Exelixis Surges 35.2% in Three Months: Buy or Sell the Stock?

Exelixis EXEL has put up a stellar performance so far this year. Shares of the biotech company have rallied 35.2% in the past three months compared with the industry’s growth of 11.8%. The stock has also outperformed the sector and the S&P 500 Index in this time frame.

EXEL Outperforms Industry, Sector & S&P 500

Positive pipeline update on promising pipeline candidate, zanzalintinib, boosted the stock last month.

Let’s delve deeper and analyze the company’s strengths and weaknesses to make an informed decision on the stock.

EXEL Stock up on Colorectal Cancer Study Data

Exelixis’ stock got a boost after the company announced positive top-line results from the late-stage STELLAR-303 study.

This phase III study is a global, multicenter, open-label study that randomized 901 patients equally to receive either investigational tyrosine kinase inhibitor (TKI), zanzalintinib (100 mg) in combination with Tecentriq (atezolizumab) or Stivarga (regorafenib). The study includes patients with previously non-microsatellite instability-high metastatic colorectal cancer (CRC).

Zanzalintinib is a third-generation oral TKI that inhibits the activity of receptor tyrosine kinases implicated in cancer growth and spread, including VEGF receptors, MET, AXL and MER.

The STELLAR-303 study met one of its dual primary endpoints, demonstrating a statistically significant improvement in overall survival (OS) for the intent-to-treat (ITT) population when treated with zanzalintinib in combination with Tecentriq compared with the current standard-of-care drug, regorafenib.

Exelixis stated that the trial will continue to a final analysis of the second primary endpoint — OS in the subgroup without liver metastases (non-liver metastases, or NLM).

The positive data from this study represent a pivotal achievement for Exelixis, increasing the likelihood of regulatory success. Zanzalintinib is currently being developed for the treatment of advanced solid tumors, including colorectal cancer, kidney cancer, head and neck cancer and neuroendocrine tumors.

Meanwhile, Exelixis collaborated with pharma giant Merck MRK to evaluate zanzalintinib, in combination with its blockbuster anti-PD-1 therapy Keytruda (pembrolizumab), in a late-stage study for treating patients with head and neck squamous cell carcinoma (HNSCC).

Per the terms of the agreement, Merck is supplying Keytruda for the ongoing, Exelixis-sponsored phase III STELLAR-305 study in previously untreated PD-L1-positive recurrent or metastatic HNSCC.  

EXEL’s Lead Drug Cabometyx’s Strong Performance

Exelixis’ lead drug, Cabometyx, maintains its status as the leading TKI for the treatment of renal cell carcinoma (RCC) in both the frontline immuno-oncology (IO) +TKI market and the second-line monotherapy segment.

Cabometyx is also approved for use in combination with Bristol Myers’ BMY Opdivo in the first-line setting in RCC. Demand has been strong for this combination, boosting sales.

BMY’s Opdivo is one of the leading IO drugs and has been approved for various oncology indications.

Given the strong momentum of Cabometyx in the first quarter, EXEL raised its annual guidance for net product revenues and total revenues by $100 million.

The recent label expansion of cabozantinib for adult and pediatric patients 12 years of age and older with previously treated, unresectable, locally advanced or metastatic, well-differentiated pancreatic NET (pNET) and those with previously treated advanced extra-pancreatic NET should further fuel sales.

Cabometyx is now the first and only systemic treatment that is FDA approved for previously treated NET regardless of primary tumor site, grade, somatostatin receptor expression and functional status.

Exelixis recently announced that its partner, Ipsen, received a positive opinion from the European Medicine Agency’s Committee for Medicinal Products for Human Use for Cabometyx for adult patients with unresectable or metastatic, well-differentiated extra-pancreatic and pNET neuroendocrine tumors who have progressed following at least one prior systemic therapy other than somatostatin analogues.

EXEL Makes Encouraging Pipeline Progress

The pipeline progress has been impressive as well, as Exelixis looks to expand its oncology portfolio beyond Cabometyx.

In April, Exelixis presented preclinical data from four pipeline candidates. Data on XL309, XB628 and XB371 were encouraging. Exelixis is on track to submit an investigational new drug application for XB371 to the FDA in 2025.

The successful development of additional drugs should broaden its portfolio and reduce its dependence on its lead drug, Cabometyx.

EXEL’s Valuation & Estimates

From a valuation standpoint, EXEL is expensive. Going by the price/sales ratio, its shares currently trade at 5.03x forward sales, higher than its mean of 3.64x and the biotech industry’s 1.57x.

The bottom-line estimate for 2025 has risen from $2.61 per share to $2.64, while that for 2026 has increased to $3.13 from $3.03 over the past 30 days.

Invest in EXEL Stock

Large biotech companies are generally considered safe havens for investors interested in this sector. Exelixis' lead drug, Cabometyx, maintains momentum for the company. The label expansion of Cabometyx should boost its growth. The company’s efforts to expand its portfolio are encouraging as well. The successful development of additional drugs should broaden its portfolio and reduce its dependence on its lead drug.

The company’s efforts to increase shareholder value are impressive and should boost returns.

EXEL is a good stock to buy now, considering its robust fundamentals and growth prospects. We recommend the stock to investors as we believe there is more room for growth.

EXEL currently carries a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


 

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This article originally published on Zacks Investment Research (zacks.com).

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