Business Overview and Company History Exelixis, Inc. (EXEL) is an oncology-focused biopharmaceutical company that has established itself as a leader in the development and commercialization of innovative cancer therapies. With a diverse portfolio of approved products and a robust pipeline of promising drug candidates, Exelixis is well-positioned to drive long-term growth and deliver value to its shareholders.
Exelixis was incorporated in Delaware in November 1994 as Exelixis Pharmaceuticals, Inc. and changed its name to Exelixis, Inc. in February 2000. The company was founded with the goal of discovering and developing new medicines for difficult-to-treat cancers. Over the years, Exelixis has faced numerous challenges and obstacles in advancing its drug discovery and development programs. In the early 2000s, the company experienced financial difficulties and had to implement cost-cutting measures, including significant workforce reductions. Despite these setbacks, Exelixis remained committed to its mission and continued to invest in research and development.
A key milestone in the company's history was the FDA approval of its first commercial product, COMETRIQ, in 2012 for the treatment of progressive, metastatic medullary thyroid cancer. This approval validated Exelixis' research efforts and provided its first source of product revenue. In 2016, the company achieved another significant breakthrough with the FDA approval of CABOMETYX for the treatment of advanced renal cell carcinoma. CABOMETYX, a formulation of Exelixis' flagship molecule cabozantinib, has since become the company's primary commercial product and a major driver of revenue growth.
Exelixis has continued to expand the approved indications for CABOMETYX, including for the treatment of previously treated hepatocellular carcinoma in 2019 and previously treated, radioactive iodine-refractory differentiated thyroid cancer in 2021. Throughout its history, the company has navigated various regulatory and competitive challenges, including patent litigation and the potential introduction of generic competitors, through strategic decision-making, operational excellence, and a relentless focus on advancing its pipeline of innovative cancer therapies.
Product Portfolio and Pipeline Exelixis has produced four marketed pharmaceutical products, with two formulations of its flagship molecule, cabozantinib, leading the way. The company's flagship product, CABOMETYX (cabozantinib tablets), is a multi-tyrosine kinase inhibitor that has been approved for the treatment of advanced renal cell carcinoma (RCC), hepatocellular carcinoma (HCC), and differentiated thyroid cancer (DTC). CABOMETYX has become a standard of care in these indications, contributing significantly to Exelixis' revenue growth and solidifying its position as a leading player in the oncology space.
CABOMETYX was first approved by the FDA in April 2016 as a monotherapy for previously treated advanced RCC, and then in December 2017 for previously untreated patients with advanced RCC. In January 2021, the CABOMETYX label was expanded to include first-line advanced RCC in combination with nivolumab, marking the first CABOMETYX regimen approved for treatment in combination with an immune checkpoint inhibitor (ICI).
In addition to CABOMETYX, Exelixis has developed COMETRIQ (cabozantinib capsules) for the treatment of progressive, metastatic medullary thyroid cancer. The company's collaboration agreements with partners such as Ipsen and Takeda have also expanded the global reach of its cabozantinib franchise, with the drug being approved and marketed in over 67 countries outside the United States.
Exelixis' pipeline expansion efforts have been equally impressive, with the company's lead asset, zanzalintinib, currently undergoing an extensive late-stage clinical development program. Zanzalintinib is a novel, potent, third-generation oral tyrosine kinase inhibitor that targets VEGF receptors, MET, and the TAM kinases. The drug is being evaluated in pivotal trials for a variety of solid tumors, including colorectal cancer, non-clear cell renal cell carcinoma, and squamous cell carcinoma of the head and neck.
Beyond zanzalintinib, Exelixis continues to advance its earlier-stage pipeline, including the development of XL309, a small molecule inhibitor of USP1 that is being evaluated for the treatment of BRCA-mutated tumors. The company also made progress with its biotherapeutics programs, such as the initiation of a phase 1 trial for XB010, an antibody-drug conjugate targeting the 5T4 tumor antigen. Other pipeline programs in Phase 1 development include XL495, a small molecule inhibitor of PKMYT1, as well as various bispecific antibodies and additional antibody-drug conjugates being advanced through research collaborations and in-licensing arrangements.
Financial Performance and Ratios Exelixis has demonstrated a strong financial profile, with consistent revenue growth and profitability. In the fiscal year 2024, the company reported total revenues of $2.17 billion, an 18% increase compared to the previous year. Net product revenues, primarily driven by CABOMETYX, accounted for $1.81 billion of the total, marking an 11% year-over-year increase. This growth was primarily driven by an 8.2% increase in the number of CABOMETYX units sold, as well as a 2.9% increase in the average net selling price of CABOMETYX.
The company's net income for the fiscal year 2024 stood at $521.27 million, with a net profit margin of 24.0%. Earnings per diluted share were $1.76, compared to $0.65 in 2023. Exelixis' balance sheet remains robust, with $1.75 billion in cash, cash equivalents, and marketable securities as of December 31, 2024. The company's current ratio, a measure of liquidity, was a healthy 3.63, indicating its ability to meet short-term obligations.
Exelixis' financial ratios further illustrate its strong financial position. The company's return on assets (ROA) stood at 17.7% in 2024, while its return on equity (ROE) was 23.8%, showcasing its efficient use of its assets and capital to generate profits. The company's debt-to-equity ratio of 0.08 suggests a conservative capital structure, providing financial flexibility for future growth initiatives.
For the fourth quarter of 2024, Exelixis reported revenue of $566.75 million, representing a year-over-year growth of 18.1%. Net income for the quarter was $139.86 million. The company's operating cash flow for the full year 2024 was $699.97 million, with free cash flow of $633.79 million.
Liquidity and Capital Resources Exelixis maintains a strong liquidity position, as evidenced by its robust cash reserves and healthy current ratio. The company's $1.75 billion in cash, cash equivalents, and marketable securities provides a significant cushion for ongoing operations, research and development initiatives, and potential strategic investments. The current ratio of 3.63 indicates that Exelixis has more than enough short-term assets to cover its short-term liabilities, demonstrating financial stability and the ability to meet its near-term obligations comfortably.
The company's strong liquidity is further underscored by its quick ratio of 3.58, which excludes inventory from current assets and provides an even more conservative measure of short-term liquidity. Exelixis' debt-to-equity ratio of 0.085 reflects its conservative approach to leverage, providing additional financial flexibility.
Management has indicated that the company's aggregate of current cash and cash equivalents, marketable securities, net product revenues, and collaboration revenues will enable it to maintain operations for at least 12 months and thereafter for the foreseeable future. This strong financial position allows Exelixis to continue investing in its pipeline and pursue strategic opportunities without immediate funding concerns.
Pipeline Advancements and Regulatory Milestones Exelixis' pipeline development efforts have been a key driver of the company's growth and investor interest. In 2024, the company made significant strides in advancing its lead asset, zanzalintinib, through a series of pivotal trials.
The STELLAR-303 trial, evaluating zanzalintinib in combination with atezolizumab versus regorafenib in patients with metastatic, refractory non-microsatellite instability-high or non-mismatch repair-deficient colorectal cancer, completed enrollment in 2024. The company expects to report top-line results from this study in the second half of 2025.
Additionally, the STELLAR-304 trial, which is assessing zanzalintinib in combination with nivolumab versus sunitinib in previously untreated patients with advanced non-clear cell renal cell carcinoma, is progressing well, with completion of enrollment anticipated by mid-2025. The company also initiated the STELLAR-305 trial, a pivotal study evaluating zanzalintinib in combination with pembrolizumab versus pembrolizumab alone in patients with previously untreated PD-L1-positive recurrent or metastatic squamous cell carcinoma of the head and neck.
Regulatory Milestones and Collaboration Efforts In 2024, Exelixis achieved a significant regulatory milestone with the FDA's acceptance of the company's supplemental New Drug Application (sNDA) for CABOMETYX in the treatment of adult patients with previously treated, locally advanced or metastatic, well- or moderately differentiated pancreatic neuroendocrine tumors (pNET) or extrapancreatic neuroendocrine tumors (epNET). The FDA granted the sNDA standard review and assigned a Prescription Drug User Fee Act (PDUFA) target action date of April 3, 2025.
Exelixis' collaboration efforts have also been instrumental in advancing its pipeline and commercialization strategies. The company's partnerships with industry leaders, such as Ipsen, Takeda, and Merck, have enabled the global expansion of the cabozantinib franchise and the development of zanzalintinib in combination with various immunotherapies.
In October 2024, Exelixis announced a clinical development collaboration with Merck to evaluate the combination of zanzalintinib and Merck's KEYTRUDA (pembrolizumab) in squamous cell carcinoma of the head and neck, as well as the combination of zanzalintinib and Merck's WELIREG (belzutifan) in renal cell carcinoma. These collaborations leverage the strengths of both companies and have the potential to further enhance the clinical profile of Exelixis' pipeline assets.
Market Opportunity and Industry Trends Exelixis operates in the rapidly growing oncology drug market, which is expected to expand at a compound annual growth rate (CAGR) of approximately 11.5% and reach over $1.3 trillion by 2033. This growth is driven by factors such as increasing cancer incidence rates, advancements in precision medicine, and the development of novel targeted therapies and immunotherapies.
The company's focus on developing innovative cancer treatments positions it well to capitalize on this market opportunity. With its established cabozantinib franchise and promising pipeline candidates like zanzalintinib, Exelixis is poised to address significant unmet needs in various cancer indications and potentially capture a larger share of the expanding oncology market.
Risks and Challenges While Exelixis has demonstrated strong financial performance and pipeline progress, the company faces several risks and challenges that investors should be aware of:
1. Competitive Landscape: Exelixis operates in a highly competitive oncology market, with several novel therapies and combination regimens emerging for the indications in which CABOMETYX and zanzalintinib are being developed. The company must continuously adapt its strategies to maintain its market position and differentiate its products.
2. Regulatory Approvals and Timelines: The successful regulatory approval and timely launch of new indications for CABOMETYX and potential approvals for zanzalintinib are critical to Exelixis' growth. Delays or setbacks in the regulatory process could impact the company's revenue projections and market share.
3. Pipeline Execution: The successful advancement and execution of Exelixis' pipeline, particularly the zanzalintinib development program, is essential for the company's long-term success. Any failures or delays in clinical trials could adversely affect the company's growth prospects.
4. Reliance on Collaboration Partners: Exelixis' collaboration agreements with partners like Ipsen, Takeda, and Merck are crucial for the global commercialization of its products and the development of combination therapies. The company's performance is, to some extent, dependent on the execution and success of these partnerships.
5. Intellectual Property Challenges: Exelixis' ability to maintain and defend its intellectual property rights, particularly related to its cabozantinib franchise, is critical to preventing the introduction of generic competitors, which could significantly impact the company's revenues.
Outlook and Conclusion Exelixis is well-positioned to capitalize on the growing oncology market, leveraging its established cabozantinib franchise and its promising pipeline, led by the development of zanzalintinib. The company's strategic collaborations, robust financial position, and focus on innovation position it for long-term growth and value creation.
In the near term, Exelixis' key priorities include securing regulatory approvals for CABOMETYX in the neuroendocrine tumor indication, advancing the zanzalintinib pipeline through its pivotal trials, and continuing to explore combination therapies to expand the addressable patient populations for its products.
For the full year 2025, Exelixis expects the gross-to-net for the cabozantinib franchise to be between 29% and 30%. The company plans to provide updated net product revenue guidance, including the neuroendocrine tumor opportunity, at a later date following approval. Management has expressed confidence in the potential for continued growth in CABOMETYX sales, projecting that net product revenues may increase in fiscal year 2025.
With a strong balance sheet, a diversified portfolio of approved products and clinical-stage assets, and a proven track record of execution, Exelixis remains an attractive investment opportunity for investors seeking exposure to the promising oncology sector. The company's ability to generate significant cash flow, maintain a debt-free balance sheet, and invest in both internal research and development and external business development opportunities further strengthens its long-term growth prospects in the dynamic and expanding field of oncology therapeutics.