ExelixisEXEL

The company earned about 91 cents per share last quarter, beating the 85 cents analysts expected. Total revenue reached nearly 629 million dollars, driven by 573 million dollars from its main kidney cancer drug franchise. While the total sales number was just under the 640 million dollar target, the core business remains highly profitable.

Management is focused on zanzalintinib, its next major drug candidate. Getting this new treatment approved is the key to growing the business as older patents eventually expire. The stock fell about 6 percent today, which looks like a reaction to the slight revenue miss rather than a change in the long-term outlook for its drug pipeline.

See the full quarter, and how our tracked metrics did

Source: 8-K filing

Key highlights

• Revenue outlook lowered: Management lowered its full year revenue forecast to a range of $2.500 billion to $2.550 billion, down from the previous $2.525 billion to $2.625 billion. This new guidance excludes any potential sales from zanzalintinib, the company's next major cancer drug, which is currently waiting for a government decision on its approval.
• Core drug sales growing: Net product revenue from the cabozantinib franchise, the company's main cancer treatment, grew 10% to $573.0 million this quarter. This increase was driven by higher sales volume compared to the $520.0 million the drug brought in during the same period last year.
• Aggressive stock buybacks: The company spent $311.6 million to buy back its own shares this quarter and authorized a new program to spend another $750 million by the end of 2027. This strategy has already reduced the number of shares outstanding from 284.4 million a year ago to 259.7 million today, which helps increase the value of each remaining share for owners.
• Spending efficiency improving: Research and development expenses for the full year are now expected to be between $825 million and $875 million, which is a reduction from the previous forecast of up to $925 million. This lower spending target comes even as the company moves forward with new clinical trials, such as the STELLAR 316 study starting in mid 2026.
• Critical approval date set: The government assigned a decision date of December 3, 2026, for whether it will approve zanzalintinib for a specific type of colon cancer. This drug is vital for the company's future because it represents the next big product line beyond their current flagship medicines.

Our take: This was a soft quarter because the lower revenue forecast for the year takes some of the wind out of the company's sails. While the core business is still growing and the aggressive stock buybacks are great for long-term owners, everything now depends on the December approval of their next major drug.