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

All right. Welcome, everyone. It's Josh Schimmer from the Evercore ISI biotech team. Pleased to introduce from Exelixis we have Chris Senner, Chief Financial Officer; and Andrew Peters, Senior Vice President of Strategies. Gentlemen, welcome, thanks for joining.

Cabo just keeps growing. It's now north of annualizing north of $1 billion. Maybe talk to us a little bit about the primary growth drivers and how sustainable those growth drivers are? And then we'll get into some of the newer emerging growth drivers.

All right. Josh, thanks for having us here, and thanks for the invitation to the conference. Before I get started, just a couple of comments around risk factors and forward-looking statements. So we'll be making forward-looking statements during the course of this fireside chat, and we refer you to our SEC filings for a full listing of the risks associated with our business. So going back to your question, from a cabo perspective, we've seen significant growth this year. As you mentioned, we're trending, if you think about the bottom end of our guidance, just around -- just over $1 billion, $1.5 billion. We've done around $775 million so far this year. And so that would suggest growth as you go into Q4. From a prescription perspective, we've seen TRx growth every quarter, and we've seen around 35% prescription growth in the first 9-months of the year as -- through Q3. And then from a new prescription growth, we've been -- we've seen around the 37% growth year-to-date over the first 9-months. Most of that is driven from the approval of 9ER, which happened at the beginning of this year. And that's the combination of cabozantinib and nivolumab and that's really driven the growth this year. We've seen steady second-line share as the first-line indication has launched -- the combination first-line indication has launched, we've seen our second line share stay relatively steady. We're seeing utilization in a broad spectrum of patients and also in both the academic setting and the community setting. So overall, it's been a great launch so far, and we're excited for the continuation of growth here. As we've talked about for the last several quarters, we're looking to end 2022 with about a $1.5 billion run rate from RCC perspective. So that would suggest continued growth next quarter and throughout next year to get to that target.

What inning are we in for the 9ER data driving that first-line adoption because you said you've got some more room to run, how much more room there?

Yes. I mean I think from an innings perspective, I think we're still in the early innings here. We still think there's a lot of growth. I mean if you think about the difference between first-line RCC in single agent versus combination therapy, if you think about cabo versus cabo/nivo, you have a doubling of PFS. So you have this longer tail of patients that will stack on top of one another as we go through the rest of this year and into next year. So that's going to be 1 of the bigger driver. Besides market share, it's going to -- 1 of the other drivers is really around the stacking of patients as we go through 2022.

Right. Do you have market share estimates in the first line?

Right now -- through Q3, in Q3, we're around 34% market share overall, but we haven't talked about specific first-line market share.

Okay. I think you've started a DTC campaign for capital. How long does DTC work in oncology? And what are you expecting to get out of that?

Yes, Josh. So from -- so from a differentiated thyroid cancer perspective, we got the approval early in September. It was about 2 months early. So we're excited about that. It's a smaller indication than RCC, but it's an indication that's important to patients. And as we talked about during JPMorgan 2020, the opportunity there is in the $100 million to $200 million range, not as big as cabo and RCC, but still important to patients and also important from a revenue perspective.

Got it. Sorry. And thought I had seen [indiscernible] I thought why did I think I had seen a direct-to-consumer campaign, but I might have been just [indiscernible] for thyroid cancer. All right, my bad.

Yes, it's differentiate thyroid cancer. So yes, -- That's what we talked about during the second quarter call, and we did launch that in September.

[indiscernible] for the record. Most 312. I think you had a recent data presentation from that. How is this positioning cabo now and HCC?

Yes. So we were excited to share the data a couple of weeks ago at the ESMO Asia conference, and it really kind of highlighted the strong PFS that the combination of cabo and atezo was really able to show. The presentation kind of went into a lot of more detail beyond the top line press release from earlier this year to kind of help frame the totality of the data and put in context our comment on the last earnings call around plans to file the NDA once the final survival analysis comes out. So a couple of things kind of to keep in mind relative to that data, again, as I mentioned, really strong PFS came through. But one of the other things that kind of came through and was talked about during the presentation as well as the discussion in Q&A is kind of potentially differences in baseline characteristics among the patients, the split of HBV versus HCC and non-viral -- HCV and non-viral HCC kind of potentially impacting how the relative benefit on survival in particular. If you contrast that with other pivotal studies in frontline HCC, kind of that HBV versus HCV versus non-viral split can certainly have an impact, not only on kind of the active arm, but on the sorafenib arm as well. And so the presentation at ESMO Asia kind of really got into it. The other thing to kind of keep in mind with that data set is really to put it in perspective and understand what are the standards of care right now in frontline HCC? And what is the unmet need and what is the opportunity? And really what's kind of come through to us, not only in that presentation, but in kind of discussions with thought leaders in this space is there's still quite a significant unmet need even with the IMbrave the atezo/bev combination moving to kind of a new standard of care. And really, what it is, is there are a lot of patients, patients with baseline things like esophageal varices that bleeding risk makes it difficult for them to kind of tolerate that combination. And so that's an area that we think kind of the cabo combination could certainly play a role. So we are excited to share the data. And as we said on the last call, we're planning to file the NDA once the final survival analysis comes through.

And is this kind of the next major growth driver after 9ER? And to what extent does this kind of drive the top line?

Yes. So one of the things that we did, going back all the way to JPMorgan 2020 is we kind of outlined what does success look like for the cabo franchise. And we listed and essentially kind of laid out our assumptions and did the math for folks as to really what does success look like? What are all the potential drivers? There obviously the RCC opportunity we have data from the 313 study, that's the triplet of cabo plus ipi plus nivo expected to read out in the first part of next year. as well as HCC and then the CONTACT studies running a second-line lung, post-NHT, [indiscernible] resistant prostate cancer and then a late-line RCC study as well. And so those are kind of collectively along with everything that Chris highlighted around kind of continued momentum on the 9ER launch. That's kind of how we view the next drivers of cabo going forward.

And what are the time lines for the CONTACT trials? And what comes after that? Those are potentially some -- in theory, some of your biggest market indications, yes?

Yes. So we recently announced the completion of enrollment of CONTACT-01. That's the second line on small cell lung cancer study, the post-ICI population. And so that's one that we're excited about. Clearly, as the standard of care has shifted to kind of checkpoint inhibitors in the frontline with or without chemo, it really kind of leaves a pretty significant unmet need and big question as to kind of what's next for those patients once they -- once they progress. And so that's one that we're certainly looking forward to kind of seeing the data from. Again, it's an event rate study so that's going to drive the timing. We haven't been specific in terms of when that's going to happen, but certainly are happy kind of with the enrollment going as well as it did and waiting to see that data, certainly.

And just remind us the design of that trial.

That's cabo/atezo versus docetaxel.

Okay. You just got China rights to cabo?

So back in 2016, when we had -- back in 2015 when we got the METEOR data, we realized that our ability to put capital towards launching in the U.S. and ex-U.S. we wanted to put all the capital to launching in the U.S. So we out licensed ex-U.S. rights to Ipsen and then Takeda for Japan. So Ipsen has everything besides the U.S. and Japan. So Ipsen has those rights. And they have a pretty large organization in China historically. And so they're looking forward to potentially launching in China.

Do we have time lines for that? I mean this could be a very big drug in that territory?

Yes. I'm not aware of Ipsen's current time lines, but it's probably a better question for them.

Sure. You got a lot in the pipeline now and a growing pipeline. I might follow your lead and where should we focus?

Yes. So I mean one of the things that we're certainly excited about internally and hope that investors and stakeholders kind of share our enthusiasm is around XL092 and the rest of the pipeline in general, which I'll get to. But XL092, really kind of the goal of that program when our restarted kind of discovery and research organization went around -- went about designing it is really to phenocopy the kinase inhibition profile of cabo, but improve the half-life. So cabo's half-life is around 99 hours. 092 significantly shortened that to around 24 hours. And so what potential advantages does it have? Why are we doing it? The shorter half-life has the potential to improve the combinability, potential combinability, improve the potential tolerability and really let us expand kind of the opportunity set of what is a TKI with a kinase inhibition like cabo? Where does it have efficacy that we haven't gone into so far? So really, it's an opportunity about looking at kind of the greenfield, the green space, places where a drug like cabo could have activity, but we haven't developed it so far. So the way we've talked about 092 is really thinking big. We announced plans to start a pivotal study from that program next year. We haven't yet said what the indication is. But what we have kind of talked about is it's going to be 1 of many, several waves of trials because what we've seen with cabo not only across the 312 or 9ER the even the DTC is kind of the breadth of opportunities that cabo or cabo-like molecule could have. So we've talked about fast-to-market opportunities kind of extensions around areas or indications where cabo has activity already something like neoadjuvant RCC or other kind of RCC indications and then areas where cabo hasn't been before, but potentially could. So that's certainly a program that we're quite excited about. We've talked about data from that program being presented next year to kind of help investors and patients and physicians kind of get a better understanding of that program as well. Moving to the rest of our pipeline, another one that I think we're quite excited about is XB002, that's the tissue factor targeting ADC that we in-licensed from Iconic. And so it's kind of the first clinical program from our entry into the biologics space. But this is an area, in particular, that we're quite excited about and we think really kind of fits within the -- really the key and core expertise of Exelixis. And if you think about ADCs in general, what we've been able to do is through a series of collaborations and partnerships work with kind of options on the antibody side options on the linker and payload side. And so we have a suite of technologies that allows us to kind of mix and match targets of interest to really find and optimize kind of those programs. But coming back to XB002, that's 1 that we think is certainly a validated target through the C-GEN Genmab program but also 1 where we think we have a potentially better compound based not only on the antibody side, where it's noncompetitive Factor VII. But on the linker warhead side, we think certainly can for some advantages. Well, we've talked about data from that program coming out next year as well. And then rounding it out in terms of data that we've guided to next year, XL102, that's our CDK7 inhibitor, that's another target that we're quite excited about. And one -- Phase I studies are ongoing. And again, as I mentioned, we're expecting data next year.

Got it. There's also -- there's a lot of buzz about ADAR -- It is interesting to see Exelixis get into the ADAR game, but from an oncology perspective. What's the thinking there?

Yes. So ADAR is quite an exciting target for us. It's one that we've been quite interested in. And a lot of the early research on the target has suggested that things like depletion of ADAR sensitizes tumor cells to checkpoint inhibition. And so it's 1 of those targets that I think historically has been relatively challenging to hit. But working with Storm Therapeutics, I think we think that they've really found a way to kind of come in and develop first-in-class, best-in-class targets or molecules to kind of hit that. So it's 1 we're really excited about. The science is really interesting going back to our last earnings call, Peter Lamb, our CSO, kind of did a great job kind of framing that above and beyond even anything I could get into, but it's a target that we're excited about and working with the folks at Storm. We think the combination of their acid development has really kind of enabled them to hit the target in ways that we hadn't thought we'd been able to do before.

And then just to come back to 092, and how you're thinking about that one. It sounds like kind of working around cabo. So if cabo is approved in a second-line indication, you might consider going into a first-line indication or if it's approved in first line, you might go into neoadjuvant, but also it sounds like you got your sights set on some indications where cabo has not been either evaluated or approved? Is that right? Then you can flush that in a little bit?

Yes. So I guess, kind of taking a step back, so the 092 program is really taking the learnings from the 2 Phase I studies that we're running STELLAR-001 and STELLAR-002, which is evaluating 092 as well as 092 in combination with kind of a whole host of other programs, whether it's avelumab, atezolizumab, nivo, BEMPEG kind of really looking at quite a broad suite of combinations. But it's also taking the learnings from the 10-plus years of cabo development and looking at the 20-plus tumor types where cabo has shown real resist responses and saying, "Okay, what is the program with a kinase inhibition profile like cabo with a potentially improved combinability profile or tolerability profile that is driven by the shorter half-life, where could that have utility, where could that have activity." And so it's kind of taking a combination of all of those different data points, not only from the 092 studies that are ongoing. But everything that we've learned historically about cabo and kind of the VEGF, MET, AXL, MER combination -- inhibition to really kind of drive that opportunity set. As I mentioned before, it's really about kind of thinking big using kind of the -- our financial position right now. We're profitable using the success that we've had on the cabo franchise to really invest in what's next. And so that's kind of how we think about the program.

Got it. And maybe to close on cabo come back to commercial. If we kind of created a pie chart of cobo revenue broken down by the different tumor types and indications. So like what percent would you estimate coming from the different tumor types today? And what do you think that's going to be in like, say, 2025 because you'll have some new slices to that pipeline.

Yes. So Josh, I guess the best way to look at it is going back to JPMorgan 2020 when we -- Andrew talked about earlier, we laid out the math for everybody around what are the potentials that with success, what would -- and approvals, what would success look like. And so I think we -- at that point in time, we've said 2025 would be in the $4 billion range, if you looked at all the indications, which are RCC, HCC, lung, prostate and DTC. And I think much of that revenue comes from RCC, particularly now, but potentially a good amount of revenue coming in both lung and prostate in the future if those get approved. So I think it's a good slice to the growth by. If you look beyond '22 and '23 is around lung and prostate.

Got it. All right. Well, still lots to come from Exelixis and a little molecule that keeps giving very [indiscernible]. Thank you so much for taking the time to join, and thanks, everyone, for tuning in. Happy holidays.

All right. Thanks, Josh.

Thanks, Josh.