Exelixis, Inc. ($EXEL)

Our second session, we've got Exelixis, and we're really excited to have them here. They're represented by Andrew Peters, who is the SVP of Strategy. Thanks for being here.

Yes. Thanks for the invite. Glad to be here.

Yes. So a lot going on at the company. I wanted to start maybe on the commercial franchises first. So you guys have given guidance. Cabo had a pretty solid quarter. So maybe at a high level, I mean, how are you thinking about the balance of the year, the future trajectory this year for cabo across its existing indications?

Yes. Happy to get into that, I guess, before answering, I want to make sure that everyone understands going to be making forward-looking statements today. So please see our relevant disclosures in our regulatory filings. Yes. So as you said, kind of our guide reflects continued growth for the cabo franchise. Kind of specifically where that's going to come from, I think it's really about our organization, our company continuing to be laser-focused on cabo, both on the base business as well as the NET launch. It's one of the things that we've done well historically, and it's something that we want to continue to do and make sure that we're not taking our eye off the ball. We've talked about kind of over the last several years, continuing to see market share gains, not only in RCC and in particular, frontline RCC. But now as we're kind of launching into that NET segment, really driving that NPS, which from our perspective, is a pretty good forward-looking indicator. As P.J. talked about on the earnings call, highest NPS we've ever had during the quarter. And so it's that laser focus on additional market share, finding those patients as we've now kind of expanded our commercial footprint to focus not only on the NET launch and community side, but really lay the groundwork ahead of potential zanza launch as well. So it's really kind of that singular focus on making sure that we're going out every day and talking about cabo, talking about the data and that, again, driving market share.

Got it. Maybe just to dive in a little deeper on that. There's obviously 2 major parts that we as investors have been focusing on the RCC side and the NET side. Just on RCC, I mean, there's been some competitive data, particularly in HIF-2. I guess how are you thinking about maybe the balance between first line and growth you have there versus maybe competitive pressures in the second line and how you envision the trajectory?

Yes. So I mean, it's sort of the obvious that oncology is competitive, has always been competitive, will always be competitive. And that's what we do every day as we kind of go out and fight to either develop new therapies to establish standard of care or really ensure that drugs like cabo are able to be used in the largest number of patients possible. So as it relates to the HIF space, obviously, this is an evolving dynamic with the recent LITESPARK-012 data as well as our own initiations of the 033 and 034 space. So it's certainly a mechanism that we're paying a lot of attention to. As it relates to kind of this dynamic around frontline, second-line use, we've seen a lot of speculation that if len/bel does get adoption, say, from LITESPARK-011 in the second line, does that drive incremental use for cabo in the first line? That certainly would be an outcome that we'd be okay with given kind of the relative duration dynamics between those. But I think there's still kind of a lot of additional information that needs to come out around just the -- between LITESPARK-05, 011, 012, 022, it's just a continuously evolving space. And so one we're obviously paying close attention to. But right now, cabo is the #1 IO/TKI. It's the #1 IO, and we want to do everything we can to make sure that, that dynamic continues in the future.

Got it. And the other side of the equation is the NET growth. And we've done a fair amount of work here as well and found pretty high levels of prescriber enthusiasm. I think on your recent call, you guys mentioned the #1 prescribed oral agent in second line plus NET. So I guess how do you think about how much more growth there is in NET? So you guys recently had the sales force expansion included team moving in that space as well. So I guess what are you hearing on the ground?

Yes. So again, I think we'd agree with your characterization around kind of that level of enthusiasm. We certainly saw a lot of adoption kind of right out of the gate in the academic space, just given the strength of the CABINET data. But again, as we've talked about historically with our success in RCC, it's really about going in and driving market share gains. And if you think about, say, NET, along with RCC, it's not only about penetrating that academic kind of KOL sphere, but then going into that community space as well where the vast majority of patients are actually treated. And so what the sales force upsizing allows us to do is kind of do both, continue to kind of really hit hard and kind of hammer home the message around cabo's strength and really the benefit for patients here, but also educate those kind of community -- more community-based docs who may not see that same kind of volume either of RCC patients or NET patients. So it's kind of expanding that to drive additional share. We're now kind of a year into the launch, but one of the dynamics with NET is just understanding that it's a relatively indolent disease. So there's always that NRx/TRx dynamic that's going to start to happen as well, where you're stacking patients not only with new patients, but refills and kind of that's something that we're going to continue to look for as well. And I think our guidance, which reflects growth not only in the RCC space, but NET as well kind of takes all of that into consideration.

Got it. I want to move on to zanza and some of the pipeline updates there. But since we're on the topic of NET, I just wanted to first touch on 311. I guess, how you're thinking about that study, the differentiation that zanza might provide both in the paradigm and which is going to fall in NET as well as how that handoff might work between cabo and zanza in the future?

Yes. So I think it's a dynamic that's really going to go into kind of 2 key areas. One is just the uniqueness or kind of differences between cabo and zanza and kind of the more user-friendly, shorter half-life, potentially more tolerable, all the things that we've started to see earlier on and then just the differences between 311 and CABINET. So CABINET relatively later line population, placebo-controlled reflecting that dynamic versus 311, where it's really kind of defining or hoping to answer the question, what should be that first oral option. And so what that means from a practical perspective is it's an earlier population, and it's also head-to-head against kind of the current standard of care in everolimus. And so again, it's going to come down to levels of evidence if we're able to show that zanza is statistically better than kind of the current standard against an active comparator. We think that, that's a really powerful message that in the future, our reps will be able to go out and market to versus CABINET, which again, it is really rare in this business to see HRs with a 0.2 and 0.3 in front of it. But again, for the most part, that was also a relatively later line population for a lot of those, if you look at kind of the breadth of that study.

The nearest-term opportunity for zanza is obviously from 303 and CRC. So I want to touch on the commercial there as well. But first, there's also going to be a potential data update in the NLM population. I guess, how are you thinking about what you'd like to see there? And maybe what success in NLMs might mean more broadly for the CRC opportunity?

Yes. So again, there's a couple of dynamics there. On the success side, statement of the obvious p-values. That's really kind of the bread and butter of the industry and what's what allows our sales force to go out and really hammer that message home that zanza/atezo should be the new standard of care for these later-line colorectal patients. In terms of does it matter? Obviously, the ITT population, which read out last year and has the PDUFA date in December is inclusive of both patients with liver mets and non-liver mets. But again, kind of the best case scenario, so to speak, is really a data set that enables our commercial organization to go out and have conversations with physicians and prescribers to really emphasize and reemphasize that dynamic around why the combination should be kind of the standard for patients what the inclusion of an IO potentially means from the patient's perspective and really just why we think the data are starting to resonate kind of as we do these kind of market research and KOL checks, a lot of those messages that are starting to come out. So the non-liver met readout, certainly looking forward to it and hoping to show as strong a data as possible. But just again, as a reminder, kind of that ITT population is really inclusive of all patients.

Appreciate there might not be a lot you can say on the next part of this. But as you mentioned the PDUFA as you guys move towards that date. I mean, anything to note on the regulatory interactions?

Yes. I mean other than we have a great relationship with the agency. From our perspective, the review and the filing has kind of gone as well as we could hope. It's one of those things that we just -- this isn't our first rodeo, so to speak, on the regulatory.

On FDA, the FDA is it?

Yes. So it's a collab that we have that experience in kind of those existing relationships. And it's been a great collegial collaborative process so far.

Great. And then as we look towards, I guess, December and potentially starting that launch, the data you've shown suggested benefits broadly for CRC patients. And your strategy, as you mentioned, has been fight for every patient. So is the initial push going to be broad? Is it going to be focused on both community academic? I guess how do you think about the initial stages of that launch and where you're going to position the drug?

Yes. I mean kind of as we've shown at RCC, going out and competing commercially is something that we do especially well. And it's really going to be about kind of targeting all of those populations, fighting for every patient, fighting for every market share point is something that we want to do. As I mentioned, kind of those dynamics around the messaging that's really resonating with patients. It's potentially the first IO that's going to be available to these patients is something that we continuously hear, but also kind of that chemo-free dynamic as well as you think about the patient's journey from diagnosis towards that treatment decision in kind of the third-line space, functionally, they'll have been on chemo that entire time. So understanding a IO-containing chemo-free regimen that has a clear survival advantage over a prior standard of care really does resonate. Then you also understand, say, relative differences between our data and as you mentioned, kind of this robust benefit across all prior subtypes, whereas if you look at, say, some competitor data, that same dynamic around something like prior Avastin use or prior bev use and the differences kind of in efficacy there. That's something that I think given how patients are treated in the U.S. could be especially relevant.

Got it. And just to remind everyone, the sales force there is largely in place so you can it's right.

Yes. So I think, again, kind of what we've talked about as a key part of the sales force expansion that we completed last quarter was not only kind of to continue to accelerate that net launch, but also lay the foundation for zanza potential approval later this year.

Got it. You guys have talked about how this could be potentially a $1.5 billion market opportunity. As investors start doing more work on the launch? I mean, are there any other metrics that you'd point to, any other launches that we should think about to better understand how the shape of zanza and CRC could look?

Yes. I mean I think the best way to think about CRC is kind of that $1.5 billion opportunity when you apply kind of contemporaneous pricing and duration and all of that is really a reasonably fragmented market, and that's in part driven by this academic versus KOL dynamic, which is probably more prevalent in CRC than some other tumor types, but it's kind of 1/3, 1/3, 1/3, 1/3 roughly that sunlight regimen, 1/3 kind of TKIs and then 1/3 hodgepodge of chemo-type options. And so our goal, our mission, our singular focus, again, is to make sure that we're taking as much share from each of those 3 buckets as we can. And so can't and won't be able to give guidance on what that trajectory looks like other than it's going to be our job every day to kind of come in and drive that adoption.

Got it. I wanted to pivot towards zanza in RCC and non-clear cell as well with the STELLAR-304 trial. We're looking for data from that this year. I guess, can you talk about, given that there's no approved -- formally no approved treatment options in this setting, specifically for this, what -- you're going to tell me p-values, but what looks like -- like what a win for you guys that can help you get competitive, move into this underserved patient population? I guess how are you thinking about that?

I mean, I don't want to say it again, but I think that's the honest answer is great data. P-values, one of the things that's driven success in for cabo and RCC and why it's the #1 IO/TKI is that kind of PFS, response rate, survival, all of those improvements really resonate with patients and physicians. And so it really comes down to kind of what the existing dynamic is in that kind of non-clear cell space and what we're hoping to achieve there. And it's this relatively unique aspect of the non-clear cell segment where there's really no data kind of across the board. And so we were having a conversation with an investor earlier and adoption is really driven somewhat by inference from the clear cell space and then as well as guideline-driven recommendations based on some really sparse data sets, single-arm unrandomized data and potentially selected patient populations. So it can be really hard to kind of understand, well, how is my patient going to respond to individual therapy or combination X. What this study does is it provides kind of robust data really to answer that question. And so that exact dynamic is actually something that I think we've heard continuously from physicians that they're really looking forward to because we're really the leaders here in defining how patients should get treated.

And how much is non-clear cell is more of a foothold for zanza in the space initially versus a large opportunity in and of itself it's 20% and cabo is a great drug as well as you know.

Yes. I mean I think 20% of a large market is still relatively sizable. And so I don't want to underplay that dynamic. But we'd certainly agree that as we think about zanza going forward, one of the things that we often talk about in the way we think about development is cabo has been the TKI and RCC of the 2020s, zanza is going to be the TKI and RCC of the 2030s. It's not only about the non-clear cell segment, but how are we approaching kind of that clear cell space as well with 033, now 034 and then kind of the next steps, the next wave of investment, so to speak, to continue to build that out. And so that's one of the kind of overarching themes for us is that 2020s to 2030s dynamic for zanza and making sure that we're covering all the bases, so to speak, not only in non-clear cell, but post adjuvant frontline, de novo frontline and then kind of that second line plus segment. And so we can make sure that as patients are treated differently now than they will be in the future, we want to make sure that zanza is a central part of that.

Yes. And you guys clearly have a leadership position in RCC. And maybe going back to this HIF discussion, there's a number of trials that is participating in with these HIF targeting agents. So are we viewing it too much through a competitive lens where really uptake growth of these agents is going to be a positive for zanza given the potential combination approach here?

Yes. I mean it's -- again, it's an interesting and relatively unique dynamic where we're now collaborating with functionally our biggest competitor. And we love working with Merck. We announced another clinical collaboration with them this morning for the 316 study. So it's a relationship that I think reflects not only our confidence in the uniqueness of zanza, but that dynamic around understanding if we fast forward the clock 5 years or so, how are patients going to be treated. Our job as drug developers is really to define new standards of care for patients and really ask the question, the way we drive value for patients, for all stakeholders, for shareholders is really if we can define a new standard of care, if we can help patients live longer, that translates to higher revenue, kind of more value, all of that dynamic. And so we think that the combination of a HIF inhibitor like belz and zanza plays well together and importantly, has the potential to answer really important questions from a clinical perspective, such as if more and more patients will get pembro on the adjuvant side, what should they get if their cancer returns. Again, we're going to be the first to define that answer. Similarly, kind of as adoption of all of these different agents kind of changes in the future, what should be that kind of second-line plus segment as well. So again, that zanza/belz combination is something that we're really excited about. So 033, 034 and then kind of, I'd say, the last piece is stay tuned for that next wave. You talked about we're the leaders in RCC -- we want to continue to be the leaders in RCC. We're going to invest there. But importantly, we're going to invest there smartly. I think the lessons not only from our own 313 study, but the recent LITESPARK-012 study kind of can certainly help inform what is it going to take to be successful there, orthogonal combinations of orthogonal mechanisms and smart trial design is going to be kind of central to that.

You alluded to 316 earlier. So I wanted to touch on that. It's an adjuvant study in MRD-positive patients. I guess the focus here right now is on execution as you guys work to ramp that up. I guess, can you talk about that, how quickly you can get that running? Obviously, there's some unique approaches to that study, looking at minimum residual disease, the Natera collaboration, Umbrella and Merck. So just how should we think about time lines there and how quickly we can start layering on the zanza opportunity?

Yes. I mean I think this is a study that we're particularly proud of because, again, we're involved in defining a new way for patients to get treated. As the recent IMvigor approval will show, this is an approach that's really cutting edge and offers an opportunity for patients to really define kind of a new journey for them. Right now, in CRC, unfortunately, there's this -- the Signatera test can help you define based on ctDNA positivity or negativity, how your treatment journey will likely go. If you look at the data, the separation of those curves between ctDNA positive and negative is really striking. And it shows that, unfortunately, for that kind of 15%, 20% or so of patients, there is a really high degree of relapse. And unfortunately, right now, kind of the current standard is watch and wait. And so from the patient's perspective, that can be particularly challenging. It's coming in waking up every day and understanding is the tumor going to come back. What we're now offering is kind of that question of either zanza alone or zanza in combination with KEYTRUDA, can that push out that DFS interval that unfortunately, for these ctDNA-positive patients is relatively short over 6 months or so. And so that dynamic, along with working with Natera to help operationalize the study is something that I think we can build on because these are patients with a high unmet need. They're being identified literally every day. And so that operational advantage from a kind of clinical trial execution perspective is something that we think we can accelerate.

Got it. Unfortunately, we're out of time. There's so much at the company to talk about. You didn't touch on prostate, lung, early-stage pipeline, business development, all else that's going on. So thanks for being here again.