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EXEL STOCK WRITE UP


EXEL (EXELISIS INC)

  • P/E: 800
  • GAAP DILUTED YEAR-OVER-YEAR EPS GROWTH LAST QUARTER: $.31
  • SECTOR: HEALTH TECHNOLOGY
  • ASSETS-LIABILITIES: 1.24
  • DIVIDEND: none
Exilixis is a pharmaceutical company specializing in cancer drugs. The company is up already over 60% YTD. It is heavily owned by the major institutions.
In each of the last 4 quarters, EXEL has beat Wall Street expectations, according to Estimize. The last two quarters have been profitable, and the company has set its expectations for profitable quarters in the future. Previously, the company posted consistent losses. Revenue increased approximately 550% on a year-over-year basis, while collaborative revenue doubled. EXEL has partnerships with Roche and GlaxoSmithKline. Cabometyx, a rectal cancer drug, is its largest revenue source in the latest quarter and most recent drug launch for the company. Exelixis announced that their R&D budget decreased due to decreased costs in one of their drug studies, although the company does have several drugs in its pipeline. Administrative costs were also decreased marginally. Exelixis also has four times as much cash and cash equivalents as it does debt, despite posting losses consistently in the past.
The exorbitant P/E of 800 is calculated based on significant losses realized in FY 2016. Should EXEL hold true to its own estimates or exceed them, it would trade at 133 P/E at the current price. This is still a high P/E multiple comparable to the S&P average, but considering that many biotech companies are not profitable, it is a cheap stock in context.
Michael Morrissey, the CEO, has been in place since 7/2010. He has been with Exelixis since 2000 after working in pharmaceuticals since 1986. He is also an inventor on 68 US patents. Exelixis' largest competitors for cabometyx are produced by Pfizer and Novartis. While Pfizer's market share in the space dropped recently, Exilixis' market share rose. Exelixis is partnering with Pfizer and Novartis competitors Bristol Myers Squibb and Genentech to expand the utilization of cabometyx, thereby taking further market share for the drug.
Exelixis has a recently launched drug for which it is leveraging market competition to gain market share. The company has posted profitable quarters of late, has a clean balance sheet, and has more drugs in the pipeline. It has high institutional ownership, but only 6 analysts have submitted forecasts, according to CNN money. The company took a huge stride up in share price 6/21/17, along with the entire biotech space.





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