Exelixis Q3 2026 Earnings Call Transcript
Exelixis (NASDAQ:EXEL) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Exelixis reported strong Q3 2026 financial results with total revenues of approximately $659 million, driven by robust performance of the Cabometyx franchise, which saw U.S. net product revenues grow by 11% year over year to $605 million.
The company’s strategic focus remains on developing its oncology pipeline, particularly with zanzalintinib, which is positioned as the next potential franchise opportunity. Multiple pivotal trials are underway to expand its indications.
Exelixis maintains a disciplined capital allocation strategy, including a $250 million share repurchase in Q3, and reported a GAAP net income of $218 million with a non-GAAP net income of $240 million.
The company updated its gross to net deductions estimate for the full year 2026 to approximately 30% and maintained strong cash and marketable securities totaling $1.4 billion.
Management expressed confidence in the long-term growth potential of its pipeline, with upcoming milestones including new pivotal trial results and potential regulatory approvals, particularly for zanzalintinib in various cancer indications.
Full Transcript
Tawanda (Operator)
Good day, ladies and gentlemen, and welcome to the Exelixis Third Quarter 2026 Financial Results Conference Call. My name is Tawanda and I will be your operator for today. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to your host for today, Mr. Andrew Peters, Senior Vice President of Strategy and Investor Relations. Please proceed.
Andrew Peters (Senior Vice President of Strategy and Investor Relations)
Thank you, Tawanda, and thank you all for joining us for the Exelixis Third Quarter 2026 Financial Results Conference Call. Joining me on today’s call are Mike Morrissey, our President and CEO; Chris Senner, our Chief Financial Officer; Dana Aftab, our Executive Vice President of Research and Development; and PJ Haley, our Executive Vice President of Commercial, who will review our progress for the third quarter 2026 ended September 30, 2026. During the call today, we will refer to financial measures not calculated according to Generally Accepted Accounting Principles. Please refer to today’s press release, which is posted on our website, for an explanation of our reasons for using such non-GAAP measures, as well as tables deriving these measures from our GAAP results.
During the course of the presentation we will be making forward-looking statements regarding future events and the future performance of the company. This includes statements about possible developments regarding discovery, product development, regulatory, commercial, financial and strategic matters, potential growth opportunities and government drug pricing policies and initiatives. Actual events or results could, of course, differ materially. We refer you to the documents we file from time to time with the Securities and Exchange Commission which, under the heading Risk Factors, identify important factors that could cause actual results to differ materially from those expressed by the company verbally and in writing today, including without limitation, risks and uncertainties related to product commercial success, market competition, regulatory review and approval processes, conducting clinical trials, compliance with applicable regulatory requirements, our dependence on collaboration partners, and the level of costs associated with discovery, product development, business development and commercialization activities.
With that, I’ll turn the call over to Mike.
Mike Morrissey (President and Chief Executive Officer)
All right, thank you, Andrew, and thanks to everyone for joining us on the call today. Exelixis has had a strong third quarter and continues to advance the key components of our business. The company is well positioned to deliver on our strategic objectives and tactical goals for 2026 and beyond as we aspire to become a company with a diverse pipeline of potential oncology franchise assets and opportunities. Most importantly, zanzalintinib is positioned to drive the next phase of growth for Exelixis as our second franchise molecule, potentially first with the third-line-plus CRC opportunity, followed by several waves of pivotal trials that we’ll highlight today. Cabometyx’s strong third quarter performance reinforces our confidence in its long-term revenue growth trajectory. We saw solid year-over-year growth in both the RCC and NET indications in Q3 and are excited with the potential of the Cabo NET indication, which serves as the foundation of our future expanded NET franchise, and with Zanza and other molecules in our pipeline.
The bottom line today is that we remain laser focused to advance Exelixis to the next level with numerous opportunities as we build new oncology franchises through discovery, development, commercial and business development activities while we reinforce our existing Cabo franchise. Key highlights for the third quarter 2026 include: first, Zanza is in the spotlight as our next potential franchise opportunity. Zanza remains our number one R&D priority and we are advancing key objectives across the program beyond our current pivotal trials.
We are actively advancing a second wave of potential pivotal trials that could further expand the scope, reach and long-term value of Zanza in GI and other indications. Our goal is to build a durable franchise with stacking capabilities that could drive growth for years to come. Second, we continue to see substantial growth from the Cabometyx franchise. Cabo remains the leading TKI for RCC and the market leader for the oral second-line-plus NET segment. Third quarter 2026 U.S. Cabo franchise net product revenues grew approximately 11% year over year to $605 million. Continuing its role as a worldwide leading TKI, global Cabo franchise net product revenues generated by Exelixis and its partners grew approximately 11% year over year to $818 million in the third quarter 2026.
Third, our commitment to rigorous expense management and capital allocation is unwavering as we invest in our mission-critical R&D priorities while returning cash to shareholders with our share repurchase program. We believe our expense management and capital allocation strategy is an important corporate differentiator and positions us to create both short-term and long-term shareholder value while maintaining strategic flexibility. Third quarter and year-to-date progress underscores the strength of our oncology franchise strategy as we advance Zanza towards becoming a major franchise, develop our broad portfolio, grow the Cabo franchise business and maintain disciplined capital allocation. So with that, please see our press release issued an hour ago for our quarterly financial results and a comprehensive summary of key corporate milestones achieved during the period. And with that I’ll turn the call over to Chris.
Chris Senner (Chief Financial Officer)
Thanks, Mike. For the third quarter 2026, the company reported total revenues of approximately $659 million, which included Cabometyx franchise U.S. net product revenues of $605 million. Cabometyx net product revenues were $603 million and included no clinical trial sales. As a continued reminder, clinical trial sales have historically been choppy between quarters and we expect this to continue into the future. Gross to net for the cabozantinib franchise in the third quarter was approximately 29%, which is lower than the gross to net we experienced in the second quarter. This decrease in gross to net deductions in the third quarter is primarily due to lower 340B discounts when compared to the second quarter. Additionally, we’re updating our estimate for full-year 2026 gross to net deductions and we’re now projecting that will be approximately 30%.
Our Cabometyx trade inventory was down at 1.8 weeks on hand at the end of the third quarter when compared to the second quarter. Total revenues in the third quarter also include approximately $52 million in royalties earned from our partners Ipsen and Takeda on their sales of cabozantinib. Our total operating expenses for the third quarter 2026 were approximately $390 million compared to $380 million in the second quarter. The sequential increase in these operating expenses was primarily driven by higher legal and advisory fees, marketing expenses and higher cost of goods sold, which were offset by lower license and other collaboration costs.
Provision for income taxes for the third quarter 2026 was approximately $64.7 million compared to approximately $50.6 million for the second quarter 2026. The company reported GAAP net income of approximately $218 million, or $0.88 per share basic and $0.85 per share diluted, for the third quarter 2026. The company also reported non-GAAP net income of approximately $240 million, or $0.97 per share basic and $0.94 per share diluted. Non-GAAP net income excludes the impact of approximately $22 million of stock-based compensation expense, net of the related income tax effect.
Cash and marketable securities for the quarter ended September 30, 2026 were approximately $1.4 billion. During the third quarter 2026, we repurchased approximately $250 million of the company’s outstanding common stock, resulting in the retirement of approximately 4.5 million shares of the company’s outstanding common stock at an average price per share of $55. As of the end of the third quarter 2026, we had approximately $348 million remaining under the $750 million stock repurchase plan authorized by the company’s board in May 2026.
And finally, we’re updating the full-year 2026 financial guidance, reflecting changes to our cost of goods sold and our tax rate estimates, which are detailed on Slide 13 of our earnings presentation. And with that, I’ll turn the call over to Dana.
Dana Aftab (Executive Vice President of Research and Development)
Thanks, Chris. Our unified strategy in R&D is focused on developing multiple franchise molecules in oncology. Therefore, we continue to be focused on maximizing our productivity with disciplined investment in high-value opportunities for zanzalintinib as well as the rest of our portfolio. Our strategy is based on our experience with Cabo, where 14 completed pivotal trials and eight approvals firmly cemented its franchise status and brought tremendous value to patients across a spectrum of different cancers.
We’re taking a similar approach with zanzalintinib, where we now have seven ongoing trials that are potentially label enabling, which we refer to as Wave One. Those trials address just a subset of the potential opportunities for zanzalintinib, and we are now well underway on planning and executing our Wave Two pivotal studies for zanzalintinib. All of these activities are aligned with our strategy, which prioritizes development of zanzalintinib as a multidimensional solid tumor oncology franchise molecule.
The STELLAR-316 trial is a key component of this strategy and is designed to entrench zanzalintinib in the GI franchise. This is a pivotal Phase 3 trial investigating zanzalintinib with and without subcutaneous pembrolizumab in patients with resected stage 2 or 3 colorectal cancer who, following definitive therapy, have tested positive for molecular residual disease and have no radiographic evidence of disease. I’m happy to say that sites in this trial are now activated and enrolling participants.
We are particularly excited about this trial not only because of its potential to improve outcomes in CRC patients at an earlier stage of disease than was addressed in the STELLAR-303 trial, but also because it utilizes the Signatera test to select patients with the greatest need. Regarding the NDA based on STELLAR-303, our updated PDUFA action date is March 3, 2027. In the neuroendocrine tumor indication, STELLAR-311 is our global Phase 3 trial evaluating zanzalintinib compared to everolimus as an initial oral therapy in patients with pancreatic or extra-pancreatic neuroendocrine tumors. STELLAR-311 positions zanzalintinib to potentially become the first and only small molecule to be randomized against an active control in a pivotal trial in this indication, which, depending on the data, could potentially position zanzalintinib to broadly displace other oral agents in the frontline setting.
Thus, we are very enthusiastic about STELLAR-311, and that sentiment is also shared by investigators and patients based on the continued robust enrollment we’ve observed in the trial since its activation. In the GU tumor franchise, STELLAR-304 is our first pivotal trial for zanzalintinib in kidney cancer, evaluating the combination of zanzalintinib plus nivolumab versus sunitinib in patients with non–clear cell renal cell carcinoma. We completed enrollment in STELLAR-304 last year, and we now expect top-line results from the study to be available in the first quarter next year. If positive, those results could lead to our second NDA filing for zanzalintinib in clear cell RCC.
Progress continues with regard to the two pivotal Phase 3 studies that Merck is running to evaluate cabozantinib in combination with belzutifan, with LITESPARK-033 investigating the combination in the frontline setting and LITESPARK-034 in the second-line-plus setting. Finally, for our Wave One trial updates, STELLAR-201 is our Phase 2 trial evaluating zanzalintinib in patients with recurrent meningioma who are no longer responsive to or eligible for local therapies, and enrollment in the trial continues to exceed our initial projections. This indication represents a very high unmet need in neuro-oncology, which we believe is a factor in the robust enrollment we’ve observed.
Pending favorable results and given the absence of any approved systemic therapies in this setting, the STELLAR-201 trial could be an important opportunity for zanzalintinib to become the first systemic therapy that could improve outcomes for these patients. We’re excited to see these seven ongoing Wave One trials continuing to move forward, and we believe that zanzalintinib’s differentiated profile has the potential to translate into meaningful benefit for patients in other tumor settings and/or combinations with additional molecules and mechanisms of action. To realize that potential, we are actively pursuing the next wave of potential pivotal trials, or Wave Two, for zanzalintinib.
A primary focus for Wave Two is to continue investigating zanzalintinib combined with established immunotherapies given the demonstrated clinical differentiation we’ve observed with zanzalintinib paired with atezolizumab in CRC and with nivolumab in RCC, which we believe strongly supports zanzalintinib’s potential to be the TKI of choice for combinations with immune checkpoint inhibitors. A clear fit within this strategy is STELLAR-202, our Phase 2 trial in squamous non–small cell lung cancer that’s investigating the addition of zanzalintinib to pembrolizumab in the maintenance phase after induction with pembrolizumab plus chemotherapy.
I’m happy to announce that STELLAR-202 is now initiated and enrolling participants. In addition to STELLAR-202 in lung cancer, we’re also planning combinations with established checkpoint inhibitors in other tumor types in Wave Two, including bladder cancer. We are especially interested in and planning for a potential trial for bladder cancer patients previously treated with enfortumab vedotin plus a PD-1 immune checkpoint inhibitor. Our cohort in STELLAR-002 evaluating zanzalintinib in this setting has enrolled extremely quickly, affirming the substantial unmet need in this setting beyond established I/O molecules.
The mechanism of action of zanzalintinib clearly supports combinations with newer generations of I/O-based therapy as well. To that end, we’ve begun enrolling a cohort combining our novel bispecific immunotherapy XB628 with zanzalintinib in our XB628 Phase 1 trial. The primary focus of this cohort is safety, and patients across a range of cancers are being enrolled. We expect to begin enrolling expansion cohorts soon to focus on our key tumor franchises including GU and GI.
We’ve also been engaged in discussions with potential collaborators to plan studies combining zanzalintinib with their novel molecules and mechanisms of action to address unmet needs across a spectrum of cancers, primarily focused in GU and GI indications, and we plan to give further updates on these activities as we get closer to launching the trials. Beyond immunotherapies, we’re also exploring the combination of zanzalintinib with chemotherapy, specifically docetaxel, in patients with metastatic castration-resistant prostate cancer who have measurable disease. This combination is being investigated in an expansion cohort in STELLAR-002, which is actively enrolling patients. The rationale for this cohort is based on data with Cabo where a small Phase 2 study showed favorable outcomes when Cabo is combined with docetaxel in patients with metastatic CRPC.
If zanzalintinib in combination with docetaxel is shown to be safe and active, that could open up a number of opportunities across a range of solid tumors where docetaxel, other chemotherapies, or ADCs carrying cytotoxic payloads remain the standard of care, such as second-line non–small cell lung cancer and CRC. Accordingly, other studies combining zanzalintinib with cytotoxic modalities to be potentially included in Wave Two are in the planning stage to allow us to move quickly depending on the data that emerge.
Finally, our early clinical pipeline continues to progress, and we’re also advancing new small-molecule and ADC programs toward IND filings and development candidate nominations. In this regard, I’m happy to announce that we have a new development candidate in our pipeline, XL558, a selective somatostatin receptor 2 agonist, which has recently been nominated and for which we plan to submit an IND later this year. I look forward to sharing more details on this and other pipeline programs as they advance, and with that I’ll turn the call over to PJ.
PJ Haley (Executive Vice President of Commercial)
Thank you, Dana. The Cabometyx franchise continues to show strength after more than a decade since its initial launch. With seven indications predominantly in the GU and GI solid tumor space, Cabometyx is a best-in-class TKI across these therapeutic franchises. Exelixis has built and refined significant commercial capabilities throughout this time, including a foundation of success in the community setting. As Dana detailed, the zanzalintinib franchise is positioned to build on the foundation of Cabometyx in both GU and GI oncology and beyond with its extensive development program, with what we believe to be a superior molecule. We are excited about the potential approval of Zanza in colorectal cancer as our first indication in a large tumor type. Significant unmet medical need in CRC, which is largely treated in the community, provides an opportunity to leverage the strength of our capabilities in that setting.
We are thrilled with the results of STELLAR-303; pending regulatory approval, we believe that these data would provide Exelixis with a compelling commercial opportunity in one of the big four tumors. The third-line-plus CRC setting consists of approximately 23,000 patients in the U.S. and represents an overall market opportunity of approximately $1.5 billion. In terms of contemporary pricing, our market research and advisory boards demonstrate positive feedback and excitement for the STELLAR-303 data. Physicians reiterate the significant unmet medical need for patients in the third-line setting and are excited for the potential to have a regimen that includes an immune checkpoint inhibitor available for the broader population of CRC patients. The analysis of CRC prescribers demonstrates a significant overlap with Cabometyx prescribers at approximately 70%, and when including co-location of addresses, the overlap increases to 90%.
This overlap and the fact that the majority of CRC is treated in the community position us well for the potential launch of Zanza. Turning to Cabometyx, net product revenue grew 12% year over year for Q3 2026 compared to Q3 2025, while showing strength across all facets of the business. RCC continues to grow as we have a strong promotional focus on our first-line 9ER data, where we maintain a high market share as the number one TKI/IO combination. In addition to being the number one prescribed TKI in renal cell carcinoma, the NET business continues to grow as Cabometyx continues to be the number one prescribed oral therapy in the second-line-plus setting.
The prescription data in the oral TKI market basket of Cabo, avatinib, xitinib, sunitinib, and pizzapinib convey the strength of Cabo relative to the competition. Looking at the TRx comparison of Q3 2025 to Q3 2026, Cabometyx grew 3 share points from 46% to 49%. Additionally, Cabometyx TRx volume grew 13% in Q3 2026 compared to Q3 2025, outpacing the growth rate of the market basket, which was 6% for the same period. In RCC, Cabometyx continues to show strength with demand growth and first-line combination market share, where Cabometyx plus nivolumab is the number one TKI/IO combination. The CheckMate 9ER data continue to resonate with prescribers across the various clinical characteristics of RCC patients. Cabometyx business showed continued strength in the community setting, which is reflective of oncologists’ comfort and experience with Cabo. With regard to NET, we are pleased that demand continues to grow, and we see further penetration into the community setting.
Cabometyx second-line-plus new patient oral market share continued to increase and is now greater than 50%, extending the brand’s leadership position in the space. We continue to see the benefit of more patients on therapy as refills are driving more demand, and given the higher new patient market share, we expect refills to continue to increase going forward. Our expanded GI sales team has now been deployed in the field for a second full quarter, providing greater reach into the community. In addition to driving continued momentum in new patient market share, the team is increasing the breadth of prescribers, with now over 1,000 unique NET prescribers activated since launch. The Cabometyx business remains strong, with growth being driven by both RCC and NET, as our team’s sole focus is maximizing the impact of our promotional efforts across all customers and tactics.
Cabo remains well positioned as the number one TKI and TKI/IO combination in RCC, as well as the number one oral therapy in the second-line-plus NET market. Looking forward to Zanza, our internal team is in full launch preparation, and the excitement around these efforts is palpable. We look forward to the opportunity to launch the next Exelixis franchise to be able to help appropriate patients with colorectal cancer. Beyond STELLAR-303, we are enthusiastic about the significant development plan for Zanza, which could position the Zanza franchise to far exceed Cabo in terms of the number of patients to be impacted across similar types and settings.
And with that, I will turn the call back over to Mike.
Mike Morrissey (President and Chief Executive Officer)
All right, thanks, PJ. I’ll close by thanking the entire Exelixis team for a strong first nine months of 2026. As we finish the year and look ahead to 2027, we’re proud of our progress and focused on achieving more. It’s a potentially transformational time for Exelixis, with Zanza taking center stage in development and commercial planning. We’re proud to be part of one team united in improving outcomes for cancer patients and building value for shareholders.
Advancing Zanza as our second potential franchise remains our top priority, supported by revenues from Cabo’s growing business as we invest in our pipeline and return value to shareholders through our share repurchase program. I want to thank everyone at Exelixis for their great focus and unwavering teamwork as we work together to advance our mission to help cancer patients recover stronger and live longer. We look forward to updating you on our progress in the future.
Thank you for your continued support and interest in Exelixis, and we’re happy to now open the call for questions.
Tawanda (Operator)
Thank you, ladies and gentlemen. To ask a question, please press star one one on your telephone, then wait for your name to be announced. To withdraw your question, please press star one one again. We ask that you limit yourself to one question only. Please stand by while we compile the Q&A roster. Our first question comes from the line of Annie Shay with William Blair. Your line is open.
Annie Shay (Analyst)
Great. Thanks for taking our question. Great performance overall across all the different business units, so congratulations on all the progress there. One bigger-picture question, if you don’t mind. Can you comment on the 340B program? It seems like there is some evolution there and just how that would impact the, obviously, the existing Cabo franchise and also the Zanza going forward? Thanks.
Mike Morrissey (President and Chief Executive Officer)
Yeah, Andy, it’s Mike. Yeah, there’s a lot going on in the 340B world. It has, to our knowledge, very little impact on us. So we continue to have our integrity agreement in place to make sure that we can track claims and reduce, essentially, double counting when it comes to other programs. But, you know, we’re really on top of that and our market access team is obviously very engaged there and doing the full-court press across the board. But, you know, we’re seeing that stabilize in the business, which is great to see, and we continue to, again, make it a focus as we go forward.
Tawanda (Operator)
Thank you. Our next question comes from the line of Yaron Werber with TD Cowen. Your line is open. Check to see if your line is on mute. Yaron, your line is open. All right, we’ll move to the next person. One moment please. Our next question comes from the line of Astika Gonwardeni with Leerink Partners. Your line is open.
Astika Gonwardeni (Analyst)
Hey guys, thanks for taking my questions, and good to speak to you from the new platform. Just want to talk about the Zanza FDA discussions that are underway right now. Have you reached labeling discussion stage of the interactions with the FDA?
Mike Morrissey (President and Chief Executive Officer)
Thank you, Astika, thanks for the question and great to hear from you again. Dana, want to take that one?
Dana Aftab (Executive Vice President of Research and Development)
Sure, yeah. You know, beyond what I said in the prepared remarks around our PDUFA date now being in March next year, for obvious reasons, I’m not going to speculate further on anything, especially regarding our interactions with the agency during an ongoing review.
Tawanda (Operator)
Thank you. Please stand by for our next question. Our next question comes from the line of Akash Tiwari with Jefferies. Your line is open.
Manojan (Analyst at Jefferies)
Hey, this is Manojan for Akash. Just two from our end. Are the overall and arm-specific adverse event-related dropout rates in STELLAR-304 tracking in line with your original design assumptions? And also, you previously mentioned about 5- to 8-month median PFS in the control arm. Is that still unchanged given the delay in the readout?
Mike Morrissey (President and Chief Executive Officer)
Yeah. You know, we had a hard time hearing you. I think the first question was around event rates and then the control arm estimate. Dana, this is in 304. In 304. Yeah. Yeah. So, yeah.
Dana Aftab (Executive Vice President of Research and Development)
So thanks for the question. So, first of all, we’re really excited about the 304 study. It represents the first Phase 3 global randomized controlled trial for patients in this setting. So it really has the potential to not only establish a level 1 evidence-based standard of care for patients, but also to set new standards, because all of the data right now that exist are from small single-arm studies, regionally restricted studies. So just regarding our announcement today about the top-line results being available in Q1, we’re not going to get into details around enrollment or event rates or anything like that other than to say that based on the events coming in, we’re now close to a clinical cutoff date, and that’s driving our expectations around Q1 for the top-line results.
Tawanda (Operator)
Thank you. Our next question comes from the line of Shawn Lawman with Morgan Stanley. Your line is open.
Shawn Lawman (Analyst)
Hey, Mike and team, hope everyone’s well, and congrats on the numbers. Just on 304 — so there’s been a bit of a delay there, but how large could non–clear cell RCC ultimately become within the broader Zanza franchise relative to CRC?
Mike Morrissey (President and Chief Executive Officer)
Shawn, thanks for that question. Great to hear from you. PJ, want to take that one?
PJ Haley (Executive Vice President of Commercial)
Yeah. Thanks for the question, Shawn. As Dana mentioned, we’re really excited about the 304 study, particularly since it’s the first randomized Phase 3 to really look at this patient population. This population is about 20% of the renal cell carcinoma population, so we’re excited about it. But I think it’s important to note that when we think about all of our Zanza studies — you know, Dana talked about in Wave 1 — this is actually the smallest of those, so our excitement for the program is really great.
And I think the other thing we think about with regards to 304 is it’s really just our first study in kidney cancer, which is obviously something we’re very focused on. We have the two LightSpark studies with Merck ongoing. And, you know, I think we’re very focused on other combinations with Zanza, as Dana referred to, with orthogonal MOAs. You know, if you look at the LightSpark-12 study being negative, which was reported at ESMO, that leaves an opportunity in the first-line setting.
So we’re very, very much looking at that as a potential opportunity going forward. And, you know, we’ve been very successful, as I referred to in my remarks, with Cabometyx, with our market share, et cetera, being the market leader in the ’20s. And our vision and our goal is to make Zanza the market leader in the ’30s. And I think with the renal program, the GI program we’re working on in Wave 1, and now the trials we’re working on in Wave 2 and beyond, set us up very well to do that.
Tawanda (Operator)
Thank you. Our next question comes from the line of Michael Schmidt with Guggenheim. Your line is open.
Michael Schmidt (Analyst)
Hey, guys, thanks for taking my questions. I had another one on a wave one zanzolitinib opportunity, this one in clear cell RCC. I’m just trying to understand the size of the LightSpark 034 opportunity, which could be the first to read out, perhaps relative to Merck’s LightSpark 011, which is similar in some ways. And then also on LightSpark 033, the other study. Curious how you think about the recent adjuvant approval and how that might impact that patient population.
Mike Morrissey (President and Chief Executive Officer)
Thanks so much. Thanks, Michael. P.J., want to take a shot at that?
PJ Haley (Executive Vice President of Commercial)
Yeah, thanks for the question, Michael. You know, as I was just referring to, we’re really excited about the zanzolitinib program broadly under ESMO. Lots of excitement and engagement with KOLs there about it. Generally speaking, with regards to those LightSpark studies 33 and 34, LightSpark 33 is in the front line in the post-adjuvant setting. So more and more patients are receiving adjuvant therapy. As far as the LightSpark 22 study, we’ll have to see how those data evolve with further follow-up and see what the impact of that is on the adjuvant setting.
But I think, Jeff, generally speaking with more options, you can only have more patients treated. And then certainly we’re excited about LightSpark 34 where the design of that is adding zanzolitinib to belzutifan. So I think in that sense it’s a bit differentiated from some of the other studies out there and could really have the potential to have some good data and be impactful in the second-line plus population in kidney cancer, which, you know, we’ve proven before with METEOR and beyond that, you know, you can have a very substantial business in that setting.
Tawanda (Operator)
Thank you. Our next question comes from the line of Sylvan Terkin with Citizens. Your line is open.
Sylvan Terkin (Analyst at Citizens)
Yeah, hello. Congrats on the great quarter with Cabo here and thanks for taking my question. I just wanted to ask maybe if you can give us your ESMO 2026 kind of overview here, what you thought was exciting for maybe the Cabo franchise in RCC and your learnings that you might have had from the failed LightSpark studies there. And maybe Yvonne, the bispecific here that’s coming late line. And then also have you learned anything at ESMO for zanzolitinib in colorectal where we had that ADC data from AbbVie in late line as well.
Any color would be helpful. Thank you.
Mike Morrissey (President and Chief Executive Officer)
Yeah, thanks for the question. Great question actually. So let’s—TJ, Dana, why don’t you guys tag team that one. TJ, why don’t you start?
Dana Aftab (Executive Vice President of Research and Development)
So, Sylvan, thanks for that question. We were obviously at ESMO and tracking all the developments very closely. And, you know, we feel that all the data coming out, especially on some of the newer IO mechanisms, all of these are mechanisms that are orthogonal to zanzolitinib. Those feed right into our strategy for developing zanzolitinib as the TKI of choice to really become the backbone of any IO combination across the spectrum of GU and GI and even in some indications outside of those key franchises.
So from a development perspective, we’re really focused on that aspect of evaluating any potential combination partner with zanzolitinib. And especially in wave two, we’re considering lots of potential combinations there. So I’d say stay tuned, but we were certainly looking at those data.
Tawanda (Operator)
Thank you. Our next question comes from the line of Jason Gilberry with Bank of America Securities. The line is open.
Jason Gilberry (Analyst)
Hey, guys, thanks for taking my question. Just one on STELLAR-304 and the question on the protocol which says, I think that’s right, that patients who drop out will continue to be followed for OS. And so I’m just trying to get a better sense of whether those patients would be censored or not for OS. If a lot of patients discontinue randomization if they want to get on a PD-1/TKI, I’m just wondering if that would at all be a factor confounding the OS analysis.
So just wondering if you could comment on that protocol point. Thanks.
Dana Aftab (Executive Vice President of Research and Development)
Yeah, so thanks for the question, Jason. This is Dana. So, regarding STELLAR-304, as I mentioned, we’re excited about this because the opportunity to deliver the first level 1 evidence for these patients and patients with high unmet need without any type of study like this to generate that type of evidence for new therapy. Regarding the specifics of the trial, I don’t want to get into details there and I don’t want to speculate on the potential for dropout or anything else like that.
As I mentioned, we’re close to data cutoff now, which is what’s driving our Q1 top-line results expectations.
Tawanda (Operator)
Thank you. Please stand by for our next question. Our next question comes from the line of Gregory Renza with Truist Securities. Your line is open.
Aneesh (Analyst)
Hi, guys, it’s Aneesh on for Greg. Congrats on the quarter and thanks for taking our questions. Just on Cabo and NETs, I know you guys gave some color on the call with oral class share now about 50%. But we wanted to know how starts and time on therapy are translating into patient accumulation relative to last quarter and perhaps your previous expectations, and what does the maintained revenue guide assume for that build in the fourth quarter? Thanks so much.
Mike Morrissey (President and Chief Executive Officer)
Thanks for the question. PJ, want to take that one?
PJ Haley (Executive Vice President of Commercial)
Yeah. Thanks for the question. You know, as you mentioned, referred to in our prepared remarks, we’re really excited and pleased with the business with regards to our NET indication. We had continued demand growth and, as you referred to, now our new patient market share in that second-line plus oral setting is now over 50%, which is great. And obviously we’re seeing continued refills and with increased patients on therapy, we expect to see more continued refills going forward.
We talked about last quarter the kinetics of patients coming on therapy. That’s just really a function of the disease—you know, it continues to be. But I think the flip side of that more indolent nature of the disease is that you tend to have really strong duration of therapy in the NET setting. So we’re pleased with that and we see continued strength and growth going forward with the NET business.
Tawanda (Operator)
Thank you. Our next question comes from the line of Leonid Temyshev with RBC. Your line is open.
Leonid Temyshev (Analyst)
Hey, guys, thanks for taking my question. I wanted to ask on STELLAR-316 and maybe how you’re thinking about expectations there. I mean, given that there’s a pembro arm and then a zanzolitinib plus pembro arm as well, how are you thinking about the relative signal that you might see between those two arms and then how you’d envision physicians might want to choose if both are successful? Thanks.
Mike Morrissey (President and Chief Executive Officer)
Thanks for the question. Dana, take that one.
Dana Aftab (Executive Vice President of Research and Development)
Sure. Thanks, Leonid, for the question. Yeah. So the cohort design in STELLAR-316 is really designed to address contribution of components. So this is in a microsatellite stable population of CRC patients. So there really isn’t an expectation of pembro alone being active. We could see activity of zanzolitinib as a single agent, certainly. And then pembro plus zanzolitinib we expect to perform the best, obviously. So it really just comes down to the data. We can’t really speculate on data we haven’t seen. But once those data come out, that will really help drive adoption of either single-agent zanzolitinib or zanzolitinib plus pembro. But again, we can’t get ahead of ourselves and try to game the potential readouts from those various cohorts.
Tawanda (Operator)
Thank you. Our next question comes from the line of Kalpit Patel with Wolfe Research. Your line is open.
Kalphit Patel (Analyst at Wolfe Research)
Yeah, hey, good afternoon and thanks for taking the question. With Cabo sales growing about 6% quarter on quarter and the continued momentum you have in NET, I guess can you comment on the decision to maintain the guidance for fiscal year ’26 and does the guidance include any impact potentially from the LightSpark 011 regimen? Thank you.
Chris Senner (Chief Financial Officer)
Thanks, Kalpit. So, you know, thanks for the question. You know, as you heard from PJ today, the business is doing really well. As you heard from Dana today, the pipeline continues to grow, so the business continues to be strong. But as we talked about last quarter when we adjusted our revenue guidance down, it was because of the temporal nature of the NET indication and the revenue growth associated with that continues today.
Tawanda (Operator)
Thank you. Please stand by for our next question. Our next question comes from the line of Edsel Durraut with Barclays. Your line is open.
Edsel Durraut (Analyst)
Thanks for taking a question. Just one quick one for me. Just curious your thinking about metastatic CRC versus an adjuvant CRC. If you can maybe talk through the relative contribution you see longer term for zanzolitinib in an adjuvant CRC population relative to the metastatic CRC population, would be great. Thank you.
Mike Morrissey (President and Chief Executive Officer)
Right, P.J.
PJ Haley (Executive Vice President of Commercial)
Yeah, thanks for the question, Edsel. In terms of the metastatic setting, I think the main things we think about there are kind of the significant unmet medical need in that third-line plus setting where we’re potentially bringing, with approval, the first IO plus TKI combination where many others have failed in this setting. So that’s exciting. Patients and physicians are very much looking forward to the opportunity to have access to immunotherapy in that broader CRC population.
As I mentioned, that’s 23,000 patients in the U.S. and, in current contemporary pricing dollars, about a $1.5 billion TAM. Now, in terms of that post-adjuvant population, the STELLAR-316 population, it’s a very exciting study, as Dana referred to it, area of significant unmet medical need. These patients, studies have shown, who have this increase in circulating tumor DNA, sadly, their disease is recurring very quickly—six to eight months. So with the opportunity to potentially prolong that disease-free survival, that would be highly meaningful and clinically meaningful to these patients, and they could be on therapy for quite some time.
So it’s a significant population there and a potential significant patient impact. But as Dana said, we’ll have to really wait to see the data there.
Tawanda (Operator)
Thank you. Our next question comes from the line of David Leibowitz with BMO Capital Markets. Your line is open.
David Leibowitz (Analyst at BMO Capital Markets)
Thank you very much for taking my question. I have a question actually on guidance specifically, and I apologize if I missed it earlier. What’s happening with the effective tax rate in the fourth quarter that’s led to the shift in guidance and how should we look at that going forward after the fourth quarter?
Chris Senner (Chief Financial Officer)
Yeah, thanks, David. So, you know, every year, you know, the months turn and you get past your tax return filing in October and you’re able to essentially take into your tax rate items that you had reserved for in prior periods. And we did that this year, we did that last year. I would say that, you know, we’re not giving guidance longer term, but our longer-term expectation is tax rate will be at the federal rate or thereabouts.
Tawanda (Operator)
Thank you. Our next question comes from the line of Ash Vermeer with UBS. Your line is open.
Ash Vermeer (Analyst at UBS)
Oh, hi. Thanks for taking my question. I wanted to ask about the Zanza launch opportunity in CRC. So it seems like in earlier-line CRC there’s quite a bit of activity. We saw the pediceptamab plus chemo data from Genmab at ESMO and there are a few upcoming PD-1/VEGF agents that have data as well. When you think about these programs in earlier line, would that change the 23,000 addressable patient population that you outlined for Zanza as an opportunity?
PJ Haley (Executive Vice President of Commercial)
Yeah, thanks for the question, Ash. You know, I think the patients are there as it is and I think, you know, folks are really excited to have the opportunity, as I mentioned, for this potential regimen to be approved. You know, we’re excited about it and as I mentioned, physicians and patients are excited about it and it’s sizable. We have, you know, the opportunity to really leverage the capabilities we’ve built with Cabometyx over the last decade.
We have a strong presence and focus in the community setting. And the majority of colon is treated in the community setting. And as I mentioned, we have prescriber overlap estimated with our CRC targets with regards to Cabometyx of about 70%. And it goes to 90% if you include the same addresses. So the way we’re looking at it, it’s a very big opportunity and we’re excited to bring this to patients where there is a significant unmet medical need.
Tawanda (Operator)
Thank you. Please stand by for our next question. Our next question comes from the line of Yaron Werber with TD Cowen. Your line is open.
Yaron Werber (Analyst)
Great. Thanks so much. Sorry about that before. Maybe a couple of questions. The first one is with the ARC-20 data being presented at ESMO. It showed a really fair 15 months PFS and 44% ORR with Cabo in second line. What do you draw from that data? Both as potential impact, maybe even a tailwind on Cabo in second line with longer duration of therapy in RCC, or potentially to the Bell, Cabo in frontline? And then secondly, for the next slew of wave one studies with Zanza, can you give us maybe just a little bit of a view? What dose of Zanza are you testing? Are you going down to 60 mg as a starting point?
Thank you.
Andrew Peters (Senior Vice President of Strategy and Investor Relations)
Okay, so let’s parse that out. PJ, want to start with the first one?
PJ Haley (Executive Vice President of Commercial)
Yeah. Thanks for the question, Yaron. You know, I think with regards to the data, it’s obviously early data and there’s multiple combinations there. I think, you know, simply put, if there’s a positive study that includes Cabo in the regimen, we would certainly be excited about that. And obviously a positive study and an approval could provide incremental opportunity for Cabo in the space.
Dana Aftab (Executive Vice President of Research and Development)
Yeah, and sorry, this is Dana. I was just regarding your question on dose. So a lot of work goes into selecting dose for a trial based on extensive modeling from the perspective of exposure-response, looking at either tumor response or safety. And we really have to look at each indication separately based on what combination partner we’re using, what’s the tumor indication, what line of therapy. So I can’t tell you right now what the different doses are.
And it really depends on each individual case and situation.
Tawanda (Operator)
Thank you. Our next question comes from the line of Andy Shea with William Blair. Your line is open.
Annie Shay (Analyst)
Thanks for taking the follow-up. Just a quick one for STELLAR-002 in the bladder cancer post EV and pembro — very interested in the new and growing opportunity. I’m just curious about, you know, what is the standard of care there just given the rapidly evolving field there and what is the clinical efficacy bar, and then maybe another one with XL… 0, sorry. 5, 5, 8. The oral SSTR2, just given the different mechanism, small molecule versus peptide. Curious if you could tell us about your TPP versus the injectables out there. Obviously the injection site reaction might go away, but any other things that you’re looking for just given the different way of antagonizing that receptor.
Thank you.
Andrew Peters (Senior Vice President of Strategy and Investor Relations)
Great. P.J.
PJ Haley (Executive Vice President of Commercial)
Yeah, I can start with the bladder piece, Andy. I think obviously EV-Pem — great data there — has done very well for patients with metastatic bladder cancer. And I think Dana alluded to we’re very excited about looking at Zanza in that space and that cohort is enrolling well. It’s really, it’s kind of a new data-free zone. So that’s a great opportunity to pursue from a development perspective. And folks are just getting typically different single-agent chemo or chemo regimens.
But again those are just older therapies that they’re using because they’ve been approved for some time.
Dana Aftab (Executive Vice President of Research and Development)
Yeah, and this is Dana, just to opine on that a little further. EVP is really being used a lot in the adjuvant setting as well in the muscle-invasive setting. And there was some new data presented at ESMO on another regimen there. So, you know, EVP or IO EV is moving earlier and earlier, creating a lot of opportunity both in the frontline setting post-adjuvant therapy as well as in the metastatic setting. So as I mentioned in my earlier remarks, we’ve seen that there’s a tremendous unmet need for these patients.
This is one of the fastest enrollments we’ve ever seen in a phase one cohort, which really kind of validates that, that these patients really have nothing out there. So we’re doing everything we can to address that need with some really innovative ideas using, again, using Zanza as a backbone for either combinations or as a single agent and. Okay, thank you.
Tawanda (Operator)
Thank you ladies and gentlemen, at this time there are no further questions. And so I will turn the call over to today’s host, Andrew Peters.
Andrew Peters (Senior Vice President of Strategy and Investor Relations)
Mr. Peters, thank you, Tawanda, and thank you all for joining us today. We welcome your follow-up calls with any additional questions you may have that we were unable to address during today’s call. Have a great rest of the week.
Tawanda (Operator)
Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.
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