Exelixis’ Strategic Reallocation Amid Zanzalintinib Setbacks and Cabozantinib Resilience

Exelixis Inc. (NASDAQ: EXEL) stands at a pivotal juncture as it navigates the dual challenges of clinical setbacks in its zanzalintinib pipeline and the looming patent expiry of its flagship drug, cabozantinib. The company’s ability to reallocate resources strategically while maintaining commercial resilience offers a compelling case study for investors evaluating long-term investment resilience in biotech.

Cabozantinib: A Pillar of Stability

Cabozantinib remains the backbone of Exelixis’ financial performance. In Q2 2025, the drug generated $520 million in U.S. net product revenues, a 19% year-over-year increase, driven by its dominance in renal cell carcinoma (RCC) and rapid adoption in neuroendocrine tumors (NET) [1]. Its recent European approval for NET has expanded its market reach, with the indication now accounting for 4% of cabozantinib sales [3]. Analysts project total 2025 revenues of $2.25–$2.35 billion, with cabozantinib contributing the lion’s share [4].

However, the drug’s patent protection is set to expire in 2026, creating a critical inflection point. While litigation settlements have extended exclusivity to 2031, the risk of generic competition post-2029 remains a significant overhang [2]. This underscores the urgency for Exelixis to transition to zanzalintinib as a revenue successor.

Zanzalintinib: Navigating Setbacks and Strategic Shifts

Zanzalintinib, a third-generation tyrosine kinase inhibitor (TKI), has faced mixed fortunes. The discontinuation of the STELLAR-305 trial in head and neck cancer—a decision driven by competitive pressures and a failed primary endpoint—highlighted the volatility of Exelixis’ pipeline [2]. Similarly, the STELLAR-304 trial in non-clear cell renal cancer was delayed, though the company remains optimistic about results in early 2026 [1].

Despite these hurdles, zanzalintinib has shown promise in colorectal cancer (CRC). The STELLAR-303 trial demonstrated a statistically significant improvement in overall survival when combined with atezolizumab, prompting regulatory discussions for approval in this indication [5]. The drug’s safety profile, consistent with prior trials, adds to its appeal [5]. Exelixis has also initiated the STELLAR-311 trial in advanced NET, aiming to position zanzalintinib as a first-line oral therapy [1].

The company’s strategic reallocation of resources—from halting underperforming trials to prioritizing high-potential indications—reflects a pragmatic approach to pipeline volatility. R&D spending in Q2 2025 totaled $200.4 million, with a focus on advancing STELLAR-303 and STELLAR-311 [4]. This shift has allowed Exelixis to maintain a leaner, more focused development strategy.

Financial Resilience and Long-Term Prospects

Exelixis’ balance sheet provides a buffer against near-term risks. The company ended Q2 2025 with $1.4 billion in cash and marketable securities, enabling continued R&D investment and strategic share repurchases [4]. Its operating margins remain robust, with a 22% compound annual growth rate in revenue over the past five years [2].

The path to long-term resilience, however, hinges on zanzalintinib’s success. Analysts estimate the drug could generate $518 million in global risk-adjusted sales by 2035 if approved across key indications [1]. Morgan Stanley’s recent “Buy” rating underscores confidence in Exelixis’ ability to navigate these challenges, citing positive revenue guidance and upcoming trial data [3].

Risks and Considerations

While Exelixis’ strategy is commendable, several risks persist. The oncology market is highly competitive, with rivals like Roche and Bristol-Myers Squibb offering alternative therapies [2]. Additionally, delays in zanzalintinib trials or regulatory pushback could disrupt the transition from cabozantinib. Investors must also monitor the STELLAR-304 and STELLAR-311 trials for signs of efficacy and safety.

Conclusion

Exelixis’ ability to balance short-term commercial strength with long-term pipeline innovation positions it as a resilient player in the oncology sector. By strategically reallocating resources and leveraging cabozantinib’s current dominance, the company is laying the groundwork for a sustainable transition to zanzalintinib. For investors, the key will be tracking the drug’s regulatory progress and market adoption, alongside cabozantinib’s ability to maintain its revenue trajectory until the next phase of growth emerges.

Source:
[1] Exelixis Announces Second Quarter 2025 Financial Results [https://ir.exelixis.com/news-releases/news-release-details/exelixis-announces-second-quarter-2025-financial-results-and]
[2] Exelixis leans on zanzalintinib as cabozantinib nears patent expiry [https://www.spglobal.com/market-intelligence/en/news-insights/research/exelixis-leans-on-zanzalintinib-as-cabozantinib-nears-patent-exp]
[3] Exelixis Receives Buy Rating Amid Optimistic Guidance [https://www.ainvest.com/news/exelixis-receives-buy-rating-optimistic-guidance-upcoming-trial-data-2507/]
[4] Exelixis Announces Second Quarter 2025 Financial Results [https://ir.exelixis.com/news-releases/news-release-details/exelixis-announces-second-quarter-2025-financial-results-and]
[5] Exelixis’ Resilience Amid Clinical Trial Setbacks [https://www.ainvest.com/news/exelixis-resilience-clinical-trial-setbacks-cabozantinib-strength-2508/]