Exelixis, Inc.

Good day, ladies and gentlemen, and welcome to the Exalexis 3rd Quarter 2021 Financial Results Conference Call. My name is Jeff, and I'll 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, Jeff, and thank you all for joining us for the XLX's third quarter 2021 financial results conference call. Joining me on today's call are Mike Morrissey, our president and CEO, Chris Senner, our chief financial officer, PJ Haley, our executive vice president of commercial, and Peter Lamb, our chief scientific officer, who will together review our progress for the third quarter 2021 and its September 30th, 2021. During the call, 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 the future events and future performance of the company. This includes statements about possible developments regarding discovery, product development, regulatory, commercial, financials, 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 limitations, 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. Now, 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. XOX has had a strong third quarter across all components of our business as CaboMedic's demand and market share grew in the face of increased competition. At the same time, we advanced our pipeline of promising early-stage programs with a new IND and an additional collaboration for an exciting target in the RNA sensing pathway. On the commercial front, ComboMedix maintained its status as the leading TKI for RCC and Q3. We saw strong demand for the ComboMedix-Nivolumab combination across all segments of the first-line RCC market, including continued NRX and TRX growth. Despite some quarter-to-quarter choppiness, we are pleased to see CaboMedic's net product revenue in the third quarter of 2021 maintains significant momentum with 63% year-over-year growth compared to the same period in 2020. To expand on this further, three factors converged to impact the second quarter of 2021 CaboMedic's revenues. First, a significant growth in demand following the success of the nine-year launch. Second, an increase in inventory, reflecting the growing demand seen throughout the first half of 2021. And third, clinical trial comparator sales. While third quarter Cobb-O-Medics demand continued to grow in the face of increased competition, the latter two factors did not occur to a significant extent in Q3. Looking ahead, we expect Cabo to achieve well in excess of $1 billion in U.S. revenue in full year 2021, and our goal remains to exit 2022 with a $1.5 billion annualized run rate for RCC in the U.S. We view our progress in 2021 as putting us in a good position to achieve this goal. XOX has also advanced key 2021 regulatory development and discovery activities in Q3. We were thrilled with the early approval of Cabo Medics and Second Line DTC and excited to bring this new treatment option to prescribing physicians and patients to treat this indication for which no standard of care previously existed. The abstract for the Cabo Atezo Doublet and First Line HCC from Cosmic 312 was accepted for presentation at the ESMO Asia Virtual Oncology Week Congress during the virtual plenary session on Saturday, November 20th. Based on recent feedback from the FDA, we plan to file the COSMIC 312 SMDA in early 2022 once the final OS data are available. In regard to late-stage development, the full portfolio of COSMIC and CONTACT trials with cabozantinib ICI combinations continues to advance. In particular, the CONTACT-01 and CONTACT-03 studies in forms of non-small cell lung cancer and renal cell carcinoma, respectively, are nearing full enrollment. Top-line results for COSMIC 313, which is evaluating the Cabo-Nevo epitriplet in previously untreated intermediate or poor-risk RCC, are now expected in the first half of 2022 based on current event rates. Our early clinical pipeline is advancing as well, with significant progress for XL092, XL102, and XB002, and we expect to share initial clinical updates for each program over the course of 2022. Since reinitiating the buildup of our early-stage pipeline in 2017, the XLX's discovery, business development, and non-clinical teams have seamlessly integrated their work streams to pursue compelling opportunities across small molecules and biologics with the aim of growing our clinical pipeline, most recently exemplified by our new IND filing for XL114 and the collaboration with Storm Therapeutics. So with that, please see our press release issued an hour ago for a full overview Q3 financial results, and an extensive list of our corporate milestones achieved in the quarter. I'll now turn the call over to Chris, who will review our third quarter 2021 financial results.

Chris? Thanks, Mike. For the third quarter 2021, the company reported total revenues of $328.4 million. Total revenues for the quarter included Cabo's Antidote franchise net product revenues of $263.1 million. Total revenues also included $65.3 million in collaboration revenues from Ipsen, Takeda, and Genentech. Our total operating expenses for the third quarter of 2021 were $276.8 million compared to $262.2 million in the second quarter of 2021. R&D expense was the primary driver of the increase in total operating expenses, which was primarily related to higher licensing and clinical trial expenses. Provision for income taxes for the third quarter of 2021 was $15.1 million compared to $28.8 million for the second quarter of 2021. The company reported gap net income of $38.2 million or 12 cents per share on a fully diluted basis for the third quarter of 2021. The company also reported non-gap net income of $64.5 million or 20 cents per share on a fully diluted basis. Non-GAAP net income excludes the impact of approximately $26.3 million of stock-based compensation expense net of the related income tax effect. Cash and investments for the quarter ended September 30, 2021, with approximately $1.8 billion. And finally, turning to our financial guidance for the full year 2021. Given where we are in the year, we are tightening the financial guidance for total revenues, net product revenues, R&D, and SG&A expenses provided earlier this year. Total revenues are expected to be in the range of $1.3 and $1.35 billion. Net product revenues are expected to be in the range of $1.05 and $1.1 billion. Research and development expenses are expected to be in the range of $650 and $675 million, which includes non-cash expenses related to stock-based compensation of approximately $50 million. Selling general administrative expenses are expected to be in the range of $400 and $425 million, which includes non-cash expenses related to stock-based compensation of approximately $70 million. And finally, we're projecting cash investments to be approximately $1.8 billion at year-end. This guidance does not include the impact of any potential new business development activities, which remains a key priority for the company. With that, I'll turn the call over to PJ.

Thank you, Chris. Today, I will discuss the Cabo Medics business with regards to Q3 2021 and particularly in the context of the continued prescription growth driven by 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. We are pleased that we continue to see broad adoption as CaboMedix built on its position as the number one TKI in RCC. Q3 saw continued growth of CaboMedix prescriptions, both in terms of new prescriptions, NRX, and total prescriptions, TRX. NRX grew 8% in Q3 relative to Q2, and TRX grew 7% in Q3 relative to Q2. This growth is being driven by CaboMedix in combination with nivolumab and first-line RCC. As the launch progresses, The success of CaboMedix in combination with nivolumab is changing the mix of patients on CaboMedix and RCC. First-line combination usage has increased the proportion of the new Cabo prescriptions in this patient population. Given the clinical data from the Checkmate 90R study, we anticipate these first-line combination patients to receive therapy for approximately 1.5 years or more driving a longer treatment duration for CABO medics. We are encouraged by the fact that in our data, we see more than a doubling of the amount of new patient starts at the 40 milligram dose year to date relative to the same period last year. This is further indication that the combination uptake in the first line setting is robust. The launch of the combination has led to an inflection in the prescription growth of CABO Medix in 2021. TRX growth in 2021 year-to-date relative to 2020 year-to-date is 35%. For the same year-to-date comparison of NRX growth in 2021 relative to 2020, the growth rate is 37%. Now, looking at the same Acuvia prescription data but for the broader market, including competitors, a couple of salient points stand out. The 7% Q3 over Q2 TRX growth affirms Cabo Medics is the only TKI in this market to have positive TRX sequential volume growth in Q3 relative to Q2. Furthermore, Cabo Medics is the only agent in this market basket to have positive market share growth as Cabo Medics TRX share went from 38% in Q2 to 41% in Q3. As I mentioned previously, the growth is being driven by first-line combination utilization, while the second-line RCC business for CaboMedix remains stable. Turning to the next slide, we looked at the same market basket and prescription data with the addition of limvatinib to the graph, given the recent first-line combination approval in RCC. The key takeaways from the previous analysis and discussion remain the same. Cabo Medics was the only product in the market basket to grow TRX volume in this competitive marketplace and the only agent to increase market share going from 32% to 34% driven by the first line combination indication. In addition to the strong momentum in the RCC business, we are pleased that Cabo Medics was approved for previously treated differentiated thyroid cancer in September, several months ahead of the PDUFA date. There were previously no therapies approved for this patient population with significant unmet medical need. We are proud that this fifth indication for CaboMedix adds to the body of data in the label and enables XOXs to help more patients with severe cancer. The strong Q3 performance and CaboMedics trajectory position the CaboZantan 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 over to Peter.

Thanks, BJ. I'm pleased to provide an update on our preclinical development and pipeline expansion efforts. Over the last six months, we've enhanced our capacity and ability to prosecute a wide variety of targets and programs, both from a small molecule and biologics point of view, while continuing to advance our preclinical pipelines. We significantly expanded our internal discovery footprint with the opening of new laboratories on our Alameda campus that will allow us to add capacity and new capabilities to our small molecule discovery efforts. Work with our partners has also advanced. In particular, we're pleased to have exercised our option for a second compound, XL114, from our collaboration with Origen. XL114 has a novel mechanism of action that results in inhibition of MOT1 activations. MULT1 is a paracaspase that is a key part of the signaling pathway downstream of B-cell receptors and is constitutively activated in a variety of B-cell lymphomas. XL114 is a potent inhibitor of B-cell lymphoma cell growth and is active in a variety of lymphoma models in vivo. Notably, since XL114 acts downstream of BTK, it has activity in BTK-resistant lymphoma models and in certain subsets of B-cell lymphoma where BTK inhibitors are not active. The IMD Faxel 114 is now active, and we anticipate initiating the Phase 1 trial in patients with non-Hodgkin's lymphoma in the next few months. Work on additional programs at Orogen is proceeding well, and we may have the opportunity to move additional compounds from the collaboration into preclinical development in the first half of next year. With respect to our biologics programs, we have greatly expanded our collaboration with Invenra to encompass an additional 20 targets over the next three years. We've been impressed by Invenra's ability to produce high-quality antibodies against a range of targets, including some very challenging ones. Antibodies and binders generated by Invenra will be used to generate bispecifics using Invenra's B-body platform and also flow into our ADC collaborations. We have already provided Invenra-generated antibodies to our partners Catalan and NBE, who have successfully moved them into their site-specific conjugation platforms and coupled them with their proprietary payloads. This has led to the identification of multiple ADCs with excellent activity in vitro and in vivo. These are being further characterized to understand their therapeutic index before potentially advancing into preclinical development. Inveno-generated antibodies have also advanced into our collaboration with Adagene, aimed at using their safe body technology to generate masked antibodies that will preferentially bind in the tumor microenvironment, thereby improving the therapeutic index versus a conventional antibody. Several mass versions of these antibodies have been identified and are being further characterized. We're excited to have recently announced a new partnership with Storm Therapeutics based on their RNA-modifying enzyme platform. Modifications to bases in RNA, termed RNA epigenetics, has emerged as a novel way to control gene expression and the activity of RNA sensing pathways, processes that are often deregulated in tumors. The collaboration includes two targets, ADAR1, or adenosine deaminase, and a second target to be named later. ADAR1 is an enzyme that converts adenosine to inosine in double-stranded RNA, thereby destabilizing the double-stranded structure. Phytoplasmic double-stranded RNA is recognized by two sensors, MDA5 and RIG-I, which then activate a gene expression program that includes upregulation of interferon production. Tumor cells which express interferon receptors then activate an interferon-stimulated gene expression program but includes upregulation of inflammatory cytokines and often results in cell death. Tumor cells can have elevated levels of double-stranded RNA, probably as a result of deregulated transcription, and this results in some chronic stimulation of MDA5 regi and consequent activation of an interferon gene signature, which is seen in about 30% of tumors. These cells are reliant on ADAL1 activity to maintain tolerable levels of double-stranded RNA, And in these tumors, a reduction in ADAR1 levels can result in tumor cell death. Consistent with this, ADAR1 emerges as an interesting target in large, unbiased CRISPR or shRNA screens for gene dependency in tumor cell lines. In addition, reduction in ADAR1 sensitizes tumors to checkpoint inhibition, even in genetic backgrounds that are refractory to single-agent checkpoint inhibitors, such as loss of beta-2 microglobulins. STORM has established a leading platform for discovery of ADAR1 inhibitors and has a suite of biochemical and cellular assays to guide lead optimization. We look forward to working with them to develop inhibitors against this novel class of targets. We continue to assess a broad range of opportunities for additional business development, including partnerships that may further complement our ongoing small molecule, bispecific, and ADC programs, as well as individual assets, particularly those that are in late preclinical or early clinical development. We look forward to providing further updates as these discussions mature. And with that, I'll turn the call back to Mike.

All right. Thanks, Peter. As you heard on the call today, our team continues to execute across all facets of our business in Q3 with significant progress across our pipeline, clinical development, and commercial activities. As we close out the remainder of this year and look to 2022, We're excited about the potential of the multiple growth drivers ahead of us to move the business forward, and most importantly, put ExoLexus in a position to help many more cancer patients. I'm pleased to share that the ExoLexus team is now greater than 99% vaccinated against COVID-19, and we are back in the office working together again side by side. I want to thank everyone on the team for their individual and collective efforts to navigate the many significant challenges introduced by the pandemic. and then ultimately see us through to a very productive third quarter. Before I close, I want to touch on the recent passing of two of our colleagues, Dr. Gisela Schwab, the company's President of Product Development and Medical Affairs and Chief Medical Officer, and John Berndt, our Senior Vice President of Sales. Losing Gisela and John in the same week, both of whom were life science industry veterans, incredible colleagues and dear friends, is a reminder of our fragility and that cancer knows no bounds. It's also a driving reminder of why we do what we do every single day at ExoLexus. It has only served to deepen our commitment to our mission to help cancer patients recover stronger and live longer. So with that, we look forward to updating you on our progress in the future. Thank you for your continued support and interest in ExoLexus, and we're happy to now open the call for questions.

At this time, I would like to inform everyone, in order to ask a question, press star, then the number 1 on your telephone keypad. Again, that's star 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Astika Guniwardine from Truist Securities. Please proceed.

Hi, guys. Thank you for taking my questions. And I have to echo, like you said, we do miss Kisa's voice on this call. Maybe I'll start us off on maybe a question to PJ. Has the excess inventory worked itself out and are we back at more normal levels? And I guess when we think about going into Q4, should we expect your reported sales numbers to sync up a little bit more with the volume growth that we see on the Symfony or IQ via data? And then I have a follow-up.

Hey, Astika. It's Chris. So the inventory that was built during the second quarter was all demand-related, so it wasn't excess inventory, as you said. I would say that our Weeks on hand inventory between Q2 and Q3 was relatively stable. And even if you go back to Q1, it's been relatively stable throughout the year. So it's not excess inventory. It was just inventory built in association with the demand increase during Q2.

Got it. So, Chris, would you expect then going to Q4 that maybe the prescription data that we all look at, like Symphony and IQA, that might more better reflect what you might report on your net sales?

Yes, Chris, again, so thanks for the question. It's hard to say. I mean, both Symphony and IMS are forecasted numbers, so it's hard to say how they collate their data and project it, but, you know, It's relatively in line with, historically in line with reported numbers.

Got it. Okay. And then it was very encouraging that the FDA gave you guys feedback to file the SMDA for frontline HCC. Just want to make sure I haven't missed anything. This actually indicates that the FDA is open to the possibility of granting approval for Cabo Tezo for first-line HCC just based on PFS. as the co-primary endpoint? And then are there maybe some specific scenarios where this is more relevant, such as, for example, where patients on the control arm are crossing over and causing complications? Thanks, guys.

Yeah, I have to go to Mike. Again, I don't want to get into the details of the discussions with the FDA. I think the information we shared today was, I think, pretty clear. We plan to file the SNDA in early 2022 once we have the the final OS data available. As we talked about previously, as other, I think, cell-side research analysts have opined upon, there's a pretty sizable population of patients with either gastric or esophageal varices that can have complications in terms of bleeding with long-lasting agents like antibodies to VEGF. for example. So we want to be able to help with that population if that's feasible. But I don't want to get ahead of ourselves. We will file as we plan to based upon the guidance we just gave in early 2022 based upon once we have the final survival data. So for all the rest, stay tuned. Great.

Thanks, guys, for taking my question.

You bet, Aska. Thank you.

Your next question comes from the line of Mike King from HC Weinreich. Please proceed.

Hi, guys. Can you hear me?

Yes, loud and clear, Mike.

Okay, great. So thanks for taking the question. I had to jump on late, and if you guys don't want to go through the numbers again, that's fine. I can always take it offline. But just on a sequential quarter basis, do you have a handle on what the underlying demand increase was quarter on quarter?

Yeah, so again, I don't want to repeat the whole call. Sorry, you missed the early part. PJ, you want to just give the high-level demand numbers, and then maybe we can cover the rest offline.

Yeah, thanks for the question. You know, we're really pleased with the quarter where we continued demand growth. Q over Q, we had 7% TRX volume growth, and 8% NRX volume growth. So continuing to see, you know, strong uptake across all segments driven by combination first-line use. So we're very pleased with that.

Okay, great. That's super helpful. And then related to that, can you talk about whether you saw any inroads or any, you know, competitive pressure from Lendema combinations with Keytrude et al. and RCC? And, you know, would that have had any impact on the numbers in the quarter?

Yeah, Mike, it's Mike. As you said numerous times in the prepared remarks, the demand growth that we saw was in the context of increased competition.

Great. Thanks.

Your next question comes from the line of Jason Gerberry from Bank of America.

Please proceed. Hey, guys. Thanks for taking my questions. I guess two for me. Just on the patent litigation front, are there any important milestone events between now and the scheduled May 2022 trial date, be it either any more patents that you guys might be adding to the Orange Book? I know you guys have been active on that front. Any important pretrial proceedings that are worth mentioning? And then secondly, just on X0092, Is the plan to still move that into some pivotal trials before year-end 2021? Just wondering if we might start to hear about some pivotal trials getting underway before the end of the year. Thank you.

Yeah, Jason, it's Mike. In terms of the patents litigation process, Topic, nothing that I'd like to point out here between now and the beginning of the trial date. Obviously, I wouldn't want to front run any news in that regard before it happens. So just stay tuned as things evolve. We will keep you up to date on that. In terms of 092, the first pivotal trial for that compound in combination with an ICI will shift to 2022. And we will alert you when we have the first site activated. So stay tuned there as well.

Okay, thank you.

Yep.

Your next question comes from the line of Michael Smith from Guggenheim. Please proceed.

Hey, guys. Thanks for taking my questions. I just had another one, you know, for Chris or PJ, just trying to understand the sequential decline in product sales a little bit better given the 7% growth in volume and I know you mentioned a few factors, but could you perhaps quantify how much, you know, each of those contributed to the decline?

Yeah, Michael, thanks. It's Chris. So, you know, we did see, as Mike mentioned, we did see an inventory, a demand-related inventory build in Q2, which didn't take place in Q3. And we also saw some comparator sales in Q2 that didn't. to a large degree, didn't take place in Q3. So those are the two drivers of the difference between the demand numbers that PJ referenced and the reported numbers that we're talking about today.

Got it. And the growth to net, was that stable in the third?

Growth to net was slightly down. Well, it's slightly up between Q3 and Q2, but down from where it was in Q1. And it's still, as I said earlier in the year, we were thinking 25% to 26% gross to net. We're still thinking in that 26% gross.

Got it. Okay, interesting. And then, you know, Peter mentioned some more details on the new product that's going into Phase 1, X0114. You know, just, you know, if you had some additional color, how this drug could potentially fit into the treatment landscape within non-Hodgkin lymphoma.

Yeah, thanks for the question. We have a very interesting and differentiated profile in that setting, particularly as I commented, because its kind of point of intervention is downstream from BTK. It is active in BTK-resistant lymphoma models, so that's certainly one place where it could go. There are also subtypes of B-cell lymphoma which activate kind of MULT1 and that pathway without activating BTK. So those, again, are insensitive to BTK inhibitors. These are lymphomas that have mutations in things like CARD11, for example, often called mold lymphomas. So that's another point of differentiation. So that's another place that this compound could go as well. So those are the two things I'd highlight initially.

Very interesting. And then, you know, I know you mentioned, you know, initial data disclosures on the earlier stage pipeline drugs in 2022. I'm just wondering if we're thinking more, you know, first half, you know, ACR or ASCO perhaps, or are we thinking more in the second half of the year at one of the conferences?

Yeah, Michael, it's Mike. Yeah, probably too early to opine upon that now, but stay tuned. As those plans evolve, we'll be sure to keep you up to speed on what's happening.

Great. Thanks again.

Your next question comes from the line of Andy C. from William Blair. Please proceed.

Thanks for taking my question. So, first and foremost, I'd like to express my deepest condolences to the Exalexis team. Gisela's and John's energy and enthusiasm are missed. So, in terms of questions, PJ, I have a question maybe on the broader RCC TKI market. maybe your perspective on where it is versus prior to the COVID-19 pandemic. It seems like there's some fluctuations between kind of growth and shrinking towards kind of the middle part of last year and also some fluctuations in the first half of this year. Just curious about your take on that.

Yeah, Andy, thanks for the question. It's PJ. I think you're right. I mean, over the course of the pandemic, I think the broader RCC marketing beyond TKIs saw certainly a little bit of choppiness, as we've discussed, you know, given the difficulties with treating patients and hospitals in that pandemic. But I think over time, what we've seen is sort of like the market expand. And I think part of it is recovery from COVID. But I think as you've seen, you know, IO-TKI combinations become more and more standard of care and first-line treatment. I think we talked about that somewhat last quarter, certainly with Cabo Nevo driving more of that utilization in the frontline setting. We're seeing the TKI market expand and could potentially see that continue as we see more and more duration from the utilization of drugs like Cabo over time for these first-line patients who would stay on therapy longer. And that could continue to potentially drive expansion of the TKI market within RCC.

Got it. Okay. And in terms of the upcoming 303 study, I have a question about the protocol. So, for Checkmate 214, they have a very strict discontinuation protocol. I'm just curious if that is also baked in to the 301 study. or maybe there's, like, improvement just because people know how to use IO-IO combinations better over time.

Yeah, Andy, it's Mike. Yeah, I think we've done a really good job of working with a variety of KOLs to optimize the protocol around managing through a variety of AEs that are seen with, you know, either one or all three of those molecules combined relative to, you know, what we've learned over the last four or five years since the the 214 data read out. So, but that's why you run trials is to, you know, look at the data in a blinded fashion and let the data speak for itself. So, we're excited about that opportunity. We're really pleased to be, you know, on the leading edge of driving potential advancement of standard of care with the first triplet in RCC. And we're excited to have the data come out sometime, hopefully in the first half of 2022. So, stay tuned.

Great. And maybe last question for Peter. Just curious on your take about the MULT1 pathway, just at least in the DLBCL space, especially with Polivi, the CD79B antibody drug conjugate potentially replacing the standard of care. Would that drive higher dependency on the MULT1 pathway as kind of patients go through to the frontline therapy?

Yeah, I think there's a lot of activity in the lethal lymphoma space generally, as you're aware. As I was commenting earlier, of course, there's still a lot of activity around new BTK inhibitors, novel BTK inhibitors, be they covalent. People are starting to advance degraders now as well against BTK. So I would say one in all of those cases, should resistance arise, which it certainly will, then there's certainly a strong opportunity for a compound like 114 to be active as well. It's interesting you raised the CD79 side of things. CD79 activation, obviously, is something that can drive B-cell lymphomas as well, but that does not go through BTK. But again, those lymphomas look active or sensitive to 114 as well. So, yeah, it'll certainly be interesting to see whether downstream of you know, agents directed at CD79, whether we have an opportunity to pick up those resistant patients as well. Time will tell.

Great. Well, thank you so much for taking all my questions.

You got it. Thank you.

Your next question comes from the line of Jay Olson from Oppenheimer. Please proceed.

Hi. This is Jonah live for Jay. Thanks for taking the question. Can you comment on the launch of Cabo in DTC, given that it's almost like three months ahead of the particular date? And also, if you are counting sales in DTC into your four-year revenue guidance? Thank you.

Yeah, this is PJ. Happy to talk about the approval. We're certainly very pleased with To have DTC approved, I think, about 79 days ahead of the PDUPA date, that's certainly great news for patients, as I mentioned, in a setting of high unmet medical need, so patients who really needed a therapy. So very happy with that. You know, the data are very strong, and I think what we heard and we continue to hear from physicians is that, you know, the progression-free survival data is very compelling and So we think as we promote and raise awareness, we will likely get very good utilization with that. Very happy that the team was ready to go immediately and launch day one, even with the sort of rapidly accelerating timelines of approval. So very good news there. Thyroid cancer is a space we've been in since 2013, so we know it extremely well. We know where those physicians are and who they are. and are really excited to be working with them.

Yeah, Chang, this is Chris. So on the guidance question, the revenue guidance question, yeah, I mean, it's in the revenue guidance generally. So, yeah, for the year.

Okay, thanks.

Your next question comes from the line of Peter Lawson from Barclays. Please proceed.

Hey, thanks for taking my questions. Just on the HTC filing, are you waiting for further data for that filing? And also, could XL092 also have a place in HTC?

Peter, it's Mike. I missed the first part of that question. Could you say it again?

Oh, just on the HTC filing. Are you waiting for other data before?

Oh, I see. Yeah, yeah. As we talked about in the prepared remarks, we've agreed with the agency to submit the SNDA once we have the final overall survival data in hand. So that's what's driving it from basically a Q4 2021 event to a 2022 event. And do you need to see more than a trend in that OS? Yeah, as I addressed on one of the earlier questions, I don't want to speculate on that whole topic. We've agreed to file once we have the final survival data in hand.

So stay tuned. Gotcha. And then Excel 092, could that find a place in HCC, or is that kind of white space not available for them?

No, it's certainly available, and we're talking a lot about various indications and combinations for 092 right now. Certainly some of the learnings that we've seen from 312, if you look at the broader context of HCC, say even with some of the emerging data from other IO combinations, 092 could play a very, I think, a very interesting role of potential doublets or triplets for HCC. We have to sit down and think about priorities and think about how we want to do that. But I would say in general, we view development in a broad sense like we're doing with RCC. It's not just one shot. It's multiple shots on goal, multiple trials covering variety of lines of therapies, combinations, et cetera, to give us the opportunity. And that's the goal we have for all of our compounds, all of our trials, is to move the bar up in terms of standard of care for patients. So certainly 092 could play an important role in a number of different indications, and liver could be one of them going forward for sure.

Richard, and just a final question. On generic SUTEN, how did that affect revenues in the quarter, and then how do you think it kind of changes the way you're thinking about position in yourself around generic suit?

Yeah, again, as I said numerous times in the prepared remarks, demand grew in the face of increased competition, and that includes that issue as well. So we're pleased with demand growth. Obviously, better data drives demand, and we think we have that with 9ER and Meteor and Kavosan, et cetera. So end of the day, better data wins, right? And that's what we're seeing here. Gotcha.

Okay. Thanks so much. Thanks for taking the question.

Your next question comes from the line of Kenan McKay from RBC Capital Markets. Please proceed.

Hi. Thanks for taking the question. Maybe for Mike or PJ, can you help us understand the magnitude of the commercial frontline RCC market that could be addressed by the triplet of Cabo Ipi Niva from your conversations with both KOLs and community physicians in your service. Thank you.

PJ, I want to give that a shot, and I'll provide color commentary as we go.

Yeah, you know, obviously it will be important to see the data, and thanks for the question, Ken. You know, the trial is being run in the intermediate and poor risk setting. where the control arm 214 is approved. I think just generally what I'd say about it is it's certainly, as Mike mentioned earlier, it's exciting to really be on the cutting edge here in terms of having the first triplet. Moving forward, in a study in RCC, and when you think about, I guess just to contextualize population, which is about 14,000 patients in the U.S. So, you know, excited to see the data when available.

Okay, next question, please.

Your next question comes from the line of Jess Hung from Morgan Stanley. Please proceed.

Hi, this is Melina Santoro on for Jeff. Thanks for taking our question. Regarding CABO and NEVO and first-line RCC, with the continued growth in new patient share in the community setting, what do you see as the remaining opportunity for growth in that segment? And maybe are there certain patient populations that would be easier to reach?

Yeah. Hi, Melina. Thanks for the question. This is PJ. I'd say... You know, we're very excited about the data and the feedback we're hearing from physicians as sort of a profile of overall survival, an improved tolerability and safety profile with the combination 40 milligram dose of CABA. We're hearing great feedback on that as well as the quality of life. So I think broadly we're seeing inroads and opportunity and, you know, still kind of early days in our launch so we can – continue to execute against that, and I think, you know, patients will have the opportunity to benefit from it regardless of the setting. You know, we continue to have more data in terms of PapMet and non-clear cell and other data being presented that continue to really round out the clinical profile of cabozanthinib in RCC, and we're really pleased with that. If you look at the NCCN guidelines, I think it's a good exercise to do. You really see we're well-positioned as a preferred agent across risk groups as well as lines of therapy, and really community physicians in particular reference that, and we're really pleased with our positioning there. So I think we have, you know, many more patients who can benefit from combo medics.

That's helpful. Thank you. And then I have one more. So you continue to establish these collaborations with other technologies recently with Storm Therapeutics. Can you kind of talk about your strategy going forward? Is it to be more opportunistic with the new platforms and technologies, or are there certain capabilities and technologies that you want to remain more focused on? Thanks.

Thanks for the question. I mean, I think going forward, we're going to kind of stay consistent with what we've been doing. Obviously, as I commented, you know, we have our own internal small molecule discovery capability, which is going through a pretty significant expansion right now. But, you know, we've always wanted to take the opportunity to complement what we can do internally with expertise that, you know, other folks have. Maybe they have a different approach, but maybe they have specific expertise in various areas that we don't have as a way of kind of managing to kind of increase our overall bandwidth and throughput. And that's what the STORM Therapeutics Collaboration represents. It's a very, it's a hot new target, relatively new target in the oncology space. It's a deaminase. It's a little bit of a newer target from that sense, and they've built, I think, a very compelling platform around how to prosecute that target as well as a broader batch of RNA-modifying enzymes. So it kind of made sense to us to do that as a collaboration with them rather than try and reinvent everything in-house. So going forward, again, we'll continue to look at opportunities like that, be that on the platform side or with folks that have interesting assets that might get us into the clinic sooner. Thank you.

Great. Thanks for taking our questions. Of course.

Your next question comes from the line of Chris Shibutani from Goldman Sachs. Please proceed.

Thank you. Could I just ask about some of the contact programs? These are phase three trials going across A number of very sizable indications. I know these trials have been ongoing for a while. I believe you mentioned that we're potentially reaching a point where we're going to get some progress updates. Can you be more specific about perhaps whether we'll see any data in 2022? I know you've been enrolling globally. And when you get that data, sort of how you're thinking about what kind of decision tree point you could be with those opportunities that those trials are designed to answer. Thanks.

Yeah, Chris, it's Mike. Thanks for the question. Contacts are, again, all important trials in non-small cell lung cancer, prostate cancer, and second line RCC, all being done in collaboration with Roche Genentech. I think they're exciting opportunities for Cabo and certainly ones that we, as part of that collaboration, are very much focused on in terms of execution right now. So do we see results in 2022? Well, those are all event-based trials. So we'll have to see how those go from the standpoint of the actual event rates as they read out. But they're certainly very important parts of the CAVO story and one that we hope will be successful. But, you know, that's why we do the experiment, to be able to get the data and move forward as appropriate. But they're certainly a very high priority for the team right now and ones that we're very focused on in terms of execution.

And then from a pipeline standpoint, 092 remains the most advanced of the programs. Can you update us with any updated thinking that you have about particular indications that you think directing further clinical development for 092 might head? Thank you.

Yeah, and again, we'll speak to that, as I mentioned in a previous question. We'll speak to that in more detail as we launch the first pivotal trial and activate the first sites. Again, I think we're very pleased and encouraged by what we're seeing right now clinically. relative to CABO across a range of different components of activity and its overall profile, and looking forward to getting that moving in pivotal trials as quickly as possible. As we advance XB002, the tissue factor targeting ADC, as well as XL102 and now 114 that Peter talked about today. So pleased with the overall progress. The goal is to get really exciting compounds for both small molecules and biologics moving into the clinic as quickly as possible with a focus on quality and novelty and, you know, high probability of success in helping patients with cancer.

Great. We'll look forward to those updates.

Thank you, Chris.

Your next question comes from the line of Mike King from HC Weinreich. Please proceed.

Oh, thanks, guys. My follow-up was answered. Thank you.

Okay. Thanks, Mike. Operator, do we have any more questions?

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

Okay, Jeff. Thank you very much, and thank you all for joining us today. We certainly welcome your follow-up calls. with any additional questions you may have that we didn't get to during today's call. Thanks so much.

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