Exelixis (EXEL) Q1 2026 earnings review
Cash Cow Cabozantinib Fuels Massive Buybacks and R&D Transition
Exelixis delivered a pristine quarter characterized by top-line growth and impressive margin expansion. Total revenue grew 10% YoY to $610.8M, but the real story is operating leverage: Operating Income surged 34% YoY to $251.3M as R&D expenses actually declined. The company is acting like a disciplined cash machine, using this leverage to aggressively retire shares. Diluted share count dropped by 21 million shares YoY, and the Board just reloaded the bazooka with another $750M buyback authorization. With Zanzalintinib's first PDUFA date locked for December 2026, Exelixis has built a highly profitable bridge to its next multi-billion-dollar oncology franchise.
🐂 Bull Case
Exelixis has retired 86.8 million shares since March 2023. The new $750M buyback authorization guarantees EPS will continue to accelerate faster than net income, providing a hard floor for the stock.
With the FDA accepting the NDA for Zanzalintinib in 3L+ colorectal cancer (CRC) and assigning a standard Dec 3, 2026 PDUFA, the company's next major growth engine is officially on the regulatory clock.
🐻 Bear Case
Cabozantinib net product sales ($555.0M) still account for 91% of total revenue. Any competitive shock in the RCC or NET markets before Zanzalintinib ramps up would severely damage the top line.
While the NDA was accepted, the dual primary endpoint for Zanzalintinib (Overall Survival in the non-liver metastases subgroup) isn't mature until mid-2026. Weakness here could limit the drug's label and commercial uptake.
⚖️ Verdict: 🟢
Bullish. The financial execution is flawless. They are growing revenue, expanding margins, and aggressively buying back stock—all while preparing for a major product launch later this year.
Key Themes
Relentless Share Count Reduction
Exelixis is shrinking its equity base at an astonishing rate. The company completed $590.6M of its October 2025 $750M program by Q1 and immediately authorized an additional $750M in May 2026. Weighted average diluted shares have plummeted from 288.2M in 25Q1 to 267.3M in 26Q1, supercharging EPS growth (+43% YoY GAAP) far beyond actual Net Income growth (+32% YoY).
Cabozantinib Franchise Remains a Juggernaut
Accelerating. Net product revenues hit $555.0M in 26Q1, up from $513.3M a year ago, driven by volume growth rather than just price hikes. The recently completed expansion of the GI sales team is successfully defending the RCC turf while expanding deeper into the neuroendocrine tumor (NET) indication.
Zanzalintinib Pipeline Milestones Locked
The transition to Zanzalintinib is accelerating. The FDA accepted the NDA for previously treated metastatic CRC (PDUFA: Dec 3, 2026). Concurrently, Phase 3 readouts for STELLAR-304 (nccRCC) are expected in 2H 2026. The pipeline is robust, but the focus is clearly shifting from R&D to commercial launch readiness.
MRD-Guided Therapy Innovation via Natera
Exelixis is embracing precision medicine technology. The company announced a collaboration with Natera to utilize its Signatera cell-free DNA assay for the upcoming STELLAR-316 Phase 3 trial. This allows them to precisely identify molecular residual disease (MRD+) in stage II/III CRC patients, ensuring highly targeted enrollment and a higher probability of clinical success.
STELLAR-303 NLM Endpoint Remains an Overhang
While management celebrates the NDA acceptance, the final analysis for the second dual primary endpoint—Overall Survival in patients without liver metastases (NLM)—is still pending until mid-2026. If this data fails to show significant benefit, Zanzalintinib could face a narrower label than expected in CRC.
Macro Pressures on Gross-to-Net Margins
As noted in prior quarters, the company faces structural macroeconomic headwinds from Medicare Part D redesign and increasing 340B/PHS hospital volumes. While volume growth masked the impact in Q1, these mandatory government pricing discounts will continue to cap net revenue realization long-term.
R&D Spend Contradicts 'Rapid Expansion' Narrative
Management boasts about executing across seven ongoing pivotal studies for Zanzalintinib and expanding early-stage Phase 1/2 trials. Yet, Q1 R&D expenses actually *decreased* by $12.3M YoY (to $199.9M). While pitched as 'manufacturing and clinical trial efficiencies,' shrinking R&D spend during a supposedly massive pivotal trial expansion raises questions about whether some pipeline activities are quietly being delayed or deprioritized to protect the bottom line.
Other KPIs
Accelerating. Operating margin expanded significantly from 33.6% in 25Q1 to 41.1% in 26Q1. This was driven by a combination of an 8% increase in net product revenues and a 6% decrease in R&D expenses, showcasing immense operating leverage.
Accelerating. Up 32% YoY from $42.2M in 25Q1. Growth was driven by higher ex-U.S. royalty revenues from partner Ipsen and higher milestone-related revenues, reflecting the global durability of the cabozantinib franchise.
Guidance
Stable. Guidance was maintained. The midpoint ($2.575B) implies approximately 11% YoY growth over FY25's actual total revenue ($2.32B). Notably, this guidance excludes any potential revenue from a Zanzalintinib CRC launch.
Stable. Maintained guidance implies ~12% growth over FY25 actuals ($2.12B). It incorporates a 3.0% U.S. WAC price increase for CABOMETYX implemented in January 2026.
Stable. The midpoint ($900M) suggests a slight increase versus FY25 actual R&D spend ($825M). Given that 26Q1 run-rate was only $200M, this implies a deceleration of spend early in the year, with a potential ramp-up expected in H2 to support the new Zanzalintinib trials (STELLAR-316, STELLAR-202).
Key Questions
R&D Spend Discrepancy
R&D expenses decreased YoY in Q1 despite management claiming an expansion of pivotal trials across the Zanzalintinib program. What specific manufacturing or trial efficiencies drove this, and should we expect a sharp R&D spend ramp in H2?
STELLAR-303 NLM Data Risk
With the Zanzalintinib PDUFA date set for December, how does the pending mid-2026 Non-Liver Metastases (NLM) survival data impact the ongoing label negotiations and your eventual commercial launch strategy?
Capital Allocation Ceiling
You've authorized another $750M buyback, bringing the total to over $3.3B since 2023. At what point does M&A or business development outrank share repurchases as a priority for your $1.6B+ cash position?
CRC Market Fragmentation
The expanded GI sales force is prepping for the Zanzalintinib launch. Given the highly fragmented nature of the 3L+ CRC market (split between chemo, TKIs, and Lonsurf), what is the specific go-to-market strategy to displace entrenched standards of care?