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

Okay. Great. Maybe we'll go ahead and get started here. Thanks, everybody, for joining us or tuning in here at Piper Sandler's Annual Healthcare Conference. I'm Joe Catanzaro, one of the Piper's biotech analyst. It's my pleasure to kick off this section with Exelixis. Joining us is their SVP of Strategy, Andrew Peters. Andrew, thanks so much for joining us.

Maybe we could just sort of jump right into questions here and start off with a high level one. I know there's been a lot of recent effort at Exelixis around sort of building up the pipeline and diversifying away from cabo. So maybe you could speak to the overall strategy for the pipeline, what you see as the most capital efficient way to bring those assets into the clinic and establish proof of concept, and then maybe we could sort of tick through some assets along way.

Yes, happy to get into that, and thanks for the invite to speak with everyone today. So before I get into that, just as a reminder, I'm going to be making forward-looking statements today. So please see relevant disclosures in our SEC filings. So at Exelixis, we've talked about this a lot. But really, our top priority as a company is to develop what we think are clinically and commercially differentiated oncology assets in large market tumor types, where we can really be a part of shifting the standard of care in driving kind of differentiated data to really help patients live longer, better lives. So that's kind of our core mission and really is kind of our underarching strategy here at Exelixis. So as part of that, we like to say we view through -- everything through the cabo lens in terms of understanding kind of how we're going to generate that data in the case of cabo. It's learning from prior generations of VEGF-targeting TKIs, bringing in and highlighting the importance of some of the other kinases, like MET, AXL, MER, kind of the TAM kinases. And then with zanza, which I'm sure we'll talk about later, kind of further iterating on that. So it's that strategy to bring to market, commercially and clinically differentiated assets, kind of been using that, that lens and that insight into how exactly we're going to drive the standard of care, whether that's in combination, whether that's in novel mechanisms, novel modalities to really kind of shift that standard. In terms of kind of the capital efficiency, what I can highlight is, historically, Exelixis has been very focused and thoughtful about that dynamic. If you look at the development history of cabo with 14-plus pivotal studies that we've run, we've been very efficient there in terms of how we've partnered, collaborated with folks like Ipsen and Bristol and Roche to help offset some of those costs and ultimately ask the right clinical questions to drive data, which ultimately is what has made cabozantinib so successful commercially. It's -- that's kind of the core focus and the core strategy. I'm sure I'll mention this a lot today, but certainly I want to highlight that we're going to be having in an R&D Day, December 12, where we're going to talk at a pretty extensive detail about a lot of this. But again, kind of that core strategy is really to develop molecules that are going to drive differentiated data. And ultimately, that's what makes things successful commercially.

Maybe since you mentioned the upcoming in R&D Day in a couple of weeks, I guess, what do you hope the take-home message there to be? Is it more high level around sort of the pipeline strategy? Or are there asset specific messages that could be important there?

Yes. I think kind of any and everything about both of those dynamics. What we talked about to kind of level set expectations on the last earnings call is really the R&D Day, which is going to be the first that we've done in quite some time, is really to talk about the science and strategy behind Exelixis now. Earlier this year, we've talked about cabo being kind of the gas that fuels the Exelixis engine going forward. So the R&D Day is going to be a chance to really talk about what those assets in particular are. We've talked at length about zanza just presented some compelling data at the IKCS Conference, talked about XB002, our tissue factor franchise -- our tissue factor ADC. But beyond that, it's going to be an opportunity to really, again, talk about some of these earlier stage programs that we do think have the potential to drive that differentiating efficacy data in tumor types that are commercially important and commercially relevant because I think that's something that's often overlooked. And we've talked about quite extensively actually is -- me-too programs with kind of undifferentiated data have not been successful commercially. And then the flip side of that is compelling data and unfortunately, smaller populations have also struggled commercially as well. So that's kind of something that we keep in mind from a portfolio perspective that we want to make sure we really have the ability to drive the differentiating data in commercially relevant population.

So maybe one last question on sort of strategy and the portfolio before we dive into some specific programs. Obviously, you guys have done a lot of work in filling in the pipeline. Do you think you're now at a point where the pipeline has been right-sized for the cabo revenue base? Or is there still some more work to do?

Yes. Again, and not to kind of be a broken record about this, but it really kind of underscores the philosophy we have at Exelixis is it's really about not the number of assets in a portfolio, but really the quality of those assets and the ability for those assets to drive differentiating data that are ultimately going to change with the standard of care for patients. And so we don't necessarily think about it quantitatively in terms of the number of assets. It's about qualitatively are these the right assets. So are we going to be able to generate data to make that go/no-go decision. Because if the data are good, we're going to continue to develop it. And I think our history has shown that if the data don't meet expectations, we're certainly willing and have a history of kind of killing things quickly as well. So it's about that idea of constantly refreshing the portfolio with assets that we think can generate differentiating data.

So maybe with that, we can move to specific programs and actually just start with a few on cabo. I guess maybe first one as we look into 2024, what do you guys see as some key potential levers that you could continue to pull to drive growth within specifically the first-line RCC market?

Yes, kind of without getting into kind of 2024 guidance, stay tuned there. What I'd certainly say is a lot of the things that PJ, our Head of Commercial, talked about on the last earnings call are certainly all relevant. Since we launched the 9ER regimen, the combination of cabo/nivo and frontline RCC, more about a doubling of revenue from the cabo monotherapy. And that's really been driven by kind of 2 main things: market therapy -- market share increases and duration of therapy. And so we're still seeing, again, as PJ mentioned, underlying demand remains strong for cabo/nivo. It's the #1 I-O/TKI in frontline RCC, certainly driven by what we think were very strong data from the 44-month update at the ASCO GU Conference earlier this year, which just continue to underscore that totality of data, that balance of data that's been so successful for physicians and patients, not only on the efficacy side, but the tolerability side and importantly, things like quality of life, which really matter to patients. And so those are the dynamics that are going to continue to change. Long term, obviously, with cabo, the opportunities from CONTACT-02 in prostate cancer as well as CABINET in pNET and epNET are certainly important dynamics to consider. But those are kind of broadly speaking, some of the main drivers.

Yes. So that's perfect because I had a couple of questions on CABINET and CONTACT-02. And maybe first with CABINET, that's sort of a two-parter. How do we think about the potential leg up that opportunity could potentially provide for cabo? And I think you guys have spoken about there's a discussion that needs to be had between yourselves and the FDA once you get this data set in-house, what are some of those questions that need to be answered before you could decide whether CABINET could actually support a regulatory filing?

Yes. So PJ and Amy will get into a lot of this in much more detail at the R&D Day, but a bunch of different factors kind of to keep in mind here. So -- as we talked about on the earnings call, one of the important next steps is really to get that data in-house at Exelixis. Obviously, CABINET was a cooperative group run study. And certainly, we have experienced translating those cooperative group studies into commercial opportunities, mainly the CABOSUN study in frontline RCC is cabo monotherapy was a cooperative group study. So we have that history, that experience to understand what needs to be done, how to do it, how to kind of translate that data into a package to then have discussions with regulators. What's clear in the net opportunity pNET and epNET is really kind of the patient population truly has an unmet need in this -- in this area. And the data that were presented at ESMO, sorry, certainly are compelling in our perspective, and we're certainly very well received and just show that this is an opportunity for a well-known, well-established drug, like cabo, to further drive standard of care and help patients.

Maybe one quick follow-up on that. I've always heard that getting data from cooperative group studies in-house can sometimes be a very burdensome and timely process. Any sense of expectations of when you could have that in-house and have that discussion with FDA?

Yes. So a little bit too early to kind of give specifics on time lines there. But again, I'd highlight we have a history in doing exactly that. So certainly, when we designed CABINET, a lot of the learnings from the CABOSUN experience kind of played into that. And so it's something that we think we have a pretty good handle on, and we want to make sure that we're moving as fast as possible to help bring this therapy to patients.

So maybe last one on cabo. You mentioned CONTACT-02. We've obviously seen some top line data there, but await mature OS data, any expectations of timing around that? And then similarly, I think you guys have said like once OS matures, there's maybe a conversation that needs to be had with the FDA to discuss a couple of key topics. What were some of those key topics be if there is, in fact, an OS benefit that's demonstrated?

Yes. I mean, as we talked about on the last call, following discussion with regulators, we're going to wait to see a little bit more mature data on overall survival before we make the decision whether or not to submit. Certainly, overall survival is important, but PFS benefit in this patient population with high unmet need is certainly highly important as well. Again, as we've talked about before, waiting for that more mature data, I think, Amy had said sometime next year, in terms of that survival readout. And then just other things to keep in mind about the study. This is a slightly different and an important patient population with a high unmet need. So CONTACT-02 enrolled specifically patients with baseline visceral mets as well as [ extrarenal ] adenopathies, which is really a high unmet need group that tend to have kind of worse performance. And importantly, allowed us as a company to really ask a pretty thoughtful experiment, clear experiment does the combination of a TKI and a checkpoint inhibitor have real clinical RECIST responses as opposed to kind of some complicating factors around what is PSA doing and bone scan. All of those complications were kind of mitigated by the design of CONTACT-02. So certainly important to keep that in mind.

All right. Maybe last one on cabo around the sort of ongoing patent litigation. Anything you could say or provide there, I guess, mainly in terms of next expected disclosure from the second MSN trial that just sort of wrapped up?

Yes. So as a reminder for the audience, just had at the end of October, MSN2, it's our second patent case and the case with a generic company called MSN, trial concluded and really can't give specifics on time lines as it really is ultimately up to the judge. So I don't want you to get ahead of that there. But certainly confident and pleased with how kind of the events and all of the topics that issue came out of trial. So kind of stay tuned there.

Great. Maybe with that, in the next 10 minutes, we can sort of tick through the pipeline to some degree and start with zanza. You mentioned you guys recently just presented some data from the CCRC, the cohort at the kidney meeting. Maybe just sort of speak to what you now know about zanza and ultimately, how it's comparing to the early days of cabo?

Yes. So as a reminder, and kind of tie back into something I mentioned earlier. So really kind of the goal of zanza was to further iterate and create a next-gen version of a VEGF targeting TKIs. In the way that cabo iterated and improved upon earlier generation VEGF TKIs, zanza does the same thing. So it's well known that one of the biggest liabilities, so to speak, for cabo is its long half-life, about 4-day half-life. And the clinical and practical challenges of that in terms of [ accumulation ] where that washout period once adverse events ultimately do pop up can be 10 days to 2 weeks. And that's a challenge both for patients as well as clinicians when they're kind of managing through that. So what zanza does is phenocopy the kinase inhibition profile of cabozantinib, but engineered in a metabolic liability that takes that 4-day half-life and down to a little under 24 hours. And so there are numerous, we think, potential advantages there, one, just in the user friendliness of potential combinations. So going forward, we're certainly going to be interested in novel doublets, novel triplets in zanza. But there are also some potential implications around things like tissue distribution and things like that, which could ultimately play a role in tolerability and efficacy as well. So the data we presented recently at the IKCS conference was really that first data set from a kind of mature homogenous cohort of clear cell RCC patients kind of in that second line plus. And certainly, the data that we saw there were especially encouraged by and really kind of underscore our enthusiasm for our aspirations for zanza, the breadth of development and what it can be. Most notably, we saw around a near 40% response rate. But if you break that down into cabo naive and cabo experienced patients, we saw about a 60% response rate in cabo naive patients. And we actually still saw some pretty good responses in cabo experienced patients. And so both of those dynamics are certainly important. On the tolerability side, certainly encouraged by both the frequency and severity of adverse events and certainly play into our excitement and enthusiasm for developing it broadly. As I said, our aspirations for Zanza are about what are the cabo sensitive or cabo-like TKI sensitive tumor types, where novel combinations can be effective, different lines of therapy as well. So those are the sorts of dynamics that we think about zanza going forward.

So you mentioned the data specifically within the subset of the post cabo RCC patients. When I looked at that and then looked at some recent data from the HIF inhibitor from Merck in a later line RCC population versus everolimus, I started wondering whether there's actually an opportunity here for zanza within a post-cabo later line RCC as a monotherapy given that 30-plus percent response rate that you're seeing?

Yes. So again, kind of -- we've already announced now 3 pivotal studies with zanza first in late-line colorectal, non-clear cell RCC and then head and neck cancer. And we've talked about our goal and our desire to initiate additional pivotal studies. So I don't want to get ahead of kind of where and when those are going to be. But certainly, we know RCC is a sensitive tumor type for cabo and zanza. And so the question really is kind of that balance of how and where can we generate that differentiating data, what are those commercially relevant indications, what are those sorts of novel combinations that we can use to generate differentiating standard of care, again, with the goal of right shifting that curve, both from a progression perspective, from a survival perspective. And importantly, kind of keeping in mind that tolerability is important as well.

So maybe last question on zanza. You mentioned sort of the later stage development programs that have been initiated. When you look at sort of the development strategy and you look out into the future, what do you see as sort of the key potential inflection point for zanza?

Yes. I mean, ultimately, this business is about data. So it's going to be about generating data, both for kind of our late-stage pivotal studies and then emerging data coming out of the STELLAR program. So STELLAR-001, STELLAR-002 are looking at novel monotherapy indications as well as combinations, doublets and triplets. And so the STELLAR data is certainly going to be informative to help us think about where we're going to develop Zanza going forward.

So maybe now we could shift gears to some of the sort of earlier stage pipeline and start with XB002, which I think you mentioned at the top, the tissue factor ADC and TIVDAK, sort of first-gen tissue factor ADC just established survival benefit in cervical cancer. When you look at that program relative to XB002, where do you see it shortcomings? Where do you see the opportunity for 002?

Yes. So XB002, again, for the audience, it's a tissue factor targeting ADC. I'd probably, again, point to that's an asset that we view through the cabo lens of an established therapy that we think we can generate differentiating data. So if you think about the ADC, it's really 3 components. There's the antibody, the linker and the warhead. And we think XB002 is differentiated versus kind of the predicate molecule, TIVDAK, across all components. So first, on the antibody side, one of the things that we think is important and differentiated about 002 is the antibody itself is not competitive of factor VII. So if you think about the role of how the antibody binds to tissue factor and the role of factor VII and tissue factor in the coagulation cascade, unsurprisingly, TIVDAK does see increased bleeds, bleeding risk is in the label. And to date, we haven't seen that in the data that we presented for O2. So certainly, that's a point of differentiation. Secondly, on the linker, warhead side, some of the earlier generations of ADCs tend to be relatively unstable. And so you free drug can be associated free warhead, can be associated with some adverse events, in particular, with MMAEs, neuropathy, neutropenia. And so the data that we presented at the Triple meeting showed that at equivalent doses, we see about twice the exposure in 1/10 the amount of free drug for TIVDAK. And so to me, kind of again through that cabo lens, we're looking at a validated target that's known to have a broad expression profile across a wide range of tumor types with an antibody that's differentiated and a linker, warhead that's much more stable. And so we actually think about tissue factor as a tissue factor franchise because behind XB002, we have XB371, which again takes that same antibody, but conjugates it to a different warhead that's a topoisomerase-based warhead. So what that does is it allows us to look at all of the different tumor types that express tissue factor. Some are more sensitive to an auristatin-based warhead, like XB002, some are more sensitive to a topo-based warhead like XB371. So it gives us a way to really interrogate and develop kind of a what we think is a really strong target across a much wider range of tumors. And so again, that's kind of the lens that we tend to view it is, is this an asset that we think can generate differentiating data.

When is the next potential disclosure from the [ JUUL ] study. I think you guys have said you've sort of established a move-forward doses. So when can we see next clinical data readout, what would it include? Do we start to see initial combination data from that trial?

Yes. So I'd point to kind of zanza experience is a pretty good example of how we tend to think about development and disclosure. So zanza, we presented data at ESMO last year, kind of showing the Phase I experience, kind of standard Phase I all-comers population that ask the question, does this molecule do what we set out to have it do and cabo with a shorter half-life, so to speak, and also to caveats about that. And then once we had that all-comers population, we went into tumor types, expansion cohorts that we knew were more sensitive and more homogenous to get a better sense of what does this profile actually look like. And so that's what the IKCS data were in clear cell RCC. So similarly, at the Triple meeting when we presented the PK data for XB002, that was kind of that Phase I all-comers experience. And then we've begun enrolling expansion cohorts in tumor types that are known to express tissue factor, and that's really going to give us a much better answer on what does this drug actually look like. And so our focus, historically, from a disclosure perspective, has been when data are mature, stable. We haven't practiced this kind of biotechy phenomenon of your 7 patients' data and do with it what you will. We're going to try and raise money, all this stuff. We're not in that phase as a company. We're profitable -- we don't need to raise money. We have a strong balance sheet. And so our focus isn't about kind of trying to hype data sets. It's really talking about here's the data when it's mature, here's what it looks like. And so those next disclosures are going to be from those homogenous expansion cohort populations in -- to really give a good view on what the molecule looks like.

So we're just about out of time, but I want to ask one more question. A lot of things we didn't discuss in the earlier stage pipeline. If you had to pick one sort of asset that maybe doesn't get in a lot of attention, but you think should, what are you sort of most excited about?

Yes. So a good thing we have an R&D day coming up, so we can get into all of that fun stuff. I mean it's really going to be a great event to talk about exactly that. This is the first one we've had in a long time. And obviously, cabo focus and IP questions and zanza and 002 have certainly been kind of the primary topics that we've discussed with investors. But just beyond that, is this whole portfolio of assets that we really do think have that potential, again, to drive differentiating data. And so that's what we're excited to talk about in a couple of weeks, and it's really going to be a chance to really frame at a high level kind of that science and strategy that's driving the Exelixis' engine.

Perfect. Well, with that, we're out of time. I want to thank you, Andrew, for your time. Thanks, everybody, for joining. Take care. Enjoy the rest of your day.