Annual Report 2018 Resilient Together 2018 Highlights 480+ employees united in our mission to help cancer patients recover stronger and live longer, a 30 percent increase in headcount versus year-end 2017 3 new pivotal trials of cabozantinib initiated, with additional pivotal trial starts anticipated in 2019 4millions profitable quarters, resulting in the company's second consecutive full year of profitability on an operating basis #1 CABOMETYX® (cabozantinib) became the #1newly prescribed TKI to treat advanced RCC "Our discovery, development, and commercialization teams are working seamlessly to advance our mission to help patients with cancer.” Letter to our stockholders Letter to Stockholders Exelixis started and finished 2018 in A Solid Commercial Foundation two very different places – literally Since the FDA first approved and figuratively. We began the year CABOMETYX in the U.S. in 2016, the in South San Francisco, California at Exelixis commercial team has leveraged the site our company had called strong data and a tireless, collaborative home for nearly two decades. We work ethic to make it the preferred finished 2018 in the nearby city of tyrosine kinase inhibitor (TKI) to treat Alameda in new headquarters advanced renal cell carcinoma (RCC), the 1 designed from scratch just for most common form of kidney cancer. Exelixis, with ample room to grow In fact, by the end of 2018, CABOMETYX had become the number one newly and new state-of-the-art onsite prescribed TKI for advanced RCC, discovery laboratories. capturing 34 percent market share for this therapy class.2 In the fourth quarter 1000 These two facilities are only about ten $851.6 of 2018 specifically, this included miles apart across the San Francisco 800 approximately 90 percent of patients Bay, but the distance feels greater when whose disease had progressed following 600 you consider what the move means for $479.6 $457.2 immune checkpoint inhibitor (ICI) our company. Four years ago, Exelixis ® 400 combination therapy with Opdivo was emerging from one of the toughest (nivolumab) and Yervoy® (ipilimumab).3 200 periods in our history, having faced This suggests, even as the therapeutic major clinical, financial, and operational landscape evolves, CABOMETYX will 0 headwinds. Today, thanks to the team’s 2016 2017 2018 continue to have an important role focus, execution, and resilience, we are a across multiple RCC settings. Year-End Cash* fully integrated biotechnology company (in millions) with a lead product, cabozantinib, that The cabozantinib franchise is approach- has secured four regulatory approvals ing a $1 billion global business in RCC *Includes cash and cash equivalents, 4 short- and long-term investments and been shown to extend life in two alone. Our progress in this first and short- and long-term restricted very difficult-to-treat diseases. In 2019, commercial indication for CABOMETYX cash and investments. our drug discovery, clinical development has positioned us well in hepatocellular and commercial teams, with deep carcinoma (HCC), for which CABOMETYX support from the broader organization, was approved by the FDA in January 2019. are working seamlessly to advance our We are excited about the ongoing mission to help patients with cancer. launch of CABOMETYX for HCC, given the significant overlap in RCC and HCC prescribers and the projected growth of the liver cancer market as new treatments lead patients to additional lines of therapy. 1National Cancer Institute. Kidney Cancer – Patient Version. http://www.cancer.gov/types/kidney. Accessed April 2019. 2IQVIA, IQVIA National Prescription Audit™ December 28, 2018. 3IQVIA BrandImpact Data for the fourth quarter of 2018, compiled in December 2018. 4Based on annualized Q4 2018 cabozantinib revenues for Exelixis and Ipsen, one of our two partners in the compound’s global commercialization and development. 1 Letter to Stockholders A Broadening Development Footprint A Return to the Labs The growth of the cabozantinib Having started my career in drug franchise provides Exelixis with the discovery, it’s exciting to walk through Select Anticipated Events financial resources necessary to fully our Alameda headquarters and see our investigate the promise of our lead new labs running at high capacity, • Progress in the ongoing U.S. medicine and maximize its potential working to identify the next generation (Exelixis) and EU (Ipsen) to help patients. In 2018, we and our of Exelixis medicines. Since making the launches of CABOMETYX development partners started new decision to reinitiate drug discovery in HCC pivotal trials in differentiated thyroid research, we’ve established a team and • First commercial sale of cancer (COSMIC-311), advanced HCC process that not only builds on our MINNEBRO™ (esaxerenone) in (COSMIC-312), and neuroendocrine legacy of preclinical productivity, but Japan, triggering a $20 million tumors (CABINET). We expect to start also reflects all the experience and milestone payment to Exelixis additional pivotal studies in 2019, insights gained from the clinical from collaborator Daiichi Sankyo† including the triplet-combination trial of development of cabozantinib and other CABOMETYX, Opdivo and Yervoy in compounds over the past decade. previously untreated RCC, as well as • Initiation of additional We celebrated an important milestone other potential ICI combination trials, cabozantinib phase 3 in the evolution of our internal drug including in bladder and lung cancers. pivotal trials discovery capabilities in early 2019 Some of these studies could be informed when we began a phase 1 clinical trial • Data from IMspire150 TRILOGY by emerging data from COSMIC-021, our for XL092, the first new internally and IMspire170, two Roche- phase 1b study of cabozantinib plus discovered Exelixis compound to sponsored phase 3 pivotal Tecentriq® (atezolizumab), Genentech’s enter the clinic since 2009. XL092 is trials evaluating COTELLIC® anti-PD-L1 antibody, which includes a next-generation oral TKI with a target (cobimetinib) in combination twenty different expansion cohorts. profile that includes VEGF receptors regimens to treat forms Cabozantinib’s clinical development and and MET. If the early clinical data are of melanoma‡ commercialization is a global undertak- supportive, we intend to follow the • Data from CheckMate 9ER, ing thanks to our strong partnerships initial trial with later-stage testing the phase 3 pivotal trial of with Ipsen and Takeda, which have the of XL092 as a single-agent and in cabozantinib + nivolumab in opportunity to co-fund clinical trials and combination with other anti-cancer first-line advanced RCC, use the data for regulatory applications therapies. As XL092 and earlier internal conducted in collaboration in their respective territories. In 2018, drug candidates move forward, we’re with Bristol-Myers Squibb and Ipsen secured additional CABOMETYX supplementing those efforts by adding co-funded by Ipsen and Takeda regulatory approvals, and Takeda made promising external assets to our significant progress on bridging studies pipeline, such as we did with the that could yield RCC and HCC approvals StemSynergy (CK1ჴ activators) and 800 in Japan. Collaboration milestones and Invenra (bispecific antibodies) collabora- royalties from these relationships make tions announced in early 2018. 700 $619.3 600 up a significant portion of the approxi- 500 mately $1.7 billion in cash that Exelixis 400 $349.0 has generated from cabozantinib since 300 the start of 2016. Over the past several 200 $135.4 years, we’ve used these funds to 100 eliminate all of our outstanding debt, 0 reinvest in cabozantinib’s clinical 2016 2017 2018 development, and restart internal and external drug discovery activities to Net Product Revenues rebuild our pipeline. (in millions) † MINNEBRO is a compound identified during the prior research collaboration between Exelixis and Daiichi Sankyo, which the companies entered 5CABINET is sponsored by the National Cancer Institute's Cancer Therapy Evaluation Program (NCI-CTEP) into in March 2006, and has been subsequently through our ongoing cooperative research and development agreement. developed by Daiichi Sankyo. ‡ As communicated on Roche’s full year 2018 financial results presentation, January 31, 2019. COTELLIC was discovered by Exelixis and is now the subject of a worldwide collaboration with Genentech, Inc. (a member of the Roche Group). 2 Exelixis in a Word: Resilient $234.5 Advancing into 2019, Exelixis has never shown the ability to do what’s needed 250 been stronger. The fourth quarter of in the moment, stay focused on the end 200 2018 was our eighth consecutive goal, and be resilient together. This is a 150 profitable quarter on an operating basis. principal reason Exelixis is still here We finished fiscal year 2018 with record today, positioned to make a difference $103.5 100 revenues, considerable cash on hand, in patients’ lives for the long term. As we $56.1 and a leading position for CABOMETYX move through 2019 and beyond, we 50 in the RCC TKI market. We are commit- know the opportunity to build on our ted to running Exelixis sustainably and rich history and past success is both a 0 2016 2017 2018 building long-term value by deploying privilege and a responsibility. That’s why the cash from product sales, milestones, we’re committed to doing all that we Collaboration Revenues§ and royalties to expand cabozantinib’s can to make our next twenty-five years (in millions) oncology franchise and build our as impactful pact u as our ou first. st. Thanks a s for o pipeline with new investigational drugs.rugs. makingmaking the journeyjourney with us, and forfor Importantly, we don’t take our currentrent youryour continuedcontinued ssupport.upport. 2.5 success for granted. We know we nneedeed $2.21 to make every day count to create vavaluelue 2.0 for all of our stakeholders, includingg ouourr 1.5 investors, our 500-plus employee bbase,ase, 1.0 the oncology community, and, mostst $0.49 importantly, the patients we serve. 0.5 $(0.28) In reflecting on Exelixis’ silver anniversaryersary 0.0 Michael M. Morrissey, Ph.D.