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

Good afternoon, and thanks, everyone, for joining us. My name is Matt Miksic from Credit Suisse. I'm very pleased to have with us today Exelixis, Chris Senner, Executive Vice President and CFO. Chris is going to go through a series of slides he's prepared. So I'm going to pass it over to you, Chris.

Thanks, Matt. Thanks for the introduction there. While we get the slides up here, hopefully, we can see them. Matt, you can see the slide?

Yes, I can.

Okay. Perfect. All right. So thank you, everybody. I'm Chris Senner, I'm the CFO here at Exelixis. And as Matt said, I'll take you through a series of slides to talk about the company, the recent financial results and also to some degree, the pipeline of the company. Before we get started, just talk about the forward-looking statements. During this presentation, I'll be making forward-looking statements. And as such, there's risk involved. And you should refer to our SEC filings that we do from time to time to see a full listing of the risk factors in our business. So starting out, as we talked about last week during our earnings call, we had strong commercial performance for -- in the first 3 quarters of the year. We're looking at generating more than $1 billion of cabozantinib global net revenue annually. We saw a 63% growth year-over-year when you think about Q3 '21 versus Q3 of last year for CABOMETYX. We continue to see strong commercial demand for both -- for the CABOMETYX/nivolumab combination across all segments of the first-line RCC market. We did see NRx, which is new prescription growth, around 8% in the third quarter; and TRx, which is total prescriptions around 7% growth when you compare Q3 versus Q2. And this is in the face of increased competition with new entrants with the pem/len combination launch in 3Q. We continue to be well positioned for exiting 2022 at a $1.5 billion run rate -- revenue run rate for RCC in the U.S. And in the third quarter, we also got -- received approval for CABOMETYX in second-line differentiated thyroid cancer, well ahead of the December PDUFA date. We continue to build out our pipeline, clinical development. So we're creating a robust multiproduct company. We're progressing again -- across late-stage both COSMIC trials, which is COSMIC-313, particularly, and the CONTACT trials evaluating cabozantinib with immune checkpoint inhibitor combinations. COSMIC-312 abstract will be presented at ESMO Asia a little later this month. In early-stage clinical trials, we have updates for XL092, XL102, XB002 are expected in 2022. And we continue to make progress across our small molecule and biologics pipeline. We recently announced that the XL114 IND became active, and we've expanded our collaboration with Invenra, which is a third expansion with that collaboration; and then a recent collaboration with STORM Therapeutics, which we signed in October of this year. We have several collaborations ongoing. We have commercial partnerships with Ipsen and Takeda, primarily, and that's related to our cabozantinib franchise. Ipsen has ex U.S., ex Japan rights and Takeda has Japan rights. From a clinical collaborations perspective, we're clinical collaborators with Roche, Bristol-Myers and Merck and the NCI related to either cabozantinib or XL092. And then from a pipeline perspective, we're continuing to license in technology from several collaborators here and most recently, as I mentioned, was STORM Therapeutics. From a P&L perspective, from a year-over-year, we saw a 42% growth in total revenues, which was primarily driven by the growth of our net product revenue from around $168 million last year from a net product revenue perspective to $263 million this year in Q3. And then our R&D expenses continue to grow. Last year, they were slightly higher. We did have onetime licensing or upfront milestone fees for 2 collaborations with Catalent and NBE in the third quarter, but we continue to invest in the pipeline. And then from an income perspective, last year, we did have a net loss for the quarter, which was our first net loss in several years. That was related to the upfront fees we took through the P&L versus this year, we had continued profitability, and we have positive EPS. Our cash position has grown over the last year from a little over $1.5 billion to almost $1.8 billion when you look at it at the end of the third quarter 2021. Our current guidance, looking at total revenues this year between $1.3 billion and $1.35 billion, and that's really driven by our net product revenue of $1.05 billion to $1.1 billion. That's up considerably if you compare to where we ended last year around $742 million. And then from an R&D expense perspective, we continue -- like I mentioned, we continue to invest in our R&D pipeline, and our R&D expenses are continuing to grow. And we're currently projecting that we'll end the year with approximately $1.8 billion of cash as we exit this year. Then CABOMETYX. Let's talk about CABOMETYX a little bit here in the third quarter. It continues to be the #1 prescribed TKI in the RCC market. In Q3, I talked about the NRx and TRx growth, but just to mention that again, 8% NRx growth, 7% TRx growth primarily driven by the growth of the cabo/nivo first-line RCC indication. We did talk about that the uptake is broad across patient risk groups and practice settings. Our second-line monotherapy share remained stable in Q3. And then we -- I talked about this, we did launch the differentiated thyroid cancer indication in September. But I guess in conclusion here, right, is -- we continue to see strong NRx growth and TRx growth despite new competitive entrants. This is a picture here of both our market share and on the right-hand side, our TRx volume trends. So from a market share perspective, we continue to increase our market share in the TRx -- RCC, TKI, TRx market. You can see here starting in Q1, we were around 30% market share, exiting Q3 at a 34% market share. And on the right side there, you can see in the box, CABOMETYX grew, as I mentioned previously, 7% from a TRx perspective in a relatively flat market when you look at it Q3 versus Q2 this year. CABOMETYX is continued to poise for growth. On the left side here, you can see that we have essentially 5 indications for CABOMETYX starting with back in -- the approval back in 2016 for second-line RCC. And since then, we've added 4 additional indications. And then on the right-hand side here, you can see the indications we continue to work on from a COSMIC-312 perspective as first-line HCC. COSMIC-313 in combination -- triple combination with cabo, nivo and ipi. And then the CONTACT studies, CONTACT-01, which is in non-small cell lung cancer; CONTACT-02, which is in prostate cancer; and CONTACT-03 is in RCC, post previous IO. And then from a pipeline perspective, where we are from a status perspective, the next milestones for COSMIC-312 will be -- as I mentioned, we'll be presenting at ESMO Asia and then file a sNDA following the final OS analysis in early 2022. COSMIC-313, we're looking to get the -- expect -- event-driven analysis expected in the first half of 2022 based on the current event rates, COSMIC-021, file an sNDA for cohort 6 post the COSMIC-02 (sic) [ COSMIC 021 ] trial. And then as we mentioned the other day, our global enrollment completed for CONTACT-01, and we don't really have -- we don't have the timing yet for a readout there; and then CONTACT-02 and CONTACT-03 are actively enrolling, and the next milestone is complete study enrollment. And then from a pipeline perspective, XL092 is our next-generation TKI with a shorter half-life than our current CABOMETYX or cabozantinib. We've added XL102 and XL114 from our Aurigene collaboration. XL102 is an orally bioavailable CDK7 inhibitor. XL114 is targeting the [ MALT ] pathway. And then we have XB002, which is a tissue factor targeting ADC, which is currently in Phase I. And then here, you can see the other collaborations we have. We have several other opportunities with Aurigene, working in CK1 alpha and activators with StemSynergy. STORM, we have ADAR1. And then we have an additional potential target with STORM, which hasn't been selected yet. And then we have XL -- internal discovery. We restarted in earnest our Exelixis discovery efforts back in 2018, and we're continuing to work through our own labs and also adding biologic programs into the mix. So we've enhanced our capabilities here at the Alameda campus. We opened up -- recently opened up a new lab building, which doubles our capacity here, and we're going to continue to -- we have a strong history in small molecule discovery, and we're continuing with that, but we're going to also continue to add capabilities around biologics. As I talked about, XL114, we exercised our option that we brought that in through a collaboration with Aurigene. We exercised our option in October for that compound. We expanded our collaboration with Invenra up to 20 targets and additional -- advancing additional activities across other ADC partners. So in summary, here, we have strong revenue growth driven by CABOMETYX label expansion. We have progress across ongoing late-stage CABOMETYX pivotal trials, be it 312, 313 or the CONTACT-01, 02 and 03. We have a diverse and rapidly maturing clinical pipeline with XL092, 102, XB002 and XL114, and the potential for multiple growth drivers in 2022. And we will continue our ongoing business development activities, which we've been very active this year and last year, and we'll continue those to supplement our internal efforts. So that is the conclusion of our presentation today. So thank you very much for your time.