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

Good afternoon, everyone. I'm George Farmer, BMO Biotechnology analyst. And with us at…

Can you hear me, George?

Yes, I can hear you, Mike. I'm in the process of introducing you. I'm introducing Mike Morrissey, the CEO of Exelixis for our final presentation of the day. Mike, I'm very happy that you're here to join us for a fireside chat. Really appreciate it. Thought maybe we could start off with some highlights from the COSMIC-021 trial that you've presented before. And maybe you can just kind of talk through about what's so exciting about the prostate and the lung cancer data cohorts in particular that you've seen to date.

All right. Well, I can't hear you, guys. Can you hear me? Looks like you could hear me.

Yes, I can hear you. I can hear you.

How is that? Try again.

I can hear you. All right. All right. Modern technology. Here we go again. All right. Maybe what you can do is just kind of review for us the highlights from the COSMIC-021 study, specifically the prostate and lung cancer cohorts that you presented today, and why those results you feel are so encouraging?

Absolutely. So first of all, afternoon, everybody. Sorry for the slight technical difficulties there, right? Before I begin, I'll be making forward-looking statements. So please see our SEC filings for a description of the risks that we face in our business. So we've had a pretty busy year of presenting data. You highlight prostate and lung from 021. I think both data sets really reflect the progress that we're making across the board. And we've had other data. We had data at ASCO for bladder. We had data from ASCO-GI for liver. And then obviously, the 9ER study that came out in April. In terms of prostate and lung, we're excited about the data for all the obvious reasons. We've got 30 plus or minus percent response rate for RECIST 1.1 in both studies, good safety, good tolerability, low discount rates, good duration of response. So we're seeing, I think, a pretty strong signal relative to what is normally seen in these various different populations. Both studies or cohorts looked at high risk, late-stage patients. Prostate was a mix of first- and second-line with a variety of different treatments in terms of either 1 or 2 NHTs. Lots of patients had chemo going into the study for their castration-sensitive disease. So pretty late-stage population. The fact that they have measurable disease reflects a higher risk prognosis as well. Lung, similar sort of story there relative to patients with a mix of second and third-line patients. About half of those patients had primary refractory disease, meaning that they had no clinical benefit from the IO. Almost all of them had chemo as well. So very late-line patients in both situations, but very encouraging data that we feel good about from the standpoint of, again, good tolerability, but also using the appropriate response assessment tools to be able to make sure that what we're seeing is real. So far so good.

Yes, the signals look really encouraging. I'm wondering regarding prostate, can you review what your regulatory strategy is there? You talked about maybe pursuing around accelerated approval path, is that still -- is it still on your mind as being the right way to go? Or you want to wait in Phase III?

Yes. Look, I mean it's going to be -- it's going to come down to the totality of data that we have from all the different cohorts that we're looking at relative to the 021 prostate experience. As you know, we've added on up to 130 patients in the primary cohort 6. So that's kind of gets in the ballpark of what the regulators want to see in terms of a critical mass of patient experience. We're also looking at single agent cohorts for both cabo and atezo. So we're doing all the right things to be able to understand activity in a well-defined population and have a clear sense of the contribution of components. So if you look at the kind of the historical, kind of look back 4 or 5 years in terms of what the agency wants to see in terms of a 45-plus now Subpart H approvals, it's in that same ballpark, about 100 patients, response rates in the mid-teens and up, good duration of response, good safety, good tolerability, et cetera. So we're in that game, obviously, and we talked about that publicly. So no change in overall approach there. And we're certainly near starting -- near ready to start the pivotal trial in collaboration with Genentech as well. So full speed ahead. Very excited about the data. And great to be back in prostate after the early attempts back in the 2014, 2015 time frame.

Yes. Yes, indeed. And speaking of pivotal trials, I saw the news that CONTACT-01 has initiated in second-line lung, yes. Combo with atezo, nivo. So I don't think there have been too many Phase III trials done in second-line lung cancer. Can you talk about what sort of challenges there might be in executing such a study? And are you stratifying enrollment in that respect for Genentech?

Yes. So the mix here is -- it's a large population. Obviously, everybody with lung cancer nowadays gets some either sequence or combination of IO, usually pembro and/or chemo, either together or sequentially. So there's a large bolus of patients who fail -- when they fail those therapies, which they eventually do, are in need of better therapies. And certainly, once you've exhausted that first IO, and you've shown to either have resistant or refractory disease, there's really no data supporting that a second IO can rescue those patients. So the unmet medical need is high. The population is large, both in the U.S. and globally. And this is kind of where the next frontier is, not only within lung cancer but across the board relative to the different opportunities. When you have frontline IO, how you basically can help those patients once they progress on IO. So this is a theme that really covers the gambit of indications where IO has not become the mainstay in the frontline setting. And we're certainly excited about playing a role in that process with CONTACT-01 and with the cabo/atezo combination. In terms of stratification factors, we certainly are. What we want to have was arms be as similar as possible. We'll talk about that more later as we roll out the study. So stay tuned.

As I'd imagine, I mean, all these patients -- most of the patients who have had prior IO, like you mentioned, and here they are getting more IO, but in the context of a combination of -- with TKI. I'm just trying to think about it, how would you think about what are the proper stratification factors in such a treatment setting? And this is comparing -- being compared against docetaxel, correct?

Yes.

So for control, you're expecting for like a 7-month OS or 8-month OS?

Yes. It's a little bit of a challenge to project that. We certainly have modeled out the different arms based upon the enrollment size and powering and those kinds of things. If you look at some of the more recent data that's done in a relatively IO-naive population. So the question is, how does chemo do in that space as well? So -- but if you look at some of the recent data, docetaxel gives about an 8, 9-month overall survival benefit depending upon the trial and depending upon the size of the trial and when it was done. So we think it's a good -- it's the appropriate comparison and one that we certainly are excited to be able to test against relative to CONTACT-01.

Okay. Good. All right. Let's move on. 9ER trial, positive study. I guess, obviously, we can't say too much about the specifics, but can you talk about what we should be looking for? Is there a specific hurdle? So -- I mean, I think everyone's gut reaction is going to be look at the KEYNOTE trial with pembro/axitinib, what do you think we should be looking for when the results absolutely matter?

Well, I think we've already given a kind of a sneak preview of the key data in terms of the hazard ratios for PFS and OS, right? PFS being 0.51, OS being 0.6, both highly significant. The PFS HR is notable, right? It's probably the lowest that's been seen to date relative to all the various IO frontline trials. And it's notable in the context of what we saw with METEOR and CABOSUN, which is kind of in the same ballpark. So look, cabo has clearly significant activity in this indication, and we've seen that going back to literally 2015, going -- adding MET or MET inhibition with VEGF inhibition with AXL inhibition makes cabo a uniquely differentiated tyrosine kinase inhibitor. The combination of that with nivo has provided some pretty interesting data. You asked, what should we be looking for? What should we highlight? I think you got to look at the totality of all the data, all the subgroups, all the safety, all the tolerability, all the quality of life issues. Again, it's the beauty of doing a large randomized global trial is that you get a lot of data, and you can really understand the nuances as they come out across risk groups, across PD-L1 status, across geographies, the whole bit. So we're really excited to get that data out in the fall and move forward with, obviously, filing ASAP and get out there in the market once we get approved.

Okay. And what do you think happens to cabo use in the second-line as -- if this is adopted frontline?

Yes. So look, as we've talked about before, our view has always been that based upon the totality of data that we have in RCC from METEOR, from CABOSUN, various ISTs. And now layer on top of that 9ER, we think cabo has -- provides the clinical benefit to be used as standard of care, either first-line or second-line. So our view quite simply is that -- and it certainly is the second-line leading therapy right now by far and away. So for those patients that don't get cabo frontline based upon the cabo/nivo doublet after approval and after we start marketing, cabo is available for them second-line. So it's a good mix in terms of how we can really dominate that market from the standpoint of either first-line, growing market share or maintaining and building our market share in the second-line setting, too. But the data -- look, the data speaks for itself. And I think it's -- people certainly understand the value that cabo brings in the second-line today. So it will be a mainstay until something beats it, right, which is going to be tough.

Okay. And do you think cabo could add benefit to a nivo? [indiscernible] is there a precedent for that effect?

Well, we certainly have data for that in both RCC and HCC. And we have the 313 study going right now to ask that question specifically. The question, I mean, at a high level is, can you take the best of the best in terms of I-O/TKI with cabo/nivo and combine it with the best of IO/IO to be able to raise the bar for standard of care even more. So that's the question. We certainly have some pretty encouraging Phase Ib data from Andrea Apolo. We're excited about that. We've learned a lot about cabo in the context of the combination dosing that we're using at the 40-milligram dose with not only 9ER, but the other liver, lung, bladder trials that -- prostate trials that we've presented on this year. So we look like -- it looks like we have a very active, tolerable relatively safe combination dose, and it's something that you have to keep patients on study, to keep patients on drug to maximize the benefit here. And I think that's going to be the real charm with what we see in 9ER. And hopefully, that will then kind of expand out as we look at more and more indications in these large pivotal trials.

Okay. Great. And how about talking about cabo positioning in hepatocellular? What's the future of the drug? There's lots have been -- there's been a lot going on in the space, frontline success, I think with atezo, bevacizumab, right?

Yes.

How does cabo fit into all this, you think?

So as we've talked about, I think, pretty extensively since we were approved in the second-line setting based upon the CELESTIAL data with cabo single agent overall survival. This opportunity, this indication is really the one of the biggest kind of indications as in terms of unmet medical need, in terms of on a global level in the U.S., hundreds of thousands of new patients every year. Until recently, standard of care was active, but people weren't really excited about either sorafenib or lenvatinib in the frontline setting. So as we've talked about previously, this is a market that needs to be rebuilt and reestablish based upon better therapies. And certainly, the IMbrave data that was, I think, very compelling as it was presented last year, talking about the improvement in response rate in PFS and overall survival for bev/atezo helps move that needle forward, raises the bar for success and gives patients a very important option that both has better efficacy and arguably better tolerability than what's been seen previously. So that's a good thing for patients, and it's a good thing for us, too, because we want to be part of that process obviously, like with other indications, if you exhaust your IO upfront in the first-line setting, then when those patients progress, they need a second therapy, which we think cabo is uniquely positioned with the survival benefit in the second line to be able to help those patients as they progress on an IO combination frontline. And we're doing the 312 study looking at the combination of cabo/atezo versus sorafenib in that frontline setting, which very similar trial design to what IMbrave looks like, but we're just simply swapping out cabo for bevacizumab, which we think is actually a pretty good trade there, right? So -- but again, all the caveats go as usual, you've got to run the experiment. You've got to get the data and you've got to see how that looks. But it's a very important indication because to date, available therapies really haven't been able to help that many people. And there's just hundreds of thousands of people every year that have liver cancer that need better therapies. So we'll extend to be part of that.

Okay. And then one more. Mike, before I let you go. I asked this question of Chris last year when he came. I know he's been with Exelixis a long time. The company has changed a lot of since you took over. Where is Exelixis in 5 years? What does this company look like?

Yes. Look, we want to be a multiproduct, diversified biotech, biopharmaceutical company with products that obviously help patients in major indications that span the modalities of small molecules and biologics, right? We have, over the last 5 years, reshaped the company. We're operating from a position of strength. We've been profitable for the last 13 quarters. We have $1.45 billion or so in cash at the end of Q1. We're doing discovery again in a major way. We've got a lot of collaborations that are either ongoing or soon to be announced. So there's huge momentum in diversifying our product offering as we go forward, right? Focusing on cabo wasn't a strategy, that was a tactic, and you've tracked this for years, right? That was a tactic to simply get the company back on track, generate free cash and then reinvest that free cash in the business in a very sustainable way. So we've done all that. And now the next challenge is to find new drugs, and we do that pretty well. So I'm excited.

All right. Very good. Thanks so much, Mike.

Thanks. Appreciate it. Yes.

All right. So long.