Exelixis Q2 Revenue Falls 11 Percent

Key Points

• - Non-GAAP earnings per share of $0.75 in Q2 FY2025 easily beat expectations, while GAAP revenue was slightly below estimates in Q2 FY2025.

• - total revenue (GAAP) declined 10.8% in Q2 2025 due to a missing collaboration milestone.

• - Pipeline progress remains a major focus, with pivotal trial successes and regulatory approvals expanding the potential future product portfolio.

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Exelixis (NASDAQ:EXEL), an oncology-focused biotech, reported results for Q2 2025 on July 28, 2025. For the period, the company delivered non-GAAP earnings per share (EPS) of $0.75 in Q2 FY2025, beating analyst consensus of $0.66. Revenue totaled $568.3 million, GAAP revenue of $568.3 million was below the analyst estimate of $580.05 million, and Revenue declined 10.8% year-over-year. This shortfall was mainly due to the absence of a $150.0 million milestone recorded in Q2 2024. Solid growth in net product revenue, especially from CABOMETYX for neuroendocrine tumors, showed strong underlying demand. While non-GAAP earnings beat expectations and commercial execution remained strong, headline GAAP revenue was negatively affected by collaboration milestone timing, making for a mixed overall quarter.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About Exelixis and Its Business Model

Exelixis (NASDAQ:EXEL) develops and commercializes therapies for cancer, focusing mostly on targeted small-molecule drugs. The company's core product is cabozantinib, sold as CABOMETYX for kidney, liver, thyroid, and, more recently, neuroendocrine cancers. Exelixis also markets COMETRIQ, another cabozantinib brand.

In recent years, Exelixis has aimed to grow beyond its reliance on cabozantinib by expanding its development pipeline and advancing strategic partnerships. Success depends on strong commercial performance of existing drugs, the approval and adoption of new therapies, maintaining intellectual property protection, and managing clinical trial progress. Collaborations with partners like Ipsen and Takeda supply royalties and milestone payments, while internal research seeks to build a wider portfolio of oncology assets.

Detailed Quarterly Developments and Financial Trends

Product sales remained the company's main growth driver. Net product revenue, made up largely of U.S. CABOMETYX sales, rose 18.8% year-over-year. CABOMETYX, a small molecule therapy for renal cell carcinoma, hepatocellular carcinoma, and now neuroendocrine tumors, made up the vast majority of sales. The company reported $520.0 million in combined U.S. cabozantinib net product revenue, including $517.9 million from CABOMETYX and $2.1 million from COMETRIQ. Notably, CABOMETYX's new neuroendocrine tumor (NET) indication now accounts for about 4% of its business in this area. Launch efforts in NET have been rapid, with commercial and educational materials deployed soon after U.S. approval in late March 2025.

Total revenue (GAAP) fell 10.8% year-over-year. This decline was not due to product weakness but rather the lack of a one-off $150.0 million milestone payment booked in collaboration revenue in Q2 FY2024. Collaboration revenue (GAAP) dropped to $48.2 million from $199.6 million, reflecting that absence. Royalties from partners such as Ipsen and Takeda, earned on their overseas sales of cabozantinib, contributed $43.4 million. The underlying core sales trend in the U.S. remains positive, but overall revenue can be volatile as it is partially influenced by random milestone payments from partners achieving specific sales thresholds.

The company protected the U.S. patent estate for cabozantinib by resolving litigation with Biocon in July 2025, delaying generic competition until at least January 1, 2031. This reduces risk to the CABOMETYX revenue stream for the foreseeable future. However, with over 90% of product sales tied to cabozantinib, Exelixis still faces concentration risk if new rivals emerge or if future indications do not deliver expected results.

This reflected lower clinical and manufacturing costs, particularly in research and development (R&D), which fell by $10.8 million. Selling, general, and administrative (SG&A) costs rose modestly to support the recent NET launch. The lower tax provision for the period, at $45.6 million versus $66.7 million last year, supported GAAP net earnings. The company continued its share buyback efforts, repurchasing $796.3 million of its stock and reducing the share count by more than 13% since March 2023 through June 30, 2025. This capital return reflects confidence in its future and use of strong cash flows.

The clinical development pipeline continues to advance. Zanzalintinib, a next-generation tyrosine kinase inhibitor (TKI), delivered promising results in the Phase 3 STELLAR-303 colorectal cancer trial, meeting its main goal of extending overall survival, as announced in Q2 2025. A regulatory submission is planned for this indication. Enrollment was completed in the pivotal STELLAR-304 trial for non-clear cell renal cell carcinoma in May 2025, with top-line data expected in the first half of 2026. The company also discontinued development of weaker assets, such as XL495 and the STELLAR-305 trial in head and neck cancer, after emerging data indicated limited prospects in Q2 2025. This reflects an ongoing pipeline pruning strategy to focus resources on the highest-potential projects.

Pipeline depth is further supported by ongoing early-stage programs, including XL309 (a targeted small molecule therapy), XB010 (a bispecific antibody), and XB628 (another bispecific antibody designed to engage natural killer cells and block immune checkpoints). Several new investigational new drug (IND) applications are expected in FY2025, which could further expand the pipeline. Maintaining momentum through regulatory approvals and successful pivotal trial results is key, as commercial revenue outside cabozantinib is not projected to materialize for at least another year.

Regulatory highlights during the period included U.S. (March 2025) and European (July 2025) approvals for CABOMETYX as a treatment for previously treated advanced neuroendocrine tumors. These approvals expand market opportunity and strengthen Exelixis’ commercial position, although the absolute financial contribution from the new indication will take time to grow. Indirectly, this expanded use further entrenches CABOMETYX against mainly generic oral alternatives in neuroendocrine tumors, with the company’s commercial team using its experience in oncology to drive adoption.

Competition in the oncology space stays intense. CABOMETYX has retained its position as the leading prescribed TKI in renal cell carcinoma -- a position supported by recent market share data and favorable guideline endorsement. In neuroendocrine tumors, CABOMETYX faces mostly generic competition, which may provide a branded marketing and engagement advantage. However, continued innovation by other drug companies, such as the advance of antibody-drug conjugates or other targeted therapies, remains a potential threat. Exelixis must succeed in pipeline execution and new indication launches to sustain and diversify its sources of revenue.

There were no dividend payments this quarter. EXEL does not currently pay a dividend.

Looking Ahead: Guidance and Market Priorities

For fiscal 2025, management maintained its prior guidance for FY2025 following the quarter. Expected total revenue remains between $2.25 billion and $2.35 billion for FY2025, with net product revenue forecast between $2.05 billion and $2.15 billion for FY2025. Operating expenses, covering both R&D and SG&A, are projected to be in line with previous expectations, reflecting continued investment in clinical development and support for new product launches. The effective tax rate is expected to remain between 21% and 23% for FY2025. These figures follow an earlier guidance increase for FY2025 after a strong first quarter, and the company states it will re-evaluate FY2025 guidance as evidence from the NET launch and other new indications provides further clarity.

With milestone revenue likely to remain unpredictable, investors should track core net product trends, especially CABOMETYX’s U.S. and ex-U.S. sales in established and new markets. Progress on the zanzalintinib pivotal trials will be important, as they hold the potential for a second major commercial franchise. Continued intellectual property defense, clinical trial milestones, and the results of regulatory submissions remain important near- and medium-term priorities. The ramp and ultimate scale of the NET launch, along with the robustness of the early-stage pipeline, could define Exelixis’ expansion beyond its current reliance on cabozantinib.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Exelixis. The Motley Fool has a disclosure policy.