prove to be a broadly applicable cancer treatment.

Last year, the market seemed to lose faith in the drug after it failed to improve clinical outcomes in a large late-stage trial dubbed "COMET-1" for metastatic castration-resistant prostate cancer. As a result, investors haven't been particularly optimistic aboutcabozantinib's forthcoming late-stage data readout as a potential second-line treatment for kidney cancer. Following today's clinical update in another hard-to-treat cancer, however, we might be seeing the beginning of a shift in sentiment.

If cabozantinib can meet its primary endpoint in kidney cancer, it would be indicated for a market that's expected to reach$2.7 billion by 2019. Even a small chunk of this growing market would cause revenues to skyrocket from current levels, making this top-line data release a major catalyst to keep your eyes peeled for in the weeks ahead.

The article Why Exelixis, Inc.'s Stock Briefly Spiked Today originally appeared on Fool.com.

George Budwell has no position in any stocks mentioned. The Motley Fool recommends Exelixis. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.