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

Great. So it's Michael Schmidt, Senior biotech analyst with Guggenheim. It is my great pleasure to welcome the next presenting company, Exelixis. With us today, we have Peter Lamb, Head of R&D or EVP of Scientific Strategy -- I'm sorry, as well as Andrew Peters, SVP of Strategy. Welcome, guys, and thanks for joining us.

Thanks for having us.

All right. So we'll jump right into the Q&A fireside chat. Starting with the commercial question. Obviously, Cabo has been tremendously successful with over $1.4 billion in net sales last year, and you've provided guidance recently for this year of $1.575 billion to $1.675 billion. Maybe, Andrew, could you remind us of the sort of the primary growth drivers for CABOMETYX sales in 2022? And how we should think about that continuing into this?

Yes. No. Happy to get into that. And just as a reminder, we may get into some forward-looking statements today. So please see our relevant disclosures in our SEC filings. So as we think about 2022 and then ahead to 2023, really, there's several factors kind of driving a lot of that growth and success that we've seen. It's really about kind of continued market share gains that we've seen over the past several years, and that's really driven by kind of the strength of the 9ER data. And really that balance of efficacy, tolerability, things like quality of life, which continue to resonate both with patients and physicians. And then as you kind of compare the earlier experiences at cabo monotherapy from the CABOSUN study, to 9ER, it's kind of that longer duration of therapy, that stacking of patients. And so as you look to kind of continued market share gains, as well as that longer duration, it's really kind of driving that. So as we look at '22 and 2023, it's a continuation of those sorts of trends. I'd highlight we have data coming up at the ASCO GU conference highlighting kind of the 44-month experience from 9ER, which we think is going to continue to kind of show that importance of the kind of balanced data set that's really been so -- been so meaningful from a patient perspective and it's really what's driving utilization.

Great. And then obviously, you have a host of label expansion trials ongoing for CABOMETYX. We've seen some data from COSMIC-313 last year, which obviously hit on PFS but missed on overall survival at an interim. Just remind us of the road map here as we think about possible regulatory submissions dependent on, I guess, the final OS analysis.

The 313 study is an exciting study from our perspective and really asked the question of -- really kind of 2 things. What is the addition of API cabo/nivo to the 9ER regimen look like or kind of said another way, what is the addition of cabo to the ipi/nivo regimen look like? And so we're thrilled to have a positive primary endpoint readout of PFS at the plenary presentation at ESMO last year. And at the time of that primary analysis, the overall survival were just immature. So as we had discussions with regulators around that data set, kind of what FDA asked is for a more mature data on overall survival before we kind of make formal regulatory decisions. And so what we've guided is we expect the next interim analysis on overall survival this year. It's event-based. And so obviously, we haven't kind of given specific timing yet. But it's really about as appropriate when that data read out having discussions with regulators to kind of have a more fulsome conversation about the data overall, and really make sure that once we have a good look at what that mature survival data look like.

All right. Sounds good. And then you're obviously also doing the CONTACT-03 study, which is a combination in second-line RCC setting. I think some of us wonder what is the incremental additional opportunity you can capture that study succeeds?

Yes. So I think the way that we think about it is actually somewhat very similar to 9ER and that as you look at that opportunity in kind of the second-line setting, while Cabo is kind of the preferred and #1 agent there. I think we've talked about something around 50% market share. A positive study, we think, has the potential to drive additional market share gains as well as longer duration, presumably from a positive study. The good thing about that, the 03 study from our perspective is comparing against cabo really affords the opportunity to just really entrench cabozantinib as a standard of care in RCC regardless of kind of the outcome there. But certainly, we're enthusiastic about the trial. And as I mentioned before, kind of a positive study should we think likely translate to additional market share gains as well as longer duration to kind of drive that opportunity.

Great. And then as we think about CONTACT-02, which is your study in prostate cancer, we heard this morning a physician panel also, I think a fair amount of enthusiasm around that to potentially come in the pre-chemo setting, just remind us of, I guess, your confidence in potential success here. Maybe I don't know if you've disclosed any of the powering assumptions, for example, and you also have a dual primary end point. Do you have to hit both to file or PFS efficient in a setting.

Yes. So that's another study we're certainly excited about and it's kind of a continuation of some of the encouraging and positive data, strong data that we saw from the COSMIC-021 study. So just as a reminder, COSMIC-021 was a 1,000-plus patient 20-plus cohort, really kind of exploration study looking at the combination of cabozantinib with atezo and one of the cohorts there was kind of in that pre-chemo, but post-NHT castrate-resistant prostate cancer segment. And so the data we saw from that study is really kind of what drove our confidence to start contact. And so it's really about kind of that unmet need for patients and kind of the encouraging signals that we saw from 021. So we've talked about that study is continuing to enroll, and we're expecting -- we're looking forward to the readout there.

And do you have to hit OS thing? Or is PFS sufficient to file?

Yes. So we'll see when data are available and have those appropriate conversations with regulators.

All right. And then obviously, a lot of us paying attention to the ongoing patent litigation, which is a big swing factor potentially for CABOMETYX life cycle duration. We've seen an outcome recently from the May bench trial, I guess -- and so obviously that's the Wave 2 trial coming up later this year as well with MSN. Just thinking were there any opinion -- notable opinions coming out of the judgment, the judge's decision out of the first trial? And how confident are you on the back of that decision as you head into sort of the Wave 2 trial?

Yes. So just to kind of orient the audience and those listening online, kind of the way that we've discuss the ongoing litigation with MSN is kind of MSN1. That was the trial you referred the cases that you referred to that went to trial in May and then MSN is scheduled to go to trial this October. So kind of more factually, the patents at issue in MSN1 around kind of the core composition of matter for cabozantinib and then the M2 polymorph patent as well. And so what the outcome of MSN1 was upheld the validity of the composition patent while the MSN polymorph that they created was found not to infringe on kind of the M2 polymorph. So I think in general, that outcome was reasonably expected. Just given a lot of commentary coming from the judge in that case kind of prior to the decision. But really from our perspective, what it does is it shows that all of the Cabozantin intellectual property has been validated. And I think that's a big part that as we look ahead to MSN2, we'd point to as something that we're really encouraged by. But we continue to vigorously defend our intellectual property position around cabozantinib and it's something that's obviously, we're going to continue to focus on this year.

Great. And then maybe switching over to talk about some of the pipeline agents in development, starting with Exelon [indiscernible] where you recently announced initiation of your second Phase III study in non-clear cell RCC. And just as we step back, just remind us of the overall strategy for the drug as it relates to balancing perhaps new indications versus in the cases where CABOMETYX is already on the market.

Yes. So maybe I'll start and then Peter can add to that as well. So as we think about zanzalintinib, XL092 it was really about kind of understanding what the best parts of cabo were from a kinase inhibition profile and seeing if we can improve upon 1 of its known liabilities, primarily the short half-life. So as we thought about that kind of as a first step in the process, we could look to, okay, what are the opportunities from a development perspective where cabo has clear efficacy signals, but we haven't yet developed there for a various number of reasons. So it's kind of looking at both what are the white space opportunities where cabo like compound could have a benefit for patients, but also looking at where can we improve upon existing opportunities to kind of further right shift the standard of care for patients because ultimately, that's kind of the business we're in. So as you look at kind of the first 2 studies -- pivotal studies that we've announced for zanza. It's really been about taking some of the learnings from cabo and then applying it to zanza. So in the colorectal cancer side, it's really looking at some of the combination data that's come out over the last several years in that space in kind of informing a trial design there. And then similarly, in the non-clear cell RCC. So Peter, you want to kind of...

Yes, absolutely. I mean when we started the program to develop zanza originally, we were sitting on a mountain of cabozantinib clinical data I think a better understanding of the biology of some of the key targets of cabozantinib. So the aim was really to keep the target profile the same. We really weren't looking to deviate at all because, in our view, that was really the secret sauce of cabozantinib and the broad efficacy that it's shown both as a single agent and in combination with immune checkpoint inhibitors in as Andrew commented, the idea was to tune the PK profile. And from the data that we presented on zanza last year, you can see it came out around 20 hours. So happily that goal was fulfilled. It really doesn't accumulate that much. which, again, we really think is going to play into easier adverse event management for physicians and patients. So we think the opportunity there basically is it's going to be easier to keep patients on zanza potentially than cabozantinib. So we think that's one potential advantage. And then again, in terms of where we're going, places where we haven't developed cabozantinib yet. I mean in the indications where Cabos always approved, it's then going to be novel combinations. So you can see obviously in the kind of [ STEROE-102 ] studies, we're starting to bring in new combination partners such as the LAG-3 antibody from BMS.

Yes. And I guess when you think about this concept of perhaps achieving higher exposures over time with 092 relative to cabo I guess, what degree of efficacy improvement might 1 predict, I guess, based on that profile.

I'd be worried to actually give you a prediction. I mean that's an experiment. It's going to depend very much, I think, on -- it's going to vary probably by tumor type, for example. So look, that's a clinical experiment that essentially we're intending to do.