Exelixis Falls on FDA Prostate Cancer Trial Design Setback

Updated with new information, stock price.

SOUTH SAN FRANCISCO, Calif. ( TheStreet) -- Exelixis ( EXEL) faces the possibility of a lengthy delay in the approval process for its experimental prostate cancer drug cabozantinib because U.S. regulators are refusing to sign off on the design of a pivotal clinical trial.

The setback introduces new risk into the development of the promising prostate cancer drug, which caused investors to flee Exelixis. Shares are down $2.97, or 38%, to $4.75 in Tuesday trading following Monday night's announcement.

Exelixis had been hoping to reach agreement with the U.S. Food and Drug Administration that a relatively small and quick phase III study of cabozantinib demonstrating pain reduction in very late-stage prostate cancer patients would be sufficient to get the drug approved.

But FDA balked at endorsing this strategy and refused to grant Exelixis a so-called Special Protocol Assessment for the cabozantinib pain study, Exelixis disclosed Monday night.

"This was surprising and unexpected," said Exelixis CEO Michael Morrissey, referring to the FDA's decision, on a conference call.

Exelixis has decided to push ahead and conduct the cabozantinib study with a pain reduction endpoint without an FDA endorsement. The company will hope that overwhelmingly positive data will convince FDA to approve cabozantinib early.

If FDA balks at this "go fast" approach to cabozantinib approval -- and Monday's announcement certainly suggests FDA opposition to this plan -- Exelixis will have to wait for results from a larger, follow-on phase III study in prostate cancer that will seek to prove cabozantinib can prolong survival.

Exelixis suggested Monday night that cabozantinib could still be approved in 2014 even if two studies are required. Analysts like Canaccord Genuity's George Farmer are skeptical about that timeline, predicting cabozantinib's approval could be pushed back to 2015 or 2016.

Exelixis decision to rely on pain relief as a primary endpoint for a pivotal study of cabozantinib has been controversial. All recently approved prostate cancer drugs -- Johnson & Johnson's ( JNJ) Zytiga, Sanofi's ( SNY) Jevtana and Dendreon's ( DNDN) Provenge -- used a survival benefit as the basis for approval. Still experimental prostate cancer drugs from Medivation ( MDVN) and Algeta both employed overall survival in their respective phase III studies.

Exelixis believes demonstrating cabozantinib's ability to shrink or eliminate the spread of prostate cancer to bone, which causes patients a lot of pain, is a clinically significant benefit and enough to convince FDA to approve the drug. To support their position, Exelixis points to the FDA's own guidance stating prostate cancer drugs can be approved on the basis of pain resolution. Mitoxantrone was approved for prostate cancer using a pain reduction endpoint in 1996.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

On Monday's conference call, Exelixis CEO Morrissey said initial feedback received from FDA in August suggested the agency was willing to grant an SPA for the pain relief trial. However, the FDA changed its tune in follow-up comments sent to the company in October.

Patients enrolled in the cabozantinib studies will have advanced, metastatic prostate cancer that no longer responds to the standard chemo regimen of Taxotere and J&J's Zytiga. These are very sick prostate cancer patients with significant prostate cancer-related pain who have few or no treatment options left.

The first study with a pain relief endpoint will begin before the end of the year. The second study, with an overall survival endpoint, will begin in the first half of next year.

--Written by Adam Feuerstein in Boston.

>To contact the writer of this article, click here: Adam Feuerstein.

>To follow the writer on Twitter, go to http://twitter.com/adamfeuerstein.

>To submit a news tip, send an email to: tips@thestreet.com.

Follow TheStreet on Twitter and become a fan on Facebook.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

More from Stocks

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Tesla's Supercharger Network Is Booming -- Here's Why That's a Concern

Tesla's Supercharger Network Is Booming -- Here's Why That's a Concern

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Tesla CEO Elon Musk Is a Rock Star: Kiss Icon Gene Simmons

Tesla CEO Elon Musk Is a Rock Star: Kiss Icon Gene Simmons

The Best Investment Advice? Stay Diversified

The Best Investment Advice? Stay Diversified