Exelixis (EXEL 0.81%)A biotechnology company known for its focus on oncology treatments, reported strong third-quarter results on Oct. 29, largely driven by its flagship cabozantinib franchise. It reported total revenue of $539.5 million, up from $471.9 million for the same period in 2023, with U.S. product net revenue reaching $478.1 million, surpassing the previous year’s $426.5 million. Non-GAAP earnings per share (EPS) also improved remarkably to $0.47, compared to $0.10 in the prior year.

An overview of Exelixis

Exelixis develops and commercializes new molecular entities to treat cancer. Its flagship product, cabozantinib, is marketed under brands such as Cabometyx and Cometriq. Cabozantinib is widely used in the treatment of renal cell carcinoma and other cancers.

In recent years, Exelixis has focused on strategic partnerships and pipeline diversification to strengthen its market position. Its collaborations with major pharmaceutical companies and the results of ongoing trials aimed at expanding the indications of cabozantinib will be key factors in its growth prospects.

Notable developments during the quarter

During the third quarter, substantial revenue growth from the cabozantinib franchise — with both increased sales volume and higher average net selling prices — demonstrated Exelixis’ continued leadership in the market. Exelixis reported GAAP net income of $118 million, significantly higher than the $1 million reported a year earlier. Non-GAAP EPS also increased dramatically, from $0.10 to $0.47.

Research and development expenses fell to $222.6 million from $332.6 million the year before, largely due to lower licensing and collaboration costs, even as the company invests in diversification of its treatment portfolio beyond cabozantinib.

The cabozantinib franchise continues to gain traction through strategic trials aimed at expanding its use in indications such as neuroendocrine and prostate cancers. Recent legal victories have extended its patent protection until at least 2030.

Notable strategic initiatives in the quarter include the partnership agreement with Merck to evaluate its treatment candidate, zanzalintinib, in tandem with pembrolizumab and belzutifan. There are now six planned or active phase 3 trials for zanzalintinib.

Looking to the future

Exelixis raised its full-year revenue forecast to between $2.15 billion and $2.2 billion. This indicates management’s confidence in the strong growth trajectory driven by the strong performance of the cabozantinib franchise. Strategic investments in pipeline diversification highlight Exelixis’ commitment to reducing its reliance solely on cabozantinib and ensuring long-term sustainable growth.

Investors should keep an eye on how Exelixis fares in its efforts to expand the cabozantinib label into new indications and in the execution of its strategic collaborations. The FDA is expected to make its decision on cabozantinib as a treatment for neuroendocrine tumors by April – which will be a key catalyst for Exelixis.