It's been a really good year for Exelixis (NASDAQ: EXEL). The biotech's share price has jumped more than 60% so far in 2017, thanks to continued momentum for its kidney cancer drug Cabometyx. But it's been a really great year for Immunogen (NASDAQ: IMGN): The stock has soared nearly 270%.
The past is the past, though. Which of these cancer-focused biotech stocks is the better choice for investors now? Here's how Exelixis and Immunogen compare.
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The case for Exelixis
Enormous potential for Cabometyx (cabozantinib) stands out as the strongest reason to buy Exelixis stock. The drug won Food and Drug Administration (FDA) approval last year as treatment for renal cell carcinoma (RCC) in patients who had received prior therapy. Since then, Cabometyx has gone on to capture a significant market share in its approved indication.
Exelixis filed for regulatory approval for the drug as a first-line treatment for RCC in August. This submission was based on great results from the phase 2 Cabosun clinical study conducted by The Alliance for Clinical Trials in Oncology. The drug is also being evaluated in a late-stage study for treating liver cancer. Exelixis expects to complete its second interim analysis by the end of 2017.
Perhaps the greatest potential for Cabometyx, though, lies in combination therapies. A late-stage study is underway testing combinations of Cabometyx and two of Bristol-Myers Squibb's immunotherapies, Opdivo and Yervoy, in treating first-line RCC. Exelixis is also evaluating its drug in combination with Roche's (NASDAQOTH: RHHBY) Tecentriq in treating several solid tumors.
Cabometyx isn't Exelixis' only approved product. The biotech also markets Cometriq -- which is a capsule form of cabozantini -- and co-markets Cotellic with its partner, Roche.
As a result of growing sales for Cabometyx, Exelixis reached profitability earlier this year. The company also paid off all of its debt. Exelixis is now looking to beef up its internal research and development, plus potentially license candidates from other biotechs.
The case for Immunogen
Immunogen doesn't have an approved product yet. However, its anti-drug conjugate (ADC) technology is used in one approved cancer drug -- Roche's Kadcyla. And Immunogen could be getting pretty close to having a product on the market of its own.
The company's experimental ADC mirvetuximab soravtansine is currently in a pivotal late-stage study for treating ovarian cancer. Immunogen is enrolling patients in the study now. A futility analysis is expected in the first half of 2018.
In addition, Immunogen has multiple partnerships with larger companies interested in the small biotech's ADC technology. Sanofi is the most active partner, with four pipeline candidates using Immunogen's ADCs, including late-stage drug isatuximab. Immunogen's most recent collaboration is with Jazz Pharmaceuticals, with the two companies announcing a deal in August involving options for three ADC drugs targeting blood cancers.
Although Immunogen remains unprofitable for now, there should be room for the stock to go even higher after its huge gains this year. The company's management thinks mirvetuximab soravtansine could hit peak annual sales topping $1 billion if approved. That seems attainable.
Both of these stocks have pulled back from their highs. Between the two, I think Exelixis is the better one to buy on the dip.
There's an old saying that seems relevant in the comparison of these biotechs: A bird in the hand is worth two in the bush. Exelixis has a "bird in the hand" with Cabometyx. The company also has a couple of other "birds," with Cometriq and Cotellic.
For Immunogen, though, the bird is still in the bush. Mirvetuximab soravtansine has a lot of promise, but the late-stage study hasn't wrapped up yet. I've seen too many cases where drugs perform well in phase 2 but flop in phase 3. I don't think that will happen for Immunogen, but the possibility can't be dismissed.
The one caveat I'll toss out is that the tables could be turned if Immunogen becomes an acquisition target, but Exelixis doesn't. I think that both of these biotechs are excellent candidates for larger companies to buy. However, Immunogen could be on more radar screens, simply because it has a much lower market cap than Exelixis does.
Investors shouldn't make their decisions on "what if" scenarios, though. Exelixis has established products with growing sales and less risk. In my view, it's the better pick right now.
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