July 22, 2008

Exelixis: Pivotal Study Raises Hopes for Potential Thyroid Cancer Drug

San Francisco-based biotech Exelixis has seen its shares rise after taking an investigational thyroid cancer drug into a Phase III trial. While the relatively low incidence of medullary thyroid cancer will limit the drug's commercial potential, the low barriers to market entry and high unmet need should help its chances of success, ultimately leading to a satisfactory return on development costs.

The Phase III registrational trial is a randomized double-blind study evaluating XL184 monotherapy versus placebo in 315 patients with unresectable, locally advanced or metastatic medullary thyroid cancer (MTC). The study's primary endpoint is duration of progression-free survival.

XL184 has already demonstrated preliminary evidence of clinical activity in an ongoing Phase I trial in patients with solid malignancies, including MTC. In all evaluable MTC patients, XL184 resulted in a disease control rate (partial response or prolonged stable disease greater than three months) of 100%. Nine out of the 17 patients, the majority of which had failed previous treatment, experienced a partial response. However, with the lack of Phase II data, the clinical potential of XL184 cannot be fully evaluated. Proceeding to Phase III development without extensive data to support clinical activity and safety has often proven to be a detrimental strategy for other molecular targeted therapies developers. Whether this will be the case for Exelixis remains to be seen.

While thyroid cancer in general is one of the least deadly tumor types, medullary subtypes are particularly difficult to treat, given their aggressive nature, tendency to metastasize early and association with a poor prognosis. Although radioiodine therapy is typically used to treat thyroid cancer, medullary tumors do not respond to this type of treatment. In fact, there are no FDA-approved agents specifically for medullary thyroid cancer. As a result, unmet needs are high, particularly for refractory or recurrent patients, where a complete lack of treatment options exists.

Given positive results from the Phase III trial, this unmet need, coupled with the low barriers to market entry, may increase XL184's chances of regulatory approval and commercial success. Moreover, Exelixis recently increased its financial strength and fluidity through a financial agreement with Deerfield Management, a healthcare investment organization. This agreement should help further support XL184's development, potentially increasing speed to market and return on development costs.