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Exelixis has quietly become one of the more profitable mid-cap oncology stories in the market. Powered by its flagship cancer drug Cabometyx, the company has delivered eight consecutive years of profitability, mid‑90s% gross margins, and steadily rising free cash flow. That kind of consistency is rare in biotech.

But the stock has already had a big run. Over the last year, EXEL has climbed roughly 50–60% from its lows and about 28% in the most recent 12‑month period, as investors embraced the “cash‑flow compounder” narrative and bid up anything with clean execution and oncology exposure. Investor’s Business Daily, Jan 21 2026

At around $44 per share, Exelixis now trades near 17x earnings and about 16x EV/EBITDA, which is no longer obvious deep value territory. The market is effectively saying: we believe Cabometyx can keep growing into 2026 and that the next big asset, zanzalintinib, will eventually turn into a second franchise.

Our job is to ask: is that belief already fully reflected in the price, or is there still enough margin of safety to justify new money today?

From our deep dive into SEC filings, management commentary, and third‑party coverage, we come to a clear stance: we rate EXEL a “WAIT”. We see a good business, solid management, and real upside optionality—but also a concentrated earnings base and a looming patent/policy overhang that are not being heavily discounted at current levels.

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In this piece, we’ll walk through how the business actually makes money, what the market is assuming, and what would need to happen—good or bad—for EXEL to move meaningfully from here over a 6–36 month horizon.

Exelixis at a Glance: A Single-Drug Cash Machine Trying to Grow Up

Exelixis is a U.S.-focused oncology biopharma company built almost entirely on one molecule: cabozantinib. The drug is sold as CABOMETYX tablets in renal cell carcinoma (RCC), hepatocellular carcinoma (HCC), differentiated thyroid cancer (DTC), and, as of March 2025, pancreatic and extra‑pancreatic neuroendocrine tumors (NET). Exelixis 10-K (2025) It’s also marketed as COMETRIQ capsules for metastatic medullary thyroid cancer.

That single franchise drives more than 80% of company revenue. In 2024, Exelixis reported $2,168.7M total revenue, of which $1,809.4M came from cabozantinib net product sales. Exelixis FY24 prelim PR, Jan 2025 Cost of goods sold is tiny at just 4–5% of net product revenue, resulting in mid‑90s% gross margins—which explains how EXEL can fund nearly $900M of R&D and more than $500M of SG&A and still throw off hundreds of millions of dollars in annual profit.

The core near‑term story is simple:

Cabometyx has gained leadership in U.S. RCC, with around 45% share of the TKI market and 21% TRx growth versus 13% for the overall TKI basket. Investing.com Q2‑25 slides, Oct 2025
The March 2025 U.S. approval in pancreatic and extra‑pancreatic NET is off to a strong start, with Cabometyx capturing about 35% new‑patient share in second‑line+ oral NET therapies. AlphaStreet Q3‑25 call, Nov 2025
Management is guiding 2026 net product revenue to $2.325–2.425B and total revenue to $2.525–2.625B, implying continued mid‑teens growth off a 2024 base. Zacks, Jan 12 2026

At the same time, Exelixis is trying to turn zanzalintinib, a next‑gen TKI, into its second major franchise across colorectal cancer (CRC), RCC, and NET. The Phase 3 STELLAR‑303 trial in metastatic CRC showed an overall survival benefit versus regorafenib, and an NDA submission in CRC is planned as the first commercial step. Business Wire, Oct 15 2025

Crucially, none of that potential zanzalintinib revenue is in the company’s 2026 guidance. For now, it’s all option value.

From a high level, our take is:

The underlying business is stronger than many mid‑cap biotechs: high margins, recurring revenue, net cash, and a real pipeline.
But the value is still dominated by one drug with a 2026 composition‑of‑matter expiry and active generic challenges. Exelixis 10-K (2025), IP discussion
The stock has rerated from “undervalued, misunderstood” to “well‑owned, momentum compounder,” which changes how we think about risk‑reward.

Is EXEL Stock a Buy in 2026—or Already Priced for Solid Execution?

Our base‑case valuation implies Exelixis is roughly fairly valued to slightly ahead of itself.

The scenario work from our research team frames it like this:

Base case (55% probability)

Implied value: $48
Assumes Cabometyx maintains around 45% U.S. RCC TKI share, the NET ramp continues, and mid‑teens revenue growth persists into 2026.

Bear case (25% probability)

Implied value: $35
Assumes payer pressure and drug‑pricing reform cap effective net prices, slowing volume growth to low single digits from 2026.

Bull case (20% probability)

Implied value: $55
Assumes clean FDA review for zanzalintinib in CRC, strong launch, and continued share gains for Cabometyx.

With the stock around $44:

Upside to the base case (~$48) is mid‑single to low‑double digits.
Upside to the bull case (~$55) is better, but requires a lot to go right on both Cabometyx and zanzalintinib.
Downside to the bear case (~$35) is on the order of 20–25% and is driven by risks we consider very real over a 3–5‑year horizon: pricing pressure, earlier‑than‑expected generic competition, or regulatory delays.

So we ask ourselves: is mid‑teens upside for base‑case execution enough to compensate for 20–25% downside if things track closer to the bear scenario? We don’t think so—at least not for new capital today.

Our judgment today:

Rating: WAIT
Attractive entry zone: around $38 or lower
Trim zone: above $52
Re‑assessment window: 6–12 months

At a lower price—or with clear evidence that Cabometyx is outrunning guidance and zanzalintinib is de‑risking faster—the skew would change, and we’d be more comfortable upgrading to a buy.

How Does Exelixis Actually Make Its Money?

Cabometyx economics: a high-margin machine with a clock on it

Cabometyx is the textbook example of a modern specialty oncology asset:

High list price per patient
Chronic or long‑duration use in metastatic disease
Very low manufacturing cost
Substantial payer rebate and co‑pay support requirements

According to the 2024 Form 10‑K (2025), revenue breakdown and FY24 preliminary release, Jan 2025:

2024 total revenue: $2,168.7M
2024 cabozantinib net product revenue: $1,809.4M
2024 royalties: $166.9M
Cost of goods sold: ~4–5% of net product revenue

By Q3 2025, cabozantinib revenue was still growing at a healthy clip:

Q3 2025 total revenue: $597.8M (+10.8% YoY)
Net product revenue: $542.9M (+13.5% YoY)
Cabometyx contribution: $539.9M
Net income: $193.6M vs $118.0M a year earlier, showing strong operating leverage. Exelixis 10-Q (2025), Q3 results

The business model is highly sensitive to:

Script volume in RCC, NET, HCC, and DTC
Net pricing, which is driven by list prices minus rebates, discounts, and co‑pay support
Coverage and reimbursement decisions by Medicare and commercial payers

Filings explicitly state that future cash generation “for the foreseeable future” depends on Cabometyx’s commercial success and payer coverage. Exelixis 10-K (2025) That tells us this isn’t yet a diversified platform story; it’s still a single‑asset story with a big R&D overlay.

Customer and payer dynamics: resilient but policy-sensitive

Oncologists tend to stick with a regimen once a patient is responding, and Cabometyx has become a standard of care in advanced RCC, which supports stable, refill‑driven volume. Exelixis 10-K (2025) That makes the revenue base relatively non‑cyclical in a macro sense.

But the real risk isn’t macro; it’s policy and competition:

A large portion of volume runs through Medicare Part D and commercial insurance.
Co‑pay accumulator and maximizer programs can increase patient cost burden and reduce effective adherence.
Denials, tighter prior authorizations, or formulary exclusions can hit both volume and net price.

Management’s own risk disclosures underscore this point: revenue is more exposed to regulatory and payer behavior than to economic cycles. Exelixis 10-K (2025)

For investors, that means you should be watching:

Any changes in Medicare or IRA frameworks that touch oncology pricing.
Signals from major specialty pharmacies and distributors (Cencora, McKesson, CVS, etc.), which together account for meaningful slices of revenue and trade receivables. Exelixis 10-K (2025), customer concentration

Will Exelixis Deliver Long-Term Growth Beyond Cabometyx?

The key strategic question for EXEL over the next 3–5 years is simple: can the company successfully transition from a single‑franchise business to a dual‑franchise oncology platform before patent and pricing headwinds catch up?

We see three moving parts.

1. Cabometyx: runway and patent risk

On the positive side, Cabometyx is performing extremely well today:

~45% share of the U.S. RCC TKI market
Only TKI gaining share, with 21% TRx growth vs 13% for the TKI basket in recent data. Investing.com Q2‑25 slides, Oct 2025
Rapid adoption in NET, with about 35% new‑patient share in 2L+ oral therapies. AlphaStreet Q3‑25 call, Nov 2025

Management guides 2026 net product revenue to $2.325–2.425B and expects to keep gross margins in the mid‑90s% range while scaling R&D to $875–925M and SG&A to $575–625M. Zacks, Jan 12 2026 That’s a strong near‑term playbook.

But the clock is ticking:

Core U.S. composition‑of‑matter patents on cabozantinib expire in 2026.
Secondary patents (salt forms, formulations, methods of use) extend listed protection for CABOMETYX into 2030–2033. Exelixis 10-K (2025), IP section
There are already Paragraph IV ANDA challenges from generic manufacturers like Sun and MSN, which could pull forward the effective loss of exclusivity. Exelixis 10-K (2025)

Our read: the moat around Cabometyx is real today, but not durably wide. It’s likely strong for the next couple of years, increasingly questionable after that.

In a bull world, secondary patents hold, generic challenges are resolved favorably, and pricing reforms are manageable. In a bear world, generic entry and/or policy changes arrive earlier and harder than the market is pricing in, compressing cash flows just as R&D and SG&A are at peak levels.

2. Zanzalintinib: the aspiring second franchise

The second leg of the stool is zanzalintinib. Management’s plan is to position it as a next‑generation backbone across:

Metastatic colorectal cancer (CRC)
RCC (including non‑clear‑cell)
NET

Key late‑stage programs include:

STELLAR‑303 (CRC) – Phase 3 data showed an overall survival benefit versus regorafenib in metastatic CRC, presented at ESMO 2025 and published in The Lancet. Business Wire, Oct 15 2025
STELLAR‑304 (non‑clear‑cell RCC) – Enrollment completed, topline data expected in 1H 2026, comparing zanzalintinib to sunitinib. Exelixis Q2‑25 PR, Aug 2025
STELLAR‑311 (NET) – Ongoing trial aiming to extend the footprint into neuroendocrine tumors.

Management has signaled an intent to submit an NDA in CRC, with 2025 as the targeted submission window and an anticipated late‑2026 decision if accepted. Business Wire, Oct 15 2025

We see three critical issues for investors:

1. Binary regulatory risk

STELLAR‑303 involved endpoint changes and design complexity. A smooth FDA review is not guaranteed.
A Complete Response Letter (CRL) or highly restrictive label would materially impair the commercial potential. Business Wire, Oct 15 2025

2. Timing vs. Cabometyx’s patent window

If CRC approval is delayed into 2027 or beyond, there is less overlap where Cabometyx is still minting peak cash flows to fund the dual‑franchise model.
Any slippage in 2026–2027 would heighten the impact of patent and pricing shocks on the overall business.

3. Market positioning and competition

CRC and RCC markets are crowded and evolving quickly with immuno‑oncology, ADCs, and other novel approaches.
Zanzalintinib has to be not just “good,” but clearly competitive enough to gain mindshare and formulary placement against entrenched regimens.

Our base case assumes that zanzalintinib gets at least one CRC indication approved and begins to contribute revenue in late 2026/2027. But we emphasize that no zanzalintinib revenue is in 2026 guidance, and the market is already starting to “capitalise” that option value in the multiple. That’s why we’re not eager to pay up today.

3. Broader pipeline: nice to have, not thesis-defining (yet)

Beyond cabozantinib and zanzalintinib, Exelixis has earlier‑stage assets:

XL309 (USP1 inhibitor)
XL495 (PKMYT1 inhibitor)
ADCs such as XB010 and XB628
Additional biotherapeutic programs in discovery Exelixis 10-K (2025), pipeline overview

These are meaningful for long‑term optionality, but in our view they don’t yet change the 3–5‑year risk profile. Until we see robust proof‑of‑concept data and clear paths to registrational trials, we treat them as out‑of‑the‑money options, not core drivers.

For now, the story remains dominated by:

Cabometyx cash flows and patent dynamics
Zanzalintinib’s regulatory and commercial trajectory

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Margin of Safety: Strong Balance Sheet, Narrow Earnings Base

One of the better aspects of the EXEL story is the balance sheet:

Market cap: ~ $11.7B
Net debt: around –$26.6M (i.e., net cash)
Cash and marketable securities: about $1.57B as of Q3 2025 Exelixis 10-Q (2025), balance sheet

Free cash flow is robust as well:

Recent quarters have shown free cash flow consistently above $200M per quarter, backed by Cabometyx’s high margins and growing revenue.

This gives Exelixis plenty of capacity to:

Fund an elevated R&D program (~$875–925M guided for 2026)
Increase SG&A to support new launches
Continue share repurchases

From a pure solvency and liquidity standpoint, EXEL is very safe. That’s a real positive.

Where the margin of safety falls short is earnings durability:

Over 80% of revenue and essentially all operating profits depend on a single asset.
That asset faces a composition‑of‑matter expiry in 2026, active generic challenges, and increasing pricing scrutiny under regimes like the Inflation Reduction Act. Exelixis 10-K (2025), pricing and policy risk
Zanzalintinib, the intended second engine, is not yet approved and carries binary regulatory risk.

So while the balance sheet provides downside cushioning, the business model does not yet provide a classic value‑investor margin of safety based on diversified, long‑duration cash flows.

In our view, that combination warrants:

Smaller initial position sizes than you might take in a diversified pharma with comparable valuation multiples.
A more active stance around price (waiting for pullbacks, trimming into strength).
Close monitoring of leading indicators, not just reported earnings.

What Are the Key Risks That Could Break the Thesis?

Our research flags three primary “thesis breakers” that would significantly change how we view EXEL.

1. Zanzalintinib regulatory disappointment (by end‑2027)

If the FDA issues a CRL for the CRC indication or approves with a highly restrictive label or onerous post‑marketing requirements, the idea of zanzalintinib as a true second franchise weakens considerably. Business Wire, Oct 15 2025

2. Accelerated generic cabozantinib penetration (by 2028)

If generic entrants take >20% market share in core RCC/NET indications well before 2030, Cabometyx’s cash engine breaks earlier than modeled. Exelixis 10-K (2025) That would force major cuts to R&D and SG&A or a willingness to accept meaningfully lower profitability.

3. Major U.S. pricing/reimbursement shock (2026–2028)

A large, sudden cut in realized net price—for example, a >20% YoY hit from IRA negotiation outcomes or payer exclusions—would compress margins sharply and force a structural reset to the company’s investment and capital‑return plans. Exelixis 10-K (2025), reimbursement risk

Any of these would justify reconsidering EXEL as a core holding and could quickly move the valuation from “cheap quality” toward “value trap.”

On the flip side, upside thesis accelerants include:

Cabometyx revenue running above the high end of 2026 guidance
RCC/NET share holding at or above ~45%
Smooth zanzalintinib NDA acceptance and favorable FDA commentary

If those pieces fall into place, the case for EXEL at or above current prices strengthens, and buying on pullbacks would make more sense.

Market Sentiment: From Contrarian Idea to Crowded Momentum Name

When we read through recent coverage, a clear narrative shift emerges.

Not long ago, Exelixis was framed as a niche oncology company with:

Heavy dependence on one drug
Some volatility in quarterly trends
A mix of positive and negative trial outcomes

Now the tone is different. Over the last 12–24 months:

Zacks, Nasdaq, and others have repeatedly highlighted strong revenue growth, Cabometyx leadership, and a promising zanzalintinib pipeline. Zacks, Jan 2025; Nasdaq, Jan 2026
Investor’s Business Daily has awarded rising composite and RS ratings and featured EXEL in technical breakout discussions. Investor’s Business Daily, Nov 2025
Some outlets, like Motley Fool, have gone as far as calling Exelixis “the ultimate biotech stock to buy with $50.” Motley Fool, Oct 2025

At the same time, there are early signs of profit‑taking and caution:

Guggenheim downgraded the stock to Neutral in November 2025, and RBC has stuck with a Sector Perform stance. GuruFocus, Nov 2025; RBC/Nasdaq, Oct 2025
IBD’s Accumulation/Distribution rating is a D, indicating that some institutions are selling into strength even as price and earnings look good. Investor’s Business Daily, Jan 21 2026

Put simply: the stock is now crowded. It’s a well‑owned, well‑covered name with a consensus “moderate buy” view and mid‑teens upside expectations. MarketBeat, Jul 2025

For value‑oriented investors, crowdedness matters because:

Surprises to the downside (e.g., a guidance cut, regulatory delay) tend to be punished more aggressively when everyone is on the same side of the boat.
Positive surprises often face the headwind of profit‑taking as early bulls lock in gains.

This is another reason we prefer patience. We don’t want to be buying after the easy multiple expansion has already happened, with limited room for sentiment to improve further.

Management and Capital Allocation: Aggressively Shareholder-Friendly—With Risk

One of the things we like about Exelixis is that management behaves like owners.

According to the 2024 10‑K and related disclosures:

R&D has ramped to around $910M in 2024 and is guided to $875–925M in 2026, funding late‑stage trials and early‑stage discovery.
SG&A is scaling to $575–625M in 2026 to support commercial expansion. Exelixis FY24 prelim PR, Jan 2025; Nasdaq, Jan 2026

In parallel, Exelixis has launched three share repurchase programs since March 2023 totaling more than $1.65B in authorization:

$205.6M repurchased under the latest 2024 program at an average price of $33.62 per share.
$494.5M repurchased cumulatively by March 31, 2025.
Share count reduced from around 305.5M in early 2024 to about 278.5M by Q3 2025. Exelixis 10-K (2025), capital returns; Exelixis 10-Q (2025); Nasdaq, May 2025

From a capital allocation standpoint, that’s impressive:

They reinvest heavily in the pipeline.
They return significant capital to shareholders.
They still maintain a net cash position and strong liquidity.

But we also see the risk:

This aggressive buyback strategy assumes Cabometyx cash flows remain strong and zanzalintinib succeeds.
If either leg underperforms, the company could be in a position where it has less balance sheet flexibility just as it needs it most (e.g., to fund litigation, weather a price hit, or support a slower‑than‑expected launch).

So far, the bet has paid off; buying back shares in the low‑$30s with a P/E now around 17x looks accretive. But it does narrow the margin for error in an inherently risky business model.

How Should Investors Approach EXEL from Here?

Pulling the pieces together, our view as of January 2026 looks like this:

Exelixis is a high‑quality oncology cash generator with a strong near‑term outlook.
The business model is still concentrated, with Cabometyx dominating revenues and earnings.
Patent, pricing, and regulatory risks sit just beyond the current 6–18‑month guidance window.
The stock has rerated to a level where base‑case execution is largely priced in, with optionality from zanzalintinib partly embedded.

For us, that leads to a clear playbook:

1. Entry strategy

Wait for either:
A meaningful pullback toward the high‑$30s, which would restore a healthier margin of safety relative to base and bear scenarios, or
Clear evidence that Cabometyx and zanzalintinib are outperforming current expectations (e.g., repeated quarters above the top end of guidance plus smooth FDA progress), which would justify a higher fair value range.

2. Position sizing

Treat EXEL as a higher‑risk healthcare holding because of its single‑asset dependence, even though it has a big‑pharma‑like P/E.
Start smaller than you might with a diversified large‑cap pharma at the same multiple, and scale only as pipeline and IP visibility improve.

3. Ongoing monitoring

Key checkpoints we’ll be watching, and that we think long‑term investors should track:

Final FY25 results and any changes to 2026 guidance. Zacks, Jan 12 2026
U.S. RCC/NET share trends—does Cabometyx maintain ~45% TRx share, or do we see a slide into the 30s?
Confirmation of zanzalintinib CRC NDA submission, FDA acceptance, and 1H 2026 STELLAR‑304 topline readout.
Any signs of earlier‑than‑expected generic entry or material pricing reform targeted at cabozantinib.

If you have a disciplined process and a watchlist approach, EXEL is the kind of name you keep on the radar and act on when either the price or the fundamentals move meaningfully in your favor.

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