Exelixis, Inc.

Good day, ladies and gentlemen, and welcome to Exelix's second quarter 2021 financial results conference call. My name is Frenzy, and I will be your operator for today. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to your host for today, Ms. Susan Hubbard, Executive Vice President of Public Affairs and Investor Relations. Please proceed.

Thank you, Francie, and thank you all for joining us for the Exalexis Second Quarter 2021 Financial Results Conference Call. Joining me on today's call are Mike Morrissey, our President and CEO, Chris Benner, our Chief Financial Officer, and PJ Haley, our Executive Vice President of Commercials, who will together review our progress for the second quarter 2021 ended June 30th, 2021. Peter Lam, our Chief Scientific Officer, is also here and will join us for the question and answer session following our prepared remarks. During the call today, we will refer to financial measures not calculated according to generally accepted accounting principles. Please refer to today's press release, which is posted on our website, for an explanation of our reasons for using such non-GAAP measures, as well as tables deriving these measures from our GAAP results. During the course of this presentation, we will be making forward-looking statements regarding future events and the future performance of the company. This includes statements about possible developments regarding discovery, product development, regulatory, commercial, financial, and strategic matters. Actual events or results could, of course, differ materially. We refer you to the documents we file from time to time with the SEC, which under the heading Risk Factors, identify important factors that could cause actual results to differ materially from those expressed by the company verbally and in writing today, including, without limitation, risks and uncertainties related to product commercial success, market competition, regulatory review and approval processes, conducting clinical trials, compliance with applicable regulatory requirements, our dependence on collaboration partners, and the level of cost associated with discovery, product development, business development, and commercialization activities. And with that, I will turn the call over to Mike.

All right. Thank you, Susan, and thanks to everyone for joining us on the call today. Exalexus had a strong second quarter across all segments of our business as we grew the Cabo Medics franchise and advanced our pipeline of promising early-stage programs. The company posted record Cabo's Antenna franchise net product revenue and total revenue in Q2, based on strong demand for the Cabo Medics Nivolumab combination across all segments of the first-line RCC market. Syndicated market research highlights that the Cabo NEVO doublet plays a leading role in first-line RCC and reflects the strength of the efficacy, tolerability, and quality of life data from the Checkmate 9ER trial. We maintain significant momentum with a 59% year-over-year growth in Cabo net product revenue in the second quarter of 2021 compared to the same period in 2020. Our goal remains to exit 2022 with a $1.5 billion annualized run rate for RCC in the U.S. ExoLux has also advanced key 2021 discovery, development, and regulatory activities in the second quarter. We reported top-line results for the Cabo Atezo doublet in first-line HCC from COSMIC 312 and in metastatic CRPC from COSMIC 021 Cohort 6. and we'll update you on regulatory feedback and details for upcoming presentations for these two trials in due course. We plan to file new SNDAs for CABO in these indications, pending positive regulatory feedback, along with the submission of COSMIC 311 and DTC, which was accepted for priority review with a PDUFA date of December 4th, 2021. The full portfolio of late-stage COSMIC and contact trials with cabozantinib-ICI combinations, continues to move forward according to plan. Our early clinical pipeline is advancing with significant progress in the XL092 program, the XL102 Phase 1 trial, and the initiation of clinical work with XB002, our first biologic to enter the clinic. The Exalexis discovery and preclinical teams continue to optimize and characterize new development candidates for both small molecule and ADC programs, which we believe will provide the foundation for new clinical candidates in the near future. Finally, we've used success by the number of patients that derive benefit from the drugs that we discover, develop, and ultimately get approval to market. We currently estimate that more than 20,000 patients are treated quarterly with cabozantinib on a global basis. While we're proud to have achieved this magnitude of impact on people with cancer, We strive to excel at an even greater level every single day with CAVO across existing and new indications and our emerging pipeline of drug candidates in clinical and preclinical evaluation. With that, please see our press release issued an hour ago for our full second quarter financial results and an extensive list of key corporate highlights detailing our accomplishments in the quarter. I'll now turn the call over to Chris, who will review our second quarter 2021 financial results and provide an update to our full year 2021 financial guidance.

Thanks, Mike. For the second quarter of 2021, the company reported total revenues of $385.2 million. Total revenues for the quarter included Cabo Zantative franchise net product revenues of $284.2 million. Net product revenues in the second quarter of 2021 were impacted by higher demand for Cabo Medics. Cabo Medics' wholesaler inventory increased in line with the change in demand and resulted in stable inventory weeks on hand. Total revenues also included $100.9 million in collaboration revenues from Ipsen, Takeda, and Genentech. Our total operating expenses for the second quarter of 2021 were $262.2 million compared to $274.8 million in the first quarter of 2021. R&D expense was the primary driver of the decrease in total operating expenses, which was primarily related to lower clinical trial and licensing expenses. provision for income taxes for the second quarter of 2021 were $28.8 million compared to a benefit of $3.6 million for the first quarter of 2021. The company reported gap net income of $96.1 million, or 30 cents per share, on a fully diluted basis for the second quarter of 2021. The company also reported non-gap net income of $117.9 million, or 37 cents per share, on a fully diluted basis. Non-gap Net income excludes the impact of approximately $21.8 million of stock-based compensation expense net of the related income tax effect. Cash and investments for the quarter ended June 30, 2021, with approximately $1.7 billion. And finally, turning to our financial guidance for the full year of 2021, we're updating the financial guidance for total revenues, net product revenues, R&D expenses, and year-end cash provided earlier this year. We're increasing our total revenues guidance which we now expect to be in the range of $1.3 and $1.4 billion due to higher net product milestone and R&D reimbursement revenues. We are increasing our net product revenues guidance, which we now expect to be in the range of $1.05 and $1.15 billion. Research and development expenses are increasing due primarily to higher forecasted licensing expenses and are now expected to be in the range of $650 and $700 million. which includes non-cash expenses related to stock-based compensation of approximately $45 million. And finally, we are projecting cash investments to be in the range of $1.7 and $1.8 billion at year-end 2021. This guidance does not include the impact of any potential new business development activities, which remains a key priority for the company. And with that, I'll turn the call over to PJ.

Thank you, Chris. Today, I will discuss the Cabo Medics business with regards to Q2 2021 and particularly in the context of the first full quarter after the approval of CaboMedix in combination with an immune checkpoint inhibitor. As you know, on January 22nd, CaboMedix received FDA approval for use in first-line RCC in combination with nivolumab. Following the approval, CaboMedix first-line market share has grown significantly, driven by broad uptake in the marketplace. In the second quarter, CaboMedix was the number one prescribed TKI in RCC. We are pleased with the growth of the CaboMedix first-line combination new patient market share, which according to Acuvia brand impact has grown steadily since approval. As you can see, the average new patient market share of CaboMedix in combination with Nivolumab in Q2 was 28%. According to the data, the Cobblematics combination has taken share from other ICI combinations and has increased the penetration of ICI combination therapy within the first-line RCC market. As you know, the median duration of therapy for patients in the Checkmate 90R study was approximately 1.5 years, so we believe that these new patient starts will drive demand growth for many quarters to come. We are also pleased that adoption was broad across a number of key segments with strong uptake in favorable, intermediate, and poor clinical risk groups as the 9ER data is resonating with physicians broadly as they think about patients who are appropriate for the regimen. Furthermore, our market research shows that CaboMedix, in combination with NEVO, is taking share from all first-line competitors. Uptake in the academic segment has been rapid as the market share for Q2 in this segment was 35%, according to Brand Impact. Adoption in the community setting typically lags the academic setting in a launch. That said, we are pleased by the increase in market share in the community from 11% in Q1 to 25% in Q2, and we believe that CaboMedix, in combination with Nivolumab, has the opportunity to continue to grow new patient market share, particularly in the community segment. In addition to the broad uptake of cabomedics plus nivolumab in the marketplace, perceptions of the 9ER data have been very positive. There has been a rapid increase in unaided awareness of the approval of this combination, as well as favorable impressions of the efficacy of the combination based on the endpoints of overall survival, progression-free survival, and objective response rate across key subgroups, including IMDC risk categories. Importantly, The safety profile of the combination driven by the optimized CABO combination starting dose of 40 milligrams daily is viewed favorably by prescribers and is improving the overall perceptions of the safety and tolerability of CABO medics. Physicians also view the quality of life benefit demonstrated in 9ER as differentiating and important for their patients who may be on first-line therapy for extended lengths of time. Ultimately, the totality and balance of the efficacy and overall survival, safety and tolerability, and quality of life data is viewed positively by prescribers. Similar trends are seen in the prescription data from Acuvia, which demonstrated an inflection point this year in CaboMedic's demand. The growth is driven by both new and refill prescriptions from the 90-hour launch and resulted in an increase of 28% growth in the first half of 2021 relative to the first half of 2020. As I mentioned previously, the growth is being driven by first-line combination uptake, while the second-line market share for CaboMedix remains stable. With regards to new prescriptions, NRX increased significantly in the first half of 2021 relative to the first half of 2020 at a rate of 29%. Cobometics NRX were stable in Q2 to 2021 relative to Q1, despite the overall CISV NRX market basket being down 5%. That said, our internal data for new patient starts shows larger increases for both these time period comparisons, but we won't be sharing the specifics of that data for competitive reasons. The success of the Cobometics launch in combination with Novolumab is changing the mix of patients on CABO medics and RCC. First line combination usage has increased the proportion of the new CABO prescriptions that are first line. Given the clinical data from the Checkmate 90R study, we anticipate these first line combination patients to receive their therapy for approximately 1.5 years or more, thus driving a longer treatment duration for CABO medics. We are encouraged by the fact that in our data, we see a near doubling of the amount of new patient starts at the 40-milligram dose relative to the same period last year. This is further indication that the combination uptake in the first-line setting is robust. One other point to note is that the proportion of Cobb-O-Medics third-line patients declined and our third-line market share has decreased as many third-line patients have already received Cobb-O-Medics. In looking at the market basket for RCC TKIs, CaboMedix was the number one prescribed TKI in Q2, and TRX market share increased to 38%. The TRX CISV market increased in volume by 5% in Q2 over Q1, and CaboMedix TRX volume grew by 13% in the same time period. The increase in CaboMedix share and volume was driven by uptake of CaboMedix in combination with nivolumab in the first-line setting. In July, NCCN updated their kidney cancer guidelines, and now cabozanthinib, either as monotherapy or in combination, is a preferred agent in every setting in RCC, regardless of clinical risk groups, line of therapy, or disease histology. This will support the strong and focused execution that the ExoLixis team is putting forth in the 90-hour launch in RCC more broadly. The strong Q2 performance and CaboMedx launch trajectory position the Cabozantin franchise to continue significant revenue growth in 2021 and beyond. We're thrilled with the opportunity that 9ER provides Exelixis, looking forward as we continue to build upon the foundation in RCC where Cabomedics is the number one prescribed TKI. Our team remains highly focused and motivated to compete every day to bring the benefit of Cabomedics to all eligible patients as we continue to build the franchise and maximize potential. And with that, I'll turn the call back over to Mike.

All right. Thanks, PJ. As you heard on the call today, we had a great second quarter with both record cobblosanthinib franchise net product revenue and total revenue, which led us to update components of our full year 2021 guidance. We're excited about the potential of our work, including the ongoing cobblosanthinib pivotal trials, the growing clinical development program for XL092, and our rapidly maturing early stage pipelines. as we advance in our mission to help cancer patients recover stronger and live longer. As we previously announced, Dr. Gisela Schwab, our President of Product Development and Medical Affairs and Chief Medical Officer, began a medical leave of absence in June. We're grateful that she continues to engage and advise us during her leave. For more than 15 years, Gisela has been deeply committed to our mission and the patients we serve. Frankly, Exalexis would not be the company nor would Composantinib be the drug that they are today without her passionate and tireless leadership. We simply can't thank Gisela enough for her countless contributions over the years, including her commitment to the mentorship and professional development of her team. We're all extremely proud of how the entire development organization has pulled even further together to keep our many programs on track during her absence. We are now actively searching for our next CMO and hope to have that person on board in the near future. I'll close by thanking the entire Exalexis team for their individual and collective efforts during a busy and productive second quarter. Exalexis has widely embraced the data supporting the efficacy and safety of the COVID-19 vaccines, and I'm proud to report that greater than 90% of our team, based both in Alameda and those working remotely, have been vaccinated to date. With that foundation, we are looking forward to working together again with the energy and creativity that can only be truly experienced when working side by side as we discover, develop, and commercialize the next generation of our medicines for cancer patients in need of better and more effective therapies. We look forward to updating you on our progress in the future. Thank you for your continued support and interest in Exalexis. We're happy to now open the call for questions.

Thank you. And participants, as a reminder, in order to ask a question, you will need to press star one on your telephone keypad. Again, that's star, then the number one on your telephone keypad. To withdraw your question, press the pound key. Your first question comes from the line of Ashika Ghaniwarin from Truist. Your line is now open.

Hi, guys. Thanks for taking my questions. First one, I want to offer my congratulations on this result. Absolutely outstanding. Well done to the team, and we hope to see more of this coming in the future. First question, the growth rate that we have here for Kabul looks really good, and I just want to maybe spend a little time teasing out the relative contributions Obviously, NIVA carbon first on RCC was a big amount. I'm just wondering if, PJ, maybe you can give us some sort of an idea of the proportion it came from, NIVA carbon first on RCC, maybe what came from non-clear cell RCC, and if there's any other stocking impact. And they got a few more as well after.

Sure, Ashtika. Thanks for the question. It's PJ. I mean, really looking at the comparisons we have of 28% demand growth sort of first half over the last first half or, you know, 29% NRX growth looking at new prescriptions, which we're really pleased with. As you mentioned, we think they're quite strong. That's really driven, I would say, almost completely by the uptake we've seen in the CaboMedx NEVO combination launch. for the new patients that are coming on there and the refills that we're starting to get in that setting. And as I mentioned, you know, it's certainly the clinical data there shows a year and a half average duration of therapy, so we think they'll be on for some time. So it's really being driven by that. I mean, I think, you know, early days now, anecdotally, I'm sure we're getting a little bit more non-clear cell, but those, the NCCN guidelines, as I mentioned, were just updated last month. We're really pleased with that, as now we have, you know, positioning in the NCCN guidelines in favorable, intermediate, poor, first-line clear cell. We have second-line clear cell as well as now non-clear cell, so cabozantinib either as a combination or monotherapy across the guidelines is, you know, certainly great, and we think that'll continue to drive growth in combination with the launch in the future, but the really the growth is predominantly the combination in the first-line setting.

Thanks, Vijay. And then I guess when you look down the line at future competition, maybe we can tell us, what does your primary research tell us about how NivoCabo will fare against maybe some of the future launches, particularly wondering about Timbrel Lin? If you look at that as a benchmark, big threat or if you think that you're pretty well protected given the familiarity that RCC docs have with Nivo and Cabo?

Yeah, no, thanks for the question. You know, certainly the market's been competitive for many years, even in our prior monotherapy settings, but certainly in this combination first-line setting. So, very pleased with our data and our team and experience and ability to compete there. And what we've seen in our market research, in our time on the market, with which we're really pleased by, already establishing the 28% first-line market share roughly five months after approval is really outstanding. I think it speaks well to the execution of the team and certainly the the strength of the data. And what we hear from clinicians is it's really the totality of the data, the balance of the data, the efficacy, particularly the overall survival, as well as the safety and tolerability we're seeing in the regimen that physicians are seeing in the data, you know, coming from the optimized 40 milligram daily starting dose, as well as our quality of life, which is important for patients, right, who are going to be on therapy for extended lengths of time. All that and all our work, we think positions us really well in the marketplace today and going forward. So we're really confident in our position, our team and our execution and look forward to continuing to grow and helping a lot more patients with RCC.

Thanks, PJ. And then one quick one if I can sneak in here. Gisela's presence is definitely missed on this call and I really hope that everything's well with her. Mike, If you can channel your inner Gisela, could you maybe talk to us a little bit about what we can expect in terms of data for XL092 in the near term?

Yes, I'm happy to do that. I'll channel my inner Mike because I don't think I can do Gisela very well. Nothing new to really report in that regard here. Our messaging at 092 is consistent today as it has been with prior messaging. We are Really excited about the profile of the next-gen CABO kind of profile that we've got with O9-2. We think there is a very exciting clinical and commercial opportunity with this molecule, and it obviously has a very high priority within the organization. We're pleased to have now three clinical collaborations to be able to profile O9-2 ICI combinations with leading ICIs and certainly our collaborations with Roche Genentech, with Merck KGA, and now BMS, I think, underscore the interest, the utility potential validation for the overall approach. So, we're certainly very pleased with that. Our priority today, as it has been for months and months now, is to really enhance and expedite the clinical program to move 092 into pivotal trials as soon as possible. Planning on this year, if we can make that work, that's the plan. So there's really no new guidance now or previous guidance on the next presentation of data. Obviously, when we have those details, we'll share those with you. you're likely to see us start either new trials, new combinations, new collaborations, et cetera, before you see that next data set.

Great. Thanks, guys. And congrats again on the data, on the update.

Thank you, Jessica.

Your next question comes from the line of Mike King from HG Wainwright. Your line is now open.

Hey, good afternoon, guys. Thanks for taking the question. Congrats on a great quarter, and let me convey my sentiments towards Gisela's well-being as well. I just wonder, for TJ, can we just talk about, I think it's very interesting that you're willing to project out what you expect the average duration of therapy would be on Cabo Nevo. For a reference standard, do you happen to know what the average time on Cabo as a single agent is in the second line now?

Yeah, Mike. This is PJ. Happy to take the questions. I mean, in talking about projecting the data, I'm just really referring to what we saw in the clinical trial about a year and a half with regards to 9ER. So that's what we certainly anchored to, and obviously you have to see a lot of data as in the commercial setting and look at it retrospectively before you can really see that in the marketplace. What we've seen and we're pleased with with regards to Cabo's single agent is we've seen it really more or less approximate what we saw in the Meteor trial in terms of duration of therapy, seven, seven and a half months, in terms of the PFS generally. And the longer... we've had patients on therapy. There are certainly some patients who do remain on for many years, which is certainly gratifying that those patients can benefit. So, you know, what we've seen so far is it's a pretty good surrogate to use the trial. And, you know, obviously something we'll track closely going forward.

Right. Okay. I appreciate that. Also, can you comment about whether on the NRXs, are these patients, individuals who are already on an immune checkpoint or on NEVO already, or do you know if they're starting the combination sort of de novo?

Well, I guess I'll point to maybe two different pieces of data in our sort of presentation today. So the NRXs are just any CaboMedix new prescription from Acuvia. So that could be in any setting, combination, line of therapy, etc., You know, what I would point to really looking at to dig into the combination utilization of CaboMedix with nivolumab in the first line setting was the other Acuvia data we shared with regard to new patient market share, which we've seen get up to 28% now in Q2 with a, you know, steady increase and taking share from all competitors in the strong market share pretty quickly. So that's really the sort of de novo combination usage according to the brand impact data.

Okay. And then one other just quick one. I should know this, but can you just remind us what the status of the filing is in Europe based on Checkmate 9ER? Thank you.

That's a good question. I think they've been, you know, I don't want to speak to that. That's a good one that Gisela would normally answer, and obviously she's not here. So, Mike, we'll get back.

Yeah, sorry, I'll just jump in and say that, you know, obviously we work closely with our partners Ipsen there, and it's approved in Europe, and, you know, they're working diligently on securing reimbursement across the various countries, which, as you know, is a is quite a workout in their focus. So it's sort of very early days in the launch over there, but they're certainly, I think we're pleased with the progress they're making in what we see.

More to come. Thanks so much. Congrats again.

Okay. Thank you, Mike. Your next question comes from the line of Jason Gerberry from Bank of America. Your line is now open.

Hey, guys. Good evening. Thank you for taking my question. So I guess just, so I think the comments about a 1.5 billion run rate end of year, year end 2022 for, I believe that's RCC revenues. I'm just trying to foot that with sort of the guidance for the end of the year. I would think like fourth quarter, you might be like at three and a quarter for renal sales and 1.5 billion run rate, you'd be at 375 like per quarter. So it, It seems like with patients stacking, you're growing market share. Just wondering, is there some conservatism baked into the guidance for a 1.5 billion run rate year in 2022, just kind of considering there'll be another IOTKI in the market, presumably with Merck? Just wondering how you guys are kind of conceptualizing the possibility of another competitor in the space.

Well, that's obviously something that we're focused on and think about a lot relative to the competitive dynamics here. I think PJ framed it well. That's been the case with RCC since, you know, the day we started the Meteor trial and the day we got approved and the day we launched. So that's nothing new here. I think the $1.5 billion run rate guidance by the end of 22, again, that was put out there several quarters ago, well before we launched with, I think, the appropriate level of market research guiding that estimate and guiding kind of a long-term view on the ramp for market share and duration of therapy. So I think we're sitting pretty good right now relative to being able to hit that mark. You can do the floor-looking math based upon these numbers, what it takes to get there over the next next six quarters. I think those are numbers that are achievable, even with competition coming up. So we feel good about that. And obviously, that's a baseline that we want to build off of with other trials in renal and certainly other indications going forward.

Got it. And if I could squeeze a follow-up in, just on CRPC filing, I know the markets are skeptical. You can get there just on cohort six. But What will be your lead arguments going into the FDA that cohort six should be an approvable basis as opposed to a more traditional phase three pathway?

Yeah, so I certainly don't want to comment on discussions or topics that we'll have with the agency. I think what I'll do is answer, as I've done previously, a near 20% response rate by blinded independent review relative to standard of care, which by contemporaneous pivotal trials has been a second NHT, with response rates in the low single digits, I think is an encouraging signal. If you look at the concordance between the two response assessments for PFS, for duration of response, for disease control rates, they're all, I think, promising and warrant, I think, a deep dive into the value of those on top of the response rate in the 20% range. So, we feel good about that. We're encouraged by it. Obviously, you know, the dialogue with the agency will define our steps forward. We're seeking alignment there. If there's alignment, we'll file. So, you know, the skepticism that's out there, so be it. We're going to generate data in this case in those discussions and have a path one way or the other based upon that feedback. So, But we forget about the data, and certainly as it portends for contact 02, we forget about that too. Okay, great. Thanks, guys.

Yeah, thank you, Jason.

Your next question comes from the line of MDK from William Blair. Your line is now open.

Great. Thanks for taking my question, and congratulations on a rate-for-breaking quarter, just like last quarter. And, you know, best regards to Gisela and her family. So in terms of questions, I'm just wondering, PJ, can you comment on kind of the RCC market size relative to pre-COVID-19 levels? So, you know, I think you've commented extensively about the market shrinking towards the back half of last year. So just maybe give us a sense of where we are currently relative to the pre-pandemic levels. And also, I'm just curious on two data points that you have, which is in the second quarter you mentioned about a shrinking in new scripts, but an increase in total scripts. Just curious if there's any sort of idiosyncrasies here in the second quarter.

Yeah, thanks for the questions, Andy. I'll start with kind of the I guess the market with regards to kind of the COVID dynamic. You know, as we talked about last year, we certainly did see some impact in the market, particularly in kind of the middle of the year, Q2, Q3, as the pandemic was kind of, you know, first really started to have impact across the country. I'd say what we've seen generally is we've seen that sort of slowly recover, at least in the RCC market. I don't think we're kind of quite all the way back to normal by any means, and obviously there's still, you know, Delta, new variants, et cetera. But I think, you know, I think it has certainly stabilized and recovered somewhat there. And, you know, with regard to your other question, just to make sure I'm clarifying, you know, what we saw with regards, I'll just point to NRX data. So what we saw was roughly stable NRX data from a QVIA in Q2 relative to Q1. For CaboMedx, while the market there was down 5%, CaboMedx was stable. And that's actually a pretty common thing. Seasonally, we see just that Q1 new prescriptions are pretty big, and that can be insurance and a variety of other things. You know, I mentioned our third-line shares declined a bit, and that's because most patients at this point have seen CaboMedic, so we're really pleased with that. You know, we still have a leading second-line share. We get the majority of post-IO patients in the second line, and obviously we've had really a lot of growth first-line. And as I mentioned, too, just with regards to the NRX, what we see internally in our new patient starts, which we track very closely and have a lot of data that I'm not going to share here, but we've really seen some stronger and more robust numbers than what the Acuvia NRX data estimates. So I think we're seeing really strong growth, and we're seeing an improving patient mix in terms of our new patients on CaboMedix driven by the first-line combination usage. And I think the 28% market share that we're seeing there is really strong and driving that.

Yeah, that's helpful. Thanks, PJ. So for Peter, you know, I think there's an increasing emphasis on ADCs in the pipeline. You know, six of the last ADCs were approved under accelerated approval program. Just curious if that is kind of the standard, you know, clinical trial or clinical development plan for XB002 going forward. Yeah, happy to kind of get a sense of your take on that.

Yeah, thanks, Andy. Appreciate the question. And, yeah, I think that's very much our view of it as well. I think as you commented, there's been six approvals, I think, in the last 12 to 18 months based on accelerated approval. I think one of the attractive features of ADCs, especially contemporary ADCs, is if they're going to be active, you find out pretty early on. And it's really a matter of them being able to balance kind of the therapeutic index in terms of obviously your activity versus side effect profile. So for XB002, which is our kind of next generation tissue factor targeting ADC, and just to recap here, this is, as I said, there's already a tissue factor targeting ADC that's been advanced into the clinic, 2-sotamab-vidotin, which is shown encouraging clinical activity in cervical cancer. So we're going to view tissue factor as a kind of de-risk target from that point of view. XB002 is a next-generation version that differs in a number of significant ways. It's a different antibody that targets a different epitope on tissue factor that should get around some of the bleeding issues that have been seen with disoptimab. The different linker payloads optimize more stable linker, which should enable us, hopefully, to dose higher as well. So we certainly see cervical cancer as an area of interest. The ongoing phase one clinical trial is actually looking at a fair number of different solid tumor types based on what we know about overexpression of tissue factor. So in addition to cervical, we intend to have patients with lung, ovarian, urothelial, pancreatic, and head and neck. So there's lots of places to go from a development point of view. And certainly from within this clinical trial, the intent obviously is to find an appropriate dose to take forward, expand out into a number of different cohorts in a Phase 1b setting, and then follow the data. So obviously if you start seeing encouraging signals, trials are designed to enable you to enroll additional patients into those cohorts as appropriate. And I would say that's a general kind of philosophy that we have right now. It's not explicit for 002, so you'll see us kind of take that path a lot.

Thank you. So last question, if you don't mind. I want to kind of revisit the $4 billion revenue guidance that you provided. You know, obviously a lot of things have changed. I'm just curious if there's, you know, kind of any sort of high-level, you know, changes that you see pertaining to maybe the different contributions from across the different indications and, you know, things like that, strengths and weaknesses across, you know, different segments. You know, happy to kind of hear your thoughts there, too.

Yeah, Andy, I'll be happy to address that one. So just as a reminder, you know, the whole goal behind putting out those numbers at J.P. Morgan in 2020 were really to define what success looked like, right? You know, assuming success across the board and generating success differentiating clinical data, how big could the Cabo franchise be? So as we've highlighted previously, we didn't risk adjust those numbers, just a kind of frame shift going back a couple years. We hadn't even seen 9ER then in terms of that data. So those were, again, aspirational in nature. They weren't meant to be updated, and we're not going to update them relative to What's happening, you know, slide 11 of that deck, which I've now got memorized and I'm sure you do as well, has all the math. So if you want to adjust that based upon your assumptions, based upon your modeling, you know, please have at it. Our focus is making sure we can advance the pipeline of the CAVO program across the board and then the pipeline across the board so we can, again, address more patients, bring more benefit to cancer patients who need better and more effective therapies, and then build a business based on that.

Got it. Okay. Well, thanks for answering all my questions, and congratulations again.

I appreciate it, Andy. Thank you.

Your next question comes from the line of Michael Schmidt from Guggenheim. Your line is now open.

Hey guys, thanks for taking my questions and congrats on the great second quarter results as well from me. A pipeline question, I guess, how are you tracking towards top line data disclosure for Cosmic 313? And perhaps could you share your thoughts on how the triplet might potentially be incorporated into clinical practice relative to the checkmate 9ER regimen? Is there perhaps an additional patient segment that is not currently addressed with the doublet that you think might benefit from the triplet?

Yeah, sure. So as we talked about previously, COSMIC 313, achieved full enrollment, I believe, back at the end of Q1, in the March timeframe of this year. So it's an event-based trial. So our projections, you know, end of this year, early next year, but, you know, it's always event-based. So I would view that estimate with pretty healthy error bars. And certainly as we accrue more events, we'll have a better sense of timing, per se. You know, we're really excited to be talking Excuse me? No. Got it. We are really excited about the opportunity there. Certainly at a high level, think about combining the best of IO-IO with the best of IO-TKI in a framework for patients who could benefit further in terms of any number of different parameters. in terms of increasing the number of patients who have some level of disease control, say what you see with IO-IO, extending the tail, raising the tail in terms of both IO-IOs and IO-TKIs. So across the segment of opportunities, we think it's a very, very important next-generation trial. I think it's notable that this is the first triplet. I think that's being done contemporaneously. for an IO that we're certainly excited to be part of. So lots of opportunity, lots of upside. Obviously, we're in the game of hazard ratios and p-values, so we have to see the data before we get too far ahead of ourselves, which we're not doing, obviously. But certainly, this is an opportunity for us to continue to build on the success of 9ER and on the success of Meteor and Cabo Sun and really continue to build a franchise in renal.

That makes sense. Great. And then just to follow up, you've obviously, you know, continued to invest in your early stage pipeline now with three additional programs and clinical studies, presumably a few things going on preclinically as well. I guess in that context, to what degree has your, you know, philosophy towards business development shifted perhaps in the last couple of years? And, you know, what level of urgency do you have at this point to perhaps in-license a later stage product candidate that's, you know, made closer to market?

Yeah, look, I think our overall approach here has been consistent, and I think we've been executing on relative to a variety of early stage deals that we've gotten done last year and this year, and the queue that we're looking to complete, you know, in the relative near future. We continue to look at a variety of late-stage assets. I think the opportunity there is to really have conviction that whatever we build into or, you know, buy into or buy has the, you know, we have the conviction that not only is there a higher probability of clinical success and regulatory success, but maybe more importantly, commercial success. And I think, you know, someone like you, I'm sure you've tracked this better than I have, but the you know, there's a lot of oncology launches that have taken place over the last couple years that, you know, just quite frankly haven't done that well. So getting over the goal line with, again, the right hazard ratio, the right p-value, and an ultimate approval doesn't necessarily guarantee commercial success. And that's the game that we're in. So any big deals that we do, any big bets that we make, we need to have conviction that it's the right value, it's the right opportunity and that the probability of commercial success is very, very high.

Understood. Great. Thank you and congrats on the quarter again. Thank you.

Thank you, Michael. Your next question comes from the line of Yaron Werber from Cohen & Co. Your line is now open.

Hey, thanks for taking my question. This is Gabe on for Yaron. Just focusing on the pipeline, just the questions on how they've been pretty much asked already. Any updates on 092 with the expansion cohorts or, you know, kind of just any updates on that? And then future INDs timing mentioned, you know, previously potentially some more in fiscal year 21. Just curious if those remain on track. Thank you.

Yeah, so I think we've said all we plan to say about 092 already in prepared remarks, and I think the question from ASTACA, so I'll pass the pipeline question with new INDs over to Peter.

Yeah, sure. So, as you probably saw on the pipeline slide, we do have a compound called XL114. That's a compound we have referred to a little bit previously. It's coming from our Origen collaboration. It's a novel small molecule. It has a novel mechanism of action, which for now, at least, we're not going to be speaking about. It does remain on track for an IND this year. We see the primary indication for this compound being a heme indication, although we are also exploring preclinically the potential for additional solid tumor indications.

Dave, any other questions, or do you want us to move on?

No, that's great. Thank you.

Thank you. Your next question comes from the line of Jay Olson from Oppenheimer. Your line is now open.

Oh, hello. This is Chong on the line for Jay. Thanks for taking our question and our best wishes to Gisela. We just want to ask about the Cabo plus Nebo in the academic and the community settings. It seemed like in the Q2 you have stronger growth in the community settings over the academic. Just curious about your thoughts on the growth rate in these two settings moving forward. Also, just wondering if the adoption in the community centers is more related to the in-person interaction between your sales team and the prescribers. Thank you.

Yeah, thanks for the question. You know, I think with regards to the academic and community kind of split, As I kind of mentioned, academics typically adopt quicker, and we saw that. We're very pleased with that and certainly think we have some potential to grow there. But we're particularly pleased by the performance in the community setting, going from a market share in Q1 there of 11% to 25% in Q2. And I think there's a lot to that. Typically, you know, it takes a little longer to sort of reach and educate broader in the community to drive that uptake in the education. And I think we're still relatively in the early days of that. So we think, you know, we certainly have the opportunity to grow a lot more in the community setting, which is, you know, really 75%, 80%, give or take, of the business in RCC communities. And I think you're kind of right on with regards to kind of navigating the pandemic. It certainly makes particularly educating in the community setting a little more complicated. And I'm really proud and pleased with our team. We've done a great job of engaging there where appropriate, you know, in person, certainly virtually by Zoom and a variety of different mechanisms there. you know, digitally in terms of non-personal promotion. And we have seen things sort of kind of open up over the past couple quarters. Obviously now with the Delta variant and, you know, kind of the trends we're seeing in COVID now, this is, you know, things are again evolving. And often this is regional and even account by account as we see that. But, you know, I think we've got great momentum there, and our story is just resonating really well, as I referred to earlier. So I see certainly a lot more potential there if things can continue in the community as well. So very pleased with the performance. And I think the 28% market share in really the first full quarter after launch is really the data resonating with physicians.

Got it. Thank you.

Your next question comes from the line of Peter Lawson from Barclays. Your line is now open.

Hey, Mike. Just thanks for all the detail. Just around the aspirational guidance, is that something that would be updated on a kind of a annual basis or every couple of years? Just how do you kind of think about that and kind of communicating that with the street?

Yeah, thanks, Peter. I think you might have missed the, I think the question that Andy asked, I mean, almost verbatim exactly the same, and I won't repeat myself again. But, yeah, already answered that question. So why don't we go to the next one?

Okay, but that's, that's not something you'll be thinking about updating every year or every couple of years.

Yeah, maybe you missed it when I answered the question previously with Andy, but, yeah, we said we're not going to update that. That was aspirational view of what success looked like prior to having any data, and it was based on the idea that if we were able to generate compelling, differentiating clinical data, that would define the market, so.

Gotcha. But would that be updated, do you think, after you get additional approvals, just to kind of, is that how you're thinking about those updates as you get more?

I think I just answered the question, Peter. Kim, let's move on to the next question.

Yeah, Peter, we do provide annual guidance, right?

Annual, yearly guidance. Yeah.

Perfect. Okay. Thanks so much.

You bet. Your next question comes from the line of Kenneth McKay from RBC Capital Markets. Your line is now open.

Hey, Mike, I was hoping on that aspirational – no, I'm kidding. I'm kidding. Oh, please, ask it again.

Come on.

You can do it. I was actually – I did have a CAVO question. I can go on CAVO all day. I know you're getting a lot of information channeled back from your commercial teams, and I was hoping to hear sort of any anecdotal evidence you're collecting for why docs are reaching for Cabo Nevo and frontline RCC versus some of the competitive combo regimens out there. We've heard over and over again that docs prefer Cabo Nevo in more advanced tumors for Cabo's rapid onset of effect. Wondering if you're seeing at all or hearing at all an increase in those more advanced tumors given the COVID-19 pandemic and decreased cancer surveillance and biomarker screening or, you know, if that's not playing out, if there are any other anecdotes that you are hearing. Thanks and congrats again on the quarter.

Yeah, thank you.

Yeah, let me say a few words and then PJ can provide some additional color commentary. Look, again, the individual components, you know, CAVO and NEVO have been the mainstay within kidney cancer since, you know, their introductions back in the, you know, 2015-2016 timeframe. So there is a a long history and familiarity with, you know, with these two drugs. And to be quite frank, almost a clamoring for the combination. I remember when on July 21st, 2015, when our data and the BMS data came out together, some of the initial feedback we got from KOLs, I mean, on the day of the top line results was, Let's start combining these molecules because you could really see some good activity if they were put together. So there's been a history here. There's been momentum building for years. The 90-yard data was, to a large degree, exceeded expectations in terms of efficacy, tolerability, and quality of life. And one of the things that we really believe in is if you combine great data with a great team, you can really make headway very, very quickly. And to go from a standing start in January to having a leading, either a co-leading or a leading share within five months is just a testament to the data that the clinical teams put together and then just the great commercial effort. So again, I think the broad uptake speaks for itself, and we're looking to capitalize that and build on that going forward. PJ?

Other words? Yeah, no, I mean, I certainly agree. You know, the experience of physicians with these drugs and the sort of longstanding excitement to use them certainly helps really across the board. And, you know, we hear a lot of, I guess, anecdotes keying into your question, but I don't really, I think they're very broad in the sense that I think physicians see the totality of the data in a way that they can find lots of different patients to utilize them in, you know, whether it's rapidly progressing patients, whether it's a favorable patient where they may be really thinking about the, you know, the tolerability profile if they view it favorably, which many do. So I think there's, you know, what we see in it, it's really represented well in the NCCN guidelines, is that it really gives them the option to use these broadly. And I think one thing we'll continue to see in the community is they don't see as many kidney cancer patients on a per capita basis, so they get comfortable with CaboMedix and Evo on kind of a use basis. They can really have the potential to use it, you know, use it across the board for all their kidney cancer patients, and particularly, you know, when we got talking about the tolerability profile, really the optimized 40 milligram dosing daily has played really well in the combination, and I think That's really reframed how folks think about the tolerability profile of Cobb-O-Medic. So it's great that we're able to do that wowing combination. But, you know, I think it just has a lot of potential benefits for a variety of patients, and physicians are seeing that across the board.

Makes sense. Thanks, and congrats again, guys. Thank you.

Yeah, thank you. Thank you, Shannon.

Your next question comes from the line of Chris Shibutani of Goldman Sachs. Your line is now open. Great.

Thank you very much for the opportunity for the question. Very healthy cash balance, obviously, generating cash flow extremely strongly from the Cabo success commercially. Can you comment upon how you're thinking about capital allocation strategies? Remind me whether or not you have a share repurchase allocation. And maybe how frequently you sort of revisit the prioritization of those types of decisions.

Thanks, Chris. This is Chris Center. So I think we break it down in a couple of pieces, right? We're going to continue to do the BD that, you know, Mike talked about earlier, you know, the smaller deals looking same size of scope that we've been doing. We continue to look for, you know, other opportunities to continue to enhance the pipeline and, you know, Right now, we think that's the best investment of our cash balance. But, you know, we do, Mike and I talk about capital allocation and cash utilization all the time. And we do that continually. And we do it in a way that we're trying to understand what's the best answer from a shareholder perspective and how do we return capital to shareholders. And so, you know, that's basically the way we look at it.

And do you have a repurchase allocation currently?

We do not have a share purchase allocation currently, but as I said, we continue to look at the capital allocation and see what's the best return on capital.

Got it. And then in terms of the generic challenges, is there anything that you might be able to share with us updating on progress? I believe we are still on track for the trial in May of 2022. Anything on that front? Incremental news.

Yeah, Chris, thanks. It's Mike. Yeah, nothing that I can really share here. You know, the process is the process, and I think it's evolving as we expect, but I really can't go into details publicly.

Okay, and then finally, share the commentary and support for others with you. So, obviously, you have a very strong clinical development bench on your team based upon Cabo's success. As you think about, you know, furthering the direction of that group of people, that core group of people, are there any different things that you're looking about, looking for? Any strengthening, particularly as you think about the ADCs that are in your pipeline, just in terms of the C-suite and guiding some of those clinical decisions? Any updates there?

Yeah, no, it's a good question. It's one that we're looking at very carefully, obviously. You know, we're never going to replace Gisela. I think that's, I think, a really... fair way to look at it. We're looking to bring somebody in with their own unique skill sets, their own unique perspective, somebody who can help us go to the next level for the years to come. So it's one that Gisela has been a key, key, key part of this team and this organization and building this culture. And I want to take her opportunity, her success, her impact on the organization and help go to the next level now. And she'll be part of that process, right? We talk on a regular basis. You know, we're brainstorming about opportunities and, you know, kind of candidates, those kinds of things already. So I'm looking forward to, you know, to continuing that collaboration to be able to bring this next CMO in and help us go to the next level.

Great. Thank you very much. Appreciate the answers. You bet. Thank you.

Your next question comes from the line of Stephen Wiley from CFO. Your line is now open.

Yeah, thanks for squeezing me in, and congrats on the quarter, and best wishes to Gisela. Just a quick question, I guess, with respect to utilization that might be occurring within specific subgroups or risk subgroups. I know that you're talking about seeing adoption across all risk subgroups, but I guess when I just kind of look at some of the TKI data, and I know that you're outpacing the market of the TKI market, but it looks like, I guess, both this quarter and last quarter, a lot of the share gains seem to be coming at the expense of Votre and Soutent, which we know are also the single-agent TKIs that are most commonly prescribed in favorable risk patients. So just wondering if if you guys have a sense as to how much of this initial adoption you're seeing in the frontline setting is a replacement of just single-agent TKI therapy within that favorable risk segment.

Yeah, Steve, it's Mike. I'm not sure what data you're looking at to come to those conclusions. I think our view on that is markedly different in terms of how, you know, the share of all the different therapies either combinations or single agents are going down at a pretty good clip with the introduction of Cabo and Evo. So that's our view based upon both syndicated data as well as internal market research. Maybe PJ can provide some more color commentary there.

Yeah, I would agree. We're certainly seeing significant uptake at the expense of other IO combinations. As we did say, we are expanding the amount of combination utilization within the marketplace with the launch of CaboMedix Nivolumab. So, by definition there, we're taking from other single agents. So, that's probably the correlation there in the prescription data where you see student and vote rate kind of declining. So, I think it all makes sense. It's really being driven by CaboMedix Nivo taking share from really across the All right.

Thanks for your question.

You bet, Steve. Your next question comes from the line of Mike King from H.E. Wainwright. Your line is now open.

Mike, you still there?

Yeah, sorry. I was just trying to get myself off mute. Thanks for taking the follow-up. I don't want to be a buzzkill, but I just want to ask you guys about COSMIC 312. And I presume that you'll show the data to FDA before you would present it at a peer-reviewed meeting. So I guess that's, you know, part A of the question. Part B is, you know, having expressed the expectation that the overall survival endpoint will be futile, you know, do you expect that the, you can't expect what the FDA will do, but is that something that you think will have a, FDA will have an issue with filing on that, you know, with on the primary. And thirdly, if they say that the study results are inadequate to file, would you consider taking 092 into that same setting rather than trying to run another study with Cabo?

Yeah, so let me work backwards. First, as a high-level, this isn't a buzzkill question. We're You know, we're proud of that data. It was a great trial from the standpoint of execution during a time of global upheaval, and the team did a remarkable job in getting that done, really unscheduled, both from the standpoint of enrollment as well as readout. So kudos to them. You know, disappointed that we didn't hit survival at the first interim, and as we said previously, it's unlikely that that we will. Not impossible, but unlikely. So we're trying to be transparent and direct with investors about expectations. That's old news. But that's the game we're in, right? Again, we're in the game of hazard ratios and p-values. And being on the run that we've had since 2015, we're literally batting 1,000 in that time frame. So it's not completely unexpected that things are going to go sideways once in a while, especially with all the moving pieces of COVID. So all that being said, I'm not going to speculate on what the FDA might say, what they might do. We have a trial that one of the two primaries hit with a very good hazard ratio and the appropriate level of significance. So with no decrement in survival, which is the important framework there. So a variety of KOLs that we talked to think that's approvable. We'll see. We'll talk to the agency and see. When you see the data in terms of presentations is really more an issue of when meetings will take place. Certainly with the complications from Delta, meetings are being postponed or you know, question marks about what will happen when. So, our goal is to get the data out and the narrative behind what happened with the dichotomy between PFS and OS out as soon as possible. You know, obviously, we have to get alignment with the, you know, with the agency around filing. And I think we have a good story to tell there. But, you know, we'll see. I'm not going to speculate on that before the fact. And once we have information to share that's material, In this context, we'll obviously share that with you. In terms of next trials, and this goes for virtually everything beyond the contacts, it'll be done with 092, right? And we've said that previously. So, you know, whether we're talking about liver, about more renal, about lung, about prostate, you know, any number of different tumor types that we've seen activity with Kabalin in the past but haven't pursued in terms of full development. That's going to come then into the purview of 092 going forward. But that obviously will get defined in the time ahead, and we're certainly very excited about the opportunity and about all these collaborations that we've got now. with various ICI doublets and triplets that we think can bring a lot of value. So it's a work in progress, but hey, no excuses, no hung heads. We're gonna just keep our eye on the ball and make sure that we can deliver every day for patients who need better therapies. Okay, thanks so much.

Be back.

At this time, there are no further questions, and so I will turn the call over to today's host, Susan Hubbard. Ms. Hubbard?

Yes, thank you, Francie, and thank you all for joining us today. We welcome your follow-up calls with any additional questions you may have that we were unable to address during today's call.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.