Exelixis (EXEL -1.31%) is not exactly a household name in the biotech industry, but that hasn't stopped the company from crushing the market this year -- rising over 30%. Perhaps one key reason behind the drugmaker's performance in 2023 is its decision earlier this year to buy back as much as $550 million of shares, a move investors tend to appreciate.

But there are more fundamental reasons to like Exelixis now, especially in regard to its product portfolio and pipeline of new products. Let's see why.

Exelixis, the cancer specialist 

While some biotech companies cast a wide net by seeking to develop medicines in multiple therapeutic areas, Exelixis is solely focused on oncology. That makes for a less diversified portfolio, but it also allows the company to conduct deeper research into its field of expertise, potentially leading to significant breakthroughs.

Its crown jewel, cancer medicine Cabometyx, is an excellent example. It was the first therapy for advanced renal cell carcinoma (or RCC, a form of kidney cancer) to demonstrate improvement in all three key measures of efficacy: progression-free survival, overall survival, and objective response rate. Cabometyx is the most prescribed RCC therapy of its kind, and it is also approved to treat hepatocellular carcinoma, a form of liver cancer.

Exelixis has been able to compete with much larger drugmakers in this small niche, a testament to the company's expertise in oncology. Cabometyx's approval and label extensions since 2016 have allowed the biotech to perform well financially. 

EXEL Revenue (Quarterly) Chart

EXEL revenue (quarterly) data by YCharts.

Exelixis has also been engaged in legal battles to uphold Cabometyx's patents and fend off generic competition. It recently settled one such lawsuit with the generic drug specialist Teva Pharmaceuticals. The two companies formed an agreement that will only allow Teva to launch a generic version of Cabometyx starting in 2031.

More programs in the pipeline

In the meantime, Exelixis is working on newer products. Its most advanced non-Cabometyx candidate, zanzalintinib, is undergoing a pair of phase 3 studies in treating advanced non-clear RCC and metastatic colorectal cancer. Despite its being treatable when caught early, the five-year survival rate for colorectal cancer drops substantially once it metastasizes.

Exelixis has several more products in early stage studies. Plus, the company has also entered into agreements with other biotechs, helping it expand its pipeline. For example, it has struck with the China-based Insilico Medicine, which will see the two companies concurrently develop ISM3091, a potential cancer therapy.

One of Exelixis' goals is to create treatments where there is a dire need, something that isn't hard to find among the dozens of different forms of cancer.Exelixis will likely continue targeting such niches in the oncology market hoping to hit gold again the way it did with Cabometyx. 

Patience shall be rewarded 

Exelixis's decision to repurchase up to $550 million worth of its shares by the end of the year isn't the only reason it is outperforming the market, given the continued performance of Cabometyx and its exciting pipeline. The company should still be able to count on Cabometyx in the foreseeable future as the medicine is still acing clinical trials. It did so twice in August, prompting Exelixis to end one of those clinical studies early.

Additional indications should lead to higher sales for the therapy and stronger revenue growth for Exelixis. And the company's pipeline should allow it to unearth more gems in the very near future. Expect the biotech to launch at least one brand new product on the market within five years. Exelixis' ability to innovate in the cancer market is one of the best reasons to buy the stock, especially for patient investors. The company might not always perform as well as it did this year, but over the long run, it can deliver solid returns.