Exelixis Surges 35.2% in Three Months: Is it a Buy or Sell?

Exelixis (EXEL) has surged 35.2% in the past three months, outperforming the industry and the S&P 500 Index. The company announced positive top-line results from the late-stage STELLAR-303 study, boosting its stock. The study met one of its dual primary endpoints, demonstrating a statistically significant improvement in overall survival for zanzalintinib in combination with Tecentriq compared with the current standard-of-care drug, regorafenib. EXEL's lead drug, Cabometyx, maintains its status as the leading TKI for RCC treatment, with strong demand for the combination with Opdivo.

Exelixis (EXEL) has demonstrated robust performance over the past three months, surging 35.2% and outperforming the broader biotech industry and the S&P 500 Index. The company's stock received a significant boost following the announcement of positive top-line results from the late-stage STELLAR-303 study. This study, which evaluated zanzalintinib in combination with Tecentriq, met one of its dual primary endpoints, showing a statistically significant improvement in overall survival (OS) compared to the current standard-of-care drug, regorafenib [2].

The positive results from STELLAR-303 are a pivotal achievement for Exelixis, increasing the likelihood of regulatory success for zanzalintinib. This drug is currently being developed for the treatment of advanced solid tumors, including colorectal cancer, kidney cancer, head and neck cancer, and neuroendocrine tumors. Additionally, Exelixis has collaborated with Merck (MRK) to evaluate zanzalintinib in combination with Merck's blockbuster anti-PD-1 therapy, Keytruda (pembrolizumab), in a late-stage study for treating patients with head and neck squamous cell carcinoma (HNSCC) [2].

Exelixis' lead drug, Cabometyx, continues to maintain its status as the leading TKI for the treatment of renal cell carcinoma (RCC). Strong demand for Cabometyx in combination with Bristol Myers' Opdivo has driven significant sales growth. The recent label expansion of Cabometyx for adult and pediatric patients with previously treated, unresectable, locally advanced or metastatic, well-differentiated pancreatic NET (pNET) and those with previously treated advanced extra-pancreatic NET should further fuel sales. Exelixis' partner, Ipsen, received a positive opinion from the European Medicine Agency for Cabometyx in adult patients with unresectable or metastatic, well-differentiated extra-pancreatic and pNET neuroendocrine tumors who have progressed following at least one prior systemic therapy other than somatostatin analogues [2].

The company's efforts to expand its oncology portfolio are encouraging. In April, Exelixis presented preclinical data from four pipeline candidates, including XL309, XB628, and XB371. Exelixis is on track to submit an investigational new drug application for XB371 to the FDA in 2025. The successful development of additional drugs should broaden Exelixis' portfolio and reduce its dependence on its lead drug, Cabometyx [2].

From a valuation standpoint, EXEL is expensive, trading at a price/sales ratio of 5.03x forward sales, higher than its mean of 3.64x and the biotech industry's 1.57x. The bottom-line estimate for 2025 has risen from $2.61 per share to $2.64, while that for 2026 has increased to $3.13 from $3.03 over the past 30 days [2].

References:
[1] https://www.benzinga.com/insights/short-sellers/25/07/46262000/peering-into-exelixiss-recent-short-interest
[2] https://finviz.com/news/96960/exelixis-surges-352-in-three-months-buy-or-sell-the-stock