Exelixis (EXEL) Q3 2026 earnings review
Exelixis protects Cabometyx until 2030, but its next drug slips
Exelixis, the maker of the Cabometyx cancer pill, protected its main drug from generic rivals while its next drug faced delays. Third-quarter revenue rose 10% from a year ago to $659 million as US product sales sped up, and buybacks lifted profit per share by 21% excluding one-offs. Chief executive Michael Morrissey kept the full-year revenue plan unchanged, which by our math leaves growth slowing to 5% in the fourth quarter.
| US net product sales | $604.9M +11.4% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $0.94 +20.5% from a year ago |
| Zanzalintinib FDA target date | Mar 3, 2027 delayed 3 months from Dec 3, 2026 |
| Full-year revenue outlook | Unchanged middle of the range: 8.8% growth |
⚖️ Verdict: 🟢 Bullish
The story got better because an appeals court victory against MSN Laboratories and a settlement with Azurity lock out generic copies of Cabometyx until 2030. That removes the main legal threat to the drug that brings in almost all of the company's revenue. The bad news: the US regulator extended its review of zanzalintinib in colorectal cancer by three months to March 2027, and kidney cancer trial results slipped into early 2027.
The question now is whether the seven late-stage trials for zanzalintinib will create a second commercial franchise or waste research cash. Supporters see multiple shots at new cancer markets paid for by Cabometyx cash flow, while skeptics point to the failed liver-free subgroup in colorectal cancer and reliance on partner Merck for the largest kidney cancer studies. The kidney trial readout in the first quarter of 2027 and the March 3 FDA decision will settle it.
🐂 Bull Case
Court Win and Settlement Protect Cabometyx Until 2030
Exelixis relies on one drug compound, cabozantinib, sold mainly as Cabometyx for kidney, liver and neuroendocrine cancers. Generic drugmakers have challenged its patents to launch cheaper copies before 2030. In August, a federal appeals court upheld a ruling against rival MSN Laboratories, so any approval of MSN's generic copy "shall not be a date earlier than January 15, 2030". Yesterday, the biotech group also settled a lawsuit with Azurity Pharmaceuticals.
The company will "grant Azurity a license to market its proposed 505(b)(2) NDA product in the U.S. beginning on December 1, 2030", while other settled generics stay out until January 2031. That removes the primary legal threats to its main product for the next three years, because the appellate court backed the core patents and Azurity agreed to wait.
What to watch: the outcome of the separate patent trial with MSN scheduled for November 2026. A victory there would close MSN's remaining path to enter the US market before 2030.
Cabometyx Sales Accelerated After Last Quarter's Cut
Three months ago, Exelixis cut its full-year sales plan by $50 million because prescriptions for neuroendocrine tumors (NET), a slow-growing cancer, built up more gradually than planned. In the third quarter, US product sales of the cabozantinib franchise rose 11.4% from a year ago to $604.9 million, "primarily due to an increase in sales volume and an increase in average net selling price".
That growth beat the 10.2% pace from the second quarter and landed slightly above the quarterly run-rate implied by the lowered full-year outlook, by our math. The drugmaker kept its full-year product sales plan at $2.30–2.35 billion, which leaves $592 million at the middle of the range for the fourth quarter, or 8.3% growth against an easy comparison.
What to watch: fourth-quarter US product sales against the $617 million top of the implied range. A finish above that ceiling would show that refills for neuroendocrine tumors are finally speeding up.
Buybacks Cut the Share Count by 8%
Exelixis uses its cash flow to buy back its own stock, which spreads profit across fewer shares. By our math, the oncology company spent about $300 million on buybacks in the third quarter, bringing total repurchases since March 2023 to $3.2 billion and retiring 97.8 million shares at an average price of $32.25.
Those purchases lowered the diluted share count by 8.2% from a year ago to 255.8 million, turning a 10.2% rise in profit excluding one-offs into a 20.5% jump in profit per share to $0.94. Under its latest $750 million buyback plan from May, the group has spent $402.1 million at an average price of $54.03 per share, leaving $347.9 million by our math.
What to watch: the remaining $347.9 million buyback allowance through the end of 2027. A new authorization before that money runs out would keep per-share profit growing faster than net income.
🐻 Bear Case
Key Zanzalintinib Milestones Slipped Into Early 2027
Chief executive Michael Morrissey said the company is "driving the cabozantinib franchise forward while preparing for zanzalintinib as our next potential franchise opportunity." Zanzalintinib is an experimental cancer pill that Exelixis is testing across seven late-stage trials to build a second product line. "The enthusiasm around the zanzalintinib franchise continues, and we look forward to sharing more progress when appropriate." Yet both near-term milestones slipped into 2027.
- Colorectal cancer FDA decision: pushed from December 3, 2026 to March 3, 2027
- STELLAR-304 kidney cancer trial readout: pushed from the second half of 2026 to the first quarter of 2027
- New trials started: STELLAR-316 in colorectal cancer and STELLAR-202 in lung cancer
The US regulator "extended the review period for its NDA by three months after the company submitted updated safety and efficacy data in response to an FDA information request". That filing rests on one survival measure because the second measure failed in June, "showing a non-statistically significant trend in OS favoring zanzalintinib in combination with atezolizumab". Meanwhile, the group now "expects topline results from the phase 3 STELLAR-304 pivotal trial in the first quarter of 2027", its second delay.
What to watch: the STELLAR-304 kidney cancer results in the first quarter of 2027 and the FDA decision on March 3, 2027. A rejection or weak trial readout would leave the company dependent on Cabometyx alone.
Launch Preparation Lifted Overhead Costs and Lowered Margins
Exelixis expanded its gastrointestinal sales team earlier this year to sell Cabometyx for neuroendocrine tumors and prepare for zanzalintinib in colorectal cancer. Selling, general and administrative expenses — overhead, legal and marketing costs — rose 25.0% from a year ago to $154.6 million, "primarily related to increases in personnel expenses, marketing activities, and legal and advisory fees".
Overhead climbed 2.8 percentage points to 23.5% of revenue, while research and development fell 1.5 points to 31.8% and manufacturing costs rose to 4.3% of product sales. Reported operating margin rose 1.2 points to 40.8% only because last year included a $19.8 million restructuring charge; without that one-off, operating margin fell 2.1 points by our math, and the FDA delay means the sales team waits longer for a second drug.
What to watch: fourth-quarter overhead spending against the $158 million implied by the middle of the full-year plan. Spending near the $183 million top of the range would squeeze operating margins before zanzalintinib earns any revenue.
Risks this quarter didn't answer
Several standing concerns and commercial metrics were not disclosed in the third-quarter press release and wait for the conference call or quarterly filing.
- Neuroendocrine tumor sales and patient share: the release gives no sales split between kidney and neuroendocrine cancers, no update to the 45% new-patient share, and no size for the patient draw from the STELLAR-311 trial.
- Prescription volume versus units sold: management did not print total prescription volume growth or unit shipments in the release to explain last quarter's six-point gap between them.
- Rebates, discounts and US drug policy: the release gives no update on the 30–31% gross-to-net discount rate or potential pharmaceutical tariffs.
- First-line kidney cancer reliance on Merck: the LITESPARK-033 and LITESPARK-034 trials remain active under Merck's control with no timeline given.
💲 Other KPIs
Collaboration revenue — payments from partners Ipsen and Takeda for drug sales outside the US and milestone fees — dipped 1.9% from a year ago and 3.4% from last quarter. Partner royalties within that total grew 11.9% from a year ago to $51.8 million, while milestone payments and research reimbursements declined.
Interest earned on cash and marketable securities fell 10.1% from a year ago, after dropping 15.4% in the second quarter. Exelixis did not include a balance sheet in its release, so lower interest income is the main read on cash levels after the biotech group spent about $300 million on share buybacks.
🔮 Guidance
Unchanged. The plan still calls for 8.8% revenue growth at the middle of the range, after the $50 million cut three months ago. By our math, that leaves $626.8 million for the fourth quarter, or 4.7% growth from a year ago against 10.2% this quarter, because the outlook excludes any new zanzalintinib revenue.
Unchanged. The drugmaker expects US product sales to grow 9.5% this year at the middle of the range, helped by a 3% list-price increase from January. By our math, that leaves $592.1 million for the fourth quarter, or 8.3% growth from a year ago, making the full-year target achievable after third-quarter sales grew 11.4%.
Unchanged at the middle of the range. Management narrowed the manufacturing cost plan from 3.5–4.5% to about 4% of product sales. Manufacturing costs rose to 4.3% of product sales in the third quarter after sitting at 3.6% in the first half, putting nine-month costs at 3.9%.
Unchanged. After cutting the research plan by $50 million last quarter, the company kept the middle of the range at $850 million, or 3.0% growth for the year. By our math, that leaves $228.6 million for the fourth quarter, up 7.2% from a year ago as new zanzalintinib trials enroll patients.
Unchanged. The plan keeps full-year overhead and marketing costs at $600 million at the middle of the range, up 15.7% from last year. By our math, that leaves $158.2 million for the fourth quarter, a 28.6% increase from a year ago.
Cut. The US company lowered its expected full-year tax rate by 5 percentage points at the middle of the range, to 17%. Because the nine-month tax rate was 21.2% after a 22.9% rate in the third quarter, the new plan points to a sharp tax drop in the fourth quarter, mirroring last year's fourth-quarter tax drop.
❓ Key Questions
What data did the FDA ask for on zanzalintinib?
The agency delayed its colorectal cancer decision by three months after Exelixis sent updated safety and efficacy data. Investors need to know whether regulators questioned the failed survival measure in patients without liver tumors.
Why did the STELLAR-304 kidney trial slip again?
Management pushed top-line results from the second half of 2026 into the first quarter of 2027, after an earlier move from the first half. Slower patient events could mean patients are living longer in both study arms.
How much did neuroendocrine tumors add to Q3 sales?
US product revenue accelerated to 11.4% growth, but the release omitted neuroendocrine tumor sales, new-patient market share, and prescription volume growth. Without those figures, outsiders cannot tell if last quarter's slow ramp has improved.
Why does the tax outlook point to a Q4 drop?
The full-year tax outlook fell from 21–23% to 16–18% even though the nine-month tax rate sits at 21.2%. Management did not explain what tax credit or deduction arrives in the fourth quarter.