Exelixis (EXEL) Q4 2025 earnings review
Profit Explosion Driven by Cost Discipline; Pipeline Execution in Focus
Exelixis closed FY25 with a bottom-line beat, as Net Income surged 75% YoY in Q4 despite only modest top-line growth (+6%). The disparity was driven by significant expense management, with R&D and SG&A expenses falling nearly $50M combined YoY. While the Cabozantinib franchise remains the cash engine (driven by the NET launch), the narrative has shifted squarely to 'Wave 2': the Zanzalintinib NDA for CRC has been accepted with a PDUFA date of Dec 3, 2026. Management's 2026 guidance implies revenue acceleration (+11% at midpoint), funded by a return to higher R&D spending.
🐂 Bull Case
The franchise generated $2.12B in U.S. net product revenues for FY25. Demand remains robust, particularly with the Neuroendocrine Tumor (NET) indication capturing >40% share in the oral 2L+ setting.
Exelixis completed its previous $500M buyback and immediately launched a $750M authorization. Q4 alone saw $264.5M repurchased, reducing share count and supporting EPS.
🐻 Bear Case
High-margin collaboration revenue nearly halved in FY25 ($197M vs $359M in FY24) due to fewer milestones. Dependence on product sales increases pressure on the Zanza launch.
The PDUFA date for Zanzalintinib in CRC is set for December 3, 2026. This implies nearly a full year of waiting before the 'next franchise' can generate commercial revenue.
⚖️ Verdict: 🟢
Bullish. The core business is funding aggressive buybacks and a deep pipeline. While the wait for the Zanza approval is long (Dec 2026), the acceptance of the NDA and strong profitability in the interim provide a solid bridge.
Key Themes
Zanzalintinib: The Next Franchise
The narrative pivot is successfully underway. The FDA accepted the NDA for zanzalintinib in metastatic CRC (PDUFA Dec 3, 2026). This validates the pipeline strategy. Furthermore, the company is doubling down on 'Wave 2' pivotal trials (STELLAR-316 in adjuvant CRC, STELLAR-201 in meningioma) and expects STELLAR-303 (non-liver mets) and STELLAR-304 (nccRCC) data in mid-2026.
Operational Efficiency Spike
Q4 profitability was artificially boosted by a sharp drop in OpEx. R&D fell 14% YoY ($213M vs $249M) and SG&A fell 8% YoY ($123M vs $134M). Management cited lower clinical trial and manufacturing costs. However, FY26 guidance suggests R&D will ramp back up ($875-925M range), indicating Q4 was a trough in spending, not a permanent baseline.
Collaboration Revenue Volatility
Collaboration revenue is becoming a smaller part of the mix, dropping from $359M in FY24 to $197M in FY25. Q4 collaboration revenue was flat at $52M. With fewer milestones expected in the immediate term, growth must come entirely from U.S. product sales.
Cabozantinib Volume Growth
Despite maturity in RCC, the Cabozantinib franchise grew U.S. net product revenues by 6% YoY in Q4 to $546.6M. This was driven primarily by volume increases rather than price, validating the demand for the new NET indication. FY26 guidance ($2.325B-$2.425B) implies continued healthy growth of ~12% at the midpoint.
Gross Margin Compression Risk
While product gross margins remain high (~96%), guidance for 2026 suggests Cost of Goods Sold will be 3.5%-4.5% of net product revenues. Previous quarters saw pressure from 340B mix shifts (rising to >24% of volume). Continued mix shift could dampen the drop-through of new revenue to the bottom line.
Other KPIs
Accelerating. Up 75% YoY from $139.9M in 24Q4. The result was driven by a $36M reduction in OpEx and higher product sales. Margins expanded significantly, though R&D timing played a major role.
Stable. Strong liquidity supports the new $750M share repurchase program. The company generated robust cash flow, allowing for $264.5M in buybacks in Q4 alone while maintaining a fortress balance sheet.
Accelerating. Up 83% from $0.48 in 24Q4. EPS growth outpaced Net Income growth due to aggressive share repurchases reducing the denominator (276M shares vs 293M shares YoY).
Guidance
Accelerating. The midpoint ($2.575B) implies ~11% YoY growth, compared to ~7% growth in FY25. This assumes continued Cabozantinib momentum and price increases (+3% WAC), but no material revenue from Zanzalintinib given the Dec 2026 PDUFA.
Accelerating. Midpoint of $900M represents a 9% increase over FY25's $825M. This signals a reversal of the Q4 cost-cutting trend as the company ramps up 'Wave 2' trials (STELLAR-316, STELLAR-201).
Accelerating. Midpoint ($600M) is a substantial 15% increase over FY25's $519M. This likely reflects pre-commercialization activities for the Zanza launch and continued expansion of the GI sales team.
Key Questions
Zanzalintinib Commercial Timeline
With a PDUFA date of Dec 3, 2026, do you anticipate any revenue contribution in FY26, or is the launch effectively a FY27 event? How does this impact the SG&A ramp timing?
R&D Spending Volatility
R&D expenses dropped sharply in Q4 ($213M) compared to Q3 ($199M - note: actually rose vs Q3 but down YoY). What specifically caused the Q4 dip, and why should investors expect a ~9% increase in FY26 given recent efficiencies?
Collaboration Revenue Outlook
With collaboration revenues nearly halving in FY25, what is the baseline expectation for FY26? Are there any significant milestones from Ipsen or Takeda baked into the guidance?