Exelixis Has 2 Major Catalysts Coming by March 2027. Here's What Investors Should Watch.

A decade ago, Exelixis (NASDAQ: EXEL) was just beginning its growth story with the launch of its star cancer treatment Cabometyx. This first indication was in kidney cancer, and the product generated about $93 million in revenue in 2016; in the recent quarter, Cabometyx, now approved for four types of cancer, brought in more than $600 million.

This franchise is going strong, with Cabometyx's sales figure representing about 12% year-over-year growth. Now, however, Exelixis is focusing on a potential product that could drive a whole new era of earnings gains for the company. And with this in mind, the biotech has two major catalysts coming by March of 2027. Here's what investors should watch.

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Exelixis' flagship product

First, though, let's take a closer look at Exelixis and its path so far. The company's flagship product right now is Cabometyx, and this is within the cabozantinib franchise. Cabozantinib is a tyrosine kinase inhibitor, a treatment that works by blocking certain enzymes -- tyrosine kinases -- that help cancer cells grow.

As part of the franchise, Exelixis sells Cabometyx for the treatment of advanced renal cell carcinoma, hepatocellular carcinoma, differentiated thyroid cancer, and neuroendocrine tumors. And the biotech company sells Cometriq for metastatic medullary thyroid cancer. Both medicines have cabozantinib as the active ingredient, but they are dosed differently. These drugs, and royalties from them when sold internationally, generate virtually all of the company's revenue.

Now, Exelixis has its sights set on its next potential growth driver, and that's zanzalintinib, a next-generation tyrosine kinase inhibitor. This candidate is similar to cabozantinib but includes improvements in certain characteristics, such as how long the drug remains in the body. Less frequent dosing, for example, could be more convenient for patients. Zanzalintinib is involved in nearly a dozen clinical trials right now, and half of those are in the pivotal stage. This suggests that this investigational drug is nearing the finish line.

Two catalysts ahead

And that brings me to what investors should watch in the coming months. Before the end of March, Exelixis should see two key catalysts emerge. One could lead to the launch of zanzalintinib for metastatic colorectal cancer (mCRC). The company has applied for approval in that indication for zanzalintinib in combination with atezolizumab (Tecentriq, sold by Roche's Genentech).

The U.S. Food and Drug Administration has set a March 3 target date for the decision. This is based on data showing that zanzalintinib met one of the trial's primary endpoints, overall survival in the intention-to-treat population, including all randomized patients. In the other endpoint, overall survival in a subgroup without liver metastases, the candidate showed a non-statistically significant survival trend favoring the combo treatment.

The second catalyst ahead is the release of data from a phase 3 trial of zanzalintinib combined with nivolumab versus sunitinib (a drug sold by Pfizer) in previously untreated patients with advanced non-clear cell renal cell carcinoma. Positive results from this trial could lead to another regulatory submission.

A potential boost to revenue

So if both of the above are positive, Exelixis could potentially bring zanzalintinib to market for two indications in the near future. That would offer revenue a significant boost in the quarters to follow, making now a fantastic time to get in on this growth story.

Does this mean every investor should buy shares of Exelixis? Not necessarily. Such catalysts also open the door to some risk. If Exelixis receives a negative answer from the FDA or if trial results fall short of expectations, the stock could drop significantly. Before buying, investors should feel comfortable with those possibilities.

That said, Exelixis has the advantage of being a commercial-stage biotech, meaning it has products on the market -- and they are generating growth. The company also has a very full pipeline, though it's heavily based on zanzalintinib. If the above two catalysts support the quality of this candidate, this could be positive, boding well for the rest of the pipeline. Negative news, however, could do just the opposite.

All of this means that now is a great time for biotech investors who can handle a bit of risk to get in on Exelixis -- but risk-averse investors might remain on the sidelines for now.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Exelixis and Pfizer. The Motley Fool recommends Roche Holding AG. The Motley Fool has a disclosure policy.