Exelixis Teams Up with Merck for Phase III CRC Study, Bolstering Zanzalintinib Pipeline

What happened

Exelixis announced a collaboration with Merck to advance zanzalintinib in a Phase III colorectal cancer study, expanding its pipeline beyond the core Cabometyx franchise. The partnership leverages Merck's expertise and potentially shares costs, though financial terms were not disclosed. This move aligns with Exelixis' strategy to build a second growth engine through zanzalintinib, which has shown positive OS data in the STELLAR-303 trial. However, the collaboration also underscores Exelixis' reliance on partners for late-stage development, and zanzalintinib revenue remains unmodeled in 2026 guidance. The stock's reaction will likely be muted as the collaboration was anticipated, but it incrementally supports the bull case for zanzalintinib's approval and commercialization.

Implication

For investors, the Merck partnership is a modest positive that de-risks zanzalintinib's pathway to CRC approval by sharing development costs and adding commercial heft. However, it also signals that Exelixis may not have the internal resources to fully prosecute late-stage studies alone, and the core investment thesis still hinges on Cabometyx sustainability and broader pipeline execution. The collaboration does not alter the WAIT rating, as the stock already prices in high expectations for zanzalintinib. Investors should watch for upcoming STELLAR-304 data and FDA submission updates rather than view this as a catalyst.

Thesis delta

The collaboration with Merck for a Phase III CRC study is directionally positive but largely incremental to our thesis. It does not change the base-case projection of Cabometyx sustaining growth and zanzalintinib achieving late-2026 approval, nor does it address the key risk of generic cabozantinib entry. The overall risk/reward remains unattractive at current levels, and we maintain our WAIT rating pending a pullback or clearer execution evidence.