Exelixis, Inc. (EXEL) Earnings Call Transcript & Summary

Good afternoon. Welcome to Barclays Global Healthcare Conference. My name is Peter Lawson. I'm one of the biotech analysts at Barclays. It's my great pleasure to introduce Mike Morrissey, CEO of Exelixis. And also, we have Chris Senner, CFO from Exelixis. Maybe, Mike, just as a general introductory question before we get into the major -- main Q&A section, perhaps you could give us a high-level overview of the company, when your lead drug was approved and indications you target. Thank you.

Yes, absolutely. Good afternoon, everybody. This is Mike Morrissey. Before I begin today, I'll remind you that I'll be making forward-looking statements today, so please see our SEC filings for a risk -- for a description of the risks that we face in our business. So Exelixis, commercial stage biotech company focused in the area of oncology. Our main drug is CABOMETYX, generic name is cabozantinib, which is now a global $1 billion brand based on our 2019 results. Main focus is in kidney cancer. We have labels for really spanning the first- and second-line population based on the CABOSUN and METEOR data as well as a second-line HCC label based on the CELESTIAL data. And then we have a capsule formulation called COMETRIQ, that is indicated for a rare form of thyroid cancer called medullary thyroid cancer. So we're a fully integrated biopharma company with R&D, regulatory and commercial. We've had a long robust journey and have some very exciting days ahead of us in terms of both 2020 and 2021 with lots of important milestones for cabozantinib and throughout the pipeline that we're building. So Peter, go ahead.

Perfect. And I guess, the initial focus, I guess, first half of this year, top line results, Phase III CheckMate 9ER cabo plus nivo in first-line kidney cancer. For you, when you kind of look at upcoming -- potential upcoming readout and now, I guess, studies, what helps derisk that CheckMate 9ER readout in first-line kidney?

Yes. So I would frame it in the context of all the existing data for individual components, both cabozantinib and nivolumab in the RCC setting as well as some of the emerging Phase Ib data that has been presented over the last year or so. Certainly both cabo and nivo have been mainstays in the RCC area going back to the nivo approval in 2015 and the cabo approval in early 2016. Both were best-in-class molecules as single agents at the time throughout -- since they were launched. Both have survival benefits in the second-line setting. And there's been obviously a lot of interest in combining those agents and the clinical benefit that one can derive from them individually in terms of this combination. So this is a long time coming. We're certainly very excited about that. Some of the NCI work that I was looking at, at the doublet in the first-line RCC setting also looks very encouraging, 50-plus percent response rate, long duration of response, long PFS. So great overall tolerability based upon some of the Apollo data. So all the caveats that go into small, nonrandomized single-arm studies, really point to some pretty interesting data. And obviously, we have the experiment going, and BMS is guiding to have top line results in the first half of 2020. So we eagerly await those results. And then, if successful, we will move forward aggressively with the filing.

And you really look at the KEYNOTE-426, so the Keytruda plus INLYTA is the real bar to beat? Kind of where do you feel areas of comfort in beating those bars?

So I think it's safe to say that the dual PFS and OS benefit afforded in KEYNOTE-426 really defines what competitive data has to look like. Obviously, JAVELIN had PFS, but no survival benefit and that hasn't done well in the commercial setting, no surprise there. So I think it's a statement of the obvious that a survival advantage with the 9ER results are going to be important to make this a competitive offering in the commercial setting. I don't think that's -- it doesn't take a rocket science just to figure that one out, right? So we acknowledge that, obviously, we've taken steps to add more power to the OS signal based upon extending the time for us to accrue more events on the survival side. So again, it's all baked in, in terms of what we're looking for here. Certainly, we've got, I think, pretty exciting single-arm data, as I mentioned before, I think both cabo and nivo are very compelling by themselves. And now the question is, how do they do together? So obviously, we need the data. And I don't want to speculate further on that, but I think, certainly, clearly, I'm excited about that and very confident in the results.

Okay. And then, I mean, how should we think about, I guess, the quite off-label script use but -- use of cabo plus PD-1 in kidney in the first-line setting? I mean based on what we've seen so far, wouldn't you kind of expect that use to be starting already before you get the final unveiling of the data?

Yes. Peter, we get asked about off-label questions a lot. And we always avoid answering those questions just because it's certainly bad form for us to be talking about that relative to our maniacal focus on compliantly marketing our drugs for the indications for which we have been granted. So I really don't want to go into that level of detail. We did that once post the second-line result and approval because we had seen some early usage of single-agent cabo after we had already presented the results for CABOMETYX. CABOMETYX was already -- or for cabo -- yes, for CABOMETYX. CABOMETYX was already on the market. So we had some -- we had a little bit of off-label use there. But again, it's a difficult, I think, issue to address per se and one that we don't often speak to and certainly before the fact, right? So...

Is the fact that there's already Keytruda INLYTA already approved in the first line, it just makes it difficult for any doctor to kind of think about using cabo plus PD-1, just because there is an alternative that's approved?

Again, I -- again, Peter, I don't want to speculate on off-label uses. So I think we can move on from that topic.

Okay. That's fair enough. How should we think about the kind of time lines for submitting NDA and getting the approval in the first line?

Yes, I would frame it as it will be a #1 priority for us once we have the data in hand. Obviously, there's a lot of work going on right now, preparing all the background work to be able to file as quickly as possible. So I would imagine that will be a very rapid process for us and our partner, BMS. And then others as well involved in the global filings, Ipsen and Takeda and other parties that work with BMS. So look, it's a very important indication for us. We're all aligned on the importance of those milestones. So without going into too much detail from a competitive point of view, I think it's safe to say that, that will go as fast as humanly possible.

And that's both you and Merck moving that forward?

No. It's -- again, just to be clear, BMS is the partner here with nivo.

Okay. And so that's kind of a dual approach, both of you moving it forwards? Or is -- you in the driving seat there?

I'm not exactly sure what you're asking. I think it's safe to assume that we'll have -- we will each do a filing. So we each in our labels have the data present if the trial is successful, and we can seek to have an authorization in our individual labels for cabo and nivo.

Got you. Okay. No, that's perfect. So it's kind of separate filings both in your individual labels. I guess, maybe move on to, I guess, the interim analysis that COSMIC-312 and in first-line liver. I mean -- so I guess, the same kind of question when you start looking at the data, what helps derisk the results in COSMIC-312?

In some ways, it's kind of the same answer, right, from the standpoint of -- it's a very similar situation that we're presented with in first-line liver relative to first-line renal, right? Again, cabo, that trial looks at the combination of cabo and atezolizumab versus sorafenib in the first-line HCC setting. Obviously, the IMbrave results was successful. That was bevacizumab and atezolizumab versus sorafenib, again, benefit was both -- seen in both, well, in overall survival, progression-free survival and objective response rates. Obviously, the bar there is analogous, if you will, to the renal situation where the importance of survival is critical here to provide a compelling competitive offer, certainly, with the CELESTIAL result where we saw survival benefits looking in the second-line HCC setting. Again, for cabo, that's a strong offering and a strong data set. Those, as you know, have been difficult to achieve. There have been many failures there in the past. The trial that we're running is very similar to IMbrave with the exception that we're studying cabozantinib in place of Avastin. And for all kinds of hand-waving reasons, which everybody should be careful of when making those kinds of comparisons, we certainly like the offering that cabo has relative to its overall profile as a very potent and unique best-in-class VEGFR targeting TKI, which also hits important resistance pathways. So it's all coalescing well, I think, in terms of how that's operating. The trial has enrolled very quickly. And we're projecting it will be completed in the first half of 2020, with the idea that the first interim analysis for both PFS and OS would take place then later in 2020.

And how should we think about the time lines around the regulatory filings?

I would -- yes, again, I would say, in general -- again, statement of the obvious, when you have -- when you have a successful trial, that filing becomes the #1 priority. So it's all hands on deck. Everybody is working nights and weekends to get that done and filed ASAP. We've -- in our kind of longer-range guidance, we're talking about that being 1 of the 4 new indications that we would hope to see if we had positive and differentiating data that would be then -- that new indication could be approved then sometime in 2021.

Got you. And I guess maybe move on to prostate cancer. Just what do you think -- so the data we saw at ASCO GU for -- was it cohort 6? How does that kind of inform the plans for the pivotal Phase III? What should we be looking at?

Yes. So that's more or less designed right now, and we're looking to start that sometime in the first half of 2020, along with the second-line renal trial and the second-line post-IO nonsmall cell lung cancer trials. So we've got a lot going on there and the collaboration with Genentech on the cabo/atezo pivotal trials that are based on some of the early encouraging, exciting data we're getting from the 021 trial. So again, it's a relatively similar population, some level of post 1 or 2 NHTs in this pivotal trial, we'll provide much more details once we have the trial initiated, and we can go through all the various details and powering assumptions, et cetera, that will go into that.

What's the bar that we should be thinking about for metastatic prostate cancer? Durability, et cetera, we should be thinking?

Well, I would say the data we had at GU, in terms of the early data on the first 44 patients, I think, is pretty consistent with how we're looking at what success could look like. Response rate per RECIST 1.1 in the 30% range or so. Durability of response, ration of response, 8-plus months, good tolerability, pretty compelling activity in patients who had one NHT, who got a second NHT and who might have gotten chemo for their castration-sensitive population or their castration-sensitive disease. So it's a pretty, pretty broad cut of patients when you look at kind of what they had received going into entering cohort 6. And I think the response rate there and what's arguably been a very cold tumor in terms of IO is pretty compelling. So we're going full steam ahead in terms of fully enrolling cohort 6 up to 130 patients. We have -- again, we've added additional cohorts to be able to assess the contribution of components. So we're -- I think we're very well aligned with what the regulators would like to see in terms of an accelerated filing. And the data continues to look encouraging, and it's all together. It's all pulled together in terms of the totality of that data. Our intent is to file for accelerated approval in 2021.

Okay. And do you think there's kind of response rates and DOR looks good versus what's potentially coming through in prostate?

Yes. If you look at across the board, especially all of the various IO and IO combinations, I think the data we had at ASCO GU from cohort 6 is very compelling in terms of response rates, in terms of duration of response. Certainly, coupled with very promising tolerability. We had one Grade 4 event in those 44 patients, small number of Grade 3s. And when you compare that to some of the earlier data with single-agent cabo at a higher dose, it was really much better tolerated. So we're working with the right population. I think the doctors and investigators have a lot more experience with cabo after having used it for the last 4 or 5 years in the renal setting. And we've got, I think, the right endpoint in terms of looking at RECIST 1.1 of valuable patients. So we've taken the mystery and the -- I'd say, the drama out of response assessment by going into this with patients who have measurable disease by RECIST 1.1

Right. Maybe we could move on to lung. Could you remind me kind of the timing of data in lung cancer?

Yes. So we've guided that we'll have data out for the first set of patients from, this is cohort 7, sometime in 2020. We haven't provided details around that further. But as we get abstracts accepted and those kinds of things, then we'll certainly provide more information.

Is that more of a, do you think, a second half thing? Or...

Again, we haven't provided any temporal guidance on any of these presentations yet.

Okay. And the bar to beat or the -- what you think would be useful for doctors in lung cancer? What do you think that should be for lung?

Yes, that's a good question. So again, that's certainly a lot of thinking is going into that, relative to how we design the label-enabling trial. Certainly, the vast majority of patients with non-small cell lung cancer get IO frontline and IO -- either IO by itself or IO-chemo combinations or they get chemo frontline followed by IO second line. So -- but there's this whole bolus of patients that then as they progress, or are refractory to those, either that IO-based therapy or IO sequential therapy, then really need better options. Right now, the only game in town is really docetaxel. And again, the -- I think some of the more recent available data provides a pretty interesting benchmark for what that looks like, 3-month PFS, 10-plus percent response rate, 9 months overall survival. So it's a real -- it's a really interesting population to study, and it's one that is of increasing importance relative to just how the patient flow is working and how doctors and the overall oncology community has embraced IO upfront in the nonsmall cell lung cancer setting.

Okay. Do you think there's going to be a difference in response rates or efficacy driven by whether they're relapsed or refractory or PD-1 high, low, et cetera?

There could be, sure. All those things are up for really studying very carefully with -- again, you can do that in small Phase Ib nonrandomized studies and get hints of activity, but it's not until you do a large, global randomized trial where you get the data that you can really, really count on and really believe. So I think a lot of that work that we're planning on doing is going to be very important to reframe not only the opportunity, but also the subset data that you talked about and probably could be sliced and diced 10 more different ways, right? So...

So how many patients could we see for that data set?

Yes, again, too early to comment on the actual nuts and bolts of what would be in our presentation, so stay tuned.

Okay. We've started a little bit late, so we're going to run over by a couple of minutes, if that's okay.

Yes. It's fine.

Just on coronavirus, your -- I guess your exposure if that's affecting any part of your business, whether it's the sales side of things or clinical trials or supply agreements or collaborations.

So we're obviously tracking that like everybody else, extremely closely. We have a SWAT team or task force that discusses that, the latest breaking news daily. We're set up pretty well right now, certainly on the supply chain, we've invested a lot of time and effort to build a very broad, robust supply chain. We have safety stock of materials, including drug product that goes back for years. So we're very, very confident in our ability to maneuver some of the shorter-term issues here on a global scale. Obviously, we do a lot of clinical trial recruiting in Europe and in Asia, impacted areas of the world right now. We haven't seen a drop-off in enrollment in any of our big trials. But we're tracking that closely and certainly understand the importance for cancer patients, even in these times of great medical issues that are outside of oncology that these patients get their drugs and they get the treatment they need. So we're working and communicating very closely with our CROs and our investigators on a global scale to make sure we're doing everything we can to make sure that the patients either coming on our trials or on our trials are getting the best care possible. And we're very -- I think we're very fortunate to have been getting great feedback there, again, on a global level. So we're pleased about that. Commercially, at least in the domestic area, we have seen no drop off at all. Again, cancer patients need their drugs and the medical system as much as it's under pressure right now seems to be responding, I think, very effectively to make sure that those patients are cared for. So that's encouraging, and we continue to monitor that very, very closely.

Okay. With that, thank you, Mike. I really appreciate the time. I really appreciate everybody on the line that's taken time out of their day, and take care, and have a good day.

All right, Peter, thank you.

Thank you.

See you.