Exelixis: The Oncology Innovator Trading Below Its Potential

While Exelixis’s top-line revenue might initially appear disappointing, a deeper analysis reveals a compelling growth narrative. The biotechnology firm is demonstrating remarkable commercial strength with its flagship product, cabozantinib. The critical question for investors is whether recent regulatory approvals and promising clinical data can reverse the stock’s current downward trajectory.

Robust Financial Health and Strategic Capital Allocation

Exelixis maintains a formidable financial position with $1.4 billion in cash and marketable securities. Demonstrating strong confidence in its valuation, the company deployed $301.8 million exclusively for share repurchases in the second quarter. This substantial buyback serves as a powerful signal from management to the market regarding their view of the company’s intrinsic worth.

Despite these solid fundamentals, the equity has shown recent weakness, trading significantly below its 52-week high. This divergence between operational performance and stock price performance presents a intriguing scenario for market participants.

Flagship Asset Drives Impressive Underlying Growth

A closer look at the Q2 financials reveals the core strength of the business. Although total revenue reached $568.3 million, this figure was impacted by a one-time $150 million milestone payment recorded in the second quarter of 2024. Excluding this special item, the company’s fundamental performance shines through.

The net product revenue for cabozantinib surged by 19% year-over-year to $520 million. This robust growth is propelled by its sustained market leadership in renal cell carcinoma and the successful commercial introduction of CABOMETYX for neuroendocrine tumors.

Should investors sell immediately? Or is it worth buying Exelixis?

Clinical Pipeline Delivers Significant Milestones

Exelisix is achieving substantial progress across its development pipeline. The company reported positive topline results from its STELLAR-303 study, evaluating zanzalintinib in combination with an immune checkpoint inhibitor for metastatic colorectal cancer. The data showed a significant improvement in overall survival, prompting plans to initiate discussions with regulatory authorities.

Furthermore, patient recruitment for the STELLAR-304 trial in non-clear cell renal cell carcinoma was completed in May. Results from this pivotal study are anticipated in the first half of 2026.

Regulatory Expansion and Intellectual Property Fortification

The recent approval of CABOMETYX by the European Union for treating neuroendocrine tumors marks a significant expansion of its commercial footprint. The therapy is already demonstrating rapid market adoption, capturing leading share among new patient treatments.

In a crucial development for long-term revenue protection, the US Patent Office recently denied challenges to key patents covering cabozantinib. This decision provides a strong validation of the company’s robust intellectual property estate.

The convergence of commercial execution, clinical advancement, and financial stability suggests Exelixis may be positioned for a potential reassessment by investors seeking value in the oncology sector.