Exelixis, Inc. (EXEL) Q1 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call presented strong financial performance with a significant increase in revenue and net product revenues, particularly in the cabozantinib franchise. The company also announced a substantial share repurchase program, which typically boosts investor sentiment. The Q&A session revealed management's confidence in growth drivers and business development activities, although some responses were unclear. Overall, the financial strength and strategic initiatives suggest a positive outlook for the stock.

Key Financial Performance

Total Revenues $555 million, an increase from $404 million in Q1 2024, driven by strong performance in the cabozantinib franchise.

Cabozantinib Franchise Net Product Revenues $513.3 million, up 36% year-over-year from $378 million in Q1 2024, reflecting increased demand and new patient starts.

Global Cabozantinib Franchise Net Product Revenues Approximately $680 million, compared to $559 million in Q1 2024, indicating strong growth momentum.

Gross to Net for Cabozantinib Franchise 28.9%, higher than the previous quarter, due to increased PHS and 340B volumes.

Total Operating Expenses Approximately $369 million, down from $404 million in Q4 2024, primarily due to lower clinical trial and manufacturing costs.

Provision for Income Taxes Approximately $46.1 million, slightly up from $44.9 million in Q4 2024.

GAAP Net Income Approximately $159.6 million or $0.57 per share basic, compared to $0.55 per share diluted.

Non-GAAP Net Income Approximately $179.6 million or $0.64 per share basic, excluding $20 million of stock-based compensation.

Cash and Marketable Securities Approximately $1.65 billion, indicating a strong balance sheet.

Share Repurchase Approximately $289 million of shares repurchased at an average price of $35.83, with $5.5 million remaining under the previous repurchase plan.

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Operating Highlights

CABOMETYX US Business Performance: First quarter 2025 US cabo franchise net product revenues grew 36% year-over-year to $513 million compared to $378 million in the first quarter 2024.

Global CABOMETYX Revenue: Global cabo franchise net product revenues generated by Exelixis and its partners were approximately $680 million in the first quarter 2025 compared to $559 million in the first quarter 2024.

CABOMETYX Approval in Neuroendocrine Tumors: US regulatory approval of CABOMETYX in both pNET and epNET was secured ahead of the assigned PDUFA date of April 3rd, 2025.

Zanzalintinib Development: Zanzalintinib is positioned as the next oncology franchise opportunity with anticipated data milestones from pivotal trials in the second half of 2025.

CABOMETYX Market Positioning: CABOMETYX is the leading TKI for RCC, with a market share increase from 40% to 44% year-over-year.

Neuroendocrine Tumors Market Opportunity: The oral market opportunity in 2025 for NETs is forecasted to be approximately $1 billion in the US.

Financial Guidance Increase: Exelixis increased its 2025 full year financial guidance for net product revenues and total revenues by $100 million.

Operating Expenses Reduction: Total operating expenses for Q1 2025 were approximately $369 million, down from $404 million in Q4 2024.

Capital Allocation Strategy: Exelixis is focused on advancing pipeline priorities, accessing new high conviction assets, and repurchasing undervalued shares.

IND Pipeline Development: Exelixis aims to file up to three new INDs in 2025, with ongoing progress on multiple new compounds.

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Risk or Challenges

Regulatory Risks: Risks related to regulatory review and approval processes, including the potential for delays or rejections that could impact product launches and revenue.

Market Competition: Competitive pressures from other oncology products, particularly in the TKI market, which could affect market share and pricing strategies.

Clinical Trial Risks: Challenges associated with conducting clinical trials, including potential delays, adverse events, and the need for compliance with regulatory requirements.

Supply Chain Challenges: Dependence on collaboration partners and potential disruptions in the supply chain that could affect product availability and costs.

Economic Factors: Economic conditions that could impact healthcare spending, pricing pressures, and overall market dynamics affecting revenue.

Product Development Costs: High costs associated with discovery, product development, and commercialization activities that could strain financial resources.

Tariff Impact: Minimal exposure to tariffs on the US cabozantinib business, but potential future changes in trade policies could pose risks.

Drug Development Attrition: High attrition rates in drug development, as evidenced by the discontinuation of the XL495 program due to drug-related toxicities.

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Guidance & Outlook

CABOMETYX US Business Performance: First quarter 2025 US cabo franchise net product revenues grew 36% year-over-year to $513 million compared to $378 million in the first quarter 2024.

2025 Financial Guidance Increase: Increasing 2025 full year financial guidance for net product revenues and total revenues by $100 million.

New Indications for CABOMETYX: US regulatory approval of CABOMETYX in both pNET and epNET ahead of the assigned PDUFA date.

Zanzalintinib Development: Advancing zanza to the center stage in 2025 as the next oncology franchise opportunity with multiple pivotal trials expected.

IND Pipeline Progress: On track to file up to three new INDs in 2025.

Capital Allocation Strategy: Focus on advancing pipeline priorities, accessing new high conviction assets, and share repurchases.

2025 Net Product Revenue Guidance: Increasing net product revenue guidance to $2.05 billion to $2.15 billion.

2025 Total Revenue Guidance: Increasing total revenue guidance to $2.25 billion to $2.35 billion.

Impact of Tariffs: Projecting minimal exposure on US cabozantinib business due to IP domiciled in the US.

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Shareholder Return Plan

Share Repurchase Program: During the first quarter 2025, Exelixis repurchased approximately $289 million of the company's shares resulting in the retirement of approximately $8 million of the company's shares at an average price per share of $35.83. As of the end of the first quarter of 2025, there was approximately $5.5 million remaining under the $500 million stock repurchase plan authorized by the company's board in August 2024. Additionally, in February 2025, the board authorized an additional $500 million stock repurchase plan that expires at the end of 2025.

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Key Q&A

Q:Could you just help us understand a little bit better what's been driving cabo growth at this point?

A:We grew significantly in terms of market share from 40% to 44%. The majority of this is being driven by RCC, particularly frontline RCC in terms of the combination of cabo with nivo.

Q:Did you see some contribution from neuroendocrine prior to approval already?

A:There was a little bit of NET utilization we saw prior to approval.

Q:Can you provide more dynamics on the NET launch? Did you see a bolus effect?

A:It's very early days in the NET launch. We're seeing new prescriptions out of the gate and just looking forward to tracking that going forward.

Q:When do you expect the NET launch to stabilize?

A:We will continue to see the trends as we move forward.

Q:Can you confirm where the $100 million increase in guidance comes from?

A:The biggest part of that is in the RCC based business. It's a little bit of NET in there, but the majority of it is based on the strength of the base business in the first quarter.

Q:Can you talk about your BD appetite and current environment influence?

A:We are definitely open for business on the BD side. We're focused on high conviction assets that fit into our franchise framework.

Q:What impact did Medicare Part D redesign have this quarter?

A:We didn't see a big dynamic there, but there was a larger difference compared to Q1 last year.

Q:How much of the $1 billion NET opportunity is first line versus second or third line?

A:The $1 billion is across all lines of therapy, but the majority of utilization is in second and third line.

Q:Can you help set expectations on the non-clear cell renal cell carcinoma study?

A:This is a very exciting study for us. We think that zanza is better than cabo.

Q:What do you want to see on event rates to justify moving forward with the head and neck study?

A:We don't typically talk about what those events are.

Q:Can you provide some color on the data to be presented for XL309 this year?

A:We will be happy to share the data publicly once we have a complete data set.

Q:What are your thoughts on the NET launch dynamics?

A:Our expectation is that it will be broadly utilized across that and we're aiming to be the small molecule leader in the space.

Q:Can you talk about clinical trial sales this quarter?

A:We had about $12 million in the quarter.

Q:How does the approval of cabo for the same indication change the buffer success for the STELLAR-3 next trial?

A:We're not that concerned about competing with cabo.

Q:Review of Unclear Management Responses

A:Management avoided giving a direct answer regarding the specific characteristics of early adopters for NET, stating they could not provide effective details on patients receiving the drug in a commercial setting. Additionally, they did not clarify the specific event rates needed for the head and neck study to justify moving forward.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

EXEL Transcript

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EXEL Slides

Exelixis Q1 2025 slides: Revenue up 31%, raises FY guidance on CABOMETYX strength

2025-05-13

Exelixis Q2 2025 slides: cabozantinib franchise grows 19% YoY, NET launch gains traction

2025-11-04

EXEL Report

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