Exelixis Partners with Merck on Phase 3 CRC Trial for Zanzalintinib

What happened

Exelixis announced a collaboration with Merck to supply KEYTRUDA QLEX (subcutaneous pembrolizumab) for the STELLAR-316 Phase 3 trial, evaluating zanzalintinib in combination with pembrolizumab in resected stage II/III colorectal cancer. This partnership pairs Exelixis' next-generation TKI with a leading PD-1 inhibitor in a convenient subcutaneous formulation, potentially improving patient access while leveraging Merck's development expertise. However, STELLAR-316 is in the planning phase and targets an earlier-stage adjuvant setting, distinct from the metastatic CRC trial (STELLAR-303) that already showed positive overall survival. While the collaboration validates zanzalintinib's potential and reduces some development risk, it does not alter the fundamental thesis: Exelixis remains heavily dependent on Cabometyx cash flows and faces an imminent patent cliff. The stock's recent strong performance already reflects significant optimism, and this news alone is unlikely to catalyze further upside without clear execution on Cabometyx guidance and zanzalintinib regulatory progress.

Implication

Investors should view this as a modest positive that strengthens zanzalintinib's commercial optionality in CRC, but it does not address the core investment challenges: Cabometyx concentration, upcoming patent expirations, and pricing pressures. The partnership reduces Exelixis' financial burden and adds a credible partner, yet STELLAR-316 results are years away, so near-term earnings and cash flow remain solely tied to Cabometyx. The stock's current valuation already embeds upside from zanzalintinib success, limiting further upside from this collaboration alone. A more compelling entry point would require a pullback or clearer evidence that Cabometyx can sustain above-guidance growth and that the zanzalintinib NDA for metastatic CRC is on track. The core thesis remains unchanged: wait for a better risk/reward setup with either a lower share price or concrete regulatory milestones.

Thesis delta

The Merck collaboration for STELLAR-316 modestly reduces the uncertainty around zanzalintinib's development by adding a high-quality partner and a convenient formulation, but it does not shift the core thesis. Exelixis still depends on Cabometyx for near-term cash flows and faces structural patent and pricing headwinds. The delta is a small positive probability adjustment for zanzalintinib's long-term commercial success, but it does not warrant upgrading from WAIT.