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Exelixis (EXEL) Q1 Earnings Miss, Revenues Increase Y/Y

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Exelixis, Inc. (EXEL - Free Report) reported earnings of 16 cents per share in the first quarter of 2023, which missed the Zacks Consensus Estimate of 23 cents and our estimate of 20 cents and declined from 26 cents per share in the year-ago quarter.

Including stock-based compensation expense, earnings per share came in at 12 cents compared with earnings of 21 cents per share in the year-ago quarter due to an increase in operating expenses.

Net revenues came in at $408.8 million, which missed the Zacks Consensus Estimate of $427 million and our model estimate of $428 million. Revenues were up 14.8% year over year.    

Exelixis’ shares have gained 19.8% in the year so far compared with the industry’s decline of 5.5%.

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Quarter in Detail

Net product revenues came in at $363.4 million, up 17.1% year over year. The increases in net product revenues were primarily due to a rise in sales volume and the average net selling price.

Cabometyx (cabozantinib) generated revenues of $361.8 million. It is approved for advanced renal cell carcinoma (RCC) and previously treated hepatocellular carcinoma (HCC). Cometriq (cabozantinib capsules) for treating medullary thyroid cancer generated $1.6 million in net product revenues.  

Collaboration revenues, comprising license revenues and collaboration services revenues, were $45.4 million in the quarter compared with $45.7 million in the year-ago quarter.   

In the reported quarter, research and development expenses were $234.2 million, up 49.5% year over year related to increases in license and other collaboration costs, personnel expenses and manufacturing costs. Selling, general and administrative expenses were $131.4 million, up 27.7% due to an increase in personnel expenses.

In March, Exelixis announced that the board authorized the repurchase of up to $550 million of the company’s common stock before the end of 2023.

Pipeline Update

In February, Exelixis and partner Sairopa announced FDA clearance of Sairopa’s IND to evaluate the safety and pharmacokinetics in a phase I study of ADU-1805 in adults with advanced solid tumors. The study has been initiated. Per the terms of the clinical development and option agreement, Exelixis has the option to obtain an exclusive, worldwide license to develop and commercialize ADU-1805 and other anti-SIRPα antibodies upon review of data from prespecified phase I studies to be completed by Sairopa during the option period. This IND clearance triggered a $35.0 million milestone payment to Sairopa, which was paid in the first quarter of 2023.

2023 Guidance Reiterated

Revenues are projected between $1.775 billion and $1.875 billion, while product revenues are estimated in the range of $1.575-1.675 billion.

Our Take

Exelixis’ first-quarter results were weaker than expected. Nevertheless, product revenues increased as demand continued to grow, driven by the combination of Cabometyx and Bristol Myers’ (BMY - Free Report) Opdivo in the first-line setting for RCC. Exelixis is also striving hard to develop its portfolio beyond Cabometyx and has advanced the STELLAR-303 and STELLAR-304 phase III studies for zanzalintinib, as well as the single-agent and combination dose-escalation cohorts of the phase I trial of XB002.

Bristol-Myers’ Opdivo, one of its leading revenue generators, is approved for various oncology indications.

Zacks Rank & Stocks to Consider

Exelixis currently carries a Zacks Rank #3 (Hold). Some top-ranked stocks in the healthcare sector include Spero Therapeutics (SPRO - Free Report) and Ligand Pharmaceuticals (LGND - Free Report) , both of which sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, loss estimates for SPRO have narrowed to $1.02 from $1.45 for 2023. SPRO topped earnings estimates in three of the last four quarters and missed in the remaining one, the average surprise being 56.37%.

Over the past 90 days, earnings estimates for LGND in 2023 have increased by 86 cents to $4.16. LGND topped earnings estimates in two of the last four quarters and missed in the other two, the average surprise being 21.50%.


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