Exelixis shares up on thyroid cancer deal with FDA

Such an agreement generally reduces the risks involved in developing a drug because the drug maker and the FDA agree ahead of time on how the trial will be conducted, and what will be considered proof that the drug works.

Shares rose 19 cents, or 3.4 percent, to $5.84 in afternoon trading.

Piper Jaffray analyst Edward A. Tenthoff said in a note to clients that based on the company's data so far, he thinks partner GlaxoSmithKline PLC will exercise its option on XL184 this fall, triggering a $55 million milestone that would offset Exelixis' debt.

He maintained a "Buy" rating and $12 price target on the stock.

Cowen and Co.'s Eric Schmidt said that although advanced/metastatic medullary thyroid cancer represents a modest commercial opportunity (roughly 5 percent to 10 percent of all thyroid cancer patients), XL184 is on a low risk development path and could become Exelixis' first marketed drug.

"We continue to be impressed by the breadth of EXEL's broad small molecule cancer pipeline, and expect shares to outperform as multiple clinical candidates progress through clinical testing," Schmidt said in a note to investors.