Exelixis, Inc.

Good day, ladies and gentlemen, and welcome to the Exxon Liquors fourth quarter and four-year 2021 financial results conference call. My name is Tawanda, 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. You may begin. Thank you.

Thank you, Tawanda, and thank you all for joining us for the Exalexis fourth quarter 2021 and full year 2021 financial results conference call. Joining me on today's call are Mike Morrissey, our president and CEO, Chris Senner, our chief financial officer, TJ Haley, our executive vice president of commercial, Vicki Goodman, our chief medical officer, and Peter Lamb, our chief scientific officer, who will together review our progress for the fourth quarter 2021. 2021, ended December 31st, 2021. 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. ExoLuxus had a strong fourth quarter and full year 2021 across all components of our enterprise, as we continue to grow the Cobb's Antidote business and advance a diversified and growing pipeline of clinical and discovery programs. We'll keep our prepared remarks short today, as we recently gave a detailed update to start 2022 at the J.P. Morgan Healthcare Conference in January. Key topics we'll focus on today include, first, the Cobb Medics business continues to grow and fuel the investment in advancing our portfolio of next-generation therapies for oncology. Hub-O-Medics maintained its status as the leading TKI for RCC and surpassed the billion-dollar net product revenue threshold in the U.S. in 2021 with a 45% year-over-year growth compared to 2020. Second, we expect our development team, now led by Vicki Goodman, to grow in size, scope, and stature in 2022 and beyond with the build-out of Exalexis East, complementing our extensive development, breadth, and depth in Alameda. 2022 could be a year of significant portfolio growth with a focus on expanding potential indications for CAVO with numerous expected top-line results and advancing our important pipeline molecules XL092, XB002, and XL102, including the initiation of the pivotal trial program for XL092. Third and finally, our drug discovery network of internal and collaborative efforts across both small molecule and biologic platforms continues to advance at a rapid pace with the selection of up to five new development candidates expected in 2022. Business development activities remain a core component of this strategy. We expect to bring additional collaborations forward, including the potential for clinical assets where we have increased conviction from both a clinical and commercial perspective. With that, please see our press release issued an hour ago for our fourth quarter financial results. and an extensive list of key corporate milestones achieved in the quarter. I'll now turn the call over to Chris, who will review our fourth quarter and full year 2021 financial results.

Chris? Thanks, Mike. For the fourth quarter of 2021, the company reported total revenues of $451.1 million, which included Cabo's Antidote franchise net product revenues of $302.7 million. Cobb Medics net product revenues were $295.1 million, which included approximately $8 million in clinical trial sales. Our trade inventory weeks on hand remained relatively flat when compared to the third quarter of 2021. Total revenues also included $148.5 million in collaboration revenues, primarily from Ipsen, Takeda, and Genentech. In the fourth quarter of 2021, Exelixis recorded a $100 million milestone payment due from Ipsen in connection with the achievement of $400 million in net sales in its related licensed territory over four consecutive quarters. Our total operating expenses for the fourth quarter of 2021 were $334.5 million compared to $276.8 million in the third quarter of 2021. R&D expense was the primary driver of the increase in total operating expenses, which was primarily related to higher licensing expenses. Provision for income taxes for the fourth quarter of 2021 was $22.9 million compared to $15.1 million for the third quarter of 2021. The company reported a GAAP net income of $95.2 million or 29 cents per share on a fully diluted basis for the fourth quarter of 2021. The company also reported non-GAAP net income of $113.3 million or 35 cents per share on a fully diluted basis. Non-GAAP net income excludes the impact of approximately $18.2 million of stock-based compensation expense net of the related income tax effect. Cash and investments for the quarter ended December 31, 2021, was approximately $1.9 billion. Turning to our full year 2022 financial guidance, which was previewed at the J.P. Morgan Conference in January, we are now including total revenues guidance, which is expected to be in the range of $1.525 and $1.625 billion. The remaining full year 2022 financial guidance items can be found on slide 12. With that, I'll turn the call over to PJ.

Thank you, Chris. 2021 was a transformative year for the Cabozantinib franchise, primarily driven by the approval of Cabomedics in combination with Nivolumab in first-line RCC in January of 2021. Cabomedics reached a significant milestone in 2021, surpassing $1 billion of U.S. net product revenue. The team continues to execute at a high level, and this has resulted in CaboMedx becoming the number one prescribed TKI in RCC. Furthermore, CaboMedx total prescriptions, or TRX, have now grown for five consecutive quarters. Additionally, the launch of CaboMedx in Differentiated Thyroid Cancer, or DTC, which received FDA approval in September, is off to a strong start. Taken together, the strength of the business and the momentum of 2021 positioned CABA well for growth in 2022. Prescription trends remain strong in Q4, both for NRX and TRX. Year-over-year growth in Q4 was 40% for NRX and 50% for TRX. As the launch progresses, the success of CABA Medix in combination with nivolumab is changing the mix of patients on CABA Medix in RCC. Given the clinical data from the Checkmate 9ER study, we anticipate these first-line combination patients to receive therapy for approximately one and a half years or more, thus driving a significantly longer treatment duration for CABO medics. We are encouraged by the fact that in our data, we see a doubling of the amount of new patient starts at the 40 milligram dose in 2021 relative to 2020. This is further indication that the combination uptake in the first-line setting is robust. Turning to the TKI market basket of Cabo Medix and Leida, Sutan, Votrien, and Limvima, Cabo Medix TRX market share increased every quarter in 2021, with market share in the fourth quarter reaching 35%. This growth is driven by combination usage in the first-line RCC settings. As we have discussed previously, the first-line RCC market is very competitive, and we are pleased with the performance of CaboMedix in combination with the Volumab in this setting. Furthermore, we haven't seen significant competitive impact on our market share. Uptake in the first line is broad across clinical risk groups and practice settings, and prescriber experience to date has been positive. We believe all of this taken together with the momentum in the business, positions Cabo Medics for continued growth in 2022. Turning to other settings, we're pleased that the Cabo second-line RCC business remained strong and was stable in Q4. In HCC, our market share was stable in Q4, and Cabo Medics continues to be the most prescribed TKI in the second-line setting for patients treated with immunotherapy in the first line. With regards to second-line DTC, we are pleased with the launch, and in Q4, we saw a strong trend of new patient starts in this indication, which exceeded our expectations. There were previously no therapies approved for this patient population with significant unmet medical need, and we believe we are quickly becoming a standard of care in this setting. We are proud that this fifth indication for CaboMedics adds to the body of data in the label, and enables Exelixis to help more patients with severe cancer. Looking beyond the five current U.S. indications for cabozantinib, we're planning for the numerous lifecycle expansion opportunities as they begin to have top-line data readouts in 2022. We look forward to having the opportunity, pending data and approval, to bring cabometics to more patients in need of therapies. Our team remains highly focused and motivated to compete every day to bring the benefit of CaboMedix to all eligible patients as we continue to build the franchise and maximize potential. And with that, I'll turn the call over to Vicki.

Thanks, PJ. Good afternoon. It's great to be here today, now a month and a half after I joined Exelixis as Chief Medical Officer. I'd like to take a moment to introduce myself. I am a medical oncologist and hematologist with nearly 18 years of experience in oncology drug development, both in government at the Food and Drug Administration and subsequently in industry. Prior to joining Exelixis in early January, I spent 15 years in roles with increasing responsibility at three global pharma companies, most recently at Merck, where I was therapeutic area head for late stage oncology. During my industry career, I have developed both small molecule drugs, including kinase inhibitors, and biologics, including immuno-oncology agents and antibody drug conjugates across all phases of drug development, from IND filings in phase ones to designing and implementing registrational studies leading to successful first approvals, as well as additional major indications. Today I will cover our progress towards our organizational expansion to the East Coast, Exelixis East, as well as progress on our pipeline and upcoming milestones for 2022. As we announced in early January, we intend to develop a presence on the East Coast, specifically in the Philadelphia area, as we seek to access talent on both coasts to support our expanding development organization. I'm happy to report that we have now identified short-term move-in ready office space in King of Prussia, Pennsylvania in the western suburbs of Philadelphia and a convenient and accessible location for much of the greater Philadelphia and central New Jersey biopharma talent base. We have also added the King of Prussia location as an option for the majority of open roles within the development and medical affairs organization and intend to initiate recruitment efforts immediately. Turning now to an update on our pipeline, beginning with our cabozantinib registrational trials. We are on track for three phase three readouts this year. COSMIC 313 evaluating cabozantinib in combination with nivolumab and ipilimumab in intermediate and poor risk renal cell carcinoma is expected in the first half of the year. An interim primary endpoint readout for contact 01 and readout of the progression-free survival primary endpoint for contact 03, in combination with the tezolizumab in PD1-experienced non-small cell lung cancer and renal cell carcinoma, respectively, are expected in second half of 2022. Additionally, the final readout for overall survival in COSMIC 312 in hepatocellular carcinoma will occur later this quarter, and we anticipate regulatory filing shortly thereafter, if appropriate. Contact O2, our Phase III study, in combination with atezolizumab in metastatic castrate-resistant prostate cancer, is expected to complete enrollment this year. We continue to make progress on our pipeline molecules. XL092, our next-generation MET, AXL, MER, and VEGFR, tyrosine kinase inhibitor is being explored in combination with several checkpoint inhibitors and IO combinations and is progressing towards registrational studies. We recently initiated dosing on a nivolumab-based immuno-oncology combination study in genitourinary malignancies and continue to explore additional potential combination opportunities with novel agents. Our first planned phase three and third line microsatellite stable colorectal cancer will be initiated in the second quarter of this year. Data supporting this study comes from two studies of cabozantinib in colorectal cancer, which were presented at ASCO GI in January and demonstrated promising activity in comparison to historical controls of regorafenib, the current standard of care. XB002, our first antibody drug conjugate, which targets tissue factor without interfering with the coagulation pathway in preclinical models, is in dose escalation. Thus far, it has been well tolerated with no bleeding events observed. A phase one study of XL102, our oral CDK7 inhibitor, is expected to move into both single agent and combination expansion cohorts after completion of ongoing dose escalation and determination of a phase two dose. Finally, XL114 has an approved IND and is currently in study initiation with first site activation expected this quarter. We expect to present phase one clinical updates for XL092, XB002, and XL102 at medical conferences in the second half of this year. I'm excited to be working with the very talented Exelixis team as we continue to progress our pipeline. Our current early clinical pipeline, as well as ongoing small molecule and biotherapeutic discovery efforts targeting novel mechanisms, positions us well to continue to address areas of unmet need to improve the lives of patients with cancer. With that, I'll turn it over to Peter for a discovery update.

Thank you, Vicki. I am pleased to provide a quick overview of the XLXS preclinical pipeline. We have multiple programs ongoing, both internally and with our collaborators, with over 10 programs in process with the aim of advancing up to five compounds into preclinical development in 2022. As you will see in the pipeline slide, the preclinical pipeline is a balanced mix of small molecules and biotherapeutics, which is reflective of how we see the clinical pipeline evolving in the future. As Vicky just commented, XB002 is advancing through phase one, and we're encouraged by both the preclinical and clinical profile we've seen to date. Tissue factor is broadly overexpressed in a wide variety of solid tumors, and preclinically, we observed compelling efficacy in multiple PDX models. The PK data we've obtained so far from the phase one trial also show high levels of intact ADC with low levels of free payload, indicating that it is a stable molecule. Hence, we believe that the underlying antibody is an excellent starting point for ADC development. The recent deal that we did with Iconic allows us to develop additional ADCs based on this same antibody, and we've started work to link it to additional payloads, particularly DNA-damaging payloads such as TCAMs. Ultimately, this will allow us to match different tissue factor-targeting ADCs to different tumor types, depending upon the sensitivity of each tumor type to different MOAs of the payload. A quick comment about XB010. This is our most recent development compound and is our first internally generated ADC that has advanced through our network of collaborators. XB010 targets the oncofetal antigen 5T4, which is overexpressed in multiple solid tumors, including non-small cell lung, breast, head and neck, and gastric carcinomas, and utilizes Catalan Smart Tag site-specific conjugation technology and proprietary linker coupled to MMAE. This gives a homogeneous ADC with a controlled drug antibody ratio and a highly stable linker, which reduces free circulating payload. Our approach with XB010 is consistent with the philosophy behind XB002, which is to advance next-generation ADCs incorporating contemporary ADC technologies directed against well-documented targets. XB010 has now moved into preclinical development and could yield an IND in 2023. We're anticipating publishing preclinical data later this year at a major meeting or in a suitable journal. And with that, I'll turn the call back over to Mike.

All right. Thanks, Peter. As you heard on the call today, our team continued to execute across all facets of our business in the fourth quarter and full year 2021 with significant progress across our pipeline, clinical development, and commercial activities. As we enter 2022, we're excited about the potential for 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. With our employees now back in the office working together side by side, I want to thank the ExoLexus team for their individual and collective efforts in navigating the many significant challenges during the pandemic, including the recent Omicron surge. As I highlighted during my recent JPM presentation, we have the vision, drive, and growing resources to become a multi-product enterprise, and to begin to expand our operation to serve cancer patients on a global scale, with our planned ExoLexus East Coast presence as the first step in that journey. We look forward to updating you on our progress in the future. Thank you for your continued support and interest in ExoLexus. We're happy to now open the call for questions.

Thank you. Ladies and gentlemen, as a reminder to ask a question, you will need to press star then 1 on your telephone. To withdraw your question, press the pound key. Again, that's star one to ask the question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jason Goodbury with Bank of America. Your line is open.

Good evening, everyone. This is Chi for Jason. Thanks for taking our questions. Maybe just the first question is on COSMIC 313. On the data expected first half, how should investors think about the level of details from the top line results? We think 9ER top line results is a pretty good indicator for the level of initial disclosure, except we'll pull five in 313, and then a couple of follow-ups for that. Thanks.

Hey, Vic, you want to take that one?

Sure. I'm happy to. I would anticipate that in terms of the top-line results in a press release, it will be consistent with our prior practice, and then we will hold the full top-line report for a medical meeting later this year.

Got it. And on XT002 initial data second half this year, the company has highlighted safety and bleeding as a potential differentiating feature for this drug. So I'm curious, do you believe the data in the second half, the initial disclosure will offer sufficient exposure or duration of treatment to fully characterize that aspect of OO2 profile?

Yes, so we're excited about the opportunity with XB002 in particular because From a preclinical perspective, we've seen that it doesn't interfere of the binding of tissue factor to the coagulation pathway, and so we don't believe it will interfere with the extrinsic coagulation pathway. We remain in dose escalation at this point. As I mentioned in my remarks, we have not yet seen any bleeding events. And we will plan, of course, to disclose the safety profile that we've seen when we presented at a medical meeting later this year.

Got it. And just last one from me, curious on the patent litigation front, maybe what's the status on the TAVA case given the recent litigation state? Is this a situation where parties are looking to consolidate a new patent similar to what's going on with the MSN case? any color you can provide there to the extent you can. That would be helpful.

Yeah, hey, it's Mike. Thanks for the question. I think Jason, and I'm sure you are involved here, have been tracking the court docket pretty closely. You've written on that. Others have. So that's been Fun to read. You guys have covered, I think, the facts per the docket pretty well. You know, I really want to avoid opining on what's happening beyond what's in the docket, the facts that are there for all to see. And, you know, we'll continue to speak when appropriate as more information emerges from the court.

Thanks so much.

Thank you, Chief. Thank you. Our next question comes from the line of Michael Schmidt with Guggenheim. Your line is open.

Hey, guys. Thanks for taking my questions. I just had one for Pietsche and one for Peter. The first one is, you know, nice to see the Cap-O-Matic market share among TKIs grow. Can you break out at this point what your share is in first line and in second line RCC respectively?

Yeah, this is PJ. Michael, thanks for the question. So with regard to that, what I'll do is just kind of reiterate what we said previously. In terms of the second line share starting there, we have a majority of share certainly in the post-IO setting. I think we said previously that's around two-thirds or so of the patients who received IO therapy in the first line previously. And then for our first line market share, we haven't disclosed specific numbers recently, and there's certainly some out there that you could You could look at what I would say is we've had significant momentum. And as I kind of mentioned in the prepared remarks, that's really what's been driving our growth as the rest of the business has been stable. So as you look at our TKI market share increasing over the year 2021 from 30 to 35%, that's essentially almost all being driven by first line uptake. So we're very pleased with that as the The messaging and the data are resonating extremely well with oncologists. You know, the balance of data in terms of our overall survival, our toxicity profile, as well as the quality of life data resonating well with physicians. And we're actually really excited. This weekend here in San Francisco, we've got the ASCO-GU meeting, and it's going to be live. So really looking forward to it. our presence there, which will be significant, and meeting with many of the KOLs in person, which will really be fantastic, as we obviously haven't had as much opportunity to do that in the pandemic. So we're very pleased with our position, as I mentioned. I think we have really great momentum heading into 2022. Yeah.

And then, yeah, thank you. And then I had a question perhaps for Peter. This one is really around some of the early stage activities, specifically around the Storm Therapeutics collaboration, and I was just wondering if you could just comment what makes that particular company's technology exciting and any additional insights on the first target. I'd be curious to hear about that. Thank you.

Yeah, absolutely. I'd be happy to speak to that. Generally speaking, the Storm collaboration fits in with our Overall approach and philosophy, certainly with respect to small molecule discovery. Obviously, we have a very significant and growing internal small molecule discovery effort. But we're happy to kind of complement that with outside partnerships and collaborations, as makes sense in terms of providing complementary expertise or insight. And STORM very much fits into that. You know, the leading target, which took us to STORM, is adenosine deaminase, or 8R1. I'd say if you look at a lot of the publicly available CRISPR-based or FH-based target discovery that's been done in oncology over the last couple of years, ADAR1 is a target that's come out as a very strong hit in a number of those screens. To be colloquial, I would call it a very hot target in oncology right now. It's probably up to about 30% of tumors or so that are probably dependent upon ongoing ADAR1 activity to help restrain what essentially becomes an interferon-mediated cell death. So that's some of the basic biology behind it. So it has been on our radar screen for a while as an interesting target. You know, we're not experts in methyl transferases per se. Storm's whole platform is a methyl transferase and kind of RNA epigenetics platform. And they've done a fair amount of work, both on that platform generally, but also on 801 specifically, in terms of putting together the assays necessary to prosecute an effective lead optimization scheme, which, as an aside, I will just say are non-trivial to put together. They'd also made good progress on kind of enabling a structural biology approach to the target. So our view was it would very much jumpstart a program in the area to work with them, rather than us trying to rebuild all that internally. Yeah, it's early days for the collaboration. We're certainly excited to be in it and have it off and running, so hopefully we'll be able to update on progress at some point in the future.

Okay, super interesting. Thank you. Appreciate it.

Thank you. Thank you, Michael. Our next question comes from the line of NDC with William Blair. Your line is open.

Oh, great. Thanks for taking my question. So I have three questions. Two really quick ones. So one is, you know, maybe for Chris, just from a modeling standpoint, how should we think about DTC contribution, you know, in the grand scheme of things? Second one, maybe PJ, I think sometimes you could have talked about, you know, with these waves, sometimes you see contraction, normalization of the RCC market. I'm just wondering, what the current status that you've seen during the quarter, and also maybe, you know, your perspective maybe a little bit in Q1. And lastly, maybe for Vicki, in terms of just thinking about Excel 092, and I think Mike has said this previously about potentially positioning that in HCC, and given the learnings from COGNIC 312. I'm just wondering if there's a way to set a minimum for hepatitis B-driven HCC and also and or a maximum for hepatitis C-driven patients in the potentially future trial just to really maximize the probability of success. Thank you.

Great. Andy, thanks for the questions. This is PJ. I'll actually... I'll take the first two. So starting with DTC and kind of how we're thinking about that opportunity, as I mentioned in my prepared remarks, we're really pleased with the launch, and certainly in Q4 we saw more patients starting therapy, really, than we anticipated, which is gratifying. It's an area of significant unmet need, and we believe we're off to a fast start towards becoming a standard of care in that setting. The duration, if you look at the PFS in the 311 trial, it's around 11 months, so we believe there's a nice duration of therapy there, and as we're kind of thinking about that opportunity at a high level, we're thinking it's about $100 million, give or take at peak, so that's kind of how we're thinking about DTC. So with regards to your second question, in terms of how we're seeing the market. One way to view that is just looking at the prescription data from Acuvia over time. Obviously in the pandemic we saw some ebbs and flows there, but I think we've really stabilized over the second half of last year. We did see the market expand in terms of TKIs, I'd say the last few quarters of last year. And, you know, I would expect as IOTKIs, you know, become more and more of a staple in frontline therapy, which they are becoming, and combinations in general really continue to grow in the first-line setting, you know, up to maybe close to 80% of patients receiving a combination therapy. But as more of those combinations of IOTKI become more prevalent, I would just expect to see you know, longer duration of therapy there that continues to drive overall growth of the TKI market. And, you know, that kind of goes in parallel to what we're talking about when we see the duration of therapy for 9ER continuing to provide growth in 2022 and potentially beyond for CaboMedx. And I'll turn it over to Vicky for the third question.

Yes, thank you. So we're excited about the opportunity for XL092 in many different tumor types, including HCC and other tumors where cabozantinib has demonstrated activity. To the point that you made, we have seen that different etiologies of liver disease and HCC may respond differently to different therapies, including checkpoint inhibitors, and VEGF-directed therapies, and we'll be taking all of those learnings into account as we build a development program for XL092 in hepatocellular carcinoma.

Got it. That's very helpful. Thank you so much.

Yeah, thanks, Andy. Thank you. Our next question comes from the line of Jay Olson with Oppenheimer. Your line is open.

Oh, hey, congrats on the results, and thank you for taking the questions. Can you talk about how much runway you see for CABO plus NEVO growth in the first-line RCC setting and any feedback you're getting from clinicians on how CABO plus NEVO compares to lenvatinib plus Penbro in a real-world setting? And then maybe just a follow-up on 09-2-1. With the initiation of a pivotal study in CRC, are you planning to initiate additional pivotal studies this year for 092, and how would you prioritize the various opportunities for 092 in your clinical development plans? Thank you.

Okay, thanks for the question. This is PJ. I'll take the first part there. So, you know, I think in terms of I won't quantify growth other than to say, you know, if you look at our guidance guidelines, we're anticipating robust growth for demand underlying that and prescriptions in 2022 for CaboMedics. And the reason I say that is really the majority of our growth. I mentioned DTC earlier. That's obviously some growth. But outside of that, the majority of that growth is due to first-line combination usage, as we think about it, of CaboMedics with Novolumab. As I mentioned earlier, the duration of therapy will continue. We're just a year on the market now, so that's going to continue to drive growth going forward, and we believe we have the opportunity to continue to get more and more new patients on therapy. Given our data and the story and kind of the strength of that resonating with physicians and the strong execution of our team, I will say that... You know, I think the experience of prescribers with the combination of feedback we get either through market research or advisory boards is very positive. You know, they view the balance of efficacy and safety in their hands as a positive impression, so I think that will also continue to augment our utilization going forward. And then I'll turn it over to Vicki for the second question.

Thanks, PJ. So we're looking to build a robust pivotal trial program for XL092. We're looking at various combination regimens, including novel mechanisms of action beyond the first few that we're evaluating currently in stellar 001 and 002. COSMIC021, a signal finding study of cabozantinib, will help inform our plans for 092. As I mentioned earlier, They have a very similar kinase profile, so we believe that there's an opportunity to develop O92 in places where we've seen activity with cabozantinib, including from various cohorts of COSMIC-021. And so those cohorts, as they read out, will help inform our plans for moving into pivotal trials with O92 beyond the CRC trial that we've already announced.

Okay, great. Thank you very much.

Thanks, Jay.

Thank you. Our next question comes from the line of Mike King with HC Wainwright. Your line is open.

Hey, guys. Thanks for taking the question. I just wanted maybe to follow up on Jay's question about use in first-line RCC. Do you have more color on the proportion of travel use that is in conjunction with a checkpoint, and I'm just curious if those are, what I'd say, add-on therapy, or is the regimen starting as a triple?

Yeah, Mike, this is PJ. So, I guess what I would say is that in the first-line setting, you know, previously we've had the CaboSun sort of data in our label, which was monotherapy. When we got approved for Combination usage a little over a year ago with CaboMedix in combination with nivolumab in the first line. We really have seen the majority of utilization of CaboMedix in the first line shift to that doublet, you know, given the strength of the data. And, you know, oncologists have been highly receptive of that. So really that's what we're seeing primarily in the first-line setting with regards to CaboMedix is utilization of the doublet. I think, you know, as we think forward to 313, should that be a positive study in terms of Cabo, Nevo, and IPI, I think that just will potentially expand the market opportunity for CaboMedix in that first-line setting. There's certainly a lot of patients that do receive the combination of NEVO-IPI now in the first line. So I think if there's an opportunity to add CAVO medics with, you know, an appropriate risk-benefit profile to those patients, we can get more and more patients should that study be positive. So hopefully that helps frame that for you.

Great. I appreciate that. And maybe one for Vicky. On contact O1, I'm just wondering how we ought to think about, you know, the combo of CAVO and Atezo. You know, there hasn't been a development of anti-ZHF in non-small cell in a while. Just thinking about how that, you know, that might provide some upside that really hasn't been widely discussed here.

Yeah, thank you for the question. So, right, CONTACT-01 is a combination of cabozantinib with atezolizumab versus docetaxel, which remains a standard of care in non-small cell lung cancer after treatment. with a checkpoint inhibitor, you know, plus or minus chemotherapy. It's really an underserved area with a lot of unmet needs. The primary endpoint here is overall survival, and we're expecting a readout of an interim analysis on overall survival sometime later this year. Again, you know, docetaxel is an old therapy. with not particularly good outcomes. And so we really believe this is an area of high unmet need and an opportunity to demonstrate, you know, further benefit for these patients. So we're looking forward to that readout later this year.

Thanks. Much appreciate it.

Thank you.

Thank you. Our next question comes from the line of Yaron Weber with Cowan. Your line is open.

Thanks very much. This is Gavon for your own. So my questions are on the pipeline. First, what kind of data can we expect for the CDK7 program XL102 in the second half? Specifically, will there be data from multiple cohorts, multiple dose cohorts? Do you expect to see monotherapy activity with objective responses? And then for XL092 in CRC, Vicki touched on a little bit, but could you please discuss in a little more detail maybe some of the early data that gives you confidence to go into the third line, pivotal study versus regorafenib? Thank you.

Sure. Thanks for the question. So I'll take the 102 first. Right now we're in dose escalation with 102, and that's what we anticipate. We anticipate the dose escalation cohorts will be presented at a medical conference sometime later this year. So these will still be fairly early data, and we will also look forward to additional clinical updates on that molecule in 2023. Regarding your question on the phase three, planned phase three in colorectal cancer for 092. So this is a study in patients with third line microsatellite stable metastatic colorectal cancer. So they've failed other therapies. We're acquiring documented RAS mutation status and basically randomizing them to either XL092 with the tezolizumab or to regorafenib. The data that are supporting this study come from two studies that were presented at ASCO GI, as I mentioned earlier in my remarks. One was a cohort of COSMIC-021, and the other, was an investigator-sponsored trial called the CAMILA study. So I can quickly run through some of those results for you. The COSMIC-021 colorectal cancer cohort response rate overall was 10%, but what we saw was a 25% response rate in patients who were RAS wild type. That was in combination with atezolizumab in patients who had no known MSI high or DMMR, so a similar population to what we plan to study in 303. Likewise, in Camila, the overall response rate in the overall population was 28%, but again, in RAS wild-type, patients did better with a 50% response rate, and this was a dervalumab combo also in microsatellite-stable patients. So as a result of these findings, we believe that the place we're most likely to see benefit is the wild-type patient population. And so the primary overall survival endpoint will be focused on RAS wild-type. However, we will also look at the population overall.

Great.

Thank you very much. Maybe I'll add, just for point of reference, the typical regorafenib response rate is about 2%.

Great. Thank you.

Thank you. Our next question comes from Akash Tewari with Jefferies. Your line is open.

This is Amy for Akash. Thanks so much for taking your questions. Just wanted to contextualize your 2022 CABO revenue guidance of $1.375 billion at midpoint with your prior expectations of CABO hitting a $1.5 billion run rate by the end of this year. Are you still comfortable with this run rate? Additionally, have you seen any seasonality in route Cabo demand in channel inventory? And is there any color you can provide on real-world median duration of treatment for Cabo in RCC? Thanks so much.

Yeah, thanks for the question, Amy. So from an inventory perspective, I'll start with that one. I touched on it in my prepared remarks. The inventory stayed relatively flat Q3 versus Q4. It actually was flat all year, but from a weeks on hand perspective, but it has been growing in line with demand throughout the year as demand increased. The first question is seasonality, but that's part of the inventory. Oh, the 1.5, sorry. So on the $1.5 billion run rate, yeah, I mean, if you think about where we guided, it does get you into that range of getting to a run rate of 1.5 as we exit the year. Great.

And just to, oh, sorry, this is PJ, just to kind of take the question. With regards to duration of therapy, our thoughts about that and CobbleMedic's accommodation in the first-line setting, it's, you know, we've been on the market for a year. So in the trial, we see a year and a half, give or take, or more of PFS, so it's really early to be able to have a look back to see the significant duration we're expecting from 9ER, but as I mentioned, we believe that's a driver of significant growth for us, and I would just say that we're certainly pleased with what we're seeing thus far.

Great, thank you so much.

Yeah, thank you, Amy. Thank you. Our next question comes from the line of Duke Kim with Piper Sandler. Your line is open.

Hi. Thanks for taking my questions. First, on contact 01, I was hoping you could frame for us the expected median survival for the control arm and maybe provide what your expectation or the hazard ratio that the study is powered to show.

Yeah, so there really aren't great data in this setting of second line. So, you know, as standard of care has changed, the, you know, there isn't great data. Dosetaxel is used because it was the second line therapy following platinum therapy in the past and has continued to be a second line therapy in patients who've received, you know, generally speaking, um, in IO and, uh, and platinum combination. So, um, I can speak to the fact that, you know, for patients who had, um, uh, lung cancer in the past, um, metastatic lung cancer, the median survivals were less than a year in the first line. Um, and obviously substantially shorter than that in the second line. Um, and, uh, We're shooting really for a substantial clinical effect here with respect to the Atezo-Cabo combination. And so, again, we'll see the first data from an interim analysis of overall survival later this year.

Okay, thanks. And I have another question on seasonality for Cabo sales. As we look to 2022, should we start seeing your typical first quarter seasonality due to reimbursement factors? Looking back at the sales for Cabo, you seem to go through any potential impact. Is it something we should start considering now, or do you manage the growth to net to offset those factors?

Hey, Doe, it's Mike. Probably not wise for us to be giving, you know, Q1 guidance in the middle of Q1. So, you know, stay tuned to the numbers when we have the Q1 call in May. You know, we feel really good about how the brand is doing. Again, timing with ASCO GU and the call are somewhat fortuitous, but, you know, we have a lot of support out there, both in the academic and community setting, and we feel like, you know, based on the data and based on the strong team that we have, we're going to continue to be able to educate physicians to the benefits of that combination. So, but Q1, stay tuned.

Understood. And last question, for XL114, How are you thinking about the opportunity for MALT1 inhibitor? Is it primarily overcoming B-cell lymphomas that have BTK inhibitor resistance, or are you expecting to see the drug perform better than a BTK inhibitor in aggressive NHL?

Yes, this is Peter. Let me take that one. I think you correctly identified BTK resistance as a significant setting for 114. The mechanism of action is clearly downstream of BTK in terms of inhibiting activation of the card BCL multiple complex. So that's certainly an area of interest. There are also subsets of lymphomas, B-cell lymphomas specifically, where BTK inhibitors are not active, where there are other mutations in the pathway, including in MOT1 itself, where we believe 114 could have activity where BTK inhibitors wouldn't. So those are two kind of early stage or initial stage opportunities that could be examined.

Great. Thank you. Thanks for taking my question, and congrats on the quarter.

Thank you, Doug. Thank you. Our next question comes from the line of Peter Lawson with Barclays. Your line is open.

Great. Thank you. Thanks for taking the questions. On XO102, so your CDK7 inhibitor, what should we think about as success, and what should we be looking for in that data later this year?

Yeah, Peter, it's Mike. It's probably premature to give you that level of guidance. It's early in the year, and we'll have a pretty fulsome update when we do present that later in the year. Peter, if you would like, can go through the basic biology there and give you a sense on how we think 102 is different. But again, it's probably early to start opining upon what we might see in a presentation months and months from now. Peter, do you want to say a few words?

Sure. Yeah, so, you know, I think if you look at this, So the history of CDK inhibitor development, we're at a pretty interesting stage right now. One way or another, people have been trying to advance CDK inhibitors for, I don't know, probably 20 years. If you look at the CDK family, they really fall, broadly speaking, into two buckets. There are those CDKs that are primarily involved in cell cycle regulation. CDKs 1 and 2, CDK 4 and 6, where obviously we have clinical proof of concept for that mechanism. And then CDK7 also clearly falls into that group. It's upstream of CDK4, 6, and 1, 2, and very clearly has a role in controlling entry into various phases of the cell cycle. So, you know, there are a lot of interesting opportunities for a CDK7 inhibitor, CDK4, 6 inhibitor resistance, you know, being just one of those. You know, other tumor types such as triple negative breast or ovarian, other possible opportunities. Then I would just add, in addition to its CDK regulatory role, CDK7 also directly enhances transcription from both AR and ER, so then that leads to opportunities in combination in ER and AR-dependent tumors as well. In terms of the profile of a CDK7 inhibitor, we obviously have our view of what's an ideal profile, and XL102 We think some of the important characteristics of first needs to be highly selective, and XL102 is. Second, I think this is a mechanism of action where you're really going to want to have maximal dosing flexibility to give you the best chance of optimizing therapeutic index. XL102 is a covalent inhibitor, but it, at least in preclinical models, clears out of the plasma out of the circulation very rapidly. So you don't have a lot of it hanging around in the circulation, but you do have a prolonged pharmacodynamic duration of action based on the covalent mechanism. Maybe I'll just finish by kind of segueing into a sort of related program. The second bucket of kind of CDKs are not that much involved in cell cycle regulation, but they are involved in regulating transcription in various subsets of genes, and that would include CDK9, but also CDK12 and 13. CDK12-13, as we have a program ongoing preclinically with Origen. There's nothing in the clinic yet for a CDK12 inhibitor. I think it's very interesting based on a lot of biology, but one part of which is that CDK12 is very much involved in regulating the transcription of DNA damage response genes in things like RAD51, BRCA, and the like. So there's lots of potential directions in which to take a CDK12 inhibitor and Hopefully, if things go well, we'll be advancing one into preclinical development in the not too distant future.

Gotcha. Thank you. And the CDK7 inhibitor, do you think it could have single agent activity or really requires combination?

Well, I can tell you that certainly preclinically what we've seen is that we've seen robust single agent activity in a number of different models. As Vicky commented, with XL1 and XL2, we're fairly early in the dose escalation at this point in time. So certainly there's a rationale, both as a single agent and in combination, but time will tell with respect to the development of clinical data.

Thank you. Just a final question around first line HTC. The filing for 312, is that dependent upon OS being significant and is HTC an area where 092 could move?

Yes, so for 312, we'll be seeing the final OS analysis later this quarter, and we'll be evaluating the totality of the data and in consideration of the evolving treatment landscape before deciding whether or not it's appropriate to file. And, yes, to answer your other question, we do see potential for 092 in hepatocellular carcinoma, as we do in other tumor types where cabozantinib has demonstrated activity, and we'll be thinking about development plans for 092 in that tumor as well.

Perfect. Thank you so much. Thanks for taking the question.

Thank you, Peter.

Thank you. Our next question comes from the line of Kenny McKay with RBC Capital Markets. The line is open.

Hey, thanks for taking the question. For Mike or maybe Vicki, how quickly do you think the COSMIC 313 data could be turned around into an SNDA if it's successful? If that data is in the first half, is that SBLI something that could happen later this year? And then maybe for PJ, with three Category 1 NCCN recommendations for frontline treatment of favorable risk, ICC, and four for poor and intermediate risk, What have been the drivers of physician preference for one regimen over another? And echoing on that, is there anything in the longitudinal Checkmate 9ER data at ASCO-GU this weekend that you think could impact physician choice here? Thanks.

Do you want to take that one? The 313?

Yes. Yep, sure. Happy to. Right. So we are expecting to see the COSMIC 313 progression-free survival primary endpoint readout in the first half of this year. We're obviously working with a partner on this study, Bristol-Myers Squibb, and we will be very motivated to work very closely with them and get that filing in as soon as possible, data-dependent.

Great, and it's PJ Kennan. With regards to your question, in terms of physician preference and kind of what we're seeing in first line, our utilization, as I've mentioned, is broad, and that really cuts across the clinical risk groups of favorable, intermediate, and poor risk disease. We're also seeing broad uptake, whether it's community risk, or academic settings, and I think that's really, it's really driven by the balance of kind of efficacy, tolerability, and quality of life data that we see in 9ER, and I think that's resonating really well with prescribers, and they're, you know, seeing good results in their patients. So I think that, you know, we're only a year into this, so I think the experience they're to continue to kind of grow in that perspective. You know, what I'll say with regards to the data this weekend is, you know, we're certainly pleased with it in terms of the longer follow-up. You know, I think it shows the durability of the data, data set overall, the complete response rate increasing to about 12% certainly is a plus. And, you know, importantly, you know, nothing to really change the perception of the tolerability profile. So I think just more follow-up gives our story, you know, a little more power behind it. So we're very pleased with that. And, you know, as I mentioned, we're very optimistic towards the momentum of the business this year.

Okay, thanks, Kenan.

Thank you. Our next question comes from the line of Jeff Hung with Morgan Stanley. Your line is open.

Thanks for taking the question. Most of my questions have been asked, so maybe one on partnerships, since you mentioned that you expect to bring additional clinical partnerships forward. Can you talk about your strategy going forward in terms of collaborations for additional technologies? Is it more to be more opportunistic with new platforms and technologies, or are there certain capabilities and technologies that you want to remain more focused on? Thanks.

Yeah, I mean, as I kind of alluded to earlier, on the discovery preclinical side, we continue to look broadly, both on the biotherapeutic and small molecule sides, both for platforms that we think will be complementary to what we have access to now, and that may kind of broaden our ability to take on or tackle various targets or target classes. We're happy to do those as they make sense for us and our partners. Of course, we continue to look at assets as well, individual assets as well, particularly ones that are either late preclinical or early clinical. But I think as we've said a number of times before on that front, it has to be an asset that we have conviction behind in terms of being able to mount an effective clinical development campaign. And so basically it's the right molecule, right time, right price kind of mantra that We're still sticking to that.

Thank you.

Thank you, Jeff.

Thank you. Our next question comes from the line of Chris Shabutani with Goldman Sachs. Your line is open.

Great. Thank you for the questions. You described the first-line RCC marketplace as being a very competitive dynamic. Two questions, and it certainly has been where the regimens that have taken primacy have shifted. The use of the IO doublet, NEBO, in combination with IPI, what would you say is the outlook for what the share of use could be in the first-line setting over the coming years? I think you've previously said it's about 20%, 25%. Is that going to be stable? Is that likely to be greater or less?

Yeah. Hey, Chris. It's PJ. You know, it certainly is a competitive market, and that's what we've seen in the data with regards to NEVO at BA. As far as predicting it, given, as you point out, the competitive nature of the market, I wouldn't endeavor to do that. You know, as I think about that, though, in terms of a potential positive 313 study, I think it just really gives us a lot of opportunity to to add TKI, which is a mainstay of RCC treatment for 15 years now to a potential IO doublet, which obviously has a solid place in the treatment regimen. So I think from more a dynamic perspective, that's how I think about things going forward.

Got it. And then a question for Vicki, perhaps. Vicki, I know you come from a lot of experience working at some of the leading players in oncology, Merck Bristol, as well as at the FDA. We've been observing more broadly across the industry some interesting decisions by the FDA, perhaps even over the last couple of weeks, where we're seeing this question of timelines for acceleration of approval be factored in with this question of unmet need. And I'm asking this question in the context of how you're thinking about the development strategy for 092. as it follows in. Is that factoring into your thinking at all as you decide how to prioritize the next steps for 092? I know that you've talked about advancing into CRC, but there's other realms as well.

Yes, so as we're thinking about development plans, you know, we're obviously looking at multiple factors. I think clinical unmet need is a big focus. areas where we believe we have the opportunity to transform the care of patients with cancer. And, of course, at the same time as we're thinking about this, we are watching the regulatory landscape and thinking about how that may impact our development plans. So we're closely watching the FDA trends, of course, taking that into account as we're developing our plans, realizing, of course, that we intend to develop our therapies globally, right? So we have to look at the regulatory climate around the world. But really we're focused on, you know, areas where we believe that our experimental medicines may demonstrate benefit for patients with cancer.

Got it. And then lastly, just one housekeeping in terms of the Cabo revenue line, just thinking back to over the past summer where the clinical trial sales, and you also did a breakout within the 295 that you had that 8 million were for clinical trial sales. Can you give us a sense for what that, you know, your visibility into clinical trial sales in 2022? Is there anything in particular about quarters that can hit or miss or make things maybe unique, one-off events? Thanks.

Yeah, Chris, it's Chris. So I'd say, you know, we don't have, you know, very good visibility. It's obviously up to those that are running the trial to place the purchase order with us. So, you know, generally, you know, those timings we'll find out, you know, a few weeks, a few months in advance. And so we don't have good visibility throughout the year, but it's not included in our guidance number.

Got it. And lastly, if I could squeeze one more in. Mike, congratulations. You had a new ad to the board at the end of the year. I was intrigued to see it with someone from outside of healthcare and the tech sector. Tell us about how you were thinking about the overall composition of the board. You've had some folks who've been around for a very long time, Lance and Stelios and whatnot, and you made an addition here. How should we be interpreting that thinking at the board level?

For sure. So we're very pleased to have Jackie Wright join the board from Microsoft. She is an amazing resource to us from a broad IT and digital technology perspective. And as I'm sure we've talked about at a high level previously, part of our corporate growth and part of our really expansion into digital is a key component to how we want to go, not only bi-coastally, but also globally going forward. So to have her engaged is just a tremendous resource for us. We're going to learn a lot from her and look forward to engaging with her on all aspects of both her view of how to really digitize healthcare and but also then helping our business become much more efficient digitally as well.

Great. Thank you for all the questions.

Sure. Thank you, Chris. Thank you. As a reminder, ladies and gentlemen, that's star one to ask the question. Our next question comes from the line of Steven Willie with Stiefel. Your line is open.

Yeah. Thanks for squeezing me in. Um, just a question on 092 and then actually just have a quick follow-up, but, um, With respect to 092, so I know the stellar 303 study was obviously predicated on the notion that you had this surrogate data with Cabo. But I guess when I look at the GU development strategy with Bristol, you know, we have Nevo Cabo plus I think it'd be Nevo Cabo data in both RCC and bladder. We have a Tezo Cabo data in prostate. Obviously no IL-2 data yet, but just trying to better understand how the GU strategy is, I guess, going a bit deeper on the expansion cohort side as opposed to going into a phase three like you did with Stella.

Vicki, you want to take a shot at that? Maybe I can provide some commentary afterwards.

Yeah, sure. Happy to. Right. So we're looking at multiple potential combinations for XL092. I think, as I said earlier, We may, in order to advance the program quickly, look also at data coming out of the COSMIC-021 trial, which is cabozantinib, right to move forward in a limited number of settings, the colorectal cancer being one of them. You know, and again, you may see additional phase 3s launched from there down the road. But we believe that IO, you know, checkpoint inhibitors and IO combos are important for the combination of 092. And that study, Stellar 002, which recently initiated enrollment, will be important to evaluating the potential of 092 in combination with those agents.

Yeah, maybe I can just add, Steve, that, you know, we're in the business of raising the bar in terms of standard of care for patients. Everything we do is focused on that. So less about generating Me Too data, but it's more about going to the next level. And I think, you know, things like 3 of 13 are a good example of that. First company, first trial going against, you know, IOIO as the control arm. And, you know, certainly with 092, we have the opportunity to do that across companies. broad indications across narrow indications as we develop that program. So I would look at the stellar OO1, stellar OO2 as the first wave, really, of that signal searching, signal validating type efforts while we're launching the Pivotal Trial Program. We have a variety of other discussions ongoing with other combination partners, other combination, you know, owners, if you will, people with different I.O. and other types of molecules that we and they want to combine with O9-2. So the program is advancing really in a multidimensional way, and I think what you're seeing here is just the beginning.

Okay, that's helpful. And then just one quick follow-up on Stellar. So I know Camilla was an investigator-sponsored trial, but I know that study used a modified or assist criteria. And I've seen it used before in liver cancer, but I guess I haven't seen it used before in colorectal. And so just wondering if you guys know why a modified or assist response was used in this instance. Did patients all have liver meds or something? I'm just trying to figure that out. Thanks.

Yeah, I don't know, Steve. Vicki, do you have anything you can say there?

Not really. I don't know specifically, but what I would say is that having the two data sets, including our own internal data set from COSMIC-021, both, you know, trending in the same direction in terms of better overall response rate than we would expect with historic controls. And although they're both single arm, the PFS and OS medians were also encouraging relative to what has been seen historically for regorafinib.

Okay. Thanks for taking the questions.

Yeah, thanks, Steve. Thank you. At this time, there are no further questions in the queue, so I would now like to turn the call back over to today's host, Susan Hubbard. Ms. Hubbard?

Great. Yeah, great. Thank you, Tawanda, and thank you all for joining us today. We certainly welcome your follow-up calls with any additional questions you may have.

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