Shares of Exelixis, Inc. EXEL have risen 13.3% year to date compared with the industry’s growth of 6.6%. The stock has also outperformed the sector and the S&P 500 Index in this timeframe.
The company's upbeat performance can be attributed to its strong quarterly results, raised guidance and efforts to increase shareholders' returns.
EXEL Outperforms Industry, Sector & S&P 500
Zacks Investment Research
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Last month, Exelixis announced a new share repurchase program of $500 million. Shares rallied following the announcement. Earlier, the company reported better-than-expected fourth-quarter results, which also drove the stock higher.
Let’s delve deeper and analyze the company’s strengths and weaknesses to understand how to play the stock in such a scenario.
Cabometyx Boosts EXEL
Exelixis’ lead drug Cabometyx maintains its status as the leading tyrosine kinase inhibitor (TKI) for the treatment of renal cell carcinoma (RCC) in both the frontline immuno-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 the treatment of 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 improve 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 study 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.
Meanwhile, Exelixis 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. MRK 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 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. On Feb. 20, its board of directors has authorized the repurchase of up to an additional $500 million of the company’s common stock before Dec. 31, 2025. This is the fourth such program undertaken by the company since March 2023.
Exelixis targets to complete the currently ongoing $500 million stock repurchase program (announced in August 2024) in the second quarter of 2025. Repurchases under the newly authorized program will be initiated thereafter.
As a result of these repurchases, Exelixis has returned more than $1.2 billion to shareholders through these programs by the end of 2024.
Stay Invested in EXEL
Large biotech companies are generally considered safe havens for investors interested in this sector. Exelixis lead drug Cabometyx maintains momentum for the company. The 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.
While the company’s efforts to increase shareholder value are impressive, we believe the recent rally limits the potential for further gains.
Hence, we advise existing investors to stay invested in the stock, given management’s efforts to boost value. However, prospective investors should wait for better entry levels.
EXEL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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