Exelixis’ Cabozantinib Margins Dip, But Zanza NDA Acceptance Fuels Optimism

Date of Call: Feb 10, 2026

Financials Results

• Revenue: $599 million for Q4 2025, with $546.6 million from cabozantinib franchise net product revenues
• EPS: $0.92 per share basic and $0.88 per share diluted for Q4 2025
• Gross Margin: Gross to net for cabozantinib franchise was 28.5% in Q4 2025, lower than 340B volume in Q3 2025; estimated full year 2026 gross to net between 31% and 32%

Guidance:

• Full year 2026 financial guidance announced during JPMorgan conference in January (details on Slide 19 of earnings presentation).
• Expect continued strong growth in 2026, building on 2025 momentum.
• Focus on expanding GI franchise with zanzalintinib, pending regulatory approval.

Business Commentary:

Revenue Growth and Product Performance:

• Exelixis reported total revenues of approximately $599 million for Q4 2025, with cabozantinib franchise net product revenues amounting to $546.6 million.
• The growth was primarily driven by the strong performance of the cabozantinib business, with CABOMETYX maintaining its position as a leading TKI in RCC and NET indications.

Zanzalintinib Development and Potential:

• The FDA accepted the NDA for zanzalintinib in combination with atezolizumab for third-line plus colorectal cancer, with a PDUFA target action date of December 3, 2026.
• This acceptance is based on the STELLAR-303 trial data, which demonstrated a 20% reduction in the risk of death in the ITT population, indicating a promising new standard of care for CRC patients.

Gross to Net and Financial Guidance:

• The gross to net for the cabozantinib franchise in Q4 2025 was 28.5%, a decrease from Q3 2025, primarily due to lower PHS and 340B volume.
• Exelixis provided financial guidance for 2026, with an estimated gross to net between 31% and 32%, reflecting the impact of the small manufacturer discount on Medicare Part D sales.

Early-Stage Pipeline and R&D Strategy:

• Exelixis has a robust early-stage pipeline with four molecules in clinical development: XL309, XB010, XB628, and XB371.
• The company's R&D strategy focuses on building franchises in key solid tumor indications, with zanzalintinib being a major opportunity due to its potential in multiple tumor types and settings.

Commercial Strategy and Market Position:

• CABOMETYX remained the #1 prescribed TKI in RCC and the #1 oral agent in second-line plus NET, with a 15% increase in TRx volume in Q4 2025.
• The company's strategy includes expanding its GI sales team to maximize the impact of potential new drug launches and to drive growth in the community setting.

Sentiment Analysis:

Overall Tone: Positive

• CEO states '2025 was a transformational year for Exelixis with strong growth across all components of our business' and 'we expect to build on this momentum in 2026.' Management highlights strong cabozantinib performance, accelerated zanza development, and a full early-stage pipeline, expressing confidence in growth and franchise potential.

Q&A:

• Question from Asthika Goonewardene (Truist Securities, Inc.): As you launch zanza, how long will you be able to benefit from the small manufacturer discount? Also, can you comment on the cadence of share repurchases so far for the 6 weeks of the new year?
  Response: Small manufacturer exemption tied to cabozantinib as primary revenue; second product would need ~20% revenue to impact. Share repurchases will continue as long as shares are undervalued, with $590 million remaining under recent authorization to be completed in 2026.

• Question from Kyuwon Choi (Goldman Sachs Group, Inc.): Can you comment on recent 340B purchasing behavior and whether you expect that channel to increase? Also, your views on how the Part D redesign could impact zanza commercialization in '27.
  Response: 340B seen as variable; expects variability in 2026 impacting gross to net. Part D redesign: channel strategy for zanza will be customized based on current market state and experience from cabo.

• Question from Silvan Tuerkcan (Citizens JMP Securities, LLC): How big is the population for STELLAR-316 in early colorectal cancer? What's the timeline for readout and are there any reference trials?
  Response: Population estimated at 20,000-25,000 patients (approx. 20% of those with MRD after definitive therapy). Trial initiation planned mid-2026, no specific readout timeline given.

• Question from Akash Tewari (Jefferies LLC): Can you help frame what it will take to grow NET revenues beyond $100M? Also, any update on when Merck will start the next study in combination with zanza?
  Response: Growth in NET expected primarily in community setting; sales team expansion completed to increase reach. Merck studies are ongoing; specific update on next study not provided.

• Question from Akash Tewari (Jefferies LLC): Why did you and Merck choose to run LITESPARK-033 in the post-adjuvant first-line RCC setting? What percent of first-line RCC patients are getting PD-1 in adjuvant setting, and what profile is needed for zanza plus belzutifan to support a trial?
  Response: Focus is on future standard of care in RCC; trials are beginning to build a franchise for zanza in the 2030s. Specific patient percentages not provided; strategy involves multiple combination partners.

• Question from Unknown Analyst (William Blair): Do you see increased utility of cabo monotherapy in first-line setting driven by evolving IO usage in adjuvant setting?
  Response: Cabo monotherapy in first-line has reasonable utilization and continues to be a valid option, especially in the monotherapy segment.

• Question from Sean Laaman (Morgan Stanley): How do you anticipate positive non-liver met OS data impacting commercial strategy or communication with physicians?
  Response: Positive data in non-liver mets (subset of ITT population) would help move the needle for third-line plus CRC, addressing significant unmet need and physician demand for immunotherapy.

• Question from Ruoxi Liao (Guggenheim Securities, LLC): Can you comment on nature of FDA interactions for STELLAR-303 NDA and anticipation of advisory committee? Also, cadence of initial data disclosures for early-stage pipeline?
  Response: Actively engaged with FDA; non-liver mets data due mid-2026 will be shared as part of review. Early-stage pipeline data disclosure cadence not specified; focus is on go/no-go decisions.

• Question from Sudan Loganathan (Stephens Inc.): Any trials ongoing that could challenge cabo in second-line plus RCC? How do trials suggest LITESPARK-033 and combo trials could help retain share in RCC?
  Response: Aware of data at GU ASCO meeting; overall survival critical to raising standard of care. Confident in cabo position based on mature data like CONTACT-3.

• Question from Leonid Timashev (RBC Capital Markets): How much growth is expected from RCC in 2026? Is it from new patient starts or maintaining share?
  Response: Significant growth expected in 2026 from both RCC and NET franchises, driven by first-line market focus and continued competition.

• Question from Jason Gerberry (BofA Securities): Can you comment on trend of higher launch pricing in cancer therapies and if sponsors are factoring in IRA?
  Response: Acknowledged trend of higher launch pricing, possibly factoring in IRA, but will not speculate on pricing for zanzalintinib.

• Question from Unknown Analyst (Barclays): For non-clear cell RCC, what is market size expectation and outcomes relative to standard of care? What proportion of patients get different regimens, and what cabo revenue is attributable to non-clear cell?
  Response: Non-clear cell RCC is ~20% of RCC; market is competitive. STELLAR-304 is first pivotal study in this underserved population; specific cabo revenue not disclosed.

• Question from Stephen Willey (Stifel, Nicolaus & Company): Is additional zanza dose optimization data being used for STELLAR-316, and will it be submitted with NDA?
  Response: Optimal dose used in pivotal studies based on setting; data from STELLAR-303 supporting dose will be shared with FDA as part of review.

• Question from Jay Olson (Oppenheimer & Co. Inc.): How should we think about zanza launch trajectory in CRC, and any Roche work to ensure rapid uptake?
  Response: Launch trajectory positive due to unmet need and fragmented market; market research shows excitement for OS benefit and immunotherapy option. Roche collaboration details not specified.

• Question from Eva Fortea-Verdejo (Wells Fargo Securities): Should we expect press release and meeting for STELLAR-304 readout similar to 303? Any significant zanza updates at ASCO GU?
  Response: Communication for 304 top line results to be determined later. ASCO GU titles available; no specific updates on zanza.

• Question from Ashwani Verma (UBS Investment Bank): Did RCC grow for cabo in Q4? What type of PFS delta from LITESPARK-011 could impact RCC sales?
  Response: Q4 growth driven by both RCC and NET; 15% TRx growth year-over-year. LITESPARK-011 PFS data not specified; focus remains on overall survival.

• Question from Kalpit Patel (Wolfe Research): For STELLAR-304, do you anticipate need to show OS benefit for full approval? Do you need to look better than cabo plus nivo historically in this setting?
  Response: Non-clear cell RCC is distinct population; positive results in STELLAR-304 would be impactful regardless of cross-trial comparisons.

Contradiction Point 1

STELLAR-303 NDA Submission Timeline and Basis

Contradiction on whether NDA submission is based on ITT data alone or requires subgroup data.

What is the nature of FDA interactions for the STELLAR-303 NDA and is an advisory committee anticipated? What is the cadence of initial data disclosures for the early-stage pipeline and how are go/no-go decisions determined? - Ruoxi Liao (Guggenheim Securities, LLC)

2025Q4: FDA interactions are active and positive. The NDA is being shared with the agency as normal; non-LM OS data (mid-2026) and other requested analyses will be provided. - Dana Aftab(EVP of R&D)

(1) Will the STELLAR-303 NDA submission by year-end 2025 include a broad label covering both ITT and NLM subgroups, or will it be a rolling submission? (2) Was the requirement for both ITT and NLM subgroups in the STELLAR-303 NDA submission due to regulatory guidance? - Sudan Loganathan (Stephens Inc.)

20251105-2025 Q3: The company can and will file based on the single positive hit in the ITT population (entire trial population, not a subgroup), which would provide the broadest label. The NLM is a subpopulation; the final analysis for it is expected mid-2026. - Dana Aftab(EVP of R&D)

Contradiction Point 2

2026 Revenue Growth Contribution from RCC vs. NET

Contradiction on the primary driver of expected 2026 revenue growth.

In 2026, how much of the growth is driven by RCC versus NET, and is it from new patient starts or defending share? Are there underutilized segments in RCC? - Leonid Timashev (RBC Capital Markets)

2025Q4: Growth in 2026 is expected from both RCC and NET franchises. The focus is on competing in RCC, with the first-line market being a key area for growth. - P. Haley(EVP of Commercial)

What strategy will address potential cannibalization from cabozantinib in earlier NET lines during zanzalintinib's Phase III trial? - Andy Hsieh (William Blair)

20251105-2025 Q3: The NET launch is in early innings with significant growth potential. The zanzalintinib trial in NET is designed with an active comparator to position it competitively upfront... - P. Haley(EVP of Commercial)

Contradiction Point 3

Merck Trial Timeline and Confidence

Contradictory statements on the certainty and timeline of Merck's pivotal trial initiation.

What drives growth in the NET market beyond $100M, and is advancing in the treatment algorithm essential? What is the current timeline for Merck's next zanza study? - Akash Tewari (Jefferies LLC)

2025Q4: The LITESPARK-003 study (zanza + belz vs. cabo in 1L RCC) initiated in December 2025. No specific update on the next study timeline was provided. - Dana Aftab(EVP of R&D)

Does the positive LITESPARK-011 data for belzutifan plus lenvatinib in 2L RCC reduce Merck's likelihood of pursuing a pivotal study with belzutifan plus zanza? - Asthika Goonewardene (Truist Securities)

2025Q3: Exelixis is confident that the Merck trials (including the belzutifan + zanza study) will continue and start later in 2025 as planned. - Michael Morrissey(CEO)

Contradiction Point 4

Zanza Colorectal Cancer (CRC) Launch Strategy and Market Focus

Contradiction on whether the focus is on the 3L+ or earlier lines of CRC.

What is the expected launch trajectory for Zanza in CRC, and what steps is Roche taking to ensure rapid adoption of the Zanza/Atezo combination? - Jay Olson (Oppenheimer & Co. Inc.)

2025Q4: The third-line plus CRC market is fragmented... presenting opportunity. - P. Haley(EVP of Commercial)

Could the Merck partnership expand beyond RCC and head & neck, and how does your head & neck data compare to Merck's in the PD-L1 refractory population? - Anna Stan (Jefferies)

2024Q3: The focus is on earlier lines (1L, 2L) for potential zanza expansion, where the unmet need is high. - Michael Morrissey(CEO)

Contradiction Point 5

Timeline for Zanza to Become a Dominant RCC Standard of Care

Contradiction on the near-term versus long-term focus for zanza in RCC.

What factors influenced the decision to conduct the LITESPARK-033 trial in the post-adjuvant 1L RCC setting versus a PD-1 naive population, what percentage of 1L RCC patients receive PD-1 in the adjuvant setting, and what zanza + belzutifan profile is needed in 2L+ to align with LITESPARK-001's population? - Akash Tewari (Jefferies LLC)

2025Q4: The strategy is future-focused (targeting the 2030s). The current trials... are the beginning of building a franchise for zanza to be a dominant RCC standard of care. - Michael Morrissey(CEO)

What are the assumptions behind Zanza's long-term revenue projections, and is it the right pipeline construct for a multi-franchise business? - Gregory Renza (RBC Capital Markets)

2024Q3: Partnering with Merck... is a major positive for advancing zanza. The goal is to build a multi-product, multi-franchise business. - Michael Morrissey(CEO)