Exelixis, Inc. ($EXEL)

Great. We'll continue with the next session. I'm Paul Choi, and I cover this mid-cap biotech sector here at the firm. It's our pleasure to have Exelixis join us for this session. To my left is Andrew Peters, who heads up Strategy and IR. Maybe what we'll do is kick it off and let Andrew maybe describe the company's priorities and strategy for the balance of 2026 and going into 2027, and then we'll go into Q&A after that.

Yes. Sounds good. And thank you for the invite. Always a great conference. Good meetings this morning and looking forward to the rest of the day. Just as a reminder, I'm giving me making some forward-looking statements today. So please see all relevant disclosures around the risk to our business and 2026 is an important big picture, I think the way that we tend to think about the world is through the lens of franchises. And kind of what I mean by that is it's kind of multidimensional. So the the idea, say, take something like cabo Rosana, where we're investing broadly in those molecules with multiple indications within each drug. And then within each of those indications, say, either RCC or CRC or nets kind of going broadly as well. So not only with Zand with multiple trials say ongoing with -- in CRC, let say, XB371, our tissue factor targeting ADC, some other areas as well. And then kind of broadly speaking, franchises within ADCs, franchises within small molecules, franchises within multi-specific antibodies. So that sort of thing. So from a big picture strategic perspective, I think really what we're doing is transitioning from a single franchise company to a multiple franchise company. And what that means is we're going to maximize the value of kind of the cabo franchise, keep our eye on the ball and make sure that we're executing, focusing every day, every minute, every hour on getting cabo to patients, while also getting ready for the launch of Xansa in third line plus CRC and then executing from a clinical development perspective, the remaining 6 pivotal studies that we have ongoing there, while we're also investing in our earlier-stage pipeline, while we're also looking externally to potentially build out that third and that fourth molecule. And then just lastly, taking kind of those cash flows that we're generating and investing in kind of the internal bucket that I mentioned before, externally and then focusing on some kind of more shareholder-friendly activities like buybacks. So big picture, the strategic question that I get a lot is that sweet spot, but it really is kind of that transition from a single franchise to a multiple franchise company and all of the individual things that are encompassed within that.

Great. Maybe let's start with your current commercial franchise with cabo and maybe more specifically, the addition of the net indication in the past few quarters and how that contributed to growth. Can you maybe help us understand what percentage of the mix is that now? And sort of how do you envision that, I guess, at steady state as you look forward here?

Yes. So as we talked about in the last quarter, now that we're kind of 1 year post launch, frankly, for competitive reasons, we're no longer kind of breaking out specifically that net contribution. What we have said is that when we reiterated guidance again on the first quarter call, we expect growth to come from both the RCC segment and from net. The net indication is 1 we're really excited about, high-priority franchise for us, not only kind of the cabo investment that we're making, but also kind of what we're doing with Xansa and then some of our earlier-stage studies. So I think it's that dynamic that we're really focused on. The only other thing I'd add there just on the net side, as you know, we added to our sales force earlier this year in part to continue to maximize the effectiveness and momentum around the launch and the net indication, but also to kind of hit the ground running, so to speak, ahead of a potential Xansa approval later this year as well kind of in that similar space. And so it's a little bit of a two-pronged effort right. ahead of gas coming up here.

Great. I am curious, though, can you provide some color on where you're seeing the most capital utilization in that versus label, where are you seeing in terms of setting versus chemo and radiopharmaceuticals. And any particular patient subgroup, whether it's pancreatic or extra pancreatic.

Yes. I mean as PJ has talked about in the last couple of earnings calls, the launch is going really well. It's the #1 oral now in kind of a new patient starts in that second line plus segment. And so it's really reflective of the data. And if you look at Cabinet broadly, I think 1 of the things that's most encouraging about it is just the robustness across each of those subcategories or subsegments of patients. And so we're really seeing use kind of across the board. It's nothing in particular jumps out, but that's kind of the benefit of having broadly robust data set.

Great. You also mentioned earlier, and this, I think, continues to surprise investors this many years into the launch is that you're continuing to see RCC growth and what people sort of write off as a mature market, but you gain share sequentially quarter after quarter, you're approaching about half the market, roughly speaking, in terms of market share. And so can you maybe articulate for us where this growth continues to come from? Is it from duration of therapy? Is it just more share gains versus other small molecules, increased utilization of IO and TK in -- maybe just some color there would be helpful.

Yes. I mean as we've talked about kind of the data that we've provided is additional share gains and we go out and fight every day for the incremental share point because we understand what that means from a value and from a revenue perspective. But someone asked the other day like why or how. And it's really simple, good data and good team. And the data that we've generated and the data that we continue to generate, say, kind of long-term 5-year data and all of these updates that you see at conferences like ASCO GU or when they're presented that gives an opportunity for our commercial organization for our reps to go out and have conversations with clinicians about why we think that cabo nivo should be the preferred option for these patients. And having the right team in place to then go out and have those conversations and interactions with prescribers is really, at the end of the day to the recipe success. And that's something that our maniacal focus on cabo and the success of cabo, we're not distracted by 1 million other different things is something that I think makes us relative unique. And it's something that, as you mentioned, we're seeing continued growth thus far after approval, it's something we're really proud of.

Great. I want to turn to Zanzlahere, and we were all at ESMO last year. And so maybe could you briefly recap the STELLAR 303 data for us and then contextualize what do these data imply for its use in sort of previously treated metastatic CRC here?

Yes. So the STELLAR 303 is really interesting study kind of foundation, let's say, to help build Xansa where we think it could go to ultimately be candidly bigger than cabo. So that study was looking at Xansa plus atezo versus regorafenib, which is standard of care in that kind of third line plus space, showed a statistically and clinically meaningful improvement over the standard of care on overall survival, which is the gold standard in oncology. And I think the important part of that, roughly 11 months, 10.9% versus 9-ish months in the control arm is really that consistency of data and that consistency of benefit across the board. That's something that has stood out in all of our market research not only around the different patient populations, but even, say, looking at things like prior treatment with say, Avastin where other studies, they may have seen a little bit of a different dynamic, different efficacy across whether patients had seen prior Avastin or not. So that consistency of benefit is something that stands out. Maybe adding to that, we had a poster at this most recent ASCO conference. And we had a pretty elegant way to -- and 1 of the dynamics there, and it shows that the combination of Zanzatezo does have an additive benefit for patients. Just the only other thing I'd add is kind of the 303 study was the latest in a series of up until then, unsuccessful attempts to get IL into this patient population. And if you compare it to, say, prior studies like LEAP 17, at the end of the day, the biggest differentiating factor candidly, was probably so it does, at least to me, show that Xansa is a differentiated best-in-class TKI. And that's why we're so excited, not only about the 303 opportunity, but as I mentioned before, using that kind of is that foundation to build on from there.

I want to double-click on something you just mentioned here, which is use of I-O in this particular patient population. I think people who treat colorectal are familiar with using KEYTRUDA and other IO agents the MSI high population, but it hasn't really been used in this particular later-line population let alone in combination. And so can you maybe share your thoughts on whatever physician feedback has been both since that ASCO poster that you referenced and ESMO with regard to use of combination therapy here from the KOLs.

Yes. I mean that's actually something that has consistently jumped out in market research and conversations that we've had. I think if you take a little bit of a step back and think about the CRC market in general. One of the things that's a little bit different about CRC, say than some of other tumor types is it tends to be a little bit more community-based than kind of academic KOL based and what that functionally means oftentimes that these clinicians, these prescribers are treating CRC patients in lung cancer patients and RCC and kind of across the board. So what that inherently means is they all have this high degree of familiar checkpoint inhibitors. And so up until now, their patients have come to them and said, "Hey, I just saw this commercial on the Super Bowl for this thing? Can it help me? And unfortunately, no, it's not approved for your type of cancer. Well, if ZYN's approved later this year with atezo, the answer can be yes. And so that dynamic around patient awareness, physician familiarity frankly, the chemo-free option for patients who have had a relatively long journey in CRC with multiple prior rounds of chemotherapy. All of those things kind of build into this market dynamic around and excitement around the doublet. And so it's something that you're right to point out, certainly comes up, but we're -- at the end of the day, we're eager to help launch this and get it into patients.

Great. Maybe 1 more question on KOL feedback before we move on is -- any sense from either the physician community at ESMO or more recently at ASCO, but there's a particularly readily identical patient population where an IO plus Xansa combination would be most initially used, I guess, based on either the patient backgrounds, demographics or just sort of appetite to try an I/O combination here?

Yes. I mean I mentioned it before, but 1 of the things that's most encouraging, I think, about the data set is the consistency across subgroup. One of the dynamics that you can often see is in other studies at least maybe an effect size in 1 particular subgroup driving the overall activity. We don't see that same dynamic here. And so as we've gone out to the market and kind of done a lot of this research ahead of time, that theme has actually played out that it doesn't really seem like it's just 1 particular group that seems most likely or most appropriate for this. Frankly, it's our goal, our job is to ensure that ZaNzatezais used in the widest group possible. Again, if you take a step back and think about kind of the overall CRC landscape, what we've said is it's about a $1.5 billion kind of total market, but that's relatively evenly split between, say, the sun line regimen, TKIs and then kind of a mix of chemos and some other things. So our goal, frankly, is really to penetrate across all 3 of those segments as broadly as possible because we do think that this is really a new novel combination that really has the potential to help these patients longer.

Great. Your PDUFA is coming up for Santa in December here. And so I guess 1 question is, would you launch immediately upon approval here in the calendar year? Or would you sort of wait for the turn of the calendar, given the rough holiday timing? And then my second question is how you think about pricing here, given the data you have and maybe some of what your payer conversations have suggested in terms of what the market can support.

Carefully. I mean I think it's something that we haven't discussed widely publicly, but I think pricing of any medicine is an important consideration, and it's something that we're spending a lot of time with. As it relates to your question on launch timing and preparedness, we're going to be ready to launch kind of day 1. When that happens, we're going to be ready. And so it's certainly not something that we're going to want to wait until the new calendar year because at the end of the day, our job at Exelixis is ultimately to help patients live longer. And we want to get this new medicine into the hands of prescribers and ultimately to patients candidly as soon as possible because we really do think that this has a potential to right shift that survival curve and benefit patients. And so we're going to be ready from day 1. If it happens on the PDUFA and it happens earlier, there's always that possibility we want to make sure that we're not going to be the limiting step here for patients.

Great. Historically, you've partnered your cabo sales in terms of ex U.S. markets. But can you maybe, first, update us on your regulatory plans for sort of the key ex U.S. markets for Xansa here? And then sort of the commercial strategy as you advance on the regulatory side for Zama, at least initially here in CRC.

Yes. So it's something that, again, we spend a lot of time on kind of internally thinking through all of those different dynamics as you can appreciate, there's a lot of inputs to say, going into that 1 of the, frankly, most relevant ones is just understanding the MFN dynamic and how pricing ex U.S. is going to potentially play a role in the U.S. as well. So as you know, we own rights to Xansa globally. We have yet to kind of decide on what we're going to do with kind of that ex U.S. market, outcomes range from do we want to launch it ourselves? Do we want to find a European partner? Do we want to find a global partner, kind of ex U.S. as opposed to, say, what we've done with cabo with Ipsen, ex U.S., ex Japan, and partners ticket with the Japanese rights. So there's all those different dynamics around it. But I think what we want to ensure is we get that U.S. launch right first, understand all of the relative dynamics around MFN and ex U.S. pricing and its potential influence on the U.S. market and then we'll kind of come to a real decision around what we're going to do with the rest of the world.

There's also, obviously, the consideration of indication expansion there as well, which we can address in a moment. But -- you talked earlier about sort of the 3 segments of -- within MCRC, but as you look at sort of commercial analogs here, there have been 1 or 2 launches in the small molecule space in CRC here in the U.S. in the past couple of years. But is there any 1 that you'd probably call out as sort of the best analog for Xansa launch here? And I guess, also on the commercial side, how much of your current cabo, whether it's on the RCC or net side prescriber base overlaps with a potential CRC prescribing population.

Yes. Probably tough to speculate on kind of what's the most similar launch dynamic. I mean, candidly, I think the way we view it is our goal, our job is to maximize penetration as quickly as possible into that segment that I mentioned before either the $1.3 billion total market or the 3 different patient buckets. And so that's, frankly, our goal is to kind of maximize the value there as quickly as we can. As it relates to kind of this commercial footprint and overlap with the sales force, as I mentioned before, getting those boots on the ground, focusing initially on kind of maximizing the net launch while also gaining familiarity with the customers, gaining familiarity with our own internal systems, that's an important driver. And so our goal, if you fast-forward the clock a couple of years, is to have much more of an equally balanced GI and GU footprint, whereas now we're much more GU than GI just kind of RCC and its relative maturity to net. But as we layer on XANZa-CRC and additional indications and kind of cabo continues to build out in net, we see that kind of GIGU is ideally more 50-50 split. One of the things we talked about ahead of the net launch, and again, this kind of plays into the dynamic 1 of the breadth of cabo, but to the community versus academic space. At the time of the NET launch, we saw a really high amount of existing cabo prescribers, something like 75%, 80% of net prescribers already wrote cabo for another indication. And the remainder were generally co-located in sites that in an office next door, for example, tended to give cabo. And so that's the foundation or the kind of base point to where we're going to grow from commercially for Santa.

Great. If there are any questions in the audience, please raise your hand, and we can get a mic to you. In the interim, I want to turn to the STELLAR 304 study, in which you're evaluating nivo plus Sampsa in the non-clear cell RCC population, the studies, I believe, are scheduled to top line in the second half of this year. And so maybe as we think about nonclerical RCC, how do you guys forecast or estimate the potential TAM here versus the clerical market?

Yes. I mean if you look at kind of just purely the Epi, it's about 20% of RCC. So that's a reasonable proxy, I guess, kind of plus/minus depending on a bunch of different factors. But just looking purely on the segmentation of patients, I think that's a good starting point.

Okay. Maybe just to provide an overview. How are these patients sort of more or less currently treated? Are they allocated to any particular therapy or direct in any way in terms of current treatment approaches. And -- as you think about your 1L study, this will be sort of the first directly focused study, I believe, in this population. How could that, I guess, in your view, potentially change prescribing behavior in this category?

Yes, that's 1 of, I think, kind of the more interesting dynamics around, frankly, any indication is we've looked at it. When we first started discussing the non-clear sale opportunity, it really was, at the end, a pretty surprising that there had never been a pivotal study run in that indication for a variety of historic reasons basically approval in the non-clear cell space is done somewhat by inference. Every drug that's approved in clear cell is also approved in non-clear cell the label reflects both despite the fact that non-clear cell hasn't really been studied in that robust way. So right now, use is somewhat guidelines driven, in those guidelines again are kind of informed by single-arm unrandomized potentially selected relatively small and studies and all of the inherent challenges and limitations with those sorts of things. Someone mentioned to me recently that use and utilization in the non-clear cell space can be something akin to like which on randomized study do you trust more sort of thing. And so the result of that is utilization is a little bit more mixed than I think 1 would expect. There's not a lot of great market share data because we don't necessarily have all of that information. Is this a clear cell script or a non-clear cell script. We just -- it's somewhat imperfect from that perspective. And so our sense is that if we can come to market with robust data showing in compelling treatment effect against a current standard of care, then that provides an opportunity to really establish what that standard of care is. kind of planted a flag in the ground, so to speak, and really kind of go from there.

Great. One question I have is, given that you're doing a combination therapy with a checkpoint inhibitor. How central sort of to the commercial outlook here is hitting on the OS secondary endpoint, to your view to driving adoption of this combination in non-clear cell RCC.

Yes. I mean, candidly, I think it's somewhat of a statement of the obvious, the more robust data we have, the better One of the lessons from 9ER is hitting that response rate PFS and ultimately survival have certainly helped adoption. I can't speculate on what the data is going to be. But again, our hope is we want to be able to come to market with as compelling of a story to again help patients live longer without cancer and ultimately live longer.

Great. Assuming the data are positive from 304, can you walk us through what time lines might be to either presenting the detailed data and filing the SNDA how does this maybe compare to maybe some cabo analogs, if that's appropriate? Or do you think you can move more quickly here, given you'll be launching Zanzain the not-too-distant future?

Yes. I mean I think the short answer is probably as soon as possible. Again, 1 of the 3 lines that we talked about at the company is live longer and recover stronger is a motto at the company. And so at the end of the day, if we're able to show positive data, we want to do everything we can possibly do to get it in the hands of prescribers and ultimately, patients because that's what we're here for. And so I think we certainly have a history of being able to move quickly, being able to prioritize effectively and efficiently to either present the full data or submit at an accelerated pace. So something we're going to hope to do, but we'll see based on the data.

We've just touched on 2 of the pivotal programs for Xansa here, but you -- you have multiple other studies going on, including 1 an MRD-positive CRC, which I think is super interesting, and we're just trying to scratch the surface on that 1 as well as combination studies with Merck Mollyreg in post adjuvant IO frontline RCC as well as a second-line population. And then also in neuroendocrine tumors, so I guess, first, you have a lot going on in terms of multiple programs, which, I guess, if you were to guesstimate could potentially be completed earliest. And second question is, as you think about resourcing and just sort of assessing the scenario of wins for these potential studies, how do you think about resourcing and likelihood of success here?

Yes. I mean I think that's something that hopefully differentiates Exelixis from a lot of other companies is that, we're trying to be particularly strategic and thoughtful around indication selection and clinical trial design and development in that, at the end of the day, we want to run positive cities in positive studies in large market opportunities. And so, if you look at the 7 pivotals that we have ongoing or announced right now, they're all in relatively large market opportunities, and they're all in areas that I think are relatively high probability studies. And we're running them in a way to be capital efficient. A model that we liked with cabo that we've now incorporated into Zanzaithis idea of finding clinical collaborators. So you take, say, our relationship with Merck, which you mentioned before. We're running 3 studies now with them. Functionally speaking, kind of the way that the economics work is the costs are split basically 50:50 across the 3 studies. And so that's a really capital-efficient way for us to interrogate broadly the Xansa opportunity, but also have a chance to work with probably the best oncology drug developer in the world who's also, frankly, our biggest competitor. And so it's this kind of interesting dynamic where we're able to efficiently allocate that incremental investment dollar in Xansa to ultimately broaden that revenue opportunity, but in a way that we think all have high probability of success, whether it's 316 where either Xansa alone or Xansa plus pembro is randomized against watch and wait or placebo just given the dynamics of that indication or looking at, say, the post-adjuvant RCC or a later line RCC, all these things kind of we take each study individually as something that we think is a smart investment to make because it's ultimately, as I've mentioned multiple times today, our goal, our job is to establish a new standard of care for patients. That's why we're here. And so if we're able to do that, we believe that will translate to meaningful revenue and if we can generate meaningful revenue, we can generate value for all stakeholders in the company.

We have a couple of minutes left here, but maybe turning to your earlier stage pipeline. Can you maybe for investors who are not as deep, call out 1 or 2 earlier stage assets that may have a near-term clinical readout. And versus what gets I guess most excited, I think DLL3 looks super interesting. There's been some progress there, most recently at ASCO, but if you were to call out sort of 1 or 2 near-term catalysts, what would you point your investors to?

Yes. I mean, without kind of getting into the specifics of timing, the way we view our early-stage pipeline is we want to generate as much data as quickly as possible to help get us to that go/no-go decision. And what we mean by that is, is there an asset that's going to raise its hand with data and say, invest in me in a pivotal study. We're not in the business of kind of dragging something along to show 10 patients here worth of data and say, "Okay, look how great this is, go raise some money and raise but. That's all too common probably, unfortunately, in biotech, but that's just the reality of how our business works. We're in the fortunate position where we don't need to go out and kind of potentially over promise. What we're going to do is essentially show a profile of -- this is what, say, XP 628 is versus what -- this is what it could be. And so we're going to present data when it's mature, stable and a sufficient cohort to get a sense of what that is. But the way, again, coming back to kind of the beginning of the conversation to view our early-stage pipeline is through that franchise space. So take XB371, the tissue factor I that we conceived of as a CRC asset to kind of build upon that foundation with Xansa. Similarly, with XB628, so that's our PD-L1 NKG2A bispecific, that 1 has really interesting novel biology, looking at bringing in both the adaptive and the innate immune system, but really kind of the crux of that is asking the question, well, does that mechanism, does that combination have the potential to combine well with, say, something like Xansa. So again, that's kind of this franchise build-out mode of building on and further enabling Xansa across all of those different indications. And so that's kind of the best lens to view the early pipeline, whether it's the SSTR program. Same thing, that has the ability to meaningfully -- meaningfully drive utilization and something like net and so that's probably the best way to view the early pipeline is through this franchise lens and maximize value kind of across these multiple different factors.

Great. we're up on time here. So I think we'll end it on that note. My thanks to Andrew for sharing how Exelixis is evolving from a sort of 1 product story into a multiproduct, multimodal story. Thanks.

Great. Thank you. Thank you.