Last week, Exelixis, Inc. EXEL reported better-than-expected fourth-quarter results.
EXEL recorded earnings of 55 cents per share, which beat the Zacks Consensus Estimate of 51 cents. The company registered adjusted earnings of 33 cents per share in the year-ago quarter. The outperformance was mainly driven by higher revenues.
Including stock-based compensation expense, earnings were 48 cents per share in the reported quarter.
Net revenues were $566.7 million, which beat the Zacks Consensus Estimate of $563 million. The top line surged 18.1% year over year.
The company’s shares rose 6.7% since it released fourth-quarter results.
Exelixis has put up a phenomenal performance in the past year on the back of the strong performance of its lead drug Cabometyx and encouraging pipeline progress. Shares of the company have soared 70.9% in the past year against the industry’s decline of 7.5%. The stock has also outperformed the sector and the S&P 500 Index during this timeframe.
EXEL Outperforms Industry, Sector & S&P 500
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Cabometyx Boosts EXEL
Cabometyx maintained its status as the leading tyrosine kinase inhibitor (TKI) for the treatment of renal cell carcinoma (RCC) in both the front-line immune-oncology (IO) +TKI market and the second-line monotherapy segment.
We note that Cabometyx has also been approved for use in combination with Bristol Myers’ BMY Opdivo in the first-line setting in RCC. BMY’s Opdivo is one of the leading IO drugs, and it has been approved for various oncology indications.
Cabometyx is also approved for hepatocellular carcinoma.
Management is also focused on the label expansion of Cabometyx. The FDA accepted EXEL’s supplemental new drug application for cabozantinib for patients with previously treated advanced pancreatic neuroendocrine tumors (pNET) and those with previously treated advanced extra-pancreatic NET (epNET). It assigned a standard review with a target action date of April 3, 2025.
The FDA also granted the orphan drug designation to cabozantinib for the treatment of pNET.
A potential label expansion should further propel its growth prospects.
EXEL Makes Encouraging Pipeline Progress
The pipeline progress has been impressive as well, as Exelixis looks to expand its oncology portfolio beyond Cabometyx.
The company is now focused on developing zanzalintinib, a next-generation oral TKI. In January 2025, results from an expansion cohort of the phase Ib/II STELLAR-001 trial evaluating zanzalintinib alone or in combination with Tecentriq (atezolizumab) in patients with previously treated metastatic colorectal cancer (CRC) were presented.
Results showed that all efficacy parameters, including objective response rate, PFS and overall survival favored the combination of zanzalintinib plus Tecentriq versus zanzalintinib monotherapy in the overall population as well as in a subgroup of patients without liver metastases.
The data support zanzalintinib’s ongoing pivotal development in metastatic CRC. Additional data from zanzalintinib’s phase Ib/II studies is expected in the first half of 2025.
Exelixis has collaborated with pharma giant Merck MRK to evaluate zanzalintinib in combination with its blockbuster anti-PD-1 therapy Keytruda (pembrolizumab) in a late-stage study for treating patients with head and neck squamous cell carcinoma (HNSCC).
Per the terms of the agreement, Merck will supply Keytruda for the ongoing, Exelixis-sponsored phase III STELLAR-305 study in previously untreated PD-L1-positive recurrent or metastatic HNSCC.
Merck will also sponsor a phase I/II study and two phase III studies evaluating zanzalintinib in combination with Welireg, its oral hypoxia-inducible factor-2 alpha (HIF-2α) inhibitor, in RCC. Merck will fund one of these phase III studies, and Exelixis will co-fund the phase I/II trial and the other phase III study as well as supply zanzalintinib and cabozantinib.
Exelixis pipeline also includes other pipeline candidates — XL495, XL309 ((potentially best-in-class small molecule inhibitor of USP1) and XB010 (5T4-targeting antibody-drug conjugate).
In November 2024, Exelixis initiated the dose-escalation stage of the first-in-human phase I study of XL495 in patients with advanced solid tumors. XL495 is a novel, potent, small-molecule inhibitor of PKMYT1.
In addition, three biotherapeutics programs are targeted for clinical development in 2025 — XB628 PD-L1-NKG2A bispecific antibody, XB064 ILT-2 monoclonal antibody and XB371 TF-topoisomerase I inhibitor ADC. Exelixis plans to file the investigational new drug applications for these compounds in 2025 if preclinical data continue to be supportive.
The successful development of additional drugs should broaden its portfolio and reduce its dependence on its lead drug, Cabometyx.
Exelixis’ Efforts to Boost Shareholder Value
Exelixis is also making efforts to increase shareholder value through repurchases. In August, the company announced that the board of directors has authorized the repurchase of up to $500 million of its common stock. As of Dec. 31, 2024, Exelixis had repurchased $205.6 million of its common stock. This is the third stock repurchase program undertaken by the company since March 2023.
EXEL’s Valuation & Estimates
From a valuation standpoint, EXEL is not very cheap. Going by the price/sales ratio, EXEL’s shares currently trade at 4.29x forward sales, higher than its mean of 3.64x and the biotech industry’s 1.63x.
Zacks Investment Research
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The bottom-line estimate for 2025 has risen from $2.22 to $2.31 while that for 2026 has increased from $2.75 to $2.81 over the past seven days.
Zacks Investment Research
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Invest in EXEL
Large biotech companies are generally considered safe havens for investors interested in this sector. EXEL is a good stock to buy now, considering its good fundamentals and growth prospects.
The stock has performed exceptionally well in the past year and we believe there is more room for growth. Potential label expansion of Cabometyx should boost its growth. The company’s efforts to expand its portfolio are encouraging as well. The successful development of additional drugs should broaden its portfolio and reduce its dependence on its lead drug, Cabometyx.
EXEL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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