Exelixis' Zanzalintinib: A Breakthrough in Colorectal Cancer and a Catalyst for Growth

The biopharma sector is rarely short on hype, but Exelixis' (NASDAQ: EXEL) recent announcement on its experimental drug zanzalintinib has generated genuine excitement. The Phase 3 STELLAR-303 trial results, released in June 2025, demonstrated a statistically significant overall survival (OS) benefit in metastatic colorectal cancer (CRC) patients treated with zanzalintinib combined with Roche's atezolizumab (Tecentriq), compared to the current standard of care, regorafenib. This milestone positions zanzalintinib as a potential game-changer in CRC treatment—a disease with dire survival rates and limited options—while unlocking significant value for Exelixis.

A Transformative Moment in Colorectal Cancer

Colorectal cancer is the third most common cancer globally and the second leading cause of cancer-related deaths in the U.S., with a five-year survival rate of just 16% for metastatic cases. For patients with non-microsatellite instability (MSI)-high CRC, treatment options are especially grim, as existing therapies like regorafenib and Tepotinib offer marginal benefits. The STELLAR-303 trial addressed this gap:

• Primary Endpoints Met: The combination therapy demonstrated a statistically significant OS improvement in both the intent-to-treat (ITT) population (all randomized patients) and the non-liver metastases (NLM) subgroup.
• Safety Profile: Adverse events were consistent with prior data, with no new safety signals. Grade 3/4 treatment-related adverse events occurred in 48% of the combination arm versus 40% for regorafenib.

The results are particularly compelling for the NLM subgroup, which excludes patients with liver metastases—a subset with a median survival of less than 14% with current therapies. Zanzalintinib's ability to improve outcomes here suggests it could redefine treatment paradigms for CRC patients, especially those lacking liver involvement.

Catalyst-Driven Valuation Upside

The trial's success sets Exelixis up for a series of near-term catalysts, all critical to unlocking shareholder value:

1. Regulatory Discussions: Exelixis will engage with global regulators, including the FDA, to seek accelerated approval. If the agency follows its precedent for breakthrough oncology drugs, a decision could come within 12–18 months.
2. Data Presentations: Detailed results from STELLAR-303 will likely be showcased at major oncology conferences in late 2025 or early 2026, reinforcing the drug's profile to investors and clinicians.
3. Market Expansion: Zanzalintinib's development pipeline includes trials in non-clear cell renal cell carcinoma (STELLAR-304) and neuroendocrine tumors (NET, via STELLAR-311), creating a multi-indication growth engine.

Synergy with Cabometyx: A Dual Oncology Powerhouse

Exelixis' current crown jewel, Cabometyx (cabozantinib), is already a blockbuster in renal cell carcinoma and thyroid cancer. Zanzalintinib's emergence creates a dual-therapy platform with synergistic potential:

• Mechanistic Complementarity: Cabometyx targets VEGFR and MET, while zanzalintinib's broader kinase inhibition (VEGFR, MET, AXL, MER) and combination with atezolizumab (an immune checkpoint inhibitor) enhances anti-tumor activity. This duality could fuel combination studies in CRC and other solid tumors.
• Pipeline Depth: The company's focus on kinase inhibitors and immuno-oncology aligns with trends in precision medicine, reducing reliance on any single drug.

Market Opportunity and Competitive Landscape

The global CRC market is projected to exceed $8 billion by 2030, with unmet needs in both first- and later-line treatments. Zanzalintinib's late-stage positioning in pretreated patients creates a clear path to market share:

• Competitors: Regorafenib (Stivarga, Bayer), Tepotinib (Tepmetko, Astellas), and immunotherapies like pembrolizumab (Keytruda, Merck) are direct rivals. However, zanzalintinib's OS advantage in the NLM subgroup and its combination with atezolizumab—a PD-L1 inhibitor—could carve out a unique niche.
• Pricing Power: As a third-generation tyrosine kinase inhibitor (TKI), zanzalintinib may command premium pricing, especially given its survival benefits.

Valuation: A Stock Poised for Lift-Off

Exelixis' market cap of ~$12 billion as of June 2025 appears undervalued relative to zanzalintinib's potential:

• Peak Sales Estimate: Analysts project peak sales of $1.5–2 billion annually for zanzalintinib in CRC alone, with upside from other indications.
• Cabometyx Momentum: Strong sales (~$2.5B in 2024) and new label expansions (e.g., hepatocellular carcinoma) provide a stable base.

The stock's price-to-sales multiple of ~5x is below peers like Array BioPharma (ARRY) or Mirati Therapeutics (MRTX), suggesting upside potential of 30–50% if the FDA approves zanzalintinib by late 2026.

Risks to Consider

• Regulatory Delays: While the data are robust, the FDA could require additional analyses or post-marketing studies.
• Commercial Competition: Rival therapies or pricing pressures in managed care could limit uptake.

Investment Thesis: Buy Ahead of the Catalysts

Exelixis is at an inflection point. The STELLAR-303 results validate zanzalintinib's potential, and the company's dual-therapy platform (Cabometyx + zanzalintinib) offers a sustainable growth path. With near-term catalysts (regulatory discussions, data presentations) and a compelling valuation, the stock is a strategic buy for investors seeking exposure to transformative oncology assets.

Recommendation: Accumulate EXEL ahead of FDA meetings and conference presentations. Set a 12-month price target of $120–$140 (vs. $95 as of June 2025), reflecting zanzalintinib's commercial potential and Cabometyx's resilience.

This analysis is for informational purposes only. Consult a financial advisor before making investment decisions.