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

Hey, everybody. It's Alethia Young. I cover  large-cap, small, mid-cap biotech  here at Cantor. Very happy to have Exelixis here with me to round out day 2, saving the best for last. We have Dr. Mike Morrissey, who is Director, President and CEO of Exelixis. And we'll be doing a fireside chat for 30 minutes and a lot to work through. But Mike can [indiscernible] going first, which is 9ER. Surprise, surprise.

But it's obviously a huge focus. And just -- I want you to just frame what you can for us around some of the new analysis that we'll get and how to think about some of those results relative to the competition?

Yes. For sure. Well, thanks again for having us. We've had a great day meeting with investors at your virtual conference miss being in New York this time of year, especially with the way the air and the smoke is. But hopefully, next year, we can do this live. How about that? Before I begin, I will say that I'll be making forward-looking statements today. So please see our SEC filings for a description of the risks that we face in our business. So yes, 9ER is coming up. Really happy to finally have the data being presented this weekend. Again, just to reiterate what's happening. Tony Schwery from Dana-Farber will be presenting the data on Saturday via taped virtual presentation as part of their presidential symposium. So we're getting prime time airplay with the presentation, which I think speaks to the importance of the data and the quality of the data. Susan Hubbard and her team have put together a really great investor meeting about an hour after that with really, the A team of GU Oncology, KOLS, Dr. Choueiri, of course, will join us for that as the PI and then Dan George from Duke, Radar Mackay from San Diego and Monty Paul from City of Hope in Los Angeles, will be joining us for a pretty -- hopefully, open-ended, very robust discussion of the data and what it means to them and how they see this in this emerging landscape around first line RCC. So question I've gotten a lot over the last few days is what's important in the presentation? What should we expect? I can't preempt anything, obviously. We had Uber top line data back in April with the 8-K that accompanied the press release to, I think, effectively frame for the investors, how good the data was. Again, hazard ratio for PFS was 0.51. Hazard ratio for survival was 0.6, many, many zeros in the P value. So highly significant on both accounts. Hazard ratio of 0.5 for PFS against active control, standard of care for a decade or more is certainly notable. And to have that kind of result for PFS I think everything -- think it's safe to say everything needs to go in the right direction. So you'll see all that information at the presentation. The totality of the data, efficacy, safety, tolerability, subgroups, quality of life, all that stuff is super important. Again, I'm not going to go into details here, but between the investigators, between us and BMS, every data point on every slide in their presentation was chosen because it was important. Maybe down to the pixel. So I would recommend that people look at that very carefully and join us for our investor event and for that discussion that will follow so. But we're super excited about having that ready for prime time and ready to -- afterwards, are talking about the data and the context of the data, the perspective on the data, once we have the data in hand. So stay tuned.

Okay. Well, just -- so I mean most of us kind of know, but let's just talk about kind of current treatment in first line RCC. What those response rates and survival and all the trends look like there just to kind of level set?

Yes. So standard of -- right now, standard of care in the frontline setting is about 75%, 25% between IO combinations and monotherapy TKIs, 75% to 80% on the combination side, 20% to 25% on the on the minor TKIs. Again, IO, TKIs, different cuts and flavors. Have shown different levels of PFS benefit, survival benefit response rates that are notable relative to sunitinib, which is the kind of chose an active comparator here across these different studies. I think it's important to drill down into the data that you have the ITT populations, which data is what it is. But certainly, you can see a pretty wide variability in data by looking at subgroups in terms of risk profiles, in terms of regional demographics, in terms of prior nephrectomies of bone mets, et cetera. So all the stuff that we normally talk about in the context of kidney cancer. So I will avoid making comparisons now, obviously. I think that's something that people do on the buy side and the sell-side pretty routinely. So I think it's probably safer to do that with all the caveats once the 9ER's data is out. But we have some very effective regimens out there. Certainly, we think that we have a very competitive offering here and have filed and at least that excellences our launch-ready in terms of being able to get out there once we get the approval letter. So we're taking this opportunity extremely seriously. We have, I think, proven over the last several years that we have an organization that can maneuver very effectively in the commercial setting and compete with the big boys in this. For an example, where we have great data, coupled with a great team and get out there and help patients benefit from this combination.

Is there anything to think about with toxicity profile of the combination versus [indiscernible] ?

What do you mean by that? Think about things.

I mean just any like consideration of like the tox profile of [ that and other agents ].

Well, I think that's -- as we talked about previously in the ensuing 4 months or so since the top line data was -- the over top line data was announced in terms of the trial working and the 8-K data. The tolerability profile we're seeing with starting cabo at the 40-milligram dose with full dose ICI provides, I think, a pretty compelling offering in terms of efficacy and tolerability. Again, you have to keep patients on drug to see the kind of hazard issue that we're seeing for PFS. If patients were falling -- dropping out because of tolerability issues widely, you would not be able to achieve a hazard ratio like we did of 0.51 for PFS. I think that's statement of the obvious. We'll talk about all that data in great detail at the presentation and then certainly on our call on Saturday. I think one of the key messages here is that the tolerability profile, starting at 40 looks really good, right, in terms of discount rates that is probably the best measure of keeping patients on the drug, on the combination and maintaining benefit from that. So we've had data throughout the year. At ASCO GI, ASCO GU, the big ASCO meeting with other tumor types, you think about liver, at GI, prostate at GU, lung and bladder at ASCO, at the big ASCO meeting, all starting with a 40 milligram dose of cabo, starting dose of cabo with various ICIs or ICI combinations. And seeing, I think, pretty compelling results in terms of response rates and PFS, other readouts. So that dose has already been validated, and I don't think anybody should be overly surprised by what they see here on Friday. It's a good dose. It's the right dose. It's one that we've optimized over the years, and we think was very -- I think the read-through to all the other trials that we're doing right now, 312, 313 and the contacts that are now started should give people confidence that we really have the right dose to maximize chronic, long-term clinical benefit for patients where the combination is active, which is what it's all about, right? So.

Yes. No, that's helpful. That's kind of what I was getting at. Can you talk about the time lines for the kind of supplemental approval and kind of just talk about broadly like readiness capability to get this thing rolling bringing on Russell?

So the filings in, the filing was made in the U.S. and Europe in the August time frame. So we're excited about that. I certainly don't want to speculate on FDA time lines and kind of how they operate. More will be said about the filing per se when it's been accepted, and we can announce that publicly later in the quarter, I'm guessing. The bottom line is that both cabo and nivo are approved first-line agents based upon their existing labels. So we feel good about that, and we've invested early to make sure that we are completely launch ready and trained and have all of our messaging issues, all of our commercial strategies and tactics locked in by the end of August. So that won't be rate limiting to launch. At some point in time get the letter when that comes, it comes. And then we'll be very quick out of the blocks to make sure we can maximize our opportunity to educate physicians, help them understand the data and then bring more benefit to their patients.

And I would say that this is a very good -- superior regimen but potentially Bristol's incentivized to marketplace. That was a...

I think there's a lot of alignment between us and BMS as well as IBSEN and eventually Takeda. To be able to push this forward. We have different businesses, and we have different kind of perspectives on how we'll message this and that's fine. There's not going to be a coordinated single message. We'll do our commercial kind of efforts and focus and messaging and they'll do theirs. And there will certainly be some overlap, obviously. But look, we're going to look at the opportunity here to target this combination to every single frontline, untreated patient possible on a global basis between us and our partners. We think the data is that good. It warrants that level of consideration in terms of what it brings to patients. And I think you'll see that in the data that comes out over the weekend.

Got it. Well, I usually start with the intro question, but here comes the intro question, but I wanted to knock out 9ER little bit. In January, you talked about guidance of $4 million, by I think 2020 -- 2025 was it? 2025? Formidable goal, but definitely, you have a lot going on. So maybe just kind of build up for us kind of the different expansion pipeline opportunities, there are the pieces of which get you to that goal. And is there a potential of that to be conservative? I mean you guys have a lot of different baskets in the basket trial going on but still are kind of -- haven't turned cards over. So I just want to get your perspective on that, especially now that we've got under almost through 2020 from when you put that out there?

Yes. So the -- we wanted to start the year this year. And certainly, the JPMorgan conference was the perfect venue for that to reset how investors looked at Exelixis, right? 2019 was the year when we probably talked about all the questions de jour about 9ER over and over and over again. How are you going to be competitive? How are you going to get survival? The other competitor, they are so good. You're never going to be able to compete, blah, blah, blah. Well, we wanted to go into 2020 with really trying to change the narrative around -- Exelixis is striving to be more than cabo, and we have a lot of talk about there, too. But certainly, cabo, the cabo story is more than just 9ER. And the whole intent of putting an aspirational number on 2025 was to give people a chance to see what does success look like if we're able to achieve our clinical goals with trials that were already literally ongoing, right, between the liver, renal, prostate, lung. What does success actually feel like and look like in a very quantitative fashion. So you call it guidance. I call it more about what is success in that upside scenario where everything works but again, it's a number that we think is realistic if we're successful in meeting our clinical goals. And doing the DCFs on the back of an envelope over the 2020s, if that's the real number, is a pretty compelling opportunity in terms of the kinds of cash flows we can generate? How we can use the opportunity to really deploy capital with cabo, with 092, with the whole kind of broad stroke of new assets and technologies that we're both exploiting and bringing compounds forward with. So it's very exciting. But clearly, we've had a year of, I think, a lot of progress and success even in the middle of pandemics and firestorms and everything else that's been going on in the world over the last 8 months, we've been successful at moving trials forward. We had a very little -- due to the great efforts of our clinical team and all the work that's been going on literally around the clock within development to make sure that we stayed on track. We've made great progress in enrolling trials, we've completed enrollment for the global first-line liver trial, 312, Cosmic 312. We've seen great progress in enrollment in the key cohorts, cohort 6 for CRPC in the one non-small cell lung cancer and making great progress on the single-agent cohorts. But liver is important, lung is important. Prostate, critically important to us based upon all of our history and the activity that we've been able to publish so far this year in terms of what we had at ASCO GI, ASCO GU and then the big Aspen. So I think those are still aspirational goals. It's all based on clinical success. This is a hard business, and we see that kind of broadly every single day, but we're -- I think we're really cranking right now across a range of opportunities with cabo in a relatively narrow range of opportunities with the idea that as we expand beyond cabo into 092 and that full development plan, the opportunity to really broadly profile the white space of either single agent IO, IOIO combinations, IO chemo combinations with layering what we think is a better next-gen. I feel like 092 on top of that, with a 20-year runway in terms of exclusivity is really exciting. So it's all part of a bigger story, a bigger puzzle. And it's one that the whole company is excited to execute on as we go forward.

Yes, it's a big puzzle. Can you talk a little bit about -- I mean I know it comes up sometimes, IP and the filings and level of confidence there?

Yes. So like any other small molecule that's been successful. And that is successful, cabo has -- and the challenges. It's not a big surprise. And certainly, we were expecting this and prepared -- well prepared for years in advance in terms of understanding how these things work. We have a lot of confidence in our data and our -- and the data that supports the issued patents that we have for both composition of matter as well as the Polymorph story. We've got a great legal team in place, both internally and externally in terms of how that is going to be litigated over the next couple of years. And it's on a time line that is I think fairly well legislated in terms of how that will work. And we're going to continue to keep our eye on the ball in terms of running the business, expanding the business driving growth, all those things while we do this extra work on the litigation side. But it's part of the way small molecules get refreshed, and we understand that. We have a lot of confidence in going down to the 2030 LOE for the polymorph. And there's no guarantees in life, obviously, but it's one that we're going to hit very, very hard and be aggressive with how we pursue it and spare no expense to make sure that we can do everything we can to come out on top there.

And can you talk a little bit about more detail of the cosmic time line for some of these particular baskets in there? You named a couple, but just kind of when should we be expecting kind of potential -- what are the core milestones and when might we get some more data?