Exelixis' Q3 2025 Earnings Call: Contradictions Emerge on Zanzalintinib's CRC Positioning, Merck Collaboration, and Sales Force Strategy

Date of Call: November 4, 2025

Financials Results

• Revenue: $598M total revenue in Q3 2025; includes cabozantinib franchise net product revenues of ~$543M (U.S. cabo net product revenues up ~14% YOY vs $478M in Q3 2024)
• EPS: GAAP: $0.69 per diluted share ($193.6M net income); Non-GAAP: $0.78 per diluted share ($217.9M non-GAAP net income)
• Gross Margin: Cabozantinib gross-to-net ~30.4% in Q3 2025 (company projects ~30% gross-to-net for full year 2025); cost of goods guidance tightened to ~4% of net product revenues

Guidance:

• Total revenue guidance narrowed to $2.30B–$2.35B for full-year 2025
• Net product revenue guidance narrowed to $2.10B–$2.15B for full-year 2025
• Cost of goods guidance tightened to ~4% of net product revenues
• R&D expense guidance lowered and narrowed to $850M–$900M
• SG&A guidance tightened to $500M–$525M
• Full-year effective tax rate guidance lowered to 17%–18%

Business Commentary:

• Revenue Growth and Cabozantinib Performance:
• Exelixis reported total revenues of $598 million for the third quarter of 2025, including cabozantinib franchise net product revenues of $543 million.
• Cabozantinib maintained its leadership position as the top TKI for RCC, with a 14% year-over-year increase in U.S. franchise net product revenues to $543 million.

• The growth was driven by strong demand and contributions from the neuroendocrine tumor segment.

• Neuroendocrine Tumor Market Success:

• Cabozantinib demand in neuroendocrine tumors grew by approximately 50%, contributing 6% of the third quarter business, and is expected to exceed $100 million in revenue for the net indication in 2025.

• The success was attributed to the drug's broad adoption and favorable efficacy and tolerability data compared to other small molecule therapies in the space.

• STELLAR-303 and zanzalintinib's Potential:

• The STELLAR-303 trial results showed a notable overall survival benefit with zanza plus atezo in the ITT population, demonstrating a 20% reduction in the risk of death.
• The potential impact in non-MSI-high CRC patients is significant, as prior trials with other immuno-oncology combinations failed to achieve similar results.
• The findings support Exelixis' strategy to develop zanzalintinib as a potential second oncology franchise, leveraging its unique mechanism of action.

Sentiment Analysis:

Overall Tone: Positive

• Management described a "strong third quarter," highlighted U.S. cabo net product revenue growth ~14% YOY to $543M and global cabo revenue growth (from $653M to $739M). They announced tightened guidance to the upper ends of ranges, $750M additional buyback authorization, and imminent NDA plans for zanzalintinib after STELLAR-303 success (file planned December).

Q&A:

• Question from Silvan Tuerkcan (Citizens JMP Securities): Summarize the post-ESMO feedback on the zanzalintinib results and how they match your planned market positioning.
  Response: Market research is very positive: physicians value the OS benefit and chemo-free IO option; zanza is expected to take share across a fragmented third-line CRC market and the company is building GI commercial capability to support launch.

• Question from Catherine (Morgan Stanley): Why is sunitinib the chosen control for STELLAR-304 given the various histologic subtypes in nccRCC?
  Response: Sunitinib is a standard-of-care comparator with relevant overlapping target profile and widespread use (especially ex-U.S.), making it an appropriate Phase III control.

• Question from Karishma (Goldman Sachs): Level-set expectations for the NLM analysis and explain enrolling ~900 patients in STELLAR-303 versus smaller trials like SUNLIGHT.
  Response: Trial added an ITT dual primary to enable an earlier, broader readout; enrollment and caps on liver-met patients increased non-liver-met representation (~38%); the NLM final analysis is projected around mid-2026.

• Question from Asthika Goonewardene (Truist Securities): Does Merck's LITESPARK-011 affect Merck pursuing belzu+zanza pivotal studies? Also, what clinical-trial revenue contribution did cabo have in 3Q?
  Response: The company expects the Merck collaborations to continue; there were no clinical-trial sales contributing to cabo revenue in Q3.

• Question from Anastasia Parafestas (Jefferies): Do you see any risk to STELLAR-303 approval given public apprehension about CABINET?
  Response: Management declined to comment on Vinay's public remarks regarding CABINET.

• Question from Tsan-Yu Hsieh (William Blair): How do you view potential cannibalization of zanza by cabo as cabo penetrates earlier NET lines?
  Response: NET launch is early with strong momentum (Q3 demand +50% vs Q2); cabo and zanza address different settings—near term there's substantial room for cabo growth and limited concern about cannibalization now.

• Question from Sudan Loganathan (Stephens): Will the planned NDA filing include both ITT and NLM subgroups, or will a rolling/expanded submission be required?
  Response: They will file based on the ITT primary endpoint (broadest population) to seek a broad label; the NLM subgroup is a separate dual primary endpoint with its final analysis expected mid-2026.

• Question from Sarah (TD Cowen): Which early-stage programs are prioritized to transition next and how is XB371 differentiated?
  Response: XL309 and XB010 have accrued more patients and are furthest along; XB628 is actively enrolling in Phase I; XB371 is newly initiated and differentiated by a tissue-factor antibody that avoids coagulation issues plus a tandem glucuronidase/peptidase-cleavable linker for stabilized payload release.

• Question from Michael Schmidt (Guggenheim): What is the commercial opportunity in non-clear cell RCC and why was STELLAR-304 timing pushed to mid-2026?
  Response: Non-clear cell RCC represents ~20%–25% of RCC patients; a positive Phase III could materially expand options in that segment; management did not provide additional timing details beyond the mid-2026 expectation.

• Question from Jason Gerberry (BofA Securities): In NET second-line+, are orals gaining share vs Lutathéra and any update on the MSN patent appeal timeline?
  Response: Orals represent a larger portion of the second-line+ NET market; CABOMETYX is preferred post-Lutathéra due to inclusive trial data; no update was provided on the patent appeal timeline.

• Question from Leonid Timashev (RBC Capital Markets): How does investigator-sponsored cabo meningioma data inform zanza development and what is the opportunity size/timing?
  Response: Investigator data showed unexpectedly high response rates with cabo (reported 25%–75% depending on criteria); zanza has a similar target profile and a meningioma trial is planned to start in 2026.

• Question from Stephen Willey (Stifel): Will you do additional dose exploration for zanza in adjuvant/post-chemo settings given low dose intensity observed in STELLAR-303?
  Response: Yes—company intends to evaluate alternative zanza doses in earlier-line/adjuvant settings to balance tolerability and efficacy; specific dosing plans will be shared when the trial is launched.

• Question from Cheng Li (Oppenheimer): How might emerging bispecific first-line CRC programs affect later-line uptake of zanza+atezo, and why hasn't the company filed earlier after top-line results?
  Response: Bispecifics are early-stage with no pivotal data yet so market impact is unclear; filing timing is constrained by the U.S. government shutdown—company intends to submit the NDA as soon as filings resume.

• Question from Ashwani Verma (UBS): How do you view current SUNLIGHT share and physician feedback—will that segment grow by the time zanza launches, and has prior bev exposure slowed SUNLIGHT adoption?
  Response: SUNLIGHT share has been relatively stable; the third-line+ market remains fragmented (~1/3 SUNLIGHT, ~1/3 TKI, ~1/3 other); company expects uptake for zanza+atezo and is expanding its salesforce to reach community prescribers.

• Question from Christopher Liu (Lucid Capital Markets): How do you prioritize buybacks versus business development and R&D going forward?
  Response: Capital allocation priorities are R&D, business development and share repurchases; with revenue growth and disciplined expense management they expect to fund all three, targeting R&D around the $1B range.

Contradiction Point 1

Zanzalintinib's Positioning in Colorectal Cancer (CRC)

It involves differing perspectives on how zanzalintinib will be positioned in the CRC market, which has implications for marketing strategy and potential market share.

Will the initial zanza NDA submission include a broad label for CRC covering both subgroups? - Sudan Loganathan(Stephens Inc., Research Division)

2025Q3: The opportunity to get a readout from STELLAR-304 is exciting. Non-clear cell accounts for 20-25% of patients. Cabo has utilization in non-clear cell, and a positive study would enhance zanza's position. - P. Haley(Executive Vice President of Commercial)

How sustainable are RCC market share gains, and can you replicate RCC's market share in NET? - Sean M. Laaman(Morgan Stanley)

2025Q2: STELLAR-303 demonstrated an OS benefit in the ITT population, which is the gold standard in oncology. We will continue to follow NLM data, but the positive ITT result already indicates potential approval. - Amy C. Peterson(Chief Medical Officer)

Contradiction Point 2

Merck Collaboration and Clinical Trial Strategy

It involves the strategic alignment and timing of collaborative clinical trials with Merck, which could impact the timeline and market impact of key products.

Given the positive results of Merck's LITESPARK-011 trial, does this reduce the likelihood of Merck pursuing a pivotal second-line study with belzu and zanza? - Asthika Goonewardene (Truist Securities, Inc., Research Division)

2025Q3: Confident that Merck trials will continue and start later this year. Don't speculate on other people's data. Excited about the collaboration and will see that move forward. - Michael Morrissey(CEO)

Is a zanubrutinib-belzutifan triplet combination expected for first-line RCC with IO? What's the go/no-go decision for STELLAR-305 based on Phase II results? - Yaron Werber (TD Cowen)

2024Q4: Our focus is on improving standard of care with zanza. Merck will announce trial designs, and we'll follow as we've done before. We're confident in our strategy to improve patient outcomes. - Michael Morrissey(CEO)

Contradiction Point 3

Sales Force Expansion and Strategy for Zanzalintinib

It involves the strategy for expanding the sales force and the focus on the GI franchise, which could impact the commercial success of zanzalintinib.

How does the post-ESMO feedback on zanzalintinib align with your current market positioning strategy? - Silvan Tuerkcan (Citizens JMP Securities, LLC, Research Division)

2025Q3: Excited to build out GI franchise capabilities, which will optimize the opportunity for zanza. Market research indicates zanza will take share from all competitors. CRC is a very fragmented market, and market research indicates zanza will take share from all competitors. - P.J. Haley(EVP of Commercial)

What's driving Cabo's growth, and did the neuroendocrine tumor approval contribute prior to approval? What are expectations for the neuroendocrine tumor launch? - Michael Schmidt (Guggenheim)

2025Q1: Regarding our sales ranks, we're really pleased. We have a great team that's driving performance across all ranks, with growth in both existing ranks and new ranks. So we're -- we're really pleased with the performance there. - P.J. Haley(EVP of Commercial)