Why Exelixis, Inc. Reported Higher Today

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What happened

Exelixis (NASDAQ: EXEL) is up 13% at 1:27 p.m. EDT after announcing third-quarter earnings after the bell yesterday.

So what

During its first full quarter on the market, Exelixis' kidney cancer drug Cabometyx registered $31.2 million in sales. The biotech's older version of the drug, Cometriq, which treats thyroid cancer, added an additional $11.5 million.

The combined $42.7 million in product sales was 35% higher than the second quarter, which only included nine weeks of sales for Cabometyx after it was approved, but also included initial stocking of $6.5 million to $7 million.

The sales, combined with some other revenue, weren't enough to make Exelixis profitable, but it's headed in the right direction with a net loss of $11.3 million compared to $45.5 million in the year-ago quarter. The biotech has $380 million in the bank and expects at least $85 million in milestone payments from its partners in the fourth quarter, putting it in a healthy cash position where it can continue to develop Cabometyx for other types of cancer even if it causes the biotech to lose money for a while.

Now what

Part of today's jump probably comes from the fact that Exelixis had fallen about 35% from the 52-week high set between the second-quarter and third-quarter earnings releases as investors worried that Exelixis couldn't keep the sales growth going. With today's move, it's trading higher than it closed after its second-quarter earnings, which seems about right.

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Brian Orelli has no position in any stocks mentioned. The Motley Fool owns shares of and 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.