No-Moat Exelixis Faces Cabozantinib Patent Losses by 2026; FVE of $18.90, Shares Fairly Valued

Exelixis is best known for its discovery of cabozantinib, a tyrosine kinase inhibitor (TKI) that was first approved in 2012 for medullary thyroid cancer (MTC). This small molecule was later approved in renal cell carcinoma (RCC), as well as hepatocellular carcinoma (HCC). The cabozantinib opportunity has room to grow further with several late-stage trials evaluating combination therapies. Although cabozantinib has generated strong returns, we believe the 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 eventual patent expiration; we believe generics could enter as early as 2026 when the composition of matter patent expires or later, depending on whether secondary patents are upheld in court and whether label expansions are approved.