Exelixis’s SWOT analysis: cabo success, zanza potential drive stock outlook

Exelixis, Inc. (NASDAQ:EXEL), a biotechnology company focused on developing and commercializing cancer treatments, has been making significant strides in the oncology market. The company’s flagship product, cabozantinib (Cabo), continues to demonstrate strong performance, while its pipeline candidate zanzalintinib (Zanza) holds promise for future growth. With a perfect Piotroski Score of 9 according to InvestingPro data, and impressive financial metrics including a 30% return on equity and 24.49% revenue growth over the last twelve months, Exelixis demonstrates robust financial health. This analysis examines Exelixis’s current position, recent financial performance, and future prospects in light of the evolving oncology landscape.

Recent Financial Performance

Exelixis reported a strong first quarter in 2025, surpassing expectations with cabozantinib sales reaching $510 million, an 11% beat over consensus estimates. This performance was driven by an impressive 18% year-over-year growth in total prescriptions (TRx) and a 27% increase in new prescriptions (NRx). The company’s success prompted a raise in its full-year 2025 guidance, with net product revenue now expected between $2.05 billion and $2.15 billion, up $100 million from previous projections. The company’s strong execution is reflected in its exceptional 92% stock return over the past year, as tracked by InvestingPro, which also notes that five analysts have recently revised their earnings estimates upward.

The robust performance in Q1 2025 is particularly noteworthy given that the first quarter has historically been challenging for Exelixis. The company had missed Q1 revenues three times in the past four years. However, the recent label expansion for neuroendocrine tumors (NET) and strong script growth have contributed to breaking this pattern.

Cabozantinib Performance

Cabozantinib, Exelixis’s lead product, continues to be the primary driver of the company’s financial success. The drug has shown particular strength in renal cell carcinoma (RCC), where it has been gaining market share. Analysts attribute this growth to the impact of five-year data and strategic sales focus.

The recent approval for NET treatment late in Q1 2025 offers additional sales potential for cabozantinib. Analysts believe that the current guidance raise may not fully account for the NET opportunity, suggesting potential further upside. The stabilization of gross-to-net (GtN) price fluctuations, with only a slight decrease to 29.8% from 26.8% in the previous quarter, also contributes to the positive outlook for cabozantinib sales.

Zanzalintinib Development and Prospects

While cabozantinib drives current revenue, much of Exelixis’s future growth potential lies with zanzalintinib. The company is preparing for several pivotal readouts in the second half of 2025, including trials for colorectal cancer (CRC) and renal cell carcinoma (RCC).

The STELLAR-303 trial, evaluating the combination of zanzalintinib and atezolizumab against regorafenib in metastatic colorectal cancer (mCRC), has shown promising results. The trial met one of its dual-primary endpoints by demonstrating a statistically significant median overall survival (mOS) benefit in the intent-to-treat (ITT (NYSE:ITT)) population. Analysts have increased their probability of success for zanzalintinib in 2L mCRC to 80% from 50% based on these results.

Zanzalintinib’s potential extends beyond CRC. Phase 1b data showed promising results in clear cell and non-clear cell renal carcinoma patients. The STELLAR-002 study indicated median progression-free survival (mPFS) of 18.5 months for the doublet (zanzalintinib + nivolumab) and 13.0 months for the triplet (zanzalintinib + nivolumab and relatlimab).

Some analysts view zanzalintinib as a potential $5 billion opportunity, highlighting its importance to Exelixis’s future growth strategy. The focus on addressing gaps in cabozantinib’s performance, particularly in terms of tolerability, rather than proving superiority, may position zanzalintinib well in the market.

Pipeline and Future Outlook

Beyond cabozantinib and zanzalintinib, Exelixis is advancing several other promising candidates. These include XL495, targeting the PKMYT1 kinase, which was featured at the American Association for Cancer Research (AACR) conference. Other pipeline assets include XB010 (an antibody-drug conjugate), XL309 (a PARP inhibitor), and potential new INDs such as XB628 (a PD-L1/NKG2A bispecific antibody) and XB064 (an ILT2 monoclonal antibody).

The company’s robust pipeline and focus on novel targets could offer new therapeutic avenues and diversify Exelixis’s portfolio beyond its current reliance on cabozantinib.

Bear Case

How might competition impact Cabo’s market share in RCC?

While cabozantinib has shown strong performance in RCC, the competitive landscape in oncology is constantly evolving. New entrants or improved therapies from competitors could potentially erode cabozantinib’s market share. The maturation of the cabozantinib franchise in its current indications may limit future growth potential without successful pipeline progression or expansion into new indications.

What risks does Exelixis face if Zanza’s clinical trials disappoint?

Exelixis has placed significant emphasis on zanzalintinib’s potential, with multiple ongoing Phase 3 trials. If these trials fail to meet their primary endpoints or show less impressive results than anticipated, it could significantly impact the company’s growth prospects. The dependence on positive outcomes from the STELLAR-303 and other pivotal trials for zanzalintinib represents a considerable risk to Exelixis’s future valuation.

Bull Case

How could Zanza’s success in CRC and RCC drive Exelixis’ growth?

If zanzalintinib demonstrates strong efficacy and safety profiles in its ongoing trials, particularly in CRC and RCC, it could become a major growth driver for Exelixis. Success in these indications would not only expand the company’s market presence but also validate its pipeline strategy. The potential $5 billion opportunity projected by some analysts for zanzalintinib underscores the significant upside if clinical trials yield positive results.

What impact could the NET approval have on Cabo’s sales trajectory?

The recent approval of cabozantinib for neuroendocrine tumor treatment opens up a new market segment for Exelixis. As the NET indication is relatively new for cabozantinib, there is potential for significant growth in this area. If cabozantinib demonstrates strong uptake and efficacy in NET patients, it could drive sales beyond current projections and extend the drug’s commercial viability.

SWOT Analysis

Strengths:

• Strong and growing cabozantinib sales
• Successful label expansion into NET
• Promising pipeline with zanzalintinib as lead candidate
• Solid financial position with consistent revenue growth

Weaknesses:

• Heavy reliance on cabozantinib for current revenue
• Potential for market saturation in current indications
• Challenges in first-quarter performance historically

Opportunities:

• Zanzalintinib’s potential in multiple cancer types
• Expansion into new markets with NET approval
• Novel pipeline candidates addressing unmet needs
• Potential for strategic partnerships or acquisitions

Threats:

• Intense competition in the oncology market
• Risk of clinical trial failures for pipeline candidates
• Regulatory challenges and potential policy changes
• Pricing pressures in the pharmaceutical industry

Analysts Targets

• JMP Securities: $47 (July 24, 2025)
• Barclays (LON:BARC): $40 (July 10, 2025)
• Barclays: $29 (June 25, 2025)
• RBC Capital Markets: $40 (May 14, 2025)
• H.C. Wainwright & Co: $40 (February 14, 2025)
• BMO Capital Markets: $40 (January 29, 2025)
• Truist Securities: $43 (January 27, 2025)
• Piper Sandler: $37 (January 27, 2025)

Exelixis continues to attract mixed but generally positive sentiment from analysts, with price targets ranging from $29 to $47. The most recent targets tend to be more optimistic, reflecting the company’s strong Q1 2025 performance and raised guidance. The wide range of targets underscores the uncertainty surrounding the outcomes of zanzalintinib’s pivotal trials and the future growth trajectory of cabozantinib.

In conclusion, Exelixis stands at a critical juncture with its established cabozantinib franchise providing stable revenue while zanzalintinib and other pipeline candidates offer significant growth potential. The company’s success in navigating clinical development, regulatory approvals, and market competition will be crucial in determining its long-term value proposition for investors. According to InvestingPro’s analysis, Exelixis currently appears undervalued based on its comprehensive Fair Value model, which considers multiple valuation methods and growth prospects. The company’s strong financial position is evidenced by its healthy current ratio of 3.5 and moderate debt levels. As Exelixis continues to evolve its portfolio and expand into new indications, it remains a closely watched player in the oncology space.

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This analysis is based on information available up to July 29, 2025, and market conditions may have changed since then.

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