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Exelixis (EXEL) Risk Analysis
Risk Overview Q1, 2026
Source: the company's latest filing for the period ended Apr 03, 2026, filed May 05, 2026
Risk Change Over Time
- Innovation / R&D - Risk 1Clinical testing of cabozantinib for new indications, or of our other product candidates, such as zanzalintinib, candidates is a lengthy, costly, complex and uncertain process that may ultimately fail to demonstrate sufficiently differentiated safety and efficacy data for those products to compete in our highly competitive market environment.
Clinical trials are inherently risky and may reveal that a product candidate is ineffective or has an unacceptable safety profile with respect to an intended use. This also applies to the testing of new indications for cabozantinib, or the clinical development of zanzalintinib, or any of our other product candidates. Adverse clinical trial results may significantly decrease the likelihood of regulatory approval of a new product or a new indication for an existing product. Furthermore, the results of preliminary studies do not necessarily predict clinical or commercial success, and late-stage or other potentially label-enabling clinical trials may fail to confirm the results observed in early-stage trials or preliminary studies. Finally, although we have established timelines for clinical development as well as manufacturing of zanzalintinib and our other product candidates based on existing knowledge of our compounds in development and industry metrics, we may not be able to meet those timelines. We may experience numerous unforeseen events, during or as a result of clinical investigations, that could delay or prevent commercialization of cabozantinib in new indications or of zanzalintinib or our other new product candidates. These events may include: - lack of acceptable efficacy or a tolerable safety profile;- being placed on clinical hold by the FDA due to safety or effectiveness concerns;- negative or inconclusive clinical trial results that require us to conduct further testing or to abandon projects;- discovery or commercialization by our competitors of other compounds or therapies that demonstrate potentially superior safety or efficacy profiles as compared to cabozantinib, zanzalintinib or our other product candidates;- our inability to identify and maintain a sufficient number of clinical trial sites;- lower-than-anticipated patient registration or enrollment in our clinical testing;- additional complexities posed by clinical trials evaluating cabozantinib, zanzalintinib or our other product candidates in combination with other therapies, including extended timelines to provide for collaboration on clinical development planning, the failure by our collaboration partners to provide us with an adequate and timely supply of product that complies with the applicable quality and regulatory requirements for a combination trial;- reduced staffing or shortages in laboratory supplies and other resources necessary to complete clinical trials;- replacement of staff at the FDA's OCE that changes OCE's view of the acceptability of the design, conduct, or data produced by our clinical trials;- failure of our third-party contract research organizations or investigators to satisfy their contractual obligations, including deviating from any trial protocols or failing to adhere to appropriate recordkeeping or data integrity requirements; and - withholding of authorization from regulators or institutional review boards to commence or conduct clinical trials or delays, variations, suspensions or terminations of clinical research for various reasons, including noncompliance with regulatory requirements or a determination by these regulators and institutional review boards that participating patients are being exposed to unacceptable health risks. Further, with the passage of the Food and Drug Omnibus Reform Act of 2022 (FDORA), Congress clarified the FDA's authority to conduct inspections by expressly permitting inspection of facilities involved in the preparation, conduct or analysis of clinical and non-clinical studies submitted to the FDA, as well as of other persons holding study records or otherwise involved in the study process, which could delay or add complexity to our clinical trials. The ongoing conflicts between Russia and Ukraine and in the Middle East and the political, economic and social instability in Venezuela have had modest impacts on our clinical development operations and may continue to have adverse impacts on the ability of clinical sites and enrolled patients to adhere to trial protocols for in-office clinical visits and other procedures, our ability to supply clinical sites with cabozantinib, zanzalintinib or other study drugs and to pay clinical sites and investigators for work performed, as well as our ability to collect data and conduct site monitoring visits, all of which could undermine the data quality for patients enrolled at these clinical sites. These issues could further impact our anticipated timelines for completing the trials and achieving clinical endpoints, as well as increase our clinical development expenses. If there are further delays in or termination of the clinical testing of cabozantinib, zanzalintinib or our other product candidates due to any of the events described above or otherwise, our expenses could increase and our ability to generate revenues could be impaired, either of which could adversely impact our financial results. Furthermore, we have relied and may in the future rely on collaboration partners to share a significant portion of the expenses associated with our clinical development programs. Should one or all of our collaboration partners decline to support future planned clinical trials, we will be entirely responsible for financing the further development of the cabozantinib franchise, zanzalintinib or our other product candidates and, as a result, the burden of clinical trial expenses we incur associated with our business plans may be materially greater than currently anticipated, which could have a material adverse impact on our business, financial condition and results of operations. We may not be able to pursue the further development of the cabozantinib franchise, zanzalintinib or our other product candidates or meet current or future requirements of the FDA or regulatory authorities in other jurisdictions in accordance with our stated timelines or at all. Our planned clinical trials may not begin on time, or at all, may not be completed on schedule, or at all, may not be sufficient for registration of our product candidates or otherwise may not result in an approvable product. The duration and the cost of clinical trials vary significantly due to a number of factors, including, but not limited to: the characteristics of the product candidate under investigation; the number of patients who ultimately participate in the clinical trial; the duration of patient follow-up; the number of clinical sites included in the trial; and the length of time required to enroll eligible patients. Any delay could limit our ability to generate revenues, cause us to incur additional expenses and cause the market price of our common stock to decline significantly.
- Innovation / R&D - Risk 2Our ability to grow our company is dependent upon the commercial success of CABOMETYX in its approved indications and and, to a lesser degree, the continued clinical development, regulatory approval, clinical acceptance and commercial success of the cabozantinib franchise in additional indications. franchise.
We anticipate that for the foreseeable future, our ability to maintain or meaningfully increase cash flow to fund our business operations and growth will depend upon the continued commercial success of CABOMETYX, both alone and in combination with other therapies, as a treatment for the highly competitive indications for which it is approved, and possibly for other indications for which cabozantinib is currently being or will be evaluated in clinical trials. We cannot be certain that these clinical trials will demonstrate adequate safety and efficacy to receive regulatory approval, and even if the required regulatory approvals to market CABOMETYX for additional indications are achieved, we and our collaboration partners may not be able to commercialize CABOMETYX effectively and successfully in such indications. If revenue from CABOMETYX decreases or remains flat, or if we or our collaboration partners fail to achieve anticipated product royalties and collaboration milestones, we may need to reduce our operating expenses, access other sources of cash or otherwise modify our business plans, which could have a material adverse impact on our business, financial condition and results of operations.
Risk Highlights Q1, 2026
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 31
- Regulation - Risk 1The regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, uncertain and subject to change, and may not result in regulatory approvals for additional cabozantinib indications or for our other product candidates, such as zanzalintinib, which could have a material adverse impact on our business, financial condition and results of operations.
The activities associated with the research, development and commercialization of the cabozantinib franchise, zanzalintinib and our other product candidates are subject to extensive regulation by the FDA and other regulatory agencies in the U.S., as well as by comparable regulatory authorities in other territories. The processes of obtaining regulatory approvals in the U.S. and other foreign jurisdictions are expensive and often takes many years, if approval is obtained at all, and they can vary substantially based upon the type, complexity and novelty of the product candidates involved. For example, before an NDA or sNDA can be submitted to the FDA, or a MAA to the EMA or any application or submission to comparable regulatory authorities in other jurisdictions, the product candidate must undergo extensive clinical trials, which can take many years and require substantial expenditures. Any clinical trial may fail to produce results satisfactory to the FDA or foreign regulatory authorities; moreover, these regulatory authorities have substantial discretion and influence over clinical trial design and conduct, as well as the drug approval process. As such, approval outcomes are difficult to predict. Even if late-state, registrational clinical trials for our new products are positive, the FDA or foreign regulatory authorities may refuse to approve any NDA or sNDA or their foreign equivalents, or require additional preclinical, clinical, safety or other non-clinical studies. In addition, policy-based activities could delay the approval of an application for cabozantinib, zanzalintinib, or our other product candidates. For example, the FDA's OCE has many initiatives aimed at improving oncology drug development, some of which may lead to the need for additional studies, such as dose optimization. Many of these initiatives are based on guidance issued by OCE. If the FDA chooses to withdraw those guidance documents for any reason it may affect our ability to gain regulatory approval based on studies that relied on those guidance documents. The FDA also continues to develop and finalize guidance documents that further refine the development process for oncology drug products, although the FDA's rate of issuing guidance has slowed significantly under the current U.S. administration. And, as this market expands, it becomes increasingly difficult to demonstrate benefit over the standard of care, which can be a hurdle for approval. Moreover, the development of our product candidates may be delayed by other events beyond our control. For example, action by the current U.S. administration to further limit federal agency budgets or personnel, may result in reductions to the FDA's budget, workforce, and operations, which may lead to slower response times and longer review periods, potentially affecting our ability to progress development of our product candidates or obtain regulatory approval for our product candidates. Pursuant to a February 2025 executive order on workforce optimization, on March 27, 2025, the HHS announced that it was initiating a restructuring of the department, including reducing the FDA's workforce by approximately 3,500 full-time employees, which began on April 1, 2025. The termination of these employees has been preceded and accompanied by the resignation of senior and mid-level leaders within the FDA, which could result in the potential loss of certain institutional knowledge and experience. Terminations, and resignations at the FDA have continued and there has been notable turnover and instability in key leadership positions. Although the full impact of these events remains unclear, there could be an adverse effect on the FDA's ability to efficiently carry out its functions, including conducting inspections and timely reviewing drug product applications, and a potential impact on how it interprets and enforces its authorities, which may be also exacerbated by other events, such as a U.S. federal government shutdown. Further, ongoing deregulation and transparency efforts at the FDA could create regulatory uncertainty for biopharmaceutical companies. Additionally, uncertainty remains as to how the FDA's use of artificial intelligence (AI) and deployment of agentic AI capabilities, including for review of drug product applications, will impact the outcomes and timeliness of FDA reviews and other activities. The FDA has also been tightening the requirements for confirmatory studies for drugs approved via accelerated approval under additional authorities the FDA received in Section 3210 of the FDORA (incorporated in Section 3222 of the 2023 Appropriations Act). While the standard for accelerated approval remains unchanged, the FDA may now require that confirmatory trials for drugs approved under the pathway be underway prior to approval, which was not previously a requirement. The changes to the law are intended to prevent accelerated approval of drugs without verified clinical benefit, which had previously resulted in withdrawal of approval for certain products and indications approved on an accelerated basis. While it is not clear at this time how these legislative and regulatory initiatives will affect our plans to pursue accelerated approval for one or more of our product candidates, these developments may have a material adverse impact on our business, financial condition, and results of operations. The FDA may also choose to convene an advisory committee of independent experts to evaluate the adequacy of the safety and efficacy data supporting a drug candidate's approvability. The outcome of such advisory committee meetings is inherently uncertain and may have a significant impact on the likelihood, timing, and scope of regulatory approval for our product candidates. In addition, while influential, advisory committee decisions are not binding on the FDA and there have been instances in the oncology space where the FDA chose not to take an advisory committee's recommendation. There is also the risk that an advisory committee may recommend against approval, suggest a narrower indication, or require additional studies or safety labeling, and the FDA may or may not accept these recommendations. This uncertainty is heightened by recent leadership changes at OCE, which may result in shifts in regulatory priorities, review standards, or interpretations of clinical data, further complicating the approval process. As a result, the regulatory pathway for our drug candidates may be even more unpredictable, complex, and lengthy, and any adverse outcome in the advisory committee process or final FDA decision could materially and adversely affect our business, financial condition, results of operations, and prospects. Even if the FDA or a comparable authority in another jurisdiction grants accelerated approval for cabozantinib in one or more new indications or for zanzalintinib or one of our other product candidates, such accelerated approval may be limited, imposing significant restrictions on the indicated uses, conditions for use, labeling, distribution, and/or production of the product and would impose requirements for post-marketing studies, including additional research and clinical trials, all of which may result in significant expense and limit our and our collaboration partners' ability to commercialize cabozantinib, zanzalintinib or our other product candidates in any new indications. In addition, some products approved under accelerated approval have encountered challenges with CMS coverage determinations. Failure to complete post-marketing requirements could significantly increase costs or delay, limit or ultimately restrict the commercialization of cabozantinib, zanzalintinib or another product candidate in the approved indication, or result in product withdrawal. Further, current or any future laws or executive orders governing FDA or foreign regulatory approval processes that may be enacted or executed could have a material adverse impact on our business, financial condition, and results of operations.
- Regulation - Risk 2Our clinical, regulatory and commercial collaborations with major companies make us reliant on those companies for their continued performance and investments, which subjects us to a number of risks.
We have established clinical and commercial collaborations with leading biopharmaceutical companies for the development and commercialization of our products, and our dependence on these collaboration partners subjects us to a number of risks, including, but not limited to: - our collaboration partners' decision to terminate our collaboration, or their failure to comply with the terms of our collaboration agreements and related ancillary agreements, either intentionally or as a result of negligence or other insufficient performance;- our inability to control the amount and timing of resources that our collaboration partners devote to the development or commercialization of our products;- the possibility that our collaboration partners may stop or delay clinical trials, fail to supply us on a timely basis with product required for a combination trial, or deliver product that fails to meet appropriate quality and regulatory standards;- disputes that may arise between us and our collaboration partners that result in the delay or termination of the development or commercialization of our products or product candidates, or that diminish or delay receipt of the economic benefits we are entitled to receive under the collaboration, or that result in costly litigation or arbitration;- the possibility that our collaboration partners may experience financial difficulties that prevent them from fulfilling their obligations under our agreements;- our collaboration partners' inability to obtain regulatory approvals in a timely manner, or at all;- our collaboration partners' failure to comply with legal and regulatory requirements relevant to the authorization, marketing, distribution and supply of our marketed products in the territories outside the U.S. where they are approved; and - our collaboration partners' failure to properly maintain or defend our intellectual property rights or their use of our intellectual property rights or proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential litigation. If any of these risks materialize, we may not receive collaboration revenues or otherwise realize anticipated benefits from such collaborations, and our product development efforts and prospects for growth could be delayed or disrupted, all of which could have a material adverse impact on our business, financial condition and results of operations.
- Regulation - Risk 3Enhanced governmental and private scrutiny over, or investigations or litigation involving, pharmaceutical manufacturer patient assistance programs and donations to patient assistance foundations created by charitable organizations could negatively impact our business practices, harm our reputation, divert the attention of management and increase our expenses.
To help patients afford our products, we have a patient assistance program and also make periodic donations to independent charitable foundations that help financially needy patients. These types of programs are designed to provide financial assistance to patients who might otherwise be unable to afford pharmaceuticals that they have been prescribed by their physicians and have become the subject of Congressional interest and enhanced government scrutiny. The HHS Office of Inspector General established guidelines permitting pharmaceutical manufacturers to make donations to charitable organizations that provide co-pay assistance to Medicare patients, provided that manufacturers meet certain specified compliance requirements. In the event we are found not to have complied with these guidelines (including as interpreted by the HHS Office of Inspector General) and other laws or regulations respecting these arrangements, we could be subject to significant investigations or damages, fines, penalties or other criminal, civil or administrative sanctions or enforcement actions. We also rely on a third-party hub provider and exercise oversight to monitor patient assistance program activities. Hub providers are generally hired by manufacturers to assist patients with insurance coverage, financial assistance and treatment support after the patients receive a prescription from their healthcare professional. For manufacturers of specialty pharmaceuticals (including our marketed products), the ability to have a single point of contact for their therapies helps ensure efficient medication distribution to patients. Accordingly, our hub activities are also subject to scrutiny and may create risk for us if not conducted in accordance with the views of federal or state enforcement authorities. A variety of entities, including independent charitable foundations and pharmaceutical manufacturers, but not including our company, have received subpoenas in recent years from the U.S. Department of Justice (DOJ) and other enforcement authorities seeking information related to their patient assistance programs and reimbursement and other product support programs, and certain of these entities have entered into costly civil settlement agreements with DOJ and other enforcement authorities that include requirements to maintain complex corporate integrity agreements that impose significant reporting and other requirements. Should we or our hub providers receive a subpoena or other process, regardless of whether we are ultimately found to have complied with the prevailing industry guidance and enforcement standards governing patient assistance and other product support programs, this type of government investigation could negatively impact our business practices, harm our reputation, divert the attention of management and increase our expenses.
- Regulation - Risk 4We are subject to healthcare laws, regulations and enforcement; our failure to comply with those laws could have a material adverse impact on our business, financial condition and results of operations.
We are subject to federal and state healthcare laws and regulations, which laws and regulations are enforced by the federal government and the states in which we conduct our business. We also conduct clinical trial activities outside the United States and are therefore subject to applicable laws in the countries where those operations take place. Should our compliance controls prove ineffective at preventing or mitigating the risk and impact of improper business conduct or inaccurate reporting, we could be subject to enforcement of the following, including, without limitation: - the federal AKS;- federal Civil Monetary Penalties law, including the beneficiary inducement provisions;- the Eliminating Kickbacks in Recovery Act;- the FDCA and its implementing regulations;- federal civil and criminal false claims laws, including the civil False Claims Act, and the Civil Monetary Penalties Law;- federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;- the HIPAA and its implementing regulation, as amended;- state law equivalents of each of the above federal laws;- state laws concerning contract pharmacy arrangements and related obligations of drug manufacturers;- state and local laws and regulations that require drug manufacturers to file reports relating to marketing activities, payments and other remuneration and items of value provided to healthcare professionals and entities;- state and federal pharmaceutical price and price reporting laws and regulations, including the provisions enacted through the IRA;- European countries' national laws mandating public disclosure of transfers of value to healthcare professionals, healthcare organizations and other entities active in the healthcare sector, as well as requirements for prior review and/or approval of agreements with healthcare professionals; and - laws and regulations in effect in foreign jurisdictions where drug manufacturers, or third party entities operating on behalf of drug manufacturers (including clinical research organizations), are conducting clinical trial activities. In addition, we are subject to the Foreign Corrupt Practices Act, a U.S. law which regulates certain financial relationships with foreign government officials (which could include, for example, medical professionals employed by national healthcare programs) and its foreign equivalents, as well as federal and state consumer protection and unfair competition laws. These federal and state healthcare laws and regulations govern prescription drug marketing practices, including off-label promotion and direct-to-consumer (DTC) advertisements. These laws and regulations may also affect our current and future business arrangements with third parties, including various healthcare entities. If our operations are found, or even alleged, to be in violation of the laws described above or other governmental regulations that apply to us, we, or our officers or employees, may be subject to significant penalties, including administrative civil and criminal penalties, damages, fines, regulatory penalties, the curtailment or restructuring of our operations, exclusion from participation in Medicare, Medicaid and other federal and state healthcare programs, imprisonment, reputational harm, additional reporting requirements and oversight through a Corporate Integrity Agreement or other monitoring agreement, any of which would adversely affect our ability to sell our products and operate our business and also adversely affect our financial results. Furthermore, responding to any such allegation or investigation and/or defending against any such enforcement actions can be time-consuming and would require significant financial and personnel resources. Therefore, if any state or the federal government initiates an enforcement action against us, our business may be impaired, and even if we are ultimately successful in our defense, litigating these actions could result in substantial costs and divert the attention of management.
- Regulation - Risk 5Lengthy regulatory pricing and reimbursement procedures and cost control initiatives imposed by governments outside the U.S. could delay the marketing of and/or result in downward pressure on the price of our approved products, resulting in a decrease in revenue.
Outside the U.S., including major markets in the EU and Japan, the pricing and reimbursement of prescription pharmaceuticals is generally subject to significant governmental control. In these countries, pricing and reimbursement negotiations with governmental authorities or payers can take six to 12 months or longer after the initial marketing authorization is granted for a product, or after the marketing authorization for a new indication is granted. This can substantially delay broad availability of the product. To obtain reimbursement and/or pricing approval in some countries, our collaboration partners Ipsen and Takeda may also be required to conduct a study or otherwise provide data that seeks to establish the cost effectiveness of CABOMETYX compared with other available established therapies. The conduct of such a study could also result in delays in the commercialization of CABOMETYX. Additionally, cost-control initiatives, increasingly based on affordability and accessibility, as well as post-marketing assessments of the added value of CABOMETYX and COMETRIQ as compared to existing treatments, could influence the prices paid for and net revenues we realize from CABOMETYX and COMETRIQ, or the indications for which we are able to obtain reimbursement, which would result in lower license revenues to us. Recent legislative changes and ongoing policy changes in the EU are aimed at increasing cooperation between the Member States of the EEA. Such initiatives, particularly the Regulation on Health Technology Assessment adopted in December 2021 and entered into application in January 2025, may further impact the price and reimbursement status of CABOMETYX and COMETRIQ.
- Regulation - Risk 6Current healthcare laws, policies, and regulations in the U.S. and future legislative or regulatory reforms to the U.S. healthcare system, including those related to drug pricing, may affect our ability to commercialize our marketed products profitably. Pricing for pharmaceutical products in the U.S. has come under increasing attention and scrutiny by federal and state governments, legislative bodies and enforcement agencies. Initiatives arising from this scrutiny may result in changes that have the effect of reducing our revenue or harming our business or reputation.
Concern over access to and affordability of pharmaceutical products continues to spur debate and action by U.S. federal and state government authorities in an effort to contain healthcare costs. Such proposals and actions include: - use of mandated discounts, rebates, restrictive formularies, or other reference-based price controls, such as most favored nation (MFN) or international reference pricing, direct-to-consumer sales of prescription drugs, as well as price transparency reporting obligations;- restrictions on Medicaid funding;- efforts to reevaluate, reduce or limit the price patients pay for pharmaceutical products;- implementation of additional data collection and transparency reporting regarding drug pricing, rebates, fees and other remuneration provided by drug manufacturers;- tariffs on imported pharmaceuticals, or their components;- revisions to rules associated with the calculation of average manufacturer price and average sales price; best price and rebate liability (including broadening the circumstances under which products are subject to rebates and recent changes CMS made to the calculation of average sales price for the Medicare Part B program regarding the treatment of fees as "bona fide service fees" and for bundled sales, which CMS could seek to implement in the Medicaid Drug Rebate Program, and which in turn could impact our rebate liability) for the Medicaid Drug Rebate Program, along with CMS' stated objective to consider potential future rulemaking that if implemented, could significantly increase manufacturer rebate liability; and - reevaluation of safe harbors under the federal Anti-Kickback Statute (AKS). The IRA, which, among other things: enables CMS to assert control over the prices of certain single-source drugs and biotherapeutics reimbursed under the Medicare Drug Price Negotiation Program; subjects drug manufacturers to potential civil monetary penalties and a significant excise tax for offering a price that is not equal to or less than the government-imposed MFP under the law; imposes Medicare rebates for certain Part B and Part D drugs where relevant pricing metrics associated with the products increase faster than inflation; and redesigns the funding and benefit structure of the Medicare Part D program, potentially increasing manufacturer liability while capping annual out-of-pocket drug expenses for Medicare beneficiaries. These provisions started taking effect incrementally in late 2022 and currently are subject to various legal challenges. As of the date of this report, for example, CMS has begun to implement aspects of the IRA and finalized regulations addressing the Medicare Part B and Medicare Part D inflation rebate provisions of the IRA. These provisions generally require manufacturers of Medicare Part B and Part D rebatable drugs to pay inflation rebates to the Medicare program if pricing metrics associated with their products increase faster than the rate of inflation. In addition, in September 2025, CMS issued final guidance for the third round of drug pricing evaluations (for which the next 15 selected products were announced January 27, 2026, with negotiations to follow over the course of the year, resulting in MFPs that will become effective beginning in 2028), as well as requirements for manufacturers effectuating MFPs in 2026, 2027, and 2028. The IRA also contains the limited small biotech exception, which applies on a drug-specific basis. Qualifying drugs may be exempt from possible pricing negotiation through 2028 and eligible for a lower limit (i.e., a price floor) on the potential MFP in 2029 and 2030, if the manufacturers of those drugs continue to qualify each year. We have qualified for the small biotech exception with respect to our cabozantinib franchise products through Initial Price Applicability Year (IPAY) 2027, and we reapplied for the small biotech exception for IPAY 2028. Additionally, in July 2025, Congress enacted legislation that expands the orphan drug exclusion under the IRA. Starting with price evaluations for 2028, CMS cannot select a drug if all of its approved indications are for rare diseases or conditions. Moreover, if a drug no longer qualifies for the orphan drug exclusion because it is approved for a non-rare disease or condition, the 7-year or 9-year timeline before it may be selected will begin upon approval of the drug for such non-rare disease or condition. Separately, in December 2024, CMS released final guidance on the Part D Discount Program, which requires manufacturers to take on more of the beneficiary cost previously subsidized by the federal government through the application of increased drug discounts. As we received notice from CMS that we qualify for the "specified small manufacturer" designation, we are eligible for a phase-in of the increased manufacturer discounts under the Part D Discount Program from 2025 to 2031. In November 2025, CMS issued a proposed rule on the Part D Discount Program that largely codifies the final guidance. In April 2025, CMS finalized regulations implementing the Medicare Prescription Payment Plan, under which Medicare Part D beneficiaries may opt to make their cost-sharing payments in capped monthly installments; CMS expects that this program will most likely benefit those beneficiaries with high cost-sharing early in their respective plan years. Over time, the IRA could reduce the revenues we are able to collect from sales of our products or present challenges for payer negotiations and formulary access for our products, as well as increase our government discount and rebate liabilities; however, the degree of impact that the IRA will ultimately have upon our business remains unclear. In addition, we cannot know the final form or timing of any other legislative, regulatory and/or administrative measures, and some of these pending and enacted policy changes, if implemented as currently proposed, would likely have significant and far-reaching impacts on the biopharmaceutical industry and therefore likely also have a material adverse impact on our business, financial condition and results of operations. Additionally, there is ongoing litigation challenging the Medicare Drug Price Negotiation Program, and we cannot predict the outcome of these cases. If additional prescription drug price controls are implemented, the resulting changes to the pricing and reimbursement of CABOMETYX and COMETRIQ could affect our ability to continue to commercialize the products. Consolidation and integration of private payers and pharmacy benefit managers in the U.S. has also significantly impacted the market for pharmaceuticals by increasing payer leverage in negotiating manufacturer price or rebate concessions and pharmacy reimbursement rates. Such restrictive or unfavorable pricing, coverage or reimbursement determinations for CABOMETYX and COMETRIQ or our other product candidates, whether made by governments (including regulatory agencies and courts) or by private payers, may adversely impact our business. In addition, there have been, and may in the future be, initiatives at both the federal and state level or legal challenges that could significantly modify the terms and scope of government-provided health insurance coverage, ranging from changes to or litigation opposing some or all of the provisions of the Patient Protection and Affordable Care Act of 2010, as amended, to establishing a single-payer, national health insurance system, to more limited "buy-in" options to existing public health insurance programs, any of which could have a significant impact on the healthcare industry. Although such attempts to reform the U.S. healthcare system have not significantly impacted our business to date, it is possible that additional legislative, executive and judicial activities in the future could have a material adverse impact on our business, financial condition and results of operations. In addition, the current U.S. administration has indicated that it plans to pursue additional policies aimed at lowering prescription drug costs. For example, on May 12, 2025, the current administration published an executive order that expressed support for equalizing the prices paid for drugs in the United States and other developed countries by employing an MFN approach to drug pricing. The May 12 executive order directs the Secretary of the HHS to communicate MFN price targets to pharmaceutical manufacturers, which the Secretary announced on May 20, 2025. If significant progress towards MFN pricing targets is not delivered, the executive order directs the Secretary to propose a rulemaking plan to impose MFN pricing. On September 25, 2025 and October 2, 2025, CMS submitted proposed rules for Center for Medicare and Medicaid Innovation (CMMI) models, called the Global Benchmark for Efficient Drug Pricing (GLOBE) Model and Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model, to the White House for review. These models, if implemented, may allow CMS to pursue formalized approaches to MFN pricing for prescription drugs. In addition, on November 6, 2025, CMS published a request for applications for another CMMI model, the GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) Model. This is a voluntary model that tests the effect of supplemental rebate agreements between manufacturers and CMS, which align Medicaid prices with a defined MFN price. The scope of these models and the impact that they could have on Exelixis' products is unclear at this time. It is also unclear which authorities the current administration could use to effectuate an MFN approach beyond the CMMI models, although the May 12 executive order makes reference to using waivers on import restrictions under section 804(j)(2)(B) of the Federal Food, Drug, and Cosmetic Act (FDCA) and also to various authorities, including the antitrust laws. And, previously, on April 15, 2025, the current administration published a separate executive order that, among other things, directs specified agency heads to pursue a range of drug policy reforms, including, among other things, innovative payment models to obtain better value for high-cost prescription drugs and biologics, increasing access to drugs imported from Canada, and accelerating the approval of generics. Because the specifics of these proposals are unclear, there is uncertainty about how these and other potential legal or regulatory changes may affect our business. Furthermore, because we participate in the 340B Program to sell a portion of our marketed products, changes in the administration of the program could have a material adverse impact on our revenues. Effective July 2022, and as subsequently updated, we implemented a 340B Program Integrity Initiative, pursuant to which Exelixis offers its 340B covered outpatient drugs (i.e., CABOMETYX and COMETRIQ) directly to all covered entities (i.e., entities that participate in the 340B Program) at their Health Resources and Services Administration (HRSA) registered locations (including both the HRSA registered parent and child site locations), and requires that covered entities provide claims-level data for all dispenses of Exelixis' 340B covered outpatient drugs including dispenses of such products at covered entity in-house pharmacies. A covered entity that does not have an in-house pharmacy capable of dispensing 340B drugs to its patients may designate one (1) contract pharmacy within our authorized specialty pharmacy network for delivery of 340B priced drugs, but may no longer select an affiliated contract pharmacy to fulfill this purpose. We believe this initiative will provide much-needed transparency and promote compliance with program requirements, and at the same time, should not restrict patient access to our medicines. Some manufacturers that have implemented similar contract pharmacy integrity programs received enforcement letters from the HHS asserting that those programs violate the 340B Program statute, have been referred to the HHS Office of Inspector General for assessment of civil monetary penalties, and have been subject to administrative dispute resolution (ADR) proceedings brought on behalf of covered entities. Several manufacturers are challenging the HHS' position in litigation. Relatedly, in November 2023, we received from several covered entities a 340B Program ADR petition seeking to invoke an administrative adjudication process overseen by the HRSA. The petitioners contend that our 340B Program Integrity Initiative caused them to be overcharged for CABOMETYX and COMETRIQ. We have since received confirmation that the HRSA will assign an ADR panel to the claim and responded to the complaint in October 2024. At this time, it remains unclear what, if any, liabilities we might incur as a party to this ADR proceeding. In addition, a growing number of states have enacted laws requiring manufacturers to provide the 340B Program pricing through contract pharmacy arrangements, and additional states may adopt similar laws. We believe these laws, which are being challenged in ongoing litigation, are invalid or are otherwise inapplicable to our 340B Program Integrity Initiative, but we have carved out covered entities in certain states while litigation challenging these laws proceeds. We also believe that our 340B Program Integrity Initiative complies with the 340B Program statute, as supported by the federal appellate court decisions in Sanofi Aventis U.S. LLC v. United States Department of Health and Human Services (U.S. Court of Appeals for the Third Circuit) and Novartis v. Johnson (U.S. Court of Appeals for the District of Columbia). On March 17, 2025, April 24, 2025, and May 27, 2025, we received notice letters (collectively, Notices) from the West Virginia Board of Pharmacy (WV Board) of complaints filed against us for purported violations of laws related to distribution of drugs to 340B facilities (West Virginia Code § 60A-8-6a (WV Statute)). The WV Statute provides for civil monetary penalties, in addition to investigative demands, remedies, and other penalties for violations. We acknowledged receipt of the Notices, and there have been no further communications. Other pharmaceutical manufacturers are challenging the WV Statute in court. Depending on the outcome of the ongoing litigation or any specific proceedings involving us, however, we may be required to modify or suspend our 340B Program Integrity Initiative. Ultimately, any negative ruling in a federal court, HHS administrative proceeding, or state-level proceeding in which we are a party, or in which the compliance of our 340B Program Integrity Initiative is at issue, could have a material adverse effect on our business, financial condition and results of operations. Other aspects of the 340B Program are subject to ongoing litigation, the resolution of which could impact the scope of the 340B Program. In addition, potential policy changes by the current U.S. administration may introduce additional uncertainty for our business. These could include changes to the level of scrutiny applied by the HRSA to enforce non-compliance with the 340B Drug Pricing Program, new price restrictions on products we sell to Medicaid, Medicare, or other government purchasers, or other regulatory changes impacting reimbursement or competitive dynamics in multisource markets. Any such policy shifts could significantly impact our business and operations. Due to general uncertainty with respect to these issues, we are unable to predict the impact of any future legislative, regulatory, third-party payer, or policy actions at this time. If proposed changes are ultimately enacted, we and any third parties we might engage may be unable to adapt to any changes implemented because of such measures, and we could face difficulties in maintaining or increasing profitability or otherwise experience a material adverse impact on our business, financial condition and results of operations. Increasingly, states are enacting legislation requiring manufacturers to report drug pricing information. However, states have not always clearly defined their reporting requirements, which may result in manufacturers inadvertently failing to properly disclose the required pricing information. Complying with federal and state programs and future changes to these programs can be complex and cost-and resource-intensive and could have a material adverse effect on our business, prospects, operating results, and financial condition. In addition to such drug pricing and transparency matters, other state legislative and regulatory initiatives include proposals designed to control pharmaceutical and biotherapeutic product pricing, including restrictions on pricing or reimbursement at the state government level, limitations on discounts to patients, advance notices of price increases, marketing cost disclosure and transparency measures, and, in some cases, policies to encourage importation from other countries (subject to federal approval) and bulk purchasing.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.