CABOMETYX Trials And Biomarker Therapies Will Expand Global Oncology

Key Takeaways

• Expansion into new oncology markets and strong performance of lead therapies position the company for sustained revenue and operating leverage in a growing sector.
  
• Ongoing pipeline development and R&D innovation support diversification, enhanced value, and future earnings growth amid industry consolidation.
  
• Heavy dependence on one drug, rising competition, regulatory risks, and weak pipeline diversification threaten future revenue, profitability, and market relevance.

Catalysts

An oncology company, focuses on the discovery, development, and commercialization of new medicines for difficult-to-treat cancers in the United States.

• The recent U.S. regulatory approval and rapid commercial execution for CABOMETYX in neuroendocrine tumors opens a new $1 billion market opportunity in the oral small molecule segment, with current drug-treated patient populations expected to grow from 9,000 to 11,000 by 2030, directly supporting sustained top-line revenue growth as global cancer incidence rises.
  
• Accelerating momentum and increasing market share in renal cell carcinoma (RCC), where CABOMETYX is now the top prescribed TKI and the only product in its class showing growth ahead of the market, indicates underlying demand that should drive continued revenue outperformance and improved operating leverage as healthcare expenditures expand access.
  
• Multiple pivotal data readouts and trial initiations for zanzalitinib across several cancer types—including colorectal, non-clear cell RCC, and head and neck cancer—are anticipated in the second half of 2025, offering near-term catalysts for pipeline value realization and long-term revenue diversification, as oncology shifts towards more targeted and biomarker-driven therapies.
  
• Exelixis’ ability to file up to three new INDs in 2025, including first-in-class or highly differentiated molecules, demonstrates continued internal R&D strength and positions the company at the forefront of innovation in precision medicine, providing potential for higher-margin products and pipeline-driven earnings growth.
  
• The company’s robust balance sheet and ongoing strong cash flows enable continued investment in R&D, strategic business development focused on complementary late-stage assets, and opportunistic share repurchases—all supporting both intrinsic value creation and potential EPS growth in a consolidating biotech environment.

Exelixis Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Exelixis compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Exelixis's revenue will grow by 17.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 28.0% today to 36.2% in 3 years time.
• The bullish analysts expect earnings to reach $1.4 billion (and earnings per share of $4.48) by about May 2028, up from $643.6 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 11.4x on those 2028 earnings, down from 19.2x today. This future PE is lower than the current PE for the US Biotechs industry at 16.3x.
• Analysts expect the number of shares outstanding to decline by 4.4% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.21%, as per the Simply Wall St company report.

Exelixis Future Earnings Per Share Growth

Risks

• Exelixis remains heavily reliant on its cabozantinib franchise (CABOMETYX/Cometriq), and any competitive displacement, market share losses, or future patent expirations could sharply reduce future revenue and undermine overall profitability.
  
• Rising global healthcare cost pressures and the potential for stricter drug pricing controls or reimbursement hurdles, especially in major markets like the US and Europe, could limit Exelixis’ net margins and slow long-term earnings growth.
  
• Intensifying competition in the oncology space from large pharmaceutical companies, emerging biotechs, and the rise of alternative modalities like cell therapies and immunotherapies may erode Exelixis’ market share, reduce pricing power, and threaten the relevance of its small molecule inhibitors, challenging both revenue and earnings.
  
• Execution risk in the development pipeline remains significant, with any failure of late-stage investigational drugs, adverse pivotal trial readouts, or regulatory delays likely to impede product diversification and constrain future revenue and net margin expansion.
  
• Demographic shifts or economic stagnation leading to reduced per-capita healthcare spending could suppress long-term demand for premium-priced oncology therapies, directly impacting Exelixis’ future sales growth and profitability.

Valuation

• The assumed bullish price target for Exelixis is $53.92, which represents two standard deviations above the consensus price target of $40.78. This valuation is based on what can be assumed as the expectations of Exelixis's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $56.0, and the most bearish reporting a price target of just $29.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $3.7 billion, earnings will come to $1.4 billion, and it would be trading on a PE ratio of 11.4x, assuming you use a discount rate of 6.2%.
  
• Given the current share price of $45.4, the bullish analyst price target of $53.92 is 15.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.