No-Moat Exelixis Focuses on Developing Pipeline to Offset Future Generic Entry for Cabozantinib

Exelixis is best known for its discovery of cabozantinib, a tyrosine kinase inhibitor (TKI) that was approved in 2012 for medullary thyroid cancer (MTC). This small molecule was later approved for the treatment of renal cell carcinoma (RCC) as well as hepatocellular carcinoma (HCC). The cabozantinib opportunity has room to grow with several late-stage trials evaluating combination therapies. Although cabozantinib has generated strong returns, we believe Exelixis' long-term outlook has a high degree of uncertainty given the company's relatively early-stage pipeline outside of cabozantinib. This is exacerbated by cabozantinib's patent expiration in January 2030.