Who Will Win the Kidney Cancer Battle Between Bristol-Myers Squibb and Exelixis?

A head-to-head competition for market share in the renal cell carcinoma (RCC) market appears to be about to intensify. In one corner is Bristol-Myers Squibb (NYSE: BMY). With a market cap of over $100 billion and a history dating back to 1887, the big pharma has a lot of muscle to put behind its enormously successful cancer drug Opdivo.

In the other corner stands Exelixis (NASDAQ: EXEL). The biotech's market cap of roughly $8 billion and 23 years of operations make the company seem like an underdog in some ways. But Exelixis' Cabometyx is already making big waves as a second-line treatment for RCC, the most common form of kidney cancer. And Cabometyx could be headed toward approval in the first-line setting.

Which of these two companies is most likely to emerge as the champion in the battle for market share in RCC? Exelixis CEO Michael Morrissey's answer might surprise you.

Where things stand now

Morrissey fielded questions on Wednesday at the Morgan Stanley healthcare conference. When asked how his team positions Cabometyx against Opdivo as a second-line treatment for RCC, he responded, "We don't do that." Was Morrissey saying that Exelixis doesn't compete against BMS for patients? Not at all. However, he took pains to point out that his sales team doesn't market against Opdivo but instead tries to lay out the positive case for Cabometyx.

That positive case for Cabometyx in the second-line RCC indication is pretty compelling. Exelixis' drug achieved progression-free survival more than double that of Novartis' (NYSE: NVS) Afinitor. Overall survival was also significantly better than the current standard of care.

But Morrissey noted that "good drugs don't sell themselves." Exelixis had to quickly ramp up its sales and marketing capability after winning Food and Drug Administration approval last year for Cabometyx as a second-line treatment for RCC. Those efforts paid off: In less than a year, Cabometyx had captured roughly 35% of the market.

While Exelixis and BMS promote their products in the second-line RCC indication, Morrissey said that "for me it's less about competition and more about collaboration." He said some patients try Opdivo then move to Cabometyx and others have a reverse sequence. Both scenarios are fine from Exelixis' point of view.

About to heat up

Morrissey didn't hesitate to admit, however, that it could be a different picture in the first-line RCC indication. He said that Bristol-Myers Squibb's recently announced data from its CheckMate-214 study will make the first-line setting "more complicated."

Those CheckMate-214 results showed that a combination of Opdivo and Yervoy reduced the risk of death for intermediate- and poor-risk RCC patients by 37% compared to Pfizer's (NYSE: PFE) Sutent, the current standard of care in the first-line RCC indication. There was also a significant improvement in overall survival rate.

"A clear win" was how Morrissey described BMS' results. So does that mean Exelixis could be in trouble in achieving the anticipated market share in the first-line setting? That's going too far. Morrissey noted that his company also had "big news" over the last weekend.

Exelixis and its partner, French drugmaker Ipsen (NASDAQOTH: IPSEY), presented new data at the European Society for Medical Oncology (ESMO) conference in Spain. This updated data from the Cabosun phase 2 study of Cabometyx as a first-line treatment for RCC showed even better improvement than announced in the past. Cabometyx achieved a 52% reduction in the rate of progression or death compared to Sutent.

Who will win?

Even though there are significant pitfalls in comparing two different clinical studies, that's exactly what many will do. Cabometyx fared better against Sutent in the Cabosun study than the Opdivo/Yervoy combo did in the CheckMate-214 study. Some will particularly highlight the fact that Cabometyx achieved statistically significant improvement in progression-free survival over Sutent, while the Opdivo/Yervoy combo didn't.

So which company will win in the first-line RCC setting? Morrissey probably hit on the right answer with his statement that "there is ample room and ample need for as many good therapies as possible." In other words, both BMS and Exelixis are likely to emerge as winners. I have maintained that Exelixis could be a gold mine for growth investors and that Bristol-Myers Squibb is a better investing pick than many think. That's still my view.

This idea of multiple winners will especially be applicable if the late-stage study underway evaluating combinations of Cabometyx with Opdivo and Cabometyx with Yervoy prove to be successful. Bristol-Myers Squibb and Exelixis are competitors, but they're also partners. This model of "coopetition" in the world of oncology means that ultimately the biggest winners of all could be cancer patients.

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Keith Speights owns shares of Pfizer. The Motley Fool owns shares of and recommends Exelixis. The Motley Fool has a disclosure policy.