Exelixis Built a Backup Plan for Its $2B Drug. It Just Hit a Wall.

When your drug can't clear the bar in the group most likely to benefit, it raises uncomfortable questions about how well the combination actually works. Oncologists had hoped for a clearer signal and lower toxicity compared to existing options, according to TD Cowen analyst Yaron Werber, who described the readout as "disappointing compared to investor expectations."

The Bigger Picture: A $2 Billion Safety Net

To understand why this matters, you need to understand Exelixis' business model. The company is essentially a one-drug company right now. Cabometyx (cabozantinib) generated $2.12 billion in net product revenue in 2025, accounting for roughly 90% of total sales. It's the top-selling oral kinase inhibitor for kidney cancer in the U.S., and it recently added a neuroendocrine tumor approval.

But every blockbuster drug faces a reckoning. Cabometyx's core composition-of-matter patent expires August 14, 2026. That's weeks away. Now, secondary patents and litigation settlements likely keep generics off the market until 2030 or 2031 (Teva and Cipla have settlements allowing entry January 1, 2031). So the cliff isn't imminent. But Wall Street thinks in five-year arcs, and Exelixis needs to show it has life after Cabometyx.

Zanzalintinib was supposed to be that life. Seven pivotal trials across colorectal cancer, kidney cancer, neuroendocrine tumors, and meningioma. Some analysts projected up to $5 billion in annual sales by 2033 under bull-case scenarios.

This endpoint miss doesn't kill that thesis. But it bruises it.

The Glass-Half-Full Argument

Exelixis isn't dead in colorectal cancer. The trial did meet its other primary endpoint in the full patient population. The FDA has already accepted a New Drug Application for zanzalintinib plus atezolizumab in previously treated metastatic CRC, with a decision date of December 3, 2026.

Morgan Stanley analyst Sean Laaman kept his $50 price target and Equalweight rating, calling the update "clinically mixed-to-negative at the margin." Translation: it's not great, but it's not fatal.

The regulatory path forward likely rests on the overall survival benefit in all patients, not just the subgroup that missed. Whether the FDA views that as sufficient for a clean label remains an open question.

Colorectal Cancer: The Toughest Room in Oncology

Colorectal cancer, particularly the microsatellite-stable (MSS) variety that doesn't respond well to immunotherapy alone, is notoriously difficult terrain. About 45% of metastatic CRC patients carry RAS mutations, and for them, the standard of care (bevacizumab plus chemotherapy) hasn't meaningfully changed in two decades. Median progression-free survival sits stubbornly around 9-11 months.

Regorafenib and fruquintinib offer modest late-line options but come with significant side effects. New targeted agents like adagrasib (for KRAS-G12C mutations) help, but only in tiny molecular subsets.

Zanzalintinib was supposed to crack open this market by combining a next-gen kinase inhibitor with immunotherapy. The overall survival win in the broad population suggests it partially succeeded. The subgroup miss suggests it's not the transformative leap investors had priced in.

What Comes Next

Exelixis still has multiple shots on goal. Beyond CRC, zanzalintinib is running pivotal trials in non-clear cell kidney cancer (STELLAR-304, topline data expected second half of 2026) and is launching an adjuvant CRC study (STELLAR-316) using MRD-guided technology to detect residual cancer DNA after surgery.

The company also has early-stage assets: a USP1 inhibitor (XL309), two antibody-drug conjugates (XB010 and XB371), and a bispecific antibody (XB628), all in phase 1.

But none of those will generate revenue anytime soon. For now, Exelixis remains what it's been for years: a Cabometyx story with a promising but complicated sequel in development.

The sequel just got a little more complicated.