Exelixis Beats on Q3 Earnings and Sales, Raises Annual Outlook

Core Insights - Exelixis, Inc. (EXEL) reported better-than-expected third-quarter results, with shares rising post-announcement [1][2] - The company recorded earnings of 47 cents per share, surpassing the Zacks Consensus Estimate of 42 cents, driven by higher revenues and lower operating expenses [1][2] - Net revenues reached $539.5 million, exceeding the Zacks Consensus Estimate of $491 million, marking a 14.3% year-over-year increase [2] Financial Performance - Net product revenues were $478 million, reflecting a 12.1% year-over-year increase, primarily due to higher sales volume and average net selling price [4] - Cabometyx generated revenues of $475.7 million, beating both the Zacks Consensus Estimate of $439 million and the model estimate of $434.6 million, with a 9% year-over-year growth in prescription volume [5] - Collaboration revenues totaled $61.5 million, up from $45.4 million in the year-ago quarter, driven by increased milestone-related revenues and higher royalty revenues from cabozantinib sales [6] Expense Management - Research and development expenses decreased to $222.6 million, down 33.1% year over year, mainly due to reduced license and collaboration costs [7] - Selling, general and administrative expenses totaled $111.8 million, down 19% year over year, attributed to declines in corporate giving, stock-based compensation, and legal fees [7] Stock Repurchase and Regulatory Updates - The board authorized a stock repurchase of up to $500 million, with $12.4 million repurchased at an average price of $25.61 per share as of September 30, 2024 [8] - Exelixis won a patent litigation case against MSN Laboratories regarding cabozantinib, with the court ruling in favor of Exelixis [9] Pipeline Developments - Management is focused on expanding the label for Cabometyx, with a supplemental new drug application accepted by the FDA for advanced pancreatic NET and extra-pancreatic NET [11] - An sNDA will be submitted for cabozantinib in combination with Tecentriq for metastatic castration-resistant prostate cancer [12] - Enrollment is complete for the STELLAR-303 study evaluating zanzalintinib in combination with Tecentriq for metastatic colorectal cancer, with preliminary results expected in 2025 [13] Revenue Guidance - Total revenues for 2024 are projected between $2.150 billion and $2.2 billion, an increase from previous guidance of $1.975-$2.075 billion [16] - Product revenues are estimated to be in the range of $1.775 billion to $1.825 billion, up from previous guidance of $1.65-$1.75 billion [16] - Research and development expenses are now estimated at $925-$950 million, while selling, general and administrative expenses are projected at $475-$500 million [17] Overall Assessment - Exelixis' third-quarter performance was strong, with both top and bottom lines exceeding estimates, and Cabometyx remains a leading TKI for RCC in the U.S. [18] - The potential label expansion for Cabometyx is expected to boost sales, and the increase in annual guidance is viewed positively [18]