Exelixis (EXEL) Q2 2026 earnings review
Double-Digit Growth Masked by a Pipeline Miss and Guidance Cuts
Exelixis posted a solid Q2 2026, with total revenues up 11% YoY to $628.7M, fueled by a 10% increase in Cabozantinib net product sales. However, the narrative is Reversing. Management quietly lowered their FY26 revenue guidance by $25M at the midpoint, contradicting the strong Q2 beat. More concerningly, the zanzalintinib (Zanza) STELLAR-303 trial failed to reach statistical significance in the critical non-liver metastases (NLM) subgroup. While the company executed $311.6M in share repurchases, the regulatory overhang on Zanza and decelerating revenue expectations sour the immediate outlook.
🐂 Bull Case
Exelixis has retired 93.3 million shares for $2.9 billion since March 2023. They completed the $750M October 2025 program early and immediately initiated repurchases under a new $750M May 2026 authorization, providing an artificial floor to EPS.
The core franchise is Stable and growing, with Q2 U.S. net product revenues reaching $573.0M (+10% YoY). The expansion into the neuroendocrine tumor (NET) market continues to drive volume.
🐻 Bear Case
STELLAR-303 missed statistical significance in the non-liver metastases subgroup. This dual-primary endpoint was highly anticipated and previously touted by management, injecting severe regulatory uncertainty ahead of the December PDUFA date.
Despite a Q2 beat, management lowered FY26 net product revenue guidance from $2.375B to $2.325B (midpoints). This points to an expected Decelerating growth rate in H2 2026, likely driven by gross-to-net pricing headwinds.
⚖️ Verdict: ⚪
Neutral. The company is generating massive cash flow and aggressively buying back stock, but the foundation of the "next massive franchise" (Zanza) showed its first real crack with the STELLAR-303 subgroup miss. The lowered guidance further caps upside momentum.
Key Themes
STELLAR-303 Subgroup Failure Contradicts Bullish Narrative
A major pipeline setback occurred: the final analysis of the dual primary endpoint of overall survival (OS) in the non-liver metastases (NLM) subgroup of STELLAR-303 showed a 'non-statistically significant trend.' In prior quarters, management enriched this trial specifically to capture this data, presenting it as a key driver for Zanza's market penetration in mCRC. This miss fundamentally contradicts the flawless execution narrative management previously sold and complicates the upcoming December 3, 2026, PDUFA date.
Revenue Guidance Cut Signals H2 Weakness
Management lowered both Total Revenue and Net Product Revenue guidance for FY26 by $25M at the lower and upper bounds. Given that Q2 revenue grew 11%, this implies a Decelerating trend for the remainder of the year. This is a concerning reversal from Q1's 'accelerating momentum' rhetoric and suggests underlying pressure on Cabozantinib volumes or pricing.
Macro: Structural Gross-to-Net Pressures
While not explicitly detailed in the Q2 press release, the persistent lowering of revenue guidance points back to a known industry macro issue heavily discussed in Q1: rising gross-to-net deductions. Increases in 340B volume and Medicare Part D discounts are eroding pricing power, forcing Exelixis to rely entirely on volume growth to drive the top line.
Cabozantinib Volume Remains Highly Resilient
Despite the guidance cut, Cabo remains the financial engine. Net product revenues grew 10% YoY to $573M, driven primarily by volume rather than price. The ongoing GI salesforce expansion to support the neuroendocrine tumor (NET) indication appears to be yielding tangible, Stable growth, offsetting the structural pricing headwinds.
Relentless Share Repurchase Execution
Exelixis' commitment to capital return is Accelerating. The company deployed $311.6M in Q2 alone at an average price of $47.85. They exhausted the October 2025 $750M plan and immediately began drawing from the new May 2026 $750M plan. Since March 2023, they have retired 93.3 million shares (roughly a quarter of the company), providing massive EPS support.
Technological Innovation via Natera Partnership
Exelixis is integrating precision medicine into its pipeline via the planned Phase 3 STELLAR-316 trial for Zanza. By partnering with Natera to use the Signatera cell-free DNA assay, they are specifically targeting molecular residual disease (MRD+) positive CRC patients. This limits trial risk by ensuring treatment is given to patients with confirmed microscopic disease.
Other KPIs
Operating profit grew 16.3% YoY, outpacing revenue growth (10.6%). The operating margin expanded slightly to 39.5%, demonstrating that despite rising R&D and SG&A expenses, the company is maintaining Stable operational leverage.
Accelerating from $48.2M a year ago (+15.6% YoY). The increase is primarily driven by higher royalty revenues from partner Ipsen's sales of cabozantinib outside the U.S., proving that the ex-U.S. Cabo franchise remains a robust, high-margin cash contributor.
Guidance
Decelerating. Management lowered the guidance range from the previous $2.525B-$2.625B. At the $2.525B midpoint, this represents roughly an 8.8% implied YoY growth vs FY25's ~$2.32B, down from the double-digit growth seen in Q2.
Decelerating. Cut from the previous $2.325B-$2.425B range. This is the core cabozantinib business, and a guidance cut here implies management expects volume growth in NET to be partially offset by intense pricing/gross-to-net pressures in H2 2026.
Reversing. Lowered significantly from the prior $875M-$925M. While this boosts near-term EPS, in biotech, an R&D cut often signals slower-than-expected clinical trial enrollment or pushed timelines (e.g., the previously noted STELLAR-304 delay into H2 2026).
Stable. Maintained from prior guidance. This confirms that the commercial build-out for the GI sales team and Zanza launch preparation remains fully funded and on track, despite the revenue and R&D guidance cuts.
Key Questions
Revenue Guidance Cut Driver
You lowered FY26 net product revenue guidance by $50M at the midpoint despite a 10% YoY beat in Q2. Is this entirely driven by gross-to-net 340B/Medicare Part D headwinds, or are you seeing competitive volume pressure in the RCC or NET markets?
STELLAR-303 Regulatory Strategy
With the non-liver metastases (NLM) subgroup showing a non-statistically significant trend in STELLAR-303, how does this alter your expectations for the FDA label in December? Will this restrict Zanza's market penetration strictly to the liver-met population?
R&D Expense Reduction Meaning
R&D guidance was lowered by $50M. Is this a result of systemic operational efficiencies, or does it reflect delays in patient enrollment and trial timelines for your Wave 2 Zanza trials and early pipeline assets?