EXELIXIS, INC.

Exelixis is an oncology company focused on innovating next-generation medicines and regimens at the forefront of cancer care. The company operates in the highly competitive biopharmaceutical industry, specifically within oncology, where it develops and commercializes therapies for difficult-to-treat cancers. The filing describes a market environment with intense competition from major pharmaceutical and biotechnology companies, as well as academic research institutions, and notes that the company's primary product, cabozantinib, is approved in 68 countries outside the U.S. for various indications including advanced renal cell carcinoma, previously treated hepatocellular carcinoma, and others. The industry is characterized by constant technological change and diverse offerings of oncology therapies, with significant scrutiny on drug pricing from U.S. federal and state governments.

Exelixis' primary competitive advantages are rooted in the strength of its clinical data for CABOMETYX, its patent portfolio, and its research and drug development capabilities. The filing names numerous competitors across its approved indications, including Merck & Co., Bristol-Myers Squibb, Pfizer, Eisai, Novartis, Bayer, and Eli Lilly, among others. For CABOMETYX in advanced RCC, principal competition includes the combination of Merck & Co.'s pembrolizumab and Pfizer's axitinib, and the combination of BMS's ipilimumab and nivolumab. The company believes its ability to compete depends on factors such as efficacy, safety, timing of regulatory approval, and protection of its intellectual property. The filing notes that many competitors have greater capital resources, larger research and development staff, and more extensive manufacturing and commercial capabilities.

Exelixis generates revenue primarily through the sale of its marketed pharmaceutical products, with sales related to cabozantinib accounting for the majority of revenues. The company's core business model involves the discovery, development, and commercialization of new medicines for difficult-to-treat cancers. Revenue is derived from net product revenues from sales of CABOMETYX and COMETRIQ in the U.S., and collaboration revenues which include license revenues (milestones and royalties) and collaboration services revenues (development cost reimbursements and product supply) from partnerships with Ipsen and Takeda for commercialization outside the U.S. The company also has historical collaborations with Genentech for COTELLIC and Daiichi Sankyo for MINNEBRO, though it does not expect significant revenues from these arrangements.

Exelixis has produced four marketed pharmaceutical products. Two are formulations of its flagship molecule, cabozantinib: CABOMETYX (cabozantinib) tablets and COMETRIQ (cabozantinib) capsules. CABOMETYX is approved for advanced renal cell carcinoma (both as monotherapy and in combination with nivolumab), previously treated hepatocellular carcinoma, previously treated radioactive iodine-refractory differentiated thyroid cancer, and previously treated advanced pancreatic neuroendocrine tumors and extra-pancreatic neuroendocrine tumors. COMETRIQ is approved for progressive, metastatic medullary thyroid cancer. In 2025, net product revenues from CABOMETYX were $2,113,369 thousand ¹ and from COMETRIQ were $9,435 thousand ². The other two products are COTELLIC (cobimetinib), an inhibitor of MEK approved for advanced melanoma and marketed under a collaboration with Genentech, and MINNEBRO (esaxerenone), approved for hypertension in Japan and licensed to Daiichi Sankyo.

The company's pipeline includes zanzalintinib, a novel oral inhibitor of kinases including TAM kinases, MET, and VEGF receptors, which is under FDA review for certain forms of colorectal cancer and is the focus of an extensive late-stage clinical development program. Other pipeline programs in phase 1 development include XL309, a small molecule inhibitor of USP1; XB010, an antibody-drug conjugate targeting 5T4; XB628, a first-in-class bispecific antibody targeting PD-L1 and NKG2A; and XB371, a next-generation tissue factor-targeting ADC with a topoisomerase inhibitor payload. The company also has a collaboration with Merck to evaluate zanzalintinib in combination with WELIREG in RCC. In 2025, the company generated $2,122,804 thousand ³ in net product revenues from sales of CABOMETYX and COMETRIQ, and earned $179,200 thousand ⁴ in royalties on net sales of cabozantinib products outside of the U.S.

In March 2025, the FDA approved CABOMETYX for patients with previously treated advanced neuroendocrine tumors. In June 2025, the company announced positive top-line results from the STELLAR-303 phase 3 pivotal trial evaluating zanzalintinib in combination with atezolizumab versus regorafenib in metastatic colorectal cancer, demonstrating a statistically significant improvement in overall survival. In December 2025, the company submitted a New Drug Application to the FDA for zanzalintinib in combination with atezolizumab for previously treated metastatic colorectal cancer. In October 2025, the Board of Directors authorized a stock repurchase program for up to an additional $750,000 thousand ⁵ of common stock. As of December 31, 2025, the company had repurchased 30.2 million ⁶ shares of common stock for an aggregate purchase price of $1,159,700 thousand ⁷ under its stock repurchase programs. The company also entered into a settlement agreement with Biocon in July 2025, resolving patent litigation related to Biocon's ANDA.

Fiscal year 2025 was the company's ninth consecutive year of annual profitability, featuring growth in net product revenues of approximately 17% year-over-year. Total revenues for 2025 were $2,320,126 thousand ⁸, compared to $2,168,701 thousand ⁹ for 2024. Net income for 2025 was $782,570 thousand ¹⁰, or $2.88 per share basic ¹¹ and $2.78 per share diluted ¹², compared to $521,267 thousand ¹³, or $1.80 per share basic ¹⁴ and $1.76 per share diluted ¹⁵, for 2024. The increase in net product revenues was primarily related to a 16% increase in the number of CABOMETYX units sold, reflecting continuing demand for CABOMETYX in combination with nivolumab as a first-line treatment for advanced RCC and demand for previously treated advanced NET.

A primary growth vector is the continued development and potential commercialization of zanzalintinib, which is being evaluated in a series of pivotal trials. The STELLAR-303 trial in metastatic colorectal cancer met its primary endpoint, and an NDA was submitted to the FDA in December 2025, with a PDUFA target action date of December 3, 2026 ¹⁶. The company expects top-line results from the STELLAR-304 trial in non-clear cell RCC in mid-2026 ¹⁷, depending on event rates. The company also plans to initiate STELLAR-201, a phase 2 study in meningioma, anticipated to commence in the first half of 2026 ¹⁸, and STELLAR-316, a phase 3 pivotal trial in collaboration with Natera in resected stage II/III CRC, anticipated to commence in mid-2026 ¹⁹. The company is also expanding its pipeline through drug discovery efforts and expects to progress up to two new development candidates into preclinical development during 2026 ²⁰.

Another growth vector is the expansion of the cabozantinib franchise into new indications. In March 2025, the FDA approved CABOMETYX for previously treated advanced neuroendocrine tumors. Outside the U.S., Ipsen received approval for CABOMETYX for this indication from the EC for the EEA and health regulatory authorities in Brazil and Australia in July 2025, and from health regulatory authorities in Switzerland and Singapore in October 2025 and December 2025, respectively. The company also has a clinical development collaboration with Merck to evaluate zanzalintinib in combination with WELIREG in RCC, with Merck sponsoring multiple trials including a phase 3 trial. The company continues to retain all global commercial and marketing rights to zanzalintinib under this collaboration.

The company projects its gross margin in 2026 will remain consistent with fiscal year 2025, which was 96% ²¹. The company projects its effective tax rate may be between 21% and 23% ²² in fiscal year 2026. The company projects its research and development expenses may increase for fiscal year 2026, primarily driven by increases in clinical trial costs, including current and planned trials evaluating zanzalintinib, XB628, XB371, and XB010, and personnel expenses. The company projects its selling, general and administrative expenses may increase in fiscal year 2026 as a result of increases in personnel expenses for salesforce expansion in support of the commercial sale of CABOMETYX for the treatment of patients with previously treated advanced NET, marketing activities in support of the anticipated commercial launch of zanzalintinib, and legal and advisory fees.

The company does not operate its own manufacturing or distribution facilities and relies on various third-party contract manufacturing organizations. The company continues to expand this network to meet manufacturing and supply needs for its biotherapeutic and small molecule product candidates. The company has entered into agreements with secondary contract manufacturing organizations to produce additional commercial supplies of CABOMETYX tablets and cabozantinib drug substance to bolster supply chain robustness. The company employs highly skilled personnel to manage activities at its third-party contract manufacturers and other supply chain partners. The company has not experienced significant production delays or seen significant impairment to its supply chain as a result of ongoing geopolitical hostilities or other global events.

The company plans to continue leveraging its operating cash flows to advance a broad array of diverse biotherapeutics and small molecule programs. In October 2025, the Board of Directors authorized the October 2025 SRP for the repurchase of up to an additional $750,000 thousand ²³ of common stock before December 31, 2026. As of December 31, 2025, approximately $590,200 thousand ²⁴ remained available under the October 2025 SRP for future stock repurchases. The company has not paid dividends on its common stock since inception and currently does not plan to pay any cash dividends in the foreseeable future. The company projects that its research and development expenses may increase for fiscal year 2026, and its primary cash requirements for operating activities are projected to increase in fiscal 2026.

A key headwind is the potential entrance of generic competitors to CABOMETYX. The company has received Paragraph IV certification notice letters from MSN, Teva, Cipla, Sun, and Biocon concerning ANDAs for generic versions of CABOMETYX tablets, and from Azurity and Handa concerning 505(b)(2) NDAs for cabozantinib tablets and capsules. The introduction of a generic version of cabozantinib would likely decrease revenues derived from U.S. sales of CABOMETYX. The company also faces risks from healthcare reform and drug pricing legislation, including the Inflation Reduction Act, which enables CMS to assert control over prices of certain drugs. The company has qualified for the small biotech exception with respect to its cabozantinib franchise products through IPAY 2027 ²⁵ and has reapplied for IPAY 2028 ²⁶.

Another constraint is the highly competitive nature of the oncology market. The filing notes that the specific indications for which CABOMETYX is approved are highly competitive, with several novel therapies and combinations approved or in advanced development. The competitive landscape for RCC is evolving rapidly, especially with the entrance and increased adoption of ICI and ICI-TKI combination therapies. The company also faces risks related to its reliance on collaboration partners Ipsen and Takeda for commercialization outside the U.S., as it cannot control the amount and timing of resources they dedicate. Additionally, the company's ability to expand its pipeline is dependent on successful drug discovery and in-licensing, which are inherently uncertain and competitive.

The company's ability to grow is highly dependent on the commercial success of CABOMETYX in its approved indications, and the timing of generic competition poses a significant risk. The company has received Paragraph IV certification notice letters from multiple companies seeking to market generic versions of CABOMETYX tablets, and the introduction of a generic version would likely decrease revenues derived from U.S. sales. The company is also subject to risks from healthcare reform, particularly the Inflation Reduction Act, which enables CMS to assert control over prices of certain single-source drugs. The company has qualified for the small biotech exception for its cabozantinib franchise products through IPAY 2027 ²⁷, but the long-term impact of the IRA remains unclear. Additionally, the company relies on collaboration partners Ipsen and Takeda for the commercialization of CABOMETYX outside the U.S., and it cannot control the amount or timing of resources they dedicate, which could reduce the revenue the company receives under these agreements. The company's clinical testing of product candidates is a lengthy, costly, and uncertain process that may fail to demonstrate sufficiently differentiated safety and efficacy data to compete in the highly competitive market environment.

Management's message emphasizes that 2025 was the company's ninth consecutive year of annual profitability, featuring growth in net product revenues of approximately 17% year-over-year. The tone is forward-looking, focusing on leveraging operating cash flows to advance a broad array of diverse biotherapeutics and small molecule programs. Key strategic priorities emphasized for the period ahead include: advancing the zanzalintinib development program, which includes a series of ongoing and planned pivotal trials; expanding the oncology product pipeline through drug discovery efforts, including research collaborations, in-licensing arrangements, and other strategic transactions; and continuing to support company-sponsored and externally sponsored clinical trials evaluating cabozantinib and zanzalintinib. Management also highlights the rational and disciplined approach to investment, as demonstrated by the decision to discontinue further development of the XL495 program and the STELLAR-305 trial.