Exelixis, Inc. (EXEL) Q3 2025 Earnings Call Transcript

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

Overview

The earnings call summary shows strong growth potential in the cabozantinib franchise and promising developments in zanzalintinib. The strategic focus on expanding market share, positive trial results, and careful capital allocation indicate a positive outlook. Although management avoided some questions, the overall sentiment is optimistic, supported by ongoing R&D investments and share repurchases. The positive feedback from ESMO and potential market share gains further strengthen this outlook.

Key Financial Performance

U.S. Cabo franchise net product revenues $543 million in Q3 2025, a 14% increase year-over-year from $478 million in Q3 2024. The growth was driven by strong demand and revenue from commercial activities, as well as consistent growth in the first-line segment.

Global Cabo franchise net product revenues $739 million in Q3 2025, up from $653 million in Q3 2024. The increase was attributed to broad adoption of cabo for recently approved indications and growth in neuroendocrine tumors.

Neuroendocrine tumor demand Grew by 50% in Q3 2025 compared to Q2 2025, contributing approximately 6% of the total Q3 business. This growth was driven by the launch of new indications and positive market reception.

Total revenues $598 million in Q3 2025, including $543 million from the cabozantinib franchise. The revenue growth was supported by higher collaboration revenues and royalties.

Collaboration revenues $54.8 million in Q3 2025, including $46.3 million in royalties from partners Ipsen and Takeda. The increase was due to strong sales performance in respective territories.

Operating expenses $361 million in Q3 2025, up from $355 million in Q2 2025. The increase was primarily due to a $19.8 million restructuring charge, partially offset by lower SG&A expenses.

Provision for income taxes $58.8 million in Q3 2025, compared to $45.6 million in Q2 2025. The increase was due to higher taxable income.

GAAP net income $193.6 million in Q3 2025, or $0.72 per share basic and $0.69 per share diluted. The increase was driven by higher revenues and effective cost management.

Non-GAAP net income $217.9 million in Q3 2025, or $0.81 per share basic and $0.78 per share diluted. This excludes $24 million in stock-based compensation expenses.

Cash and marketable securities $1.6 billion as of September 30, 2025. The strong cash position was supported by robust free cash flows and share repurchase activities.

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Operating Highlights

Cabozantinib U.S. Business: Strong growth in demand and revenue, maintaining leadership as the top TKI for RCC. U.S. net product revenues grew 14% year-over-year to $543 million in Q3 2025.

Zanzalintinib: Rapidly advancing as the next oncology franchise with seven ongoing pivotal trials. Positive results in STELLAR-303 for CRC, showing a 20% reduction in risk of death in ITT population.

Neuroendocrine Tumors (NET): Cabozantinib achieved over 40% new patient share in the oral second-line plus NET segment. Demand in NET grew 50% in Q3 2025, contributing 6% of total business.

Colorectal Cancer (CRC): Zanzalintinib plus atezolizumab showed significant survival benefits in late-line CRC patients, with plans for regulatory filing in December 2025.

R&D Momentum: Accelerated progress with zanzalintinib pivotal trials and early-stage pipeline development. Preparing for NDA filing for zanzalintinib in CRC by December 2025.

Commercial Expansion: Expanding GI sales team to support CABINET indication and prepare for zanzalintinib launch.

Capital Allocation: Authorized an additional $750 million for share repurchase, reflecting confidence in financial stability and growth.

Strategic Focus: Building a multi-franchise oncology business with emphasis on improving cancer care standards.

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Risk or Challenges

Regulatory Review and Approval Processes: The company faces risks related to regulatory review and approval processes for its products, including potential delays or rejections in obtaining necessary approvals for new drugs or indications.

Market Competition: Exelixis operates in a highly competitive oncology market, facing pressures from other pharmaceutical companies and alternative treatments, which could impact its market share and revenue growth.

Clinical Trial Challenges: The company is engaged in numerous clinical trials, including pivotal trials for zanzalintinib. Challenges such as patient recruitment, trial delays, or failure to meet endpoints could adversely affect product development timelines and outcomes.

Economic and Pricing Pressures: Government drug pricing policies and initiatives could impact the company's revenue and profitability, particularly in the context of high-cost oncology treatments.

Supply Chain and Inventory Management: Trade inventory levels were noted to be lower compared to the previous quarter, which could pose risks to meeting demand if not managed effectively.

Dependence on Collaborative Partners: The company relies on partners like Ipsen and Takeda for sales in certain territories. Any issues in these collaborations could affect revenue streams.

Capital Allocation and Restructuring Costs: The company incurred a $19.8 million restructuring charge in the third quarter, highlighting risks associated with cost management and capital allocation.

Strategic Execution Risks: The company is expediting the build-out of its GI sales team and expanding its commercial capabilities. Any missteps in execution could impact the success of these initiatives.

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Guidance & Outlook

Revenue Projections: The company is narrowing its total revenue and net product revenue guidance to the upper end of previously provided guidance ranges. Total revenue is projected to be between $2.3 billion and $2.35 billion, and net product revenue is projected to be between $2.1 billion and $2.15 billion for the full year 2025.

R&D Expense Guidance: The company is lowering its R&D expense guidance range by $75 million to $850 million to $900 million for the full year 2025.

SG&A Expense Guidance: The company is tightening its SG&A expense guidance range to be between $500 million and $525 million for the full year 2025.

Effective Tax Rate: The company is lowering its full-year effective tax rate guidance to be between 17% and 18%.

Zanzalintinib Development: The company is prioritizing zanzalintinib with seven ongoing and soon-to-start pivotal trials. A potential NDA filing for zanzalintinib in colorectal cancer is planned for December 2025, pending government reopening. Additional pivotal trials are expected to start in 2026, including studies in recurrent meningioma and adjuvant colorectal cancer.

Cabozantinib Growth: The company expects to exceed $100 million in revenue for the neuroendocrine tumor (NET) indication in 2025. The GI sales team is being expanded in Q4 2025 to support growth in the CABINET indication and prepare for zanzalintinib's launch.

Clinical Trial Updates: The STELLAR-303 trial for zanzalintinib in colorectal cancer met one of its dual primary endpoints, showing a 20% reduction in the risk of death in the ITT population. Final analysis for the non-liver metastases subgroup is expected around mid-2026. The STELLAR-304 trial in non-clear cell renal cell carcinoma is anticipated to have top-line results by mid-2026.

Pipeline Development: The company is advancing four early-stage molecules (XL309, XB010, XB628, XB371) and plans to share more details at the R&D Day on December 10, 2025.

Share Repurchase Program: The company has been authorized to repurchase an additional $750 million of its shares, with the program expiring at the end of 2026.

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Shareholder Return Plan

Share Repurchase Authorization: The company has been authorized to repurchase an additional $750 million of its shares, with the program expiring at the end of 2026.

Share Repurchase Activity: During the third quarter of 2025, the company repurchased approximately $99 million of its shares, resulting in the retirement of approximately 2.4 million shares at an average price per share of $41.69.

Remaining Authorization: As of the end of the third quarter 2025, approximately $105 million remained under the $500 million stock repurchase plan authorized in February 2025.

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Key Q&A

Q:Can you summarize the post-ESMO feedback on zanzalintinib results and its market positioning?

A:The feedback from ESMO was very positive, with physicians valuing the overall survival benefit and the introduction of an IO option in a major tumor type where it was previously unavailable. The market is fragmented, with 1/3 Lonsurf-bev, 1/3 TKI, and 1/3 other therapies. Market research indicates zanzalintinib could take share from all competitors, and the company is building its GI franchise and sales team to prepare for a potential launch.

Q:Why is sunitinib the chosen control for the STELLAR-304 trial in nccRCC?

A:Sunitinib is the standard of care in this setting, with a target profile overlap with zanzalintinib. It is widely used, especially outside the U.S., making it a relevant comparator for the Phase III trial.

Q:What are the expectations for the NLM cut of STELLAR-303 data coming early next year?

A:The trial initially had dual primary endpoints but evolved to include the ITT population due to the faster progression of patients with liver metastases. The NLM subgroup results are expected mid-next year, and the ITT population results presented in Berlin include both liver and non-liver metastases.

Q:Does the LITESPARK-011 trial reduce the likelihood of Merck pursuing a pivotal second-line study with belzutifan and zanzalintinib?

A:The company is confident that Merck's trials will continue as planned, but they refrained from speculating on Merck's data or decisions.

Q:Is there any risk to the STELLAR-303 trial approval due to public apprehension about CABINET?

A:The management declined to comment on this question.

Q:What is the strategy to navigate potential cannibalization between cabo and zanzalintinib in the NET population?

A:The NET launch is progressing well, with significant demand growth. Zanzalintinib is positioned differently with an active comparator in its Phase III trial, and there is ample room for both drugs to coexist in the market.

Q:Will the NDA submission for STELLAR-303 include a broad label for CRC?

A:The NDA will be based on the ITT population, which is the entire trial population, providing the broadest label. The NLM subgroup is a secondary endpoint and not required for the initial filing.

Q:What is the prioritization among the company's four Phase I programs, and how is XB371 differentiated?

A:The USP1 inhibitor and 5T4 targeting ADC are more advanced, while XB371, a tissue factor TOPO1-ADC, is the newest. XB371 is differentiated by its antibody that avoids the coagulation cascade and a tandem mechanism release linker for payload stabilization.

Q:What is the commercial opportunity for zanzalintinib in non-clear cell RCC based on STELLAR-304?

A:Non-clear cell RCC accounts for 20%-25% of the kidney cancer space. Cabo and other agents are used, but a positive Phase III result for zanzalintinib could significantly impact this market.

Q:What is the dynamic between oral therapies and Lutathéra in the NET market?

A:Oral therapies constitute a larger share of the second-line plus market, and cabo is the preferred treatment post-Lutathéra due to its study design, which included pretreated patients.

Q:What is the potential of zanzalintinib in meningioma based on investigator-sponsored data?

A:Investigator-sponsored trials with cabo showed high response rates (25%-75%) in meningioma, and zanzalintinib, with a similar target profile, is expected to perform well. A trial is planned for 2026.

Q:Will dose exploration be conducted for zanzalintinib in post-chemoadjuvant CRC?

A:Yes, dose exploration is planned as the drug moves to earlier lines of therapy, and more details will be shared when the trial is launched.

Q:How will emerging bispecific programs in first-line CRC impact zanzalintinib's uptake in later lines?

A:The company is monitoring the evolving landscape but emphasized that data will drive decisions. They are focused on advancing their own data and adapting as needed.

Q:What is the expected market share for zanzalintinib in CRC given the current dynamics?

A:The market is fragmented, with 1/3 SUNLIGHT regimen, 1/3 TKI, and 1/3 other therapies. Physician feedback indicates zanzalintinib will take share from all competitors, and the company is expanding its sales force to target the community setting.

Q:How is the company balancing share buybacks with R&D and business development investments?

A:The company plans to continue investing in R&D, business development, and share repurchases, supported by revenue growth and prudent expense management.

Q:Review of Unclear Management Responses

A:Management avoided giving a direct answer to the question about the risk to the STELLAR-303 trial approval due to public apprehension about CABINET. Additionally, they refrained from speculating on Merck's decisions regarding the LITESPARK-011 trial and its impact on zanzalintinib.

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Earnings Word Cloud

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

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EXEL Slides

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

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

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EXEL Report

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