Exelixis, Inc. (NASDAQ:EXEL) Q1 2026 Earnings Call Transcript

Exelixis, Inc. (NASDAQ:EXEL) Q1 2026 Earnings Call Transcript May 5, 2026

Exelixis, Inc. beats earnings expectations. Reported EPS is $0.87, expectations were $0.75.

Operator: Good day, ladies and gentlemen, and welcome to the Exelixis, Inc. first quarter 2026 Financial Results Conference Call. My name is Sherry, and I will be your operator for today. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to your host for today, Andrew Peters, Senior Vice President of Strategy and Investor Relations. Please proceed.

Andrew Peters: Thank you, Sherry, and thank you all for joining us for the Exelixis, Inc. first quarter 2026 financial results conference call. Joining me on today’s call are Michael M. Morrissey, our President and CEO; Christopher J. Senner, our Chief Financial Officer; Dana T. Aftab, our Executive Vice President of Research and Development; and Patrick Joseph Haley, our Executive Vice President, Commercial, who will review our progress for the first quarter 2026 ended 03/31/2026. During the call today, we will refer to financial measures not calculated according to Generally Accepted Accounting Principles; please refer to today’s press release, which is posted on our website, for an explanation of our reasons for using such non-GAAP measures as well as tables deriving these measures from our GAAP results.

During the course of this presentation, we will be making forward-looking statements regarding future events and the future performance of the company. This includes statements about possible developments regarding discovery, product development, regulatory, commercial, financial, and strategic matters, potential growth opportunities, and government drug pricing policies and initiatives. Actual events or results could, of course, differ materially. We refer you to the documents we file from time to time with the Securities and Exchange Commission which, under the heading Risk Factors, identify important factors that could cause actual results to differ materially from those expressed by the company verbally and in writing today, including, without limitation, risks and uncertainties related to product commercial success, market competition, regulatory review and approval processes, conducting clinical trials, compliance with applicable regulatory requirements, our dependence on collaboration partners, and the level of costs associated with discovery, product development, business development, and commercialization activities.

With that, I will turn the call over to Mike.

Michael M. Morrissey: All right. Thank you, Andrew, and thanks everyone for joining us on the call today. Exelixis, Inc. is off to a strong start in 2026, with meaningful progress across our discovery, development, and commercial activities. Our strategy has a singular focus: to build a multi-franchise business in solid tumor oncology focused on GU and GI histologies, based on the depth of the cabozantinib business, the potential breadth of the zanzalintinib opportunity, and the scope of our early-stage pipeline. Key highlights for the quarter include: first, we saw continued strong performance of the cabozantinib business in 2026. CABOMETYX continued to grow in revenue, demand, and market share, as the leading TKI for RCC and the market leader for neuroendocrine tumors in the oral second line plus segment.

Importantly, we expedited the buildout of our GI sales team in the first quarter to accelerate the growth of the CABOMETYX NET opportunity before ZANZA could come online for CRC later in 2026. First quarter 2026 U.S. cabo franchise net product revenues grew 8% year-over-year to $555 million compared to the first quarter 2025. Continuing its role as a worldwide leading TKI, global cabo franchise net product revenues generated by Exelixis, Inc. and its partners grew 12.5% year-over-year to $764 million in the first quarter 2026. Chris and PJ will share our financial and commercial highlights in their prepared remarks. Second, ZANZA is in the pole position as our next potential oncology franchise opportunity. The NDA for the ZANZA + atezo combination in third line plus CRC based on the STELLAR-303 data is currently under review and is the top priority for the entire Exelixis, Inc.

organization. The ZANZA development program is rapidly advancing with seven ongoing or soon-to-start pivotal trials, along with additional Phase II trials planned in prostate cancer and lung cancer. Dana will review the highlights for ZANZA and our extensive pipeline of early-stage assets in his prepared remarks. Third, the goal of our development effort is to establish ZANZA as the TKI of choice in the 2030s for RCC and other important indications that could surpass the impact of cabo in the 2020s. ZANZA already has a meaningful development footprint in RCC, with three ongoing Phase 3 studies across multiple lines of therapy, underscoring both the breadth of our ambition and the confidence we and others have in this molecule. At the same time, as our experience with COSMIC-313 highlighted, and as was also recently seen with news from competitive trials, navigating the complexities of first-line RCC to improve upon existing regimens is a challenging endeavor at best and requires careful selection of combination partners to improve efficacy parameters while managing tolerability and safety considerations.

We remain committed to raising the bar in first-line RCC and continue to prioritize orthogonal MOAs to combine with ZANZA. In parallel, we seek to expand the breadth and depth of our ZANZA pivotal trial efforts, positioning ZANZA for durable leadership in RCC and other important tumor types. Fourth and finally, we remain committed to running the business at the highest level of efficiency as we advance our R&D priorities, and at the same time generate substantial free cash to invest in the pipeline through the right targeted BD at the right price to access external sources of innovation and to continue our share repurchase program, including an additional $750 million that was just authorized by the Exelixis, Inc. Board. See our press release issued an hour ago for our first quarter 2026 financial results and extensive list of key corporate milestones achieved in the quarter.

I will now turn the call over to Chris.

Christopher J. Senner: Thanks, Mike. For the first quarter 2026, the company reported total revenues of approximately $611 million, which included cabozantinib franchise net product revenues of $555 million. CABOMETYX net product revenues were $552.8 million and included $3.6 million in clinical trial sales. As a continued reminder, clinical trial sales have historically been choppy between quarters and we expect this to continue into the future. Gross-to-net for the cabozantinib franchise in 2026 was 30.2%, which is higher than the gross-to-net we experienced in 2025. This increase in gross-to-net deductions in 2026 is primarily related to higher 340B volume, higher Medicare Part D discounts and rebates, and higher co-pay assistance when compared to the fourth quarter 2025.

Our CABOMETYX trade inventory was slightly lower at 2.1 weeks on hand at the end of the first quarter 2026 when compared to the fourth quarter 2025. Total revenues in the first quarter 2026 also include approximately $45.9 million in royalties earned from our partners Ipsen and Takeda on their sales of cabozantinib. Our total operating expenses for the first quarter 2026 were approximately $359 million compared to $363 million in 2025. The sequential decrease in these operating expenses was primarily driven by lower clinical trial costs, offset by higher FTE-related costs and stock-based compensation expense. Provision for income taxes for the first quarter 2026 was approximately $57.2 million compared to a provision for income taxes of approximately $8.2 million for the fourth quarter 2025.

This increase in tax provision was related to certain items that were recognized in the fourth quarter 2025. The company reported GAAP net income of approximately $210.5 million, or $0.81 per share basic and $0.79 per share diluted, for the first quarter 2026. The company also reported a non-GAAP net income of approximately $232.8 million, or $0.90 per share basic and $0.87 per share diluted. Non-GAAP net income excludes the impact of approximately $22.3 million in stock-based compensation expense, net of the related income tax effect. Cash and marketable securities for the quarter ended 03/31/2026 were approximately $1.4 billion. During the first quarter 2026, we repurchased approximately $430.8 million of the company’s outstanding common stock, resulting in the retirement of approximately 10 million shares of the company’s outstanding common stock at an average price per share of $42.99.

As of the end of the first quarter 2026, we had $159.4 million remaining under the $750 million stock repurchase plan authorized by the company’s board in October 2025. We expect to complete the October 2025 stock repurchase plan this month. Additionally, in May 2026, the company’s board authorized a new $50 million stock repurchase plan that expires on 12/31/2027. Finally, we are reiterating our full-year 2026 financial guidance, which is detailed on slide 16 of our earnings presentation. I will now turn the call over to PJ.

Patrick Joseph Haley: Thank you, Chris. The CABOMETYX business continued to grow in 2026. The team is executing at an extremely high level, with CABOMETYX continuing to be the number one prescribed TKI in renal cell carcinoma, the number one TKI plus IO combination in first-line RCC, and the number one oral agent in second line plus neuroendocrine tumors. Importantly, Q1 had the highest number of new patient starts in a quarter ever for CABOMETYX, representing strong momentum in the business. At the same time, CABOMETYX plus nivolumab had the highest quarterly first-line RCC market share to date. This is an exciting time for the team with zanzalintinib on the horizon as we prepare to launch our next franchise molecule, which would also expand the Exelixis, Inc.

GI franchise. The prescription data in the oral TKI market basket of cabo, lenvatinib, axitinib, sunitinib, and pazopanib convey the strength of cabo relative to the competition. Looking at 2025 to Q1 2026, CABOMETYX grew three share points from 44% to 47%. Additionally, CABOMETYX TRx volume grew 14% in Q1 2026 compared to Q1 2025, outpacing the growth rate of the market basket, which was 7% for the same period. Physicians are responding positively to the broad NET label and the contemporary trial design, and perceive the efficacy and tolerability of cabo as favorable relative to other small molecule therapies in the space. Both academic and community prescribers are using cabo broadly across patient and tumor characteristics, including patients with neuroendocrine tumors arising in the pancreas, GI tract, and lung, across all tumor grades, functional and SSTR status, and those who have received prior treatment with Lutathera.

Turning to new patient market share for second line plus neuroendocrine tumors in the first quarter, we are pleased that CABOMETYX remains the market leader in the oral therapy segment. Additionally, our research indicates that there is opportunity to continue to grow market share, particularly in the community. For that reason, we expedited the expansion of our GI sales team in Q1, and the team was in the field providing greater reach into the community in order to continue to grow NET market share for CABOMETYX. Our new representatives joined us with significant oncology sales experience, particularly colorectal cancer and GI oncology. Importantly, the expanded team will be able to gain valuable experience selling cabo before we turn our focus to the potential launch of zanzalintinib in colorectal cancer.

If we are thinking about building on and expanding our GI franchise, we are thrilled with the results of STELLAR-303 and the PDUFA date set for later this year. Pending regulatory approval, we believe that these data would provide Exelixis, Inc. with a compelling commercial opportunity in one of the big four tumors. The third line plus CRC setting consists of approximately 23,000 patients in the U.S. and represents an overall market opportunity of approximately $1.5 billion in terms of contemporary pricing. Our market research and advisory boards demonstrate positive feedback and excitement for the STELLAR-303 data. Physicians reiterate the significant unmet medical need for patients in the third line plus CRC setting and are excited for the potential to have an ICI option available for the broader population of CRC patients.

In closing, we are pleased with the growth of the cabo business both in RCC and NETs. In neuroendocrine tumors, prescribers see CABOMETYX as a more favorable choice versus other previously approved generic small molecule therapies. Simultaneously, our internal team is in full launch preparation for ZANZA, and the excitement around these efforts is palpable. We look forward to the opportunity to launch the next Exelixis, Inc. franchise later in the year to be able to help appropriate patients with colorectal cancer. Beyond STELLAR-303, we are enthusiastic about the significant development plan for ZANZA, which could position the ZANZA franchise to far exceed cabo in terms of the number of patients that could be impacted across tumor types and settings.

With that, I will turn the call over to Dana.

Dana T. Aftab: Thanks, PJ. Our strategy in R&D continues to focus on developing ZANZA as a multidimensional solid tumor oncology franchise molecule. As you will hear in my upcoming remarks, we continue to be focused on maximizing our productivity with disciplined investment in high-value opportunities for ZANZA as well as the rest of our portfolio. Today’s update provides a little more clarity on the seven ongoing or soon-to-start pivotal studies for ZANZA, so my update today will be focused mostly on those trials, but I will also spend some time on additional exploratory studies that we have designed to investigate ZANZA’s potential in certain patients with prostate or lung tumors. Starting with our NDA for ZANZA plus atezo in colorectal cancer, which is based on the results from the STELLAR-303 trial, our team has been highly engaged during the review process, and from our standpoint, the review has been proceeding on schedule toward the PDUFA date in early December.

As a quick reminder, the trial has dual primary endpoints designed to assess overall survival both in the broad intention-to-treat, or ITT, population, which includes patients both with and without liver metastases, as well as more specifically in the population of patients without liver metastases, which we refer to as the NLM patients or population. The study met one of its dual primary endpoints, demonstrating a 20% reduction in the risk of death with the combination in the broad ITT population at final analysis, while data pertaining to the other dual primary endpoint of overall survival in the NLM population showed a trend in overall survival favoring the combination. The NLM data were immature at the data cutoff, and the trial has been proceeding to the planned final analysis for this endpoint, and we continue to expect to have those top-line results around the middle of this year depending on event rates.

The level of excitement here is really high right now about what a potential approval would mean for this large and underserved patient population. As you heard from PJ, our preparations for launch are in full swing. We will be ready to go the moment we receive a positive decision. But as we have discussed since late last year, we believe there is significant additional franchise potential for ZANZA in colorectal cancer in an earlier stage of the disease. To realize that potential, our team has been highly focused on launching the STELLAR-316 trial, which will investigate ZANZA with and without an immune checkpoint inhibitor in patients with resected stage 2 or 3 colorectal cancer who, following definitive therapy, have tested positive for molecular residual disease, or MRD, and have no radiographic evidence of disease.

About 20% of patients are MRD positive following definitive therapy, and these patients typically have a poor prognosis, with median disease-free survival times in the six- to eight-month time frame. Critically, these patients have no therapeutic options that have been shown in a Phase 3 trial to prevent or delay metastatic progression of their disease, so this represents a significant opportunity in the colorectal cancer landscape. As we have communicated in the past, MRD in STELLAR-316 will be determined with the Signatera circulating tumor DNA test, with Natera as our diagnostic partner. Their database, built from testing thousands of patients each year, has been incredibly helpful to us in terms of prioritizing activation of clinical trial sites that are already known to have the highest cadence of testing and the highest numbers of eligible patients.

We are quite pleased with the level of enthusiastic feedback on STELLAR-316 that we have gotten from key opinion leaders and other stakeholders, and we are on track for initiating the trial around midyear. Moving on to kidney cancer, ZANZA’s target profile, including the TAM kinases, MET, and VEGF receptors, positions ZANZA for success given the known roles played by these kinases in kidney tumors. STELLAR-304 is our first pivotal trial for ZANZA in kidney cancer, evaluating the combination of ZANZA plus nivolumab versus sunitinib in patients with locally advanced or metastatic non–clear cell renal cell carcinoma. The non–clear cell RCC space is underserved, with no positive readouts from a Phase 3 study specifically focused on these patients, despite them representing approximately a quarter of all RCC cases.

If positive, 304 could potentially establish the first standard of care based on a randomized controlled Phase 3 trial for these patients. We completed enrollment last year and, given current event rates, we now expect top-line results from the study in 2026, and, if positive, those results could lead to our second NDA filing for ZANZA. In terms of opportunities in the clear cell RCC space, progress continues with regard to the two pivotal studies that Merck is running in clear cell RCC evaluating ZANZA in combination with belzutafan. LightSpark-033, which compares ZANZA plus belzutafan versus cabo as first-line therapy in patients who received anti–PD-1 or anti–PD-L1 therapy in the adjuvant setting, was initiated last year. In addition, Merck recently initiated LightSpark-034, a global Phase 3 pivotal trial evaluating ZANZA plus belzutafan versus belzutafan plus placebo in second- or third-line patients with advanced RCC who have progressed on or after both anti–PD-1/PD-L1 and VEGFR TKI therapies, in sequence or in combination.

We are certainly excited to see these Phase 3 studies in clear cell RCC moving forward, and based on our franchise experience in this indication, we believe there are other important opportunities to explore. As we have mentioned previously, we continue to have discussions with potential collaborators to investigate novel combinations pairing ZANZA with other modalities and orthogonal mechanisms when there is strong scientific rationale for the combination. Given the demonstrated clinical differentiation we have seen with ZANZA and its potential to be the TKI of choice for combinations with immunotherapies and other mechanisms of action, we are looking to advance novel combinations in the future that have significant potential to move the needle for clear cell RCC patients.

We hope to give further updates on these activities in the future as we get closer to launching the trial. Moving on now to neuroendocrine tumors, STELLAR-311 is our Phase 3 trial evaluating ZANZA compared to everolimus as an initial oral therapy in patients with pancreatic and extrapancreatic neuroendocrine tumors. That study was initiated last year, and we have been quite pleased by the speed of enrollment in the trial. In fact, we are now far ahead of our initial enrollment projections. The sites and investigators are very enthusiastic about the trial, given their growing experience with cabo in later-line disease and the opportunity presented by STELLAR-311 to improve on the current treatment landscape in earlier lines, which has not seen anything new for over a decade.

That enthusiasm appears to be driving the very strong momentum we are seeing in the trial. Another opportunity for ZANZA that we have been discussing since late last year is in meningioma, which is the most common primary central nervous system tumor, accounting for approximately 40% of cases. Most meningiomas are benign, slow-growing neoplasms; however, up to 22% will recur after primary therapy, which consists of surgery and radiation. Importantly, there are no approved systemic therapies for meningioma that is refractory to local therapies, so this represents a very high unmet need in neuro-oncology. Today, we announced that we have now initiated STELLAR-201, our Phase II trial evaluating ZANZA in patients with recurrent meningioma who are no longer responsive to or eligible for local therapies.

The primary endpoint of the trial is objective response rate, with secondary efficacy endpoints including duration of response, progression-free survival, and overall survival. The trial will enroll up to 100 patients, and given the extremely high level of interest and enthusiasm for the trial among neuro-oncologists, we anticipate enrollment to be brisk. Pending favorable results and given the absence of any approved systemic therapies in this setting, the STELLAR-201 trial represents an important opportunity for ZANZA to become the first systemic therapy that could improve outcomes for these patients. Today, we also announced two additional studies exploring ZANZA combinations in indications where significant unmet need exists. STELLAR-202 is a planned Phase II trial in squamous non–small cell lung cancer that will explore the addition of ZANZA to pembro in the maintenance phase after induction with pembro plus chemotherapy.

Part of the rationale for this trial comes from data we obtained from cabo plus atezo in the CONTACT-01 trial, where the subgroup of non–small cell lung cancer patients with squamous histology appeared to derive substantial benefit from the combination compared to chemotherapy. This is an important opportunity given the relatively short PFS in the maintenance setting and the lack of any new approvals in frontline squamous non–small cell lung cancer since KEYNOTE-407 established the current standard of care with pembro plus chemo. We are also planning an additional expansion cohort in the ongoing STELLAR-2 study to evaluate ZANZA in combination with docetaxel in patients with metastatic castration-resistant prostate cancer who have measurable disease.

This is also based on initial observations with cabo, where a small Phase II study showed favorable outcomes when combined with docetaxel in metastatic CRPC patients. This cohort in STELLAR-2 is particularly meaningful because, if ZANZA in combination with chemotherapy is shown to be safe and active, that could open up a number of opportunities across a range of solid tumors where chemo or potentially even ADCs carrying chemo payloads are standard of care. Our teams are super focused on launching these new studies soon, and we expect both to be initiated in the second half of this year. Now shifting to our early clinical pipeline, we have four molecules in this space that are currently in clinical development, namely XL309, XB010, XB628, and XB371, and the Phase 1 studies for these early molecules are progressing well.

In terms of earlier-stage development candidates, we are continuing to advance exciting new small molecule and ADC programs, and I look forward to sharing more details as these early pipeline programs advance. Our strategy with the early pipeline is focused on identifying the next potential franchise molecules beyond cabo and ZANZA, so we will continue our approach of getting to go/no-go decisions quickly and efficiently, leveraging our expertise to pick the winners and ultimately maximize impact for patients. With that, I will turn the call back over to Mike.

Michael M. Morrissey: All right. Thanks, Dana. I will wrap up here by thanking the entire Exelixis, Inc. team for their outstanding efforts in the first months of 2026. We think 2026 could be a potentially transformational year for the company, and everyone at Exelixis, Inc. is working together to move the needle for cancer patients and continue building value for all our stakeholders. We are focused on growing the cabo business, at the same time advancing ZANZA as our second potential franchise opportunity, all while continuing to investigate our early-stage pipeline. As always, I want to thank everyone at Exelixis, Inc. for their individual and collective efforts, great teamwork, and positive energy as we work every day to exceed expectations on our mission to help cancer patients recover stronger and live longer.

We look forward to updating you on our progress in the future. Thank you for your continued support and interest in Exelixis, Inc. We will now open the call for questions.

Q&A Session

Operator: Thank you. To ask a question, you will need to press 11 on your telephone. To withdraw your question, press 11 again. Due to time restraints, we ask that you please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question will come from the line of Paul Choi with Goldman Sachs. Your line is open.

Analyst: Thank you. Good afternoon, and thanks for taking the question. My question is for Dana. In light of the recent miss from the LightSpark-012 study, can you comment on your updated thoughts or learnings from that trial for your belzutafan plus ZANZA combination development program, specifically LightSpark-033 and -034? Any learnings or potential trial considerations that you have had in the wake of that data? Thank you very much.

Dana T. Aftab: Sure. Thanks for the question, Paul. First of all, our strategy with ZANZA is to really focus on creating the next franchise molecule in RCC and the top TKI combination therapy in clear cell RCC in the 2030s. The results from LightSpark-012, which evaluated the triplet of pembro + lenva + belzutafan versus pembro + lenva, highlight that triplet therapy in clear cell renal cell carcinoma is not an easy game. Our strategy is focused on trying to establish a standard of care that covers multiple possible outcomes based on trials that are going on now. We have multiple shots on goal with LightSpark-033 and -034, and we have the STELLAR-304 data coming in non–clear cell carcinoma. As I mentioned earlier, we are evaluating a number of other potential novel and innovative combinations to further explore the clear cell RCC space, including molecules from our own early pipeline.

If XB628, which is our novel and innovative bispecific with multiple IO arms on it, pans out, that could be a very interesting combination to explore in these patients. We have multiple shots on goal to really establish and drive the ZANZA franchise into clear cell RCC in the future, focused on the 2030s.

Operator: One moment for our next question. That will come from the line of Yaron Werber with TD Cowen. Your line is open.

Analyst: Hi, team. Congrats on the quarter, and thanks so much for the question. Two quick questions: first, could you please provide some color on the contribution in renal cell carcinoma versus NET for cabo? And second, I recall that cabo failed as a monotherapy in advanced unselected non–small cell lung cancer and also on OS in Phase 3 for pancreatic, even though it showed a response and PFS. You touched on some of the combo regimens that are showing early data, but could you expand on the rationale for testing combo therapies in STELLAR-202 and STELLAR-2?

Michael M. Morrissey: I think you were talking about prostate cancer as well. Dana, why do you not take that second question first—going into Phase II in non–small cell and then prostate cancer?

Dana T. Aftab: Sure. As I mentioned, data that support our hypothesis for testing zanzalintinib in patients with non–small cell lung cancer come from the CONTACT-01 study, the Phase 3 study evaluating cabozantinib plus atezolizumab versus docetaxel in a broad population of non–small cell lung cancer patients. In that study, the subpopulation of patients with squamous histology actually did quite well and appeared to have a favorable benefit compared to the control arm. For that reason, the STELLAR-202 trial is focused 100% on the squamous patient population. The current standard of care is platinum-based chemotherapy plus pembrolizumab during induction, then pembrolizumab maintenance. We are looking to add zanzalintinib onto the maintenance arm of pembrolizumab.

We have already shown that ZANZA can sensitize patients to benefit with IO in the STELLAR-303 trial, a population of colorectal cancer patients historically refractory to IO, so we think this is a very rational exploration. In prostate cancer, there was a small Phase 1 study combining cabozantinib with docetaxel that showed favorable outcomes in metastatic CRPC patients. Based on those results, we believe there is rationale to pursue that combination in the Phase 1 STELLAR-2 trial. Once we get data showing safety and potentially activity, that opens up a lot of avenues of exploration, including in castration-resistant prostate cancer, potentially in lung cancer, and potentially in other indications where chemo or chemo-based therapies, including ADCs, are standard of care.

Operator: Thank you. One moment for our next question. That will come from the line of Sudan Loganathan with Stephens. Your line is open.

Analyst: Hi, thank you for taking my question. First, could you comment on the quantifiable metrics regarding cabo sales in NETs and how the sales team has grown over this time and how it will continue to? Second, on ZANZA ahead of the CRC launch, what are some quantifiable metrics we can keep in mind ahead of the potential launch toward the end of this year? Thanks.

Patrick Joseph Haley: Great, thanks. With regards to NET, we are really pleased with how the business is going. As I mentioned, overall in the first quarter we had our highest new patient starts ever for CABOMETYX in a quarter, which is a really strong sign of the health of the business. As those new patient starts translate to refills going forward, it puts us in a really good position. Our business in NET is broad, across all segments, and is viewed very favorably by physicians. Importantly, we are the market leader in the second line plus oral segment, and our research and feedback indicate that we have opportunity to continue to grow, particularly in the community setting. That is why we expedited the buildout of our GI sales force to have deeper reach into the community and drive further business there.

We brought in a very strong team with GI and CRC experience in sales, and we are already seeing impact from that team. Importantly, the team gets to know the customers in the GI segment and gains experience selling cabo and a TKI, which is fantastic as we look forward to the potential approval of ZANZA in CRC. Our launch preparation is in full swing, and the team is focused on optimizing that launch and helping patients with CRC. This is a big and exciting opportunity for us in one of the big four tumors. The third line plus CRC setting is approximately 23,000 patients and, at contemporary pricing, a $1.5 billion opportunity. We are thinking about ZANZA as a franchise: the initial launch will be important, but we are focused on expanding the CRC franchise with an earlier study such as STELLAR-316 and building it out in RCC, and potentially in lung, meningioma, etc., with many exciting opportunities.

Operator: One moment for our next question. That will come from the line of Sean Laaman with Morgan Stanley. Your line is open.

Analyst: Hi, good afternoon. This is Catherine on for Sean. We just had one on the updated STELLAR-304 data readout timing. Could you provide a bit more color on whether the slower event accrual reflects better-than-expected disease control within a mix of the enrolled histologies, or other trial dynamics? As a quick follow-up, given that the population is highly heterogeneous, how are you defining success across histologies, and are there specific subtypes where you believe the rationale is strongest?

Dana T. Aftab: Thanks for the question, Catherine. Regarding 304, this is our Phase 3 study comparing zanzalintinib combined with nivolumab versus sunitinib, and it is the first Phase 3 trial to address this high unmet-need patient population. Currently, there is no level one evidence supporting a standard of care in these patients, so we see a huge opportunity for ZANZA plus nivo. Regarding the slight change in timing for events, I do not want to speculate on what is driving that. We are in the late stages of collecting events and expect results in the second half of the year.

Operator: One moment for our next question. That will come from the line of Andy with William Blair. Your line is open.

Analyst: Thanks for taking our question. Talking about the 316 a little bit: there was an AdCom recently discussing a progression definition based on non-radiographic progression. For the adjuvant CRC study, what was the back-and-forth with the FDA agreeing on MRD positivity as a way to change therapy? How did you conclude this is a regulatory-approvable approach?

Dana T. Aftab: Thanks for the question, Andy. We have discussed the STELLAR-316 trial since December. We are super excited because it addresses a high unmet-need population: patients with resected stage 2 or 3 colorectal cancer who have completed definitive therapy and are now in a watch-and-wait game to see if they develop late-stage disease. The Signatera test has shown in a number of studies to, with a high degree of accuracy, predict rapid progression. Patients who are positive for the test typically have a median disease-free survival of around six months, so it is a very high unmet-need population. The trial has been well designed with a large degree of input from key opinion leaders, other stakeholders, as well as the agency. We are very confident in our design and will release more details as we get closer to launch and when it is posted to clinicaltrials.gov. Please stay tuned for more information.

Operator: One moment for our next question. That will come from the line of Michael Schmidt with Guggenheim. Your line is open.

Analyst: Hey, thanks for taking my question. On RCC, I want to understand the size of the opportunity for LightSpark-033. What percentage of patients would be qualified? Beyond 033 and 034, are there any other studies you are considering for RCC specifically with ZANZA?

Patrick Joseph Haley: Thanks for the question. With regards to LightSpark-033, we are thinking about RCC broadly and establishing ZANZA as a franchise in RCC and beyond. In the first-line setting, approximately a quarter of patients may be coming off adjuvant therapy, and that can evolve as more patients receive adjuvant therapy. More importantly, we are doing multiple studies—LightSpark-033, -034, and STELLAR-304—drawing off our experience with cabo, where we did multiple studies in RCC to establish ourselves as the leading TKI in the 2020s. We are building toward our vision of establishing ZANZA as a leading TKI of the 2030s. As Mike and Dana mentioned, we are looking at combinations with orthogonal MOAs and different approaches to continue to raise the bar in the first-line setting and in RCC generally.

Operator: One moment for our next question. That will come from the line of Sylvan Tuerkcan with Citizens. Your line is open.

Analyst: Good afternoon, and thanks for taking my question. More broadly on your strategy around allocation: you are running one of the broadest development strategies for an unapproved drug and even expanded it now. How do you balance that broad strategy with buybacks and potential M&A, which has not happened yet?

Christopher J. Senner: Thanks for the question. From a capital allocation perspective, we look at how we allocate capital across R&D, BD opportunities, and share repurchases. We are a financially strong company with significant cash flows. We are prioritizing our R&D spend on a constant basis so we understand which projects are sticking their heads up and saying, “fund us,” and we will continue to do that. Andrew and Stefan and the team are continuing to look at BD opportunities. We also have access to capital. All of that allows us to execute on R&D investments, BD investments, and share buybacks. From a share buyback perspective, we believe Exelixis, Inc. is a great opportunity, that our opportunity is not being fully appreciated generally, and we think we are undervalued, so we are going to continue to buy back shares.

Operator: One moment for our next question. That will come from the line of Jay Gerberry with Bank of America. Your line is open.

Analyst: Hey guys, this is Chi on for Jason. On LightSpark-034, can you contextualize the choice of using belzutafan monotherapy as the control arm as opposed to an alternative TKI monotherapy or perhaps even tivozanib plus lenvatinib given the pending sNDA review there? I also noticed that OS is listed as a dual primary endpoint—would PFS alone be sufficient to support approval, or would you need an OS win, based on the recent LightSpark-011 data?

Dana T. Aftab: LightSpark-034 is Merck’s study evaluating ZANZA plus belzutafan versus belzutafan plus placebo in the second-line-plus setting in patients who have progressed on both an IO-based regimen and a VEGFR TKI regimen, either in sequence or in combination. The dual primary endpoints are two different efficacy endpoints. In clear cell RCC, OS has really become a gold standard. Having two different efficacy endpoints typically requires both to hit, but it depends on the data and timing. Regarding the population and control, this study, as well as many others ongoing now or planned for the future, anticipates multiple potential treatment landscapes. It focuses on patients who are candidates for belzutafan alone or belzutafan in combination with a TKI after having progressed on both a TKI-containing regimen and an IO-containing regimen. That represents an important unmet need when this trial reads out.

Operator: One moment for our next question. That will come from the line of Leona Timischev with RBC. Your line is open.

Analyst: Thanks for taking my question. Sticking with the franchise approach by 2030 you have been talking about: you mentioned RCC. I wanted to focus on NETs and how you are thinking about the franchise there in the future. You are running 311, but are there any other combinations you are looking at, especially as the treatment landscape evolves with radiopharmaceuticals and ADCs? How are you envisioning building out ZANZA into the 2030s in that setting?

Patrick Joseph Haley: Thanks for the question, Leonid. Regarding how we are thinking about 311 in the marketplace, cabo is off to a really strong start in the second line plus setting, and that study is designed to go head-to-head with everolimus as an active comparator, which is a first in the setting. It positions ZANZA in earlier lines of therapy and a larger patient population, with potential to beat an active comparator head-to-head. There is a lot of excitement around the study design, and we are excited about ZANZA’s opportunity.

Dana T. Aftab: Beyond that, we are very committed to this patient population. We have seen how much benefit cabo brings and the excitement around STELLAR-311. We are focused on how else we can address this population. As we discussed at R&D Day, we are looking at other opportunities earlier in the discovery pipeline to address neuroendocrine tumor patients who require treatment with an SSTR2 agonist—mainly patients with functional tumors, but also others who express the receptor. We are developing a small molecule that we hope to file an IND on later this year, which could be a novel approach to offer in combination with ZANZA if STELLAR-311 is successful. We are also broadening to other neuroendocrine carcinomas, namely tumors that express DLL3—primarily small cell lung cancer but also a range of other neuroendocrine carcinomas in the GI tract and prostate.

We presented data this year for XB773, a DLL3-targeted ADC with a very small, novel format and a topoisomerase inhibitor payload that we think is differentiated. If it shows interesting activity, we can also explore combinations with ZANZA. We have multiple irons in the fire across histologies and patient populations.

Operator: One moment for our next question. Our next question will come from the line of Kalpit Patel with Wolfe Research. Your line is open.

Analyst: Good afternoon, and thanks for taking the questions. On the LightSpark-012 trial, there was no benefit of the triplet compared to the doublets in the first-line setting. For your and Merck’s strategy, would you ever entertain a triplet in that exact same first-line setting, and what would that future study look like in ccRCC?

Dana T. Aftab: Thanks for the question, Kalpit. We are collaborating with Merck on LightSpark-033, which is evaluating ZANZA plus belzutafan in the frontline setting versus cabozantinib. This is a different hypothesis; there is no IO in this combination because it assumes or requires prior adjuvant IO. As for other potential combinations, especially triplets, that requires very specific and focused scientific rationale. We are not opposed to doing it; it just has to be the right molecule in the right setting. As mentioned earlier, we have been looking at orthogonal MOAs to pair with ZANZA and will investigate ZANZA plus our novel bispecific IO (XB628) in its Phase 1 study. We will disclose more details as those trials come to fruition.

Operator: One moment for our next question. That will come from the line of Esther DeRoot with Barclays. Your line is open.

Analyst: Hi, thanks for taking my question. First, how are you planning to leverage the non–liver metastases data from STELLAR-303 given the December PDUFA date? Are you going to update your NDA to include that data? Also, thoughts around the investigator-sponsored trial coming up at ASCO of cabo + nivo in non–clear cell renal cell carcinoma, and how to think about that dataset relative to ZANZA and 304?

Dana T. Aftab: Thanks for the question. Regarding STELLAR-303, as mentioned, we are on track to see the results of the non–liver metastasis subgroup primary endpoint around midyear. Regarding sharing data with the FDA, we certainly plan to share those data as well as any other data the agency might ask for as part of the ongoing review, which from our standpoint is progressing on schedule toward the PDUFA date in early December. On the cabo + nivo IST in non–clear cell RCC, we are aware of those data and look forward to seeing them. STELLAR-304 is a randomized Phase 3 designed to establish level one evidence, and we believe it represents a significant opportunity for ZANZA plus nivolumab in this underserved population.

Operator: One moment for our next question. That will come from the line of Ash Verma with UBS. Your line is open.

Analyst: Hi. I wanted to get your latest thoughts on combo competitiveness in RCC. Given the earlier LightSpark-022 study had a PFS-positive result, do you think it is unlikely to show OS separation because of enough alpha not being attributed to that analysis?

Patrick Joseph Haley: Thanks for the question. We are pleased with where we are competitively in RCC. Generally, we would not want to speculate on how other trials will read out. We have built a franchise in RCC with strength across segments. This quarter we saw the highest frontline market share for CABOMETYX plus nivolumab in the first-line setting, and we continue to see strong momentum there given the breadth and depth of the data and the long-standing prescriber experience with this combination. We see potential to continue growing in RCC, particularly in the first-line setting.

Operator: At this time, there are no further questions. I will turn the call over to today’s host, Andrew Peters. Mr. Peters?

Andrew Peters: Thank you, Sherry, and thank you all for joining us today. We welcome your follow-up calls with any additional questions you may have that we were unable to address during today’s call. Thank you all again, and have a great rest of your week.

Operator: This concludes today’s program. Thank you all for participating. You may now disconnect.