Exelixis, Inc. (EXEL) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a positive outlook with strong revenue growth, new product launches, and a robust pipeline, especially with zanzalintinib. Despite some unclear responses from management, the company's strategic focus on expanding its oncology franchises and maintaining financial health through share repurchases supports a positive sentiment. Analysts' questions did not reveal significant risks, and the market expansion plans and strong CABOMETYX sales reinforce the positive sentiment.
Key Financial Performance
U.S. CABO franchise net product revenues $555 million in Q1 2026, an 8% year-over-year increase compared to Q1 2025. The growth is attributed to CABOMETYX's strong performance in revenue, demand, and market share as the leading TKI for RCC and neuroendocrine tumors.
Global CABO franchise net product revenues $764 million in Q1 2026, a 12.5% year-over-year increase compared to Q1 2025. This growth reflects CABOMETYX's continued role as a worldwide leading TKI.
Total revenues $611 million in Q1 2026. This includes cabozantinib franchise net product revenues of $555 million and royalties of $45.9 million from partners Ipsen and Takeda.
Gross to net for cabozantinib franchise 30.2% in Q1 2026, higher than Q4 2025. The increase is due to higher 340B volume, Medicare Part D discounts and rebates, and co-pay assistance.
Operating expenses $359 million in Q1 2026, a slight decrease from $363 million in Q4 2025. The decrease is due to lower clinical trial costs, offset by higher FT-related costs and stock-based compensation expense.
Provision for income taxes $57.2 million in Q1 2026, compared to $8.2 million in Q4 2025. The increase is related to certain items recognized in Q4 2025.
GAAP net income $210.5 million in Q1 2026, or $0.81 per share basic and $0.79 per share diluted.
Non-GAAP net income $232.8 million in Q1 2026, or $0.90 per share basic and $0.87 per share diluted. This excludes $22.3 million of stock-based compensation expense net of related income tax effect.
Cash and marketable securities $1.4 billion as of March 31, 2026.
Stock repurchase $430.8 million worth of common stock repurchased in Q1 2026, retiring approximately 10 million shares at an average price of $42.99 per share.
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Operating Highlights
CABOMETYX: Continued strong performance with U.S. CABO franchise net product revenues growing 8% year-over-year to $555 million. Global CABO franchise net product revenues grew 12.5% year-over-year to $764 million. CABOMETYX remains the #1 prescribed TKI in renal cell carcinoma and the #1 oral agent in 2nd line plus neuroendocrine tumors.
ZANZA (zanzalitinib): Positioned as the next oncology franchise opportunity. NDA for ZANZA/atezolizumab combination in third-line plus CRC is under review. Development program includes seven pivotal trials and additional phase II trials in prostate and lung cancer. Aims to establish ZANZA as the TKI of choice in the 2030s for RCC and other indications.
Colorectal Cancer (CRC) Market: Pending regulatory approval, ZANZA could address a market opportunity of approximately $1.5 billion in the third-line plus CRC setting, which consists of approximately 23,000 patients in the U.S.
Operational Efficiency: Generated substantial free cash flow to invest in the pipeline and authorized an additional $750 million for share repurchase. Operating expenses decreased slightly to $359 million in Q1 2026.
Strategic Expansion: Expedited the build-out of the GI sales team to grow CABOMETYX market share and prepare for ZANZA launch. Focused on disciplined investment in high-value opportunities for ZANZA and early-stage pipeline development.
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Risk or Challenges
Regulatory Review and Approval Processes: The approval process for ZANZA/atezolizumab combination in third-line plus CRC is under review, with potential delays or negative outcomes impacting the company's strategic plans.
Market Competition: The competitive landscape in RCC and other oncology markets remains challenging, requiring careful selection of combination partners and differentiation of products like ZANZA and CABOMETYX.
Clinical Trial Risks: Challenges in navigating complexities of first-line RCC trials and ensuring efficacy and safety in combination therapies, as highlighted by COSMIC-313 and competitive trials.
Economic and Pricing Pressures: Higher gross-to-net deductions due to increased 340B volume, Medicare Part D discounts, and co-pay assistance, which could impact profitability.
Supply Chain and Inventory Management: CABOMETYX trade inventory was slightly lower at 2.1 weeks on hand, indicating potential risks in supply chain management.
Dependence on Collaboration Partners: Reliance on partners like Merck for pivotal studies in clear cell RCC and other collaborations, which could pose risks if partnerships face challenges.
Unmet Medical Needs and Market Opportunities: Significant unmet needs in areas like non-clear cell RCC, colorectal cancer, and meningioma, requiring successful trial outcomes to capitalize on these opportunities.
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Guidance & Outlook
Revenue Growth: Exelixis reiterated its full-year 2026 financial guidance, emphasizing continued growth in the CABOMETYX franchise, which achieved an 8% year-over-year increase in U.S. net product revenues for Q1 2026. Global CABOMETYX revenues grew 12.5% year-over-year.
ZANZA Development and Launch: The NDA for ZANZA/atezolizumab combination in third-line plus colorectal cancer (CRC) is under review, with a PDUFA date in early December 2026. The company is preparing for the potential launch of ZANZA later in 2026, targeting a $1.5 billion market opportunity in the third-line plus CRC setting. Additionally, seven pivotal trials for ZANZA are ongoing or planned, including studies in prostate cancer, lung cancer, and kidney cancer.
Pipeline Expansion: Exelixis is advancing its early-stage pipeline with four molecules in clinical development and plans to initiate new studies for ZANZA in squamous non-small cell lung cancer and metastatic castration-resistant prostate cancer in the second half of 2026.
Strategic Investments: The company plans to continue investing in R&D and business development while maintaining operational efficiency. A new $750 million stock repurchase plan has been authorized, expiring in December 2027.
Market Trends and Opportunities: Exelixis is focusing on expanding its GI franchise and addressing unmet medical needs in oncology, including neuroendocrine tumors, meningioma, and molecular residual disease-positive colorectal cancer. The company aims to establish ZANZA as the TKI of choice in the 2030s.
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Shareholder Return Plan
Share Repurchase Program: During the first quarter of 2026, Exelixis repurchased approximately $430.8 million of the company's outstanding common stock, resulting in the retirement of approximately 10 million shares at an average price per share of $42.99. As of the end of the first quarter, approximately $159.4 million remained under the $750 million stock repurchase plan authorized in October 2025. The company expects to complete this plan in May 2026. Additionally, in May 2026, the board authorized a new $750 million stock repurchase plan, set to expire on December 31, 2027.
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Key Q&A
Q:What are the updated thoughts or learnings from the LITESPARK-012 trial results for the belzutifan plus zanza combination development program?
A:The strategy with ZANZA is to focus on creating a franchise molecule in RCC and the top TKI combination therapy in clear cell RCC for the 2030s. The LITESPARK-012 results highlighted the challenges of triplet therapy in clear cell RCC. The company is focusing on establishing a standard of care through ongoing trials like LITESPARK-033 and LITESPARK-034, and exploring innovative combinations, including molecules from their early pipeline.
Q:What is the rationale for testing combo therapies in STELLAR-202 and STELLAR-002?
A:The rationale for STELLAR-202 in non-small cell lung cancer is based on favorable results from the CONTACT-01 study, particularly in patients with squamous histology. For prostate cancer, the rationale comes from a small phase I study combining cabozantinib with docetaxel, which showed favorable outcomes. These combinations aim to explore unmet needs in specific patient populations.
Q:What are the quantifiable metrics regarding cabo sales in NET and the preparation for the zanzalintinib CRC launch?
A:CABOMETYX had its highest new patient starts in a quarter, with strong performance in NET across all segments. The company is the market leader in the 2nd-line plus oral segment and has expanded its GI sales force. For zanzalintinib, the CRC launch preparation is in full swing, targeting a $1.5 billion opportunity in the 3rd-line plus setting with 23,000 patients.
Q:What is the updated timing and rationale for the STELLAR-304 data readout?
A:The STELLAR-304 data readout is expected in the second half of the year. The slight change in timing for events is due to late-stage event collection, but the company did not speculate on the reasons. The study addresses a high unmet need in non-clear cell renal cell carcinoma, where there is no level 1 evidence supporting a standard of care.
Q:What is the regulatory approach for the adjuvant CRC study in STELLAR-316?
A:The STELLAR-316 trial addresses a high unmet need in resected stage II or III colorectal cancer patients. The trial design, including the use of MRD positivity as a way to change therapy, has been developed with input from key opinion leaders, stakeholders, and the FDA. The company is confident in the design and will release more details closer to launch.
Q:What is the size of the opportunity for the LITESPARK-033 study and future plans for RCC with zanzalintinib?
A:The first-line RCC setting represents approximately a quarter of patients, with potential growth as more patients receive adjuvant therapy. The company is conducting multiple studies, including LITESPARK-033, LITESPARK-034, and STELLAR-304, to establish ZANZA as the leading TKI in RCC for the 2030s.
Q:How does the company balance its broad development strategy for zanzalintinib with buybacks and potential M&A?
A:The company prioritizes R&D investments, business development opportunities, and share repurchases. They believe zanzalintinib is undervalued and continue to buy back shares while maintaining financial strength and exploring BD opportunities.
Q:What is the rationale for the control arm choice and endpoints in LITESPARK-034?
A:LITESPARK-034 evaluates ZANZA plus belzutifan versus belzutifan plus placebo in the 2nd-line plus setting. The dual primary endpoints include OS, which is considered a gold standard in clear cell RCC. The study anticipates multiple potential treatment landscapes for patients who have progressed on TKI and IO regimens.
Q:What is the strategy for building out the NET franchise with zanzalintinib?
A:The company is committed to addressing NET with studies like STELLAR-311, which targets earlier lines of therapy. They are also exploring combinations with novel molecules, such as a small molecule SSTR2 agonist and a DLL3-targeted ADC, to expand treatment options for NET and other neuroendocrine carcinomas.
Q:Would the company consider a triplet therapy in the first-line setting for ccRCC?
A:The company is open to triplet therapies but emphasizes the need for specific and focused scientific rationale. They are exploring combinations with orthogonal MOAs and investigating zanzalintinib with a novel bispecific IO in phase I studies.
Q:How will the company leverage non-liver met data from STELLAR-303 and the investigator-sponsored trial data?
A:The company plans to share non-liver metastasis subgroup data from STELLAR-303 with the FDA as part of the ongoing review. They are also monitoring investigator-sponsored trial data for cabozantinib and nivolumab in non-clear cell RCC to compare with zanzalintinib and STELLAR-304.
Q:What are the latest thoughts on CABOMETYX competitiveness in RCC?
A:CABOMETYX continues to perform strongly in RCC, with the highest frontline market share for CABOMETYX plus nivolumab in the first-line setting. The company sees potential for continued growth and emphasizes the breadth and depth of data supporting its use.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the reasons for the slower event accrual in STELLAR-304, stating they did not want to speculate. Additionally, they did not provide clear metrics or data on the financial impact of their broad development strategy for zanzalintinib or the specifics of their resource allocation decisions.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CABO franchise
CRC
III study
III trial
MRD
NDA ZANZA
RCC market
STELLAR phase
Today
ZANZA belzutifan
ZANZA development
ZANZA potential
breadth
cell RCC
cell lung
cohort STELLAR
combination chemotherapy
docetaxel
effort ZANZA
enrollment
experience
franchise molecule
histology
line RCC
lung cancer
maintenance
meningioma therapy
neuro
number patient
opportunity ZANZA
patient level
pembrolizumab
phase III
phase trial
prostate cancer
study ZANZA
trial ZANZA
zanza combination
zanzalitinib
EXEL Transcript
Exelixis, Inc. (EXEL) Q1 2026 Earnings Call Transcript
Positive5-6
The earnings call presents a positive outlook with strong revenue growth, new product launches, and a robust pipeline, especially with zanzalintinib. Despite some unclear responses from management, the company's strategic focus on expanding its oncology franchises and maintaining financial health through share repurchases supports a positive sentiment. Analysts' questions did not reveal significant risks, and the market expansion plans and strong CABOMETYX sales reinforce the positive sentiment.
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