Exelixis, Inc.

ladies and gentlemen, and welcome to Exelix's first quarter 2024 financial results conference call. My name is Tawanda, and I'll be your operator 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, Mr. Varun Shravarnan, Director of Investor Relations. Please proceed.

Thank you, Tawanda. Thank you all for joining us for the XLX's first quarter 2024 financial results conference call. Joining me on today's call are Mike Morrissey, our president and CEO, Chris Senner, our chief financial officer, D.J. Haley, our executive vice president of commercial, Amy Peterson, our chief medical officer, and Dana Aftab, our chief scientific officer, who together will review our progress for the first quarter 2024 and in March 31st, 2024. 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 Securities and Exchange Commission, 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 costs associated with discovery, product development, business development, and commercialization activities. With that, I'll turn the call over to Mike. All right.

Thanks, Bharat, and thanks to everyone for joining us on the call today. Exalexis is off to a strong start in 2024 and had a productive first quarter across all components of our business. We're pleased to see both revenue and demand growth for the Cabo Zanza franchise in the U.S. and globally. Top priority is to move the needle for patients and shareholders by advancing Cabo Zanza and the rest of our exciting pipeline to improve the standard of care for patients with cancer. We have a lot to cover today, so let's jump right into it with the key highlights for the quarter, including first, We saw a strong performance of the Cabo Zantanib business in the first quarter of 2024 with continued growth in demand and revenue year over year compared to first quarter of 2023. Even with typical seasonal headwinds that were further magnified by the implementation of the IRA, Cabo Medics maintained its status as the leading TKI for RCC in both the first-line IO TKI market and the second-line monotherapy segment. First quarter, 2024, Cabo franchise net product revenues grew 4% year-over-year compared to first quarter 2023. Highlighting its role as a worldwide leading TKI, global Cabo's antediluted franchise net product revenues generated by Exalexis and its partners grew approximately 9% year-over-year in the first quarter of 2024 compared to first quarter 2023. As discussed previously, we're excited about the potential for additional Cabo growth with the new indications on the horizon that PJ and Amy will discuss shortly. Chris will review our full first quarter 2024 financial results in his prepared remarks. Second, we continue to advance our industry-leading pipeline across all stages of preclinical and clinical development. Our top priorities for 2024 are to advance potential new combo indications for NET and metastatic CRPC and expedite ZANSA clinical development with both existing and new pivotal trials, as well as potential new combination strategies. XB002 cohort expansion remains a clear focus for us, and XL309 continues to generate exciting momentum in the synthetic lethality space. Finally, we're thrilled with our progress in advancing new candidates in discovery and preclinical development, targeting a range of solid tumor indications that comprise an IND pipeline of both small molecules and biotherapeutics, which we expect to evolve quickly over the next several years. Third, final reply briefs for the second MSN and the trial were submitted in February, and we continue to expect a ruling in the first half of 2024. While we will not speak to any specifics today, this remains a critical milestone for the company and the Cabo Sanford franchise. ExoLexis will continue to vigorously protect our intellectual property rights with respect to Cabo and our other differentiated molecules we pursue on behalf of patients with cancer. Finally, fourth, we expect business development activities to ramp up significantly as we gain clarity on the outcome of the patent litigation. Importantly, we're exploring options to collaborate with other organizations in cost and compound sharing arrangements in a manner similar to our prior Cabos Antidote checkpoint combination endeavors. In addition, we are carefully reviewing the competitive landscape on an enterprise-wide level to identify additional later stage assets that we believe, through our unique Cabos Antidote lens, fit into our GU and GI oncology-focused drug development and commercialization platform. So with that, please see our press release issued an hour ago for our first quarter of 2024 financial results and an extensive list of key corporate milestones achieved in the quarter. I'll now turn the call over to Chris.

Thanks, Mike. For the first quarter of 2024, the company reported total revenues of approximately $425 million. which included Cabo Xanthid and franchise net product revenues of $378.5 million. Cabo Medix net product revenues were $376.4 million and included approximately $6 million in clinical trial sales. Gross to net for the Cabo Xanthid and franchise in the first quarter of 2024 was 32.9%, which is higher than the gross to net we experienced in the fourth quarter of 2023, but overall in line with our expectations. This increase in gross net deductions in the first quarter of 2024 is primarily related to higher Medicare Part D and PHS expenses. Historically, we have experienced higher Medicare Part D expenses in the first quarter of the year due to many Part D patients moving through the donor hole at the start of the calendar year. Our complementics trade inventory decreased by approximately 350 units when compared to the fourth quarter of 2023, approximately 2.4 weeks on hand. As I mentioned on our fourth quarter earnings conference call, we experienced a trade inventory build in the fourth quarter of 2023 of approximately 1,000 units, and that we had observed an inventory drawdown in January. As discussed previously, XLX took a 2.2% price increase on January 1, 2024. This price increase is more than offset by the higher gross net deductions during the first quarter of 2024. While we don't provide quarterly revenue guidance, we do see some seasonality in net product revenue trends, where first quarter net product revenues have historically been lower than the following quarters in a year. If you analyze the last seven years of first quarter net product revenue and compare them to the reported annual net product revenues of the same year, in many of those years, the first quarter net product revenues are in the range of 21% to 23% of our annual net product revenues. We took this seasonality impact into account when preparing our annual net product revenue guidance of $1.65 to $1.75 billion, which we are reiterating on today's call. As a reminder, clinical trial sales have historically been choppy between quarters, and we expect this to continue in future quarters. Total revenues also included approximately $47 million in collaboration revenues, including approximately $40 million of royalty earned from Ipsen and Decatur on their sales of Cabozantinib in their territories. total operating expenses excluding restructuring charges for the first quarter of 2024 were approximately $363 million compared to $398 million in the fourth quarter of 2023. The sequential decrease in these operating expenses was primarily driven by lower drug discovery and general and administrative expenses in the first quarter of 2024. In January 2024, we announced a restructuring of our business, which included a headcount reduction of 174 FTEs. The total cost of this restructuring in the first quarter of 2024 were approximately $33 million, which includes severance and employee-related costs, asset impairment, and contract termination costs. Provision for income taxes for the first quarter of 2024 was approximately $12 million, compared to provision for income taxes approximately $18 million for the fourth quarter of 2023. The company reported gap net income of approximately $37 million, or 12 cents per share, on a fully diluted basis for the first quarter of 2024. The company also reported non-gap net income of approximately $52 million, or 17 cents per share, on a fully diluted basis. Non-gap net income excludes the impact of approximately $15 million of stock-based compensation expense net of the related income tax effect. Cash and investments for the quarter ended March 31, 2024, was approximately $1.6 billion. During the first quarter of 2024, we repurchased approximately $191 million of Exelixis shares at an average price of $22.08. We remain committed to fully executing on the $450 million share repurchase program we announced in January 2024. Combining the 2023 and 2024 share repurchase program, we will return $1 billion to our shareholders by the end of 2024. This level of cash and investments supported by our ongoing cash flow from operations provides XFLXs with the flexibility to invest in internal R&D activities, to pursue external business development opportunities to expand our pipeline, and allows us to return capital to our shareholders through our $450 million share repurchase program. And finally, we are reiterating our full year 2024 financial guidance, which is detailed on slide 14 of our earnings presentation. And with that, I'll turn the call over to PJ.

Thank you, Chris. In the first quarter of 2024, SEEM continued to execute at a high level which has resulted in CABOMEDX continuing to be the number one prescribed TKI in RCC and second line HCC. Additionally, CABOMEDX in combination with nivolumab remains the number one TKI plus IO combination in first line renal cell carcinoma. With regards to prescriptions, CABOMEDX TRX volume grew 4% year over year in Q1 2024 relative to Q1 2023. In the same period, the TKI market basket was flat. Furthermore, the business remained strong, both in terms of demand and new patient starts. Cabo Medics continued to perform well in the first quarter from both a marketplace and competitive perspective. Cabo Medics again led the TKI market basket in TRX share at 40%. As we have discussed previously, the first-line RCC market is extremely competitive, and Q1 was the sixth full quarter in which cabomedics plus nivolumab remained the number one prescribed TKI plus IO combination in first-line RCC. Furthermore, long-term data from the Checkmate 9ER study, now with a minimum of four years' follow-up, was presented at ASCO GU this year continues to reinforce the leadership position that CaboMedix has in the RCC marketplace. Looking forward, the commercial team is excited about the positive results from the cabinet trial in neuroendocrine tumors, as well as the CONTACT-2 trial in metastatic castration-resistant prostate cancer, which Amy will discuss in some detail. Neuroendocrine tumors comprise a large and heterogeneous patient population, patients become metastatic and progress, treatment options become limited. The only oral therapy options are sunitinib and everolimus, and there has not been an approval in the U.S. for an oral agent in net since 2016. There is a strong unmet need for new options for patients who have progressed on systemic therapy. There are approximately 8,000 incident second-line plus drug-treatable patients annually in the U.S. Approximately 20% of these patients are SSTR negative, and in lung NETs, that percentage is higher, with 40% to 60% being SSTR negative. Most NET patients will receive many lines of therapy, in part due to the more indolent nature of the disease relative to other solid tumors. We have conducted preliminary market research which reveals that oral therapies account for approximately 50% of the utilization in this market in the second-line plus setting. The cabinet study had a diverse population, including pancreatic, extrapancreatic, and lung net patients, SSTR positive or negative patients, as well as previously treated with Lutathera. Regulatory approval for CABNET would potentially position CABO to help a broad range of NET patients. Metastatic castration-resistant prostate cancer is a large market with significant unmet medical need, where the primary therapeutic options remain novel hormonal therapy, chemotherapy, and radioligand therapy. There is a significant unmet need in this patient population particularly for patients progressing on an NHT and who wish to delay chemotherapy. Many patients receive an NHT before they become metastatic and castrate resistant. PABO plus Atezo represents a potential option for many of these patients with novel mechanisms of action and convenient administration in the metastatic CRPC setting. Furthermore, the commercial organization would be well-positioned to leverage the RCC team infrastructure to achieve synergy in a new GU oncology indication. In summary, regulatory approval in these additional indications with significant unmet need would provide the opportunity for continued growth for CABO medics in the coming years. I would also add that the commercial team is extremely excited about the progress in the pipeline, particularly zanzalitinib as we look forward to having another product to help patients with cancer. With that, I will turn the call over to Amy.

Thanks, BJ. Today, I'll provide a high-level update on our clinical stage pipeline. The team is continuing the momentum across all of the programs we highlighted during our R&D day last December with laser focus on execution for the Cavozantinib franchise as well as for our clinical pipeline. Our pipeline is broad, both in terms of modalities and targets, representing a variety of development opportunities, which, combined with our robust translational and clinical development capabilities, provide an exciting and high-potential platform for growth. Today, I'll share the progress we are making towards executing on our clinical trials across the development pipeline and on our potential regulatory submissions for cabizantinib. So let's start with cabizantinib and cabinet. which is a phase three study that evaluated CAVO versus matched placebo in patients with previously treated advanced or metastatic pancreatic or extrapancreatic neuroendocrine tumors, which I'll refer to as PNET or EPNET, respectively. The study was conducted by the Alliance for Clinical Trials in Oncology, and data was presented by Dr. Jennifer Chan at ESMO 2023. The study had two independently powered cohorts, one for PNET and the other for ePNET. Notably, the PFS hazard ratio for each cohort strongly favored CAVO with hazard rates of 0.27 and 0.45 in the PNET and ePNET populations, respectively. The safety profile of monotherapy CAVO was consistent with its known profile and no new safety signals were identified. This initial analysis was based on local assessments with limited data available from the Blinded Independent Radiology Committee, or BIRC. The compelling results triggered an IDMC recommendation and Alliance decision to stop enrollment, unblind the study, and allow patients to cross over from placebo to cabozantinib. The final analysis by BIRC will be shared at a conference later this year and support our intention to file in the coming months. As PJ mentioned in his section, we are very excited about the potential to bring cabozantinib to patients with neuroendocrine tumors. The cabinet data are quite impressive and robust, and if approved, support CAVO as a potential new standard of care in a population that is in dire need of effective treatment options. Turning now to CONTACT-02, our randomized open-label Phase III study of CAVO plus atezolizumab versus second novel hormonal therapy, or NHT, in patients with castration-resistant prostate cancer and measurable extra pelvic soft tissue disease. We believe the data from this study support a favorable risk-benefit to patients and are intent to file. Remember, this is a unique study population, given the requirement for measurable disease, which we deliberately chose to ensure a robust assessment of PFS by Burke. CONTACT had dual primary endpoints of PFS by Burke and OS. We anticipate having the final OS analysis in the coming months. So what does a dual primary endpoint mean? It means that for a study to be considered positive from a statistical standpoint, we only have to hit on one of the endpoints. Dr. Neeraj Agarwal presented the significant and robust PFS results at ASCO-GU. The PFS hazard rate in the pre-specified PFS population was 0.65, with a p-value equal to 0.0007. So, statistically significant, hence a positive study. The PFS hazard rates, medians, and Kaplan-Meier curves in the ITT population by Burke were nearly identical to that in the PFS population. This was also true for PFS according to the PCWG3 criteria, which includes bone imaging also assessed by Burke. A PFS benefit was observed in all subgroups, notably in those with the poorest outcomes, that is in patients with liver metastases and in patients who've already received both an NHT and docetaxel. At this analysis, OS demonstrated a trend favoring CAVO-ATISO. Contact O2 enrolled a uniquely aggressive clinical subset of MCRPC, one that is typically highlighted for having the worst prognosis, which is reflected by the limited activity with second NHT. The toxicities reported with CAVO plus ATISA were higher than those with second NHT, and this is not surprising given NHTs are very well tolerated, especially in those who've already demonstrated good tolerance to prior NHT. And remember, the median duration of prior NHT was one year in contact O2. The tolerability profile CAVO-ATISA was consistent with the known tolerability profile of each monotherapy agent and with the doublet from other studies, as well as with other approved IOTKI combinations. Putting this together and based on the input we've received from many in the GU oncology community, from patient advocacy groups and patients, We firmly believe these findings represent an acceptable risk-benefit profile, and we are committed to filing this year. So there's quite a lot of excitement with CAVO in 2024, but I'm going to turn now to zanzalitinib, where our excitement continues to grow. Our Phase I studies have multiple expansion cohorts and a variety of tumors and combinations. Data generated from these cohorts has and will continue to support our expanded development for ZANZA. At the IKCF conference and R&D day last year, Dr. Monty Powell presented promising data with Zanzibar monotherapy where compelling and durable responses were observed in 32 patients with treatment refractory clear cell kidney cancer, all of whom had received prior IO and the majority of whom, or 81%, had received prior VEGFR TKIs, including 51% who previously received CAVO. The ORRs of 38% in the ITT and of 24% in patients who had received prior CABO are very encouraging, especially given that Zanza shares the target kinase profile of CABO but a shorter half-life, which you will hear about in more detail from Dana and which seems to result in differential partitioning into tissues, including tumor tissue, potentially explaining the emerging differentiated activity and tolerability profile. We're not the only ones excited about ZANSA's potential. The GU community was very receptive to the data presented at IKCS, and discussions around collaboration opportunities are ongoing. Turning now to our pivotal studies, we currently have three phase three studies with ZANSA. We're evaluating additional pivotal studies, including opportunities for collaboration with other companies. Our most mature study is Stellar 303. This study will evaluate the combination of zanza plus atezolizumab versus regorafenib in patients with non-MSI high, non-DMMR, metastatic, and refractory colorectal cancer. The primary endpoint is OS in the population of patients without liver mets or NLM, followed by an evaluation of OS in the ITT population should OS in the NLM population be statistically significant. So this is not a dual primary endpoint. The sample size for both NLM and LM patients is capped to ensure adequate number of events in each of these analyses. PI excitement about the potential of this combination, especially in patients without liver mets, has resulted in rapid uptick in enrollment, and enrollment to the liver met cohort is basically complete. Enrollment to the NLM cohort should be complete in the coming months. is our Phase III trial, which compares the combination of Zanza plus nivalumab to sunitinib in patients with previously untreated metastatic non-clear cell kidney cancer. This has dual primary endpoints of progression-free survival and overall response rate. OS is a secondary endpoint. The probability of success of a study is a key strategic lever when we consider how to prioritize our portfolio. Given that VEGFR TKIs work in non-clear cell kidney cancer, that TKI-IO combos work in non-clear cell kidney cancer, that CAVO monotherapy beats SUTENT in kidney cancer, and that ZANZA has a best-in-class potential for a VEGFR TKI, we believe this study has a reasonably high PTS. Investigators are also excited about this combination, and enrollment is ongoing in multiple countries. Cellar 305 is our Phase 2-3 trial, which will evaluate zanzalitinib in combination with pembrolizumab versus pembrolizumab alone in patients with untreated PD-L1-expressing advanced or metastatic squamous cell carcinoma of the head and neck. This study was activated late last year, and we are full steam ahead into site activation mode. Given the emerging favorable activity and tolerability profile of ZANSA and its mechanism of action that results in an immune-permissive environment, we believe this combination of ZANSA plus PEMBRO could result in improved outcomes versus single-agent PEMBRO and has the potential to offer patients a chemo-free option. Of course, we are intrigued by the LEAP-010 data, and just as we did with STELLAR-310, will make necessary or appropriate modifications to Stellar 305 to increase the probability of success. We are always evaluating data from ZANSA and CABA studies, emerging data from our competitors, and the evolving treatment landscape to inform the design and initiation of the next pivotal studies for ZANSA, an asset that we believe has potential for best-in-class as a VEGFR TKI with commensurate improved activity in patients that ultimately transfer into value for our shareholders. I'll now briefly touch on our early clinical pipeline assets, XB002 and XL309 before passing the call over to Dana. XB002 is our tissue factor directed antibody drug conjugate incorporating a modified or a statin as a payload. Enrollment into the cohort expansions in the JUUL 101 study is robust, and as the data matures, will allow us to understand the initial benefit-risk profile. We will provide updates when we have data maturity. Finally, last and certainly not least, is XL309, which we are very excited about. Dana will talk more on why we remain optimistic about this particular USP1 inhibitor. So in the interest of time, I'll just state that dose escalation cohorts are enrolling, and we hope to open combination cohorts with PARP inhibition a little later this year. In summary, we're advancing a robust pipeline of clinical stage molecules while maximizing the potential benefit to patients from our flagship asset, cabozantinib, in high unmet medical need indications. We remain very optimistic about what we can do for patients who, despite significant advances, still need better treatment options. And with that, I'll turn the call over to Dana.

Thanks, Amy, and good afternoon, everyone. Today, I'm giving a brief update on our progress in the first quarter of 2024. toward our goals for preparing for IND filings and for advancing new compounds to development candidate status. And then I'll wrap up with some preclinical updates on our USP1 inhibitor XL309 and our next generation VEGF receptor tyrosine kinase inhibitor zanzolintinib. On the IND front, we are making good progress on all of our pre-IND programs and are on track to file up to three this year. The first one we expect to file this year is for XB010, our 5T4-targeted antibody drug conjugate that carries the cytotoxic antitubulin payload MMAE. IND preparation is wrapping up soon, so we expect that one to file around mid-year. The second IND we expect to file this year is for XL495, which is a small molecule inhibitor of PKMIT1 that shows synthetic lethality in the context of increased cyclin E levels, which occurs across a wide range of tumors. IND preparation is progressing, and we are on track to also file this one around mid-2024. The third IND we expect to file this year will be for XB628, our bispecific antibody that targets PD-L1 along with NKG2A and displays NK cell engager activity in preclinical models. The GLP TOCS study for XB628 is now complete. and manufacturing and other activities have us on track for IND filing in the fourth quarter of 2024. Each one of these programs has a solid rationale for generating differentiating data in the clinic, so we're excited to get these INDs filed and to get the trials up and enrolling quickly. In terms of new development candidates this year, we are currently on track to achieve our goals of at least two this year with some exciting new programs, including a small molecule inhibitor targeting PLK4, which is synthetically lethal in cells with amplified TRM37, and a novel antibody drug conjugate program. Both of these programs represent first or best-in-class approaches with potential to generate differentiating results in the clinic, So we're certainly pleased that we remain on track for putting these additional assets into the preclinical pipeline this year. So now I'd like to shift gears a bit and describe some exciting preclinical data we generated for two of our small molecules in the clinical pipeline. I'll start first with a brief update on XL309 and then describe some preclinical data we've generated comparing zanzalintinib and cabozantinib. We recently tested the combination of XL309 with the selective PARP1 inhibitor, seruparib, in the preclinical breast cancer xenograft model, MDA-MB436, in which the BRCA1 gene is mutated. The data we generated with the combination showed that at doses of both compounds that alone showed minimal tumor growth delay, when given in combination, resulted in very strong tumor after dosing had ceased. The other data I'm sharing with you today I think will help to shed more light on the underlying basis for an emerging benefit-risk profile for zanzalitinib that appears to be improved compared to cabozantinib. You may recall that zanzalitinib retains the target kinase profile of cabozantinib, but with a PK profile that's more optimal for dose adjusting to manage tolerability. And as you just heard from Amy, we're seeing what appears to be an overall improved benefit-risk profile with ZANSA, with responses in some patients who progressed on CABO and lower rates of certain AEs with ZANSA, such as hand-foot syndrome, diarrhea, and fatigue. We now have some preclinical data which we think help to explain these differences between the two molecules. First, we've continued to explore potential differences in the biological target profiles of the compounds. And both were recently run side by side in the same experiment in a prism screen at the Broad Institute. This is a large-scale, diverse cancer cell line screen that determines the effects of compounds on cell viability across approximately 900 distinct cell lines, representing over 45 cancer subtypes. The results we got back from the screen showed the compounds were remarkably similar in terms of their ability to impact cell viability. which largely confirms the hypothesis that the key biological target profiles of CABO and ZANSA are essentially the same. Given the similar target profiles, we hypothesized that a potential rationale for the improved profile we're seeing in the clinic with ZANSA might be related to differences in tissue drug concentrations between tumors and normal healthy tissue when compared to CABO. Therefore, we conducted tissue distribution studies in both rats and mice And observed that, compared to cabozantinib, zanzalitinib showed higher free drug concentrations in tumors and lower free drug concentrations in normal tissues. This translated to more potent on-target activity for inhibition of MET in tumors by ZANZA. These results were a bit surprising as we had not expected such differentials in tissue partitioning between these two molecules. But the results certainly are consistent with, and I think help explain, the apparently improved benefit-risk profile that's emerging with ZANs in the clinic. So with that, I'll turn the call back over to Mike.

All right, thanks Dana. I'll close by highlighting that two longstanding Exalexis executives are retiring after serving our company for nearly two decades. First, Peter Lam, EBP of Scientific Strategy, was with Exalexis for nearly 25 years. As you all know, made an outsized impact on our drug discovery efforts during his tenure at the organization. Additionally, Laura Dillard, our EDP of Human Resources, spent nearly 20 years leading our HR efforts to ensure we are keeping pace with the evolution and growth of the company. On behalf of the entire Exalexis team, I'd like to thank both Peter and Laura for their friendship, dedication to Exalexis, and most importantly, commitment to cancer patients on a global level. We wish them all the best as they start their retirement. So with that, I want to thank the entire Excel team for their efforts to support our discovery, development, and commercial activities. We're off to a great start in 2024 and expect this year to be critical for our science and the patients we hope to serve in the future. We built and are constantly fortifying Exalexis as a big, small company with all that we do every hour of every day. the ExoLexus team is highly motivated to exceed expectations in our mission to help cancer patients recover stronger and live longer. We look forward to updating you on our progress in the future, and thank you for your continued support and interest in ExoLexus, and we're happy to now open the call for questions.

Thank you. Ladies and gentlemen, to ask a question, please press star 11 on your telephone and then wait to hear your name announced. To withdraw your question, please press star 11 again. In the interest of time, we ask that you limit yourself to one question only. Please stand by while we compile the Q&A roster. Our first question comes from the line of Joe Catanzaro with Piper Sandler. Your line is open.

Yeah, hi. Thanks for taking my questions, and I appreciate you taking the time here. So I'm wondering if you could... elaborate a bit on your earlier comments in the events of a positive outcome with regards to MSN patent litigation and sort of interest in looking for later stage assets in GU, GI, oncology. I guess, you know, how would you define later stage? Is this sort of modality agnostic? And what size deal do you think you could execute with the balance sheet and clarity around the CAVO revenue tail? Thanks.

Yeah, Joe, it's Mike. Thanks for the question. Yeah, this isn't really a new approach. We talked about this earlier in the year as we were implementing the restructuring, focusing our BD efforts on later stage assets in terms of new modalities that are either in or entering pivotal trials, as well as their focus on helping us find collaborations with ZANZA and other molecules in our pipeline to collaborate on in terms of cost and or compound sharing So, look, we're very interested in building a pipeline. We've got a great discovery, development, and commercial organization, and late-stage assets fit well into that overall approach. Whether they be already in pivotal trials or about to enter, we think we can add a lot of value as we go forward. So wouldn't want to comment on size, wouldn't want to comment, and certainly on, you know, individual targets. We're modality agnostic in terms of small molecules and biologics. We have, I think, a very good eye for good data and good compounds. Again, the Cabo lens, if you will, really informs that. We talked about that at R&D Day back in December. So we're all in in terms of finding potential assets to be able to bring into our pipeline, and that will continue as we go forward.

Thank you. Please stand by for our next question. Our next question comes from the line of Jason Gerberry with Bank for America. Your line is open.

Hey, guys. Thanks for taking my question. So, mine, I just wanted to follow up on the NET commercial opportunity slide. I'm just curious how you guys think an indication like that could ramp, you know, the second-line incidents. It's a decent-sized number. I just wonder about the availability of an established oral TKI, which wasn't studied head-to-head, again, if that creates a barrier at all or... might flow the launch versus the launches we're accustomed to seeing, like TechMate 90R, just given the need to potentially retrain physicians or educate them about your data. Thanks.

Yeah. Hi, Jason. This is PJ. Thanks for the question. You know, I'd say we're really excited about the data that, you know, Amy went into a little more detail on. As I mentioned, we've kind of conducted some preliminary market research. We've certainly had some advisory boards. I guess what I'd say at a high level is, you know, there's a lot of enthusiasm for the data. You know, I don't think there'll be anything significantly different than prior launches. You mentioned 9ER in terms of kind of trajectory or uptake or sort of retraining physicians per se. I think they're very comfortable, obviously, with TKIs and, you know, even in this setting. So, you know, we think this is a really nice opportunity potentially should we receive approval. For CAVO, you know, as I spoke to, I think the broad population that was studied with regards to pancreatic, extra pancreatic, site of origin tumors, including lung, which is a little bit different from some of the other agents which weren't studied as broadly, as well as the fact that, you know, were studied in SSTR positive and negative, as well as kind of having a modern data set, which included a lot of patients treated with Lutathera before the study, really gives us, you know, the potential to be broad and I think, in a sense, very user-friendly for oncologists who are really looking for something new in this setting.

Thank you. Please stand by for our next question. Our next question comes from the line of Michael Schmidt with Guggenheim. Your line is open.

Hey, guys. Thanks for taking my questions. I had one for Amy on Stellar 305. And so just wondering, how the enrollment criteria in the study compare to that from Keynote 048 or LEAP-10, to what degree you feel like you may need to adjust the trial based on the LEAP-10 data that was presented recently, and what your confidence level is in demonstrating a positive overall survival trend, which was obviously not the case in LEAP-10. Thanks so much.

Yeah, thanks for the question, Michael. It was very interesting to actually get a chance to see the results from the presentation earlier this year in terms of LEAP-10. Notably, you know, an ORR and a PFS that favored len-PEM, but an OS that didn't. And, you know, an interesting duration of response with monotherapy, PEM, favored over the doublet. So, you know, this is a different population, frontline head and neck, a little bit more frail than other patient populations. And, you know, we're interested in trying to uncover as much as we can around the dose of Len, the dose reductions, and how much that may have abrogated a patient's ability to receive full PEMBRO dose. So we are busy. deeply trying to understand that and if need be, make a change to the 305 study with regard to dose in the context of a frailer patient population, if you will. I think that there's a differentiation between ZANZA and LEN in that ZANZA does inhibit the TAM kinase family which is implicated, if you will, in favoring an immune permissive environment. So the mechanism of action of ZANZA is different from LEN and because of that could very likely have a differential outcome and we believe it will. We'll see what ultimately needs to be changed, and we'll keep you posted on those changes as they're made. Right now, the eligibility criteria for the most part are posted on clinicaltrials.gov, and where we need to make an update, we will. Thank you.

Please stand by for our next question. Our next question comes from the line of Gregory Renza with RBC Capital Markets. Your line is open.

Great. Good afternoon, Mike, and thanks for the updates, and thanks for taking the question. Mike, maybe just to ask a little bit, building on the neuroendocrine tumor opportunity, certainly nicely in context with respect to CABO, but as you do think about ZANSA and the combo optionality there and the white space that you have, I'm wondering if you could just comment a bit about ZANSA in this indication. Is there opportunity and what are the potential development paths as you think about combos? Would potentially Zanza and Lutathera be something to explore? Thanks again.

Yeah, Greg, thanks for the question. That's a great one. I can punt over to Amy and PJ to opine upon. Amy?

Yeah, sure. As I mentioned during the call, we're always assessing what is the next best thing to think about for Zanzalitinib. We look at all things that are strategic in our assessment. So I talked about the probability of technical success. That's a big one for us to consider, as well as the time it takes to conduct the study and the competitive and evolving landscape and the value proposition. And I would say that neuroendocrine tumor is high on the list for ZANZA, and we are very interested in it. I'll let PJ comment a little bit on the commercial.

Yeah, I mean, I think just at a high level, you know, if I go back to kind of the opportunity here, certainly a large unmet medical need, as I mentioned, with not many new therapies, really any oral therapies being approved since 2016. So I think there's a lot of room to maneuver in this tumor type in particular. You know, the orals, as I mentioned in my remarks and on the slide, account for approximately 50% of the second-line plus population. So if you think about Lutathera, for example, you know, which is doing over $400 million in revenue annually, basically a second-line plus population, they have the NETR2 data. at ASCO GI this year, but, you know, those revenue kind of predate that. So that's a pretty significant opportunity in less than 50% of that market. So I think this is a big space that's really, there's a high appetite for, you know, new therapies, for new trials, and really an opportunity for this market to grow over time. So I see it as very exciting.

Yeah, that's great, PJ. You know, I would just add, I think the way we talk about NET here, and we're really excited about certainly the cabinet data and the opportunities to go forward with ZANZA. You know, we think NET is similar to what we saw with RCC back in the 2014, 2015, 2016 timeframe. And there's lots of similarities between the two, even though they're obviously very different indications. So we're excited about this. We hope to invest more as we go forward. Lots of opportunities with Zanza and other potential combinations. So stay tuned. As that evolves, we'll keep you in the loop.

Thank you. Please stand by for our next question. Our next question comes from the line of Yaron Weber with TD Cohen. Your line is open.

Hey, this is Joyce on for your own. Thanks for taking the question. Maybe just another follow-up on the NET market opportunity. I think you guys have previously said that the prevalent population is about five times the size of the second line plus incident population or about 40,000 patients. Just wondering how much of that market you think you can capture or pull into this opportunity with CAVO and or ZANDA. Thank you.

Yeah. Hi, Joyce. This is PJ. Thanks for the question. I think, you know, as I mentioned, the 8,000 patients, those are kind of new incident patients in a given year. And as you mentioned, the prevalent population is much larger. I think, you know, I wouldn't want to speculate before we get to a label on the potential upside or where it might play out in the marketplace. But I think, you know, when we think about the 8K patients, et cetera, That's kind of the baseline, and there certainly could be many more patients, given that this is an indolent disease where patients receive many lines of therapy that might be kind of out there. But, you know, again, I think we need to wait until we get in the market to really get a good sense of that. But we're very confident and comfortable in the 8,000 patients as it is being a really significant potential opportunity for Cabo.

Thank you. Please stand by for our next question. Our next question comes from the line of Andy C. with Wim Blair. Your line is open.

Oh, great. Thanks for taking in our questions. Two quick ones if you don't mind. One financial, one scientific. In terms of Medicare fee exposure, Chris, do you mind reminding us your exposure there for the CABA franchise? Several companies, including Gilead, kind of called out the potential impact next year stemming from the, you know, the Medicare Part D redesign. So, that's part one. Part two, very provocative differential partitioning data, CABA versus ZANZA. I am curious, one, how was that determined? Was it based on kind of radio labeling experiments, and then perhaps from a hypothesis perspective, do you have any sort of, you know, initial working in terms of why that is? You know, is that kind of a difference in passive diffusion or maybe transporters are involved? So those are the two questions. Thank you.

Yeah, thanks, Andy. It's Mike.

Dana, why don't you take that second question first, and then we'll punt over to PJ for the Medicare Part D question.

Sure. Okay. Thanks for the question, Andy. Yeah, so in terms of the partitioning, We generated data in rats, and this is really data for preparing for the mass balance studies in humans. That was the first sort of view into differential partitioning into normal tissues that we got, so that was using radiolabeled drug. So, of course, that measures everything, metabolites and anything else that's attached to the radioactive tracer. In terms of the tumors, and actually the data that I showed on the slide came from sort of a side-by-side experiment in mice where we were determining the compound concentrations by mass spectrometry. And at doses that generated similar free drug concentrations in the plasma, which again were determined by doing protein binding experiments, etc., we saw those free drug concentrations in normal tissues and tumors, and that was just one of several representative normal tissues. So we're still generating a lot of data. There's obviously a lot of different components that go into how drugs distribute within a living animal or person, including things like protein binding, tissue binding, which involves other components other than protein, membranes, lipids, and whatnot, transporter effects, pH-dependent effects. There's so many different pieces of the puzzle that go into understanding how this happens. So we're still gathering data to try to understand the full model that's driving these differences. And what I would just say is, you know, stay tuned as we generate more data and publish those data. That will hopefully lay out the full mechanism of how this happens. But I must say that it was a surprise to us to see this happen. We had not anticipated or predicted that this would happen with these drugs a priori.

Great. Thanks, Dana. PJ? Yeah. So, hi, Andy. You know, our Part D Medicare Part D accounts for approximately 40% of the business. And as you know, with regards to the IRA, that will continue to evolve in 2025. So the out-of-pocket cap for patients will be even lower next year, around $2,000. And also it will be spread out over a monthly basis. So, you know, the thinking is that could potentially reduce the burden on patients even further.

Thank you. Please stand by for our next question. Our next question comes from the line of Jay Olson with Oppenheimer. Your line is open.

Oh, hey. Thank you for providing this comprehensive update and for taking our question. For Zanza, can you talk about when we should expect to see some combination data? And Bristol recently mentioned initial clinical proof of concept for Opdualag and non-small cell lung cancer. What's your thinking and interest level in the combination of ZANZA with Opduolag and Stellar O2? Thank you.

Sure. Thanks for the question. I'll take that. This is Amy. So you saw on the slides, we do have a variety of cohorts that we are expanding in both Stellar O01 and Stellar O02. And in combination with PD-1, in addition to other IO agents, including CTLA-4 and LAIG-3. We will present the data when it is mature. Some of these are early-line cohorts. It just takes a while because you want to get ORR, you want to get DOR, you want to get PFS. Some of them actually also have OS. They're event-driven, and we just have to wait for those events before we can report on that. When it comes to interest with combination partners, I've you know, I also presented the various combinations that we're doing, not only IO, IO, IO, but also, you know, we have the collaboration with HIF-2-alpha, and we're looking at other combinations. So, I would say that we're data-driven, and we'll go where the combinations tell us we should go, but we are, you know, we remain open. I think that the what we're continuing to identify and uncover is that the ability for ZANZA to combine with all of these other agents is actually rather straightforward. It's reasonably well tolerated at full doses, and so we don't think that there's an issue in terms of ZANZA's ability to combine with any of these agents. It just has to be The decision to move forward into additional studies just has to be made upon the data that we see as it matures in the 001 and 002 cohorts.

Thank you. Will you stand by for our next question? Our next question comes from the line of Akash Tewari with Jefferies. Your line is open.

Hi, this is Cathy on for Akash. I just wanted to follow up on the Medicare Part D question that was asked earlier, and specifically on how will the restructure of the catastrophic coverage component impact Cabo in the coming years, and also how does Exflexis specifically plan to mitigate these pricing impacts?

Thank you. Thanks for the question. This is Mike. Yeah, I certainly wouldn't want to comment on what's going to happen in the years ahead.

We have a pretty good idea about what to expect relative to 25 and beyond. So, again, I wouldn't want to opine beyond what's happening in 2024. And we have a high degree of confidence that we've got that really good sense of where that's going and how to navigate those different changes. So moving full steam ahead, and when we get to 25 and beyond, we'll talk about those changes then. Okay? Thank you.

Thank you. Please stand by for our next question. Our next question comes from the line of Chris Shabritaney with Goldman Sachs. Your line is open. Thank you.

Great, thank you very much. Perhaps you could help us understand your prioritization of capital allocation between the share of purchases and the business development activity. I think Joe had tried to ask earlier and recognizing that you aren't necessarily thinking of sharing specifics, but it sounded as if it was contingent upon the outcome of the MSM IP decision for you to perhaps lean in more intentionally on the BD front. I just wanted to make sure I understood because you also include in your release that you plan on completing the share of purchase allocation that the Board approved for the full year 2024. Thank you.

Yeah, thanks for the question, Chris. Yeah, I would not certainly assume those two activities are mutually exclusive. We have plenty of cash. We're generating free cash every quarter. We've been profitable for years. I think we have the appetite to do both, as Chris and others have all talked about previously. The share buyback between last year and this year will be a billion dollars. You know, the idea that we want to add additional late-stage assets to our portfolio certainly makes sense in the context of growing the business in terms of both top line and bottom line growth by having a diversified offering of products that we can use in the context of our development and commercialization platform to move the needle for patients and shareholders. So we are certainly very excited about the options we have ahead of us. Getting beyond, getting certainty with the ANDA is the first priority. Once we have that in place, then I think the next steps are relatively straightforward with how we want to maneuver the business. So thanks for the question and happy to follow up at a later time if you want.

Thank you. Will you stand by for our next question? Our next question comes from the line of Derek Archela with Wells Fargo. Your line is open.

Hey, guys. Thanks for taking the question. I guess one from us, how do you envision the CABA approvals in both prostate and neuroendocrine tumors? How does that, you know, change the volume growth profile of CABA relative today? How much acceleration could we potentially see in the future? Thanks.

Yeah. Hi, Derek. This is PJ. So certainly wouldn't want to, you know, give guidance beyond this year specifically on revenue or volume. I guess I'd kind of reiterate some of my earlier comments. With regards to NET, obviously, and CRPC, for that matter, both significant areas of unmet medical need. You know, as I mentioned, NET is 8,000 patients in the second-line-plus setting, and more broadly, we have the potential to really have a broad opportunity in that marketplace. CRPC, obviously, a really large market, again, ultimately with limited treatment options with regards to, you know, primary treatment options being chemo, NHT, radioligant therapy, but you're talking about tens of thousands of patients. You know, so we're very excited about the opportunities. And, you know, should we have the opportunity to bring them to market and help patients, we think there'll be a really significant opportunity for growth.

Thank you. Please stand by for our next question. Our next question comes from the line of Silvan Turkin with Citizens JMP. Your line is open.

Yeah, thank you. Congrats on the quarter and thanks for taking my question. I just want to ask about the overlap in sales force and call points between RCC and a potential sales force for prostate cancer. And basically what I'm trying to get to is can you tell us What's kind of the incremental cost for potentially launching NET and prostate cancer?

Yeah, Sylvain, thanks for the question.

PJ, why don't you address both in terms of prostate, RCC, and then on the GI side, NET and HCC? Yeah, happy to, Mike.

Thanks for the question, Sylvain. So I'll start with RCC. You know, we see really significant overlap there. In terms of GU oncologists, right? So whether it's in the community setting or even in academia, in particular, you know, focus are really treating the majority of these GU indications. So again, significant overlap there, which is, you know, potentially great for a number of reasons. One, we really, as I mentioned in my prepared remarks, we can leverage our existing RCC infrastructure. So, you know, without having to invest significantly to build that for a potential prostate cancer launch. And two, you know, these are physicians who are very familiar with cabozantinib in RCC, managing side effects, et cetera. So that could be, you know, certainly something that would be in our favor as well. With regards to NETs, you know, a lot of these... you know, as 50% plus, really 60% plus, are GI-related. We have, you know, another sort of sleeve of our team, if you will, is GI-focused. And, you know, there's a heavy overlap there as well with our call points both in the community as well as, again, in academia. physicians who are treating NET, as well as those GI tumors. So, again, it's a really nice potential for us to leverage our existing infrastructure, as well as launch into a market where a lot of the prescribers have existing comfort and familiarity and, frankly, positive experiences, according to all our market research. tumors, whether it's HCC, thyroid cancer, DTC, or, you know, in many different settings in renal cell carcinoma.

So that's certainly something we look forward to.

Thank you. Please stand by for our next question. Our next question comes from the line of David Lebowitz with Citi. Your line is open.

Thank you very much for taking my question. When you discuss the strategy Zonzo versus Cabo going forward, it seems it's clearly an effort to focus on different overall indications. Does that strategy evolve in the event of an unfavorable MSN2 ruling?

Yeah, David, thanks for the question. Yeah, I wouldn't want to, we wouldn't want to speculate on that right now.

So, you know, I think we've made the commitment to evolve the overall approach in terms of how we're developing TKIs, veg up our targeting TKIs over to Zanza. And that's still the plan going forward. We think we have what looks like to be an emerging strategy. improvement in overall activity and safety that you know totality of data it's still early would suggest that so we're all in on Zanza and there's a lot of excitement there in the community and we're having I think a lot of very interesting productive discussions about how we might combine with Zanza so lots of opportunity lots to do there so stay tuned thank you please stand by for our next question

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

Thanks for taking my question. Following up on the neuroendocrine tumor prevalent population, given heterogeneity of tumors, are you planning to stratify the prevalent population to focus on specific subgroups initially? I appreciate any details you can provide.

Thanks. Yeah, Jeff, this is PJ. Thanks for the question. You know, generally what I would say is as we focus Coming out of the gate, given that, as I mentioned, we kind of really have broad inclusion criteria in our study of whether that's site of origin, SSTR receptor status, what patients have been previously treated with. We really believe we have the opportunity to, you know, go right out of the gates should we be approved and launch this very broadly. And I think that will be um in you know what we're hearing in ad boards etc very much um appreciated and adopted well from a physician community perspective because you know they need new options for really all of these patients um and in some cases um you know like right now uh for patients who have been on a variety of therapies so i think it would be a broad opportunity and we would certainly uh position it to to as such

Thank you. Please stand by for our next question. Our next question comes from the line of Edsel Durout with BMO Capital Markets. Your line is open.

Hi, this is Luke Shumling. I'm for Edsel. Thanks for taking my question. For the prostate and NET filings, what are the key factors that are going to influence, like, the timing of those filings? What are you waiting on for those? And are those only going to be US filings? Are we also looking for ex-US and are there any other gating factors for filing those?

Thanks, Lucas. This is Amy. I'll take that question. So I can't comment on what our partners are going to be doing with regard to ex-US filing. CAVO is in collaboration under a collaboration agreement with Ipsen for non-US, non-Japan. and with Takeda for Japan. What we're focused on and what I mentioned in the call is that we needed the data by Burke in order to complete the dossier for a filing and we have the data and we're in discussions and we really are hoping to be able to submit in the coming months for the cabinet study. For contact, I also mentioned we have final OS which we're anticipating in the coming months The study was a positive study. Statistically significant OS is not required. In order for the study to be positive, we showed a really nice trend favoring Cabo Atezo, which I will point out, given what else is going on in prostate cancer in terms of radioligand PSMA4 assets, where initially hazard ratios for OS were above one. Novartis just announced there's a less than one, probably very close to one. The fact that we had a nice trend I think is also supportive of a risk-benefit profile that favors the patients. And so, you know, stay tuned. We'll let you know how conversations and filings progress with the agency.

Thank you. Please stand by for our next question. Our next question comes from the line of Peter Lawson with Barclays. Your line is open.

Thanks for taking the questions. Chris, just a question on the share buyback and thoughts on expanding that, especially if there's a negative outcome around IP. Would that be something you'd expand or accelerate?

Hey, Peter. Thanks for the questions. Chris, yeah, I'm not going to speculate on what we're going to do depending on the different variables around outcomes on the MSN trial. You know, as I mentioned in our prepared remarks, we're committed to executing on the $450 million.

You know, we did $191 million in the first quarter, and we're committed to getting the rest done this year.

Thank you. At this time, there are no further questions, and so I would now like to turn the call back over to your host, Byron, for closing remarks.

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

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. you Thank you. Thank you. Thank you. Thank you. Good day, ladies and gentlemen, and welcome to Exelix's first quarter 2024 financial results conference call. My name is Tawanda, and I'll be your operator 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, Mr. Varun Shravarnan, Director of Investor Relations. Please proceed.

Thank you, Tawanda. Thank you all for joining us for the XLX's first quarter 2024 financial results conference call. Joining me on today's call are Mike Morrissey, our president and CEO, Chris Senner, our chief financial officer, DJ Haley, our executive vice president of commercial, Amy Peterson, our chief medical officer, and Dana Aftab, our chief scientific officer, who together will review our progress for the first quarter 2024 and in March 31st, 2024. 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 Securities and Exchange Commission, 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 costs associated with discovery, product development, business development, and commercialization activities. With that, I'll turn the call over to Mike. All right.

Thanks, Virant, and thanks to everyone for joining us on the call today. Exalexis is off to a strong start in 2024 and had a productive first quarter across all components of our business. We're pleased to see both revenue and demand growth for the Cabo Zanza franchise in the U.S. and globally. Top priority is to move the needle for patients and shareholders by advancing Cabo Zanza and the rest of our exciting pipeline to improve the standard of care for patients with cancer. We have a lot to cover today, so let's jump right into it with the key highlights for the quarter, including first, We saw a strong performance of the Cabo Zantanib business in the first quarter of 2024 with continued growth in demand and revenue year-over-year compared to first quarter of 2023. Even with typical seasonal headwinds that were further magnified by the implementation of the IRA, Cabo Medics maintained its status as the leading TKI for RCC in both the first-line IO TKI market and the second-line monotherapy segment. First quarter, 2024, Cabo franchise net product revenues grew 4% year-over-year compared to first quarter, 2023. Highlighting its role as a worldwide leading TKI, global Cabo's antediluted franchise net product revenues generated by Exalexis and its partners grew approximately 9% year-over-year in the first quarter of 2024 compared to first quarter of 2023. As discussed previously, we're excited about the potential for additional Cabo growth with the new indications on the horizon that PJ and Amy will discuss shortly. Chris will review our full first quarter 2024 financial results in his prepared remarks. Second, we continue to advance our industry-leading pipeline across all stages of preclinical and clinical development. Our top priorities for 2024 are to advance potential new combo indications for NET and metastatic CRPC and expedite ZANSA clinical development with both existing and new pivotal trials, as well as potential new combination strategies. XB002 cohort expansion remains a clear focus for us, and XL309 continues to generate exciting momentum in the synthetic lethality space. Finally, we're thrilled with our progress in advancing new candidates in discovery and preclinical development, targeting a range of solid tumor indications that comprise an IND pipeline of both small molecules and biotherapeutics, which we expect to evolve quickly over the next several years. Third, final reply briefs for the second MSN and the trial were submitted in February, and we continue to expect a ruling in the first half of 2024. While we will not speak to any specifics today, this remains a critical milestone for the company and the Cabo Sanford franchise. Exalexis will continue to vigorously protect our intellectual property rights with respect to Cabo and our other differentiated molecules we pursue on behalf of patients with cancer. Finally, fourth, we expect business development activities to ramp up significantly as we gain clarity on the outcome of the patent litigation. Importantly, we're exploring options to collaborate with other organizations in cost and compound sharing arrangements in a manner similar to our prior Cabos Antidote checkpoint combination endeavors. In addition, we are carefully reviewing the competitive landscape on an enterprise-wide level to identify additional later stage assets that we believe, through our unique Cabos Antidote lens, fit into our GU and GI oncology-focused drug development and commercialization platform. So with that, please see our press release issued an hour ago for our first quarter of 2024 financial results and an extensive list of key corporate milestones achieved in the quarter. I'll now turn the call over to Chris.

Thanks, Mike. For the first quarter of 2024, the company reported total revenues of approximately $425 million. which included Cabo Xanthid and franchise net product revenues of $378.5 million. Cabo Medix net product revenues were $376.4 million and included approximately $6 million in clinical trial sales. Gross to net for the Cabo Xanthid and franchise in the first quarter of 2024 was 32.9%, which is higher than the gross to net we experienced in the fourth quarter of 2023, but overall in line with our expectations. This increase in gross net deductions in the first quarter of 2024 is primarily related to higher Medicare Part D and PHS expenses. Historically, we have experienced higher Medicare Part D expenses in the first quarter of the year due to many Part D patients moving through the donor hole at the start of the calendar year. Our problematics trade inventory decreased by approximately 350 units when compared to the fourth quarter of 2023, approximately 2.4 weeks on hand. As I mentioned on our fourth quarter earnings conference call, we experienced a trade inventory build in the fourth quarter of 2023 of approximately 1,000 units, and that we had observed an inventory drawdown in January. As discussed previously, XLX took a 2.2% price increase on January 1, 2024. This price increase is more than offset by the higher gross net deductions during the first quarter of 2024. While we don't provide quarterly revenue guidance, we do see some seasonality in net product revenue trends, where first quarter net product revenues have historically been lower than the following quarters in a year. If you analyze the last seven years of first quarter net product revenue and compare them to the reported annual net product revenues of the same year, in many of those years, the first quarter net product revenues are in the range of 21 to 23 percent of our annual net product revenues. We took this seasonality impact into account when preparing our annual net product revenue guidance of $1.65 to $1.75 billion, which we are reiterating on today's call. As a reminder, clinical trial sales have historically been choppy between quarters, and we expect this to continue in future quarters. Total revenues also included approximately $47 million in collaboration revenues, including approximately $40 million of royalty earned from Ipsen and Decatur on their sales of Cabozantinib in their territories. Total operating expenses, excluding restructuring charges for the first quarter of 2024, were approximately $363 million compared to $398 million in the fourth quarter of 2023. The sequential decrease in these operating expenses was primarily driven by lower drug discovery and general and administrative expenses in the first quarter of 2024. In January 2024, we announced a restructuring of our business, which included a headcount reduction of 174 FTEs. The total cost of this restructuring in the first quarter of 2024 were approximately $33 million, which includes severance and employee-related costs, asset impairment, and contract termination costs. Provision for income taxes for the first quarter of 2024 was approximately $12 million, compared to provision for income taxes of approximately $18 million for the fourth quarter of 2023. The company reported gap net income of approximately $37 million or 12 cents per share on a fully diluted basis for the first quarter of 2024. The company also reported non-gap net income of approximately $52 million or 17 cents per share on a fully diluted basis. Non-gap net income excludes the impact of approximately $15 million of stock-based compensation expense net of the related income tax effect. Cash and investments for the quarter ended March 31, 2024 was approximately $1.6 billion. During the first quarter of 2024, we repurchased approximately $191 million of Exelixis shares at an average price of $22.08. We remain committed to fully executing on the $450 million share repurchase program we announced in January 2024. Combining the 2023 and 2024 share repurchase program, we will return $1 billion to our shareholders by the end of 2024. This level of cash and investments supported by our ongoing cash flow from operations provides Exflexis with the flexibility to invest in internal R&D activities, to pursue external business development opportunities to expand our pipeline, and allows us to return capital to our shareholders through our $450 million share repurchase program. And finally, we are reiterating our full year 2024 financial guidance, which is detailed on slide 14 of our earnings presentation. And with that, I'll turn the call over to PJ. Thank you, Chris.

In the first quarter of 2024, SEEM continued to execute at a high level which has resulted in CABOMEDX continuing to be the number one prescribed TKI in RCC and second line HCC. Additionally, CABOMEDX in combination with nivolumab remains the number one TKI plus IO combination in first line renal cell carcinoma. With regards to prescriptions, CABOMEDX TRX volume grew 4% year over year in Q1 2024 relative to Q1 2023. In the same period, the TKI market basket was flat. Furthermore, the business remained strong, both in terms of demand and new patient starts. Cabo Medics continued to perform well in the first quarter from both a marketplace and competitive perspective. Cabo Medics again led the TKI market basket in TRX share at 40%. As we have discussed previously, the first-line RCC market is extremely competitive, and Q1 was the sixth full quarter in which cabomedics plus nivolumab remained the number one prescribed TKI plus IO combination in first-line RCC. Furthermore, long-term data from the Checkmate 9ER study, now with a minimum of four years' follow-up, was presented at ASCO-GU this year continues to reinforce the leadership position that Cabo Medix has in the RCC marketplace. Looking forward, the commercial team is excited about the positive results from the cabinet trial in neuroendocrine tumors, as well as the CONTACT-2 trial in metastatic castration-resistant prostate cancer, which Amy will discuss in some detail. Neuroendocrine tumors comprise a large and heterogeneous patient population, patients become metastatic and progress, treatment options become limited. The only oral therapy options are sunitinib and everolimus, and there has not been an approval in the U.S. for an oral agent in net since 2016. There is a strong unmet need for new options for patients who have progressed on systemic therapy. There are approximately 8,000 incident second-line plus drug-treatable patients annually in the U.S. Approximately 20 percent of these patients are SSTR-negative, and in lung NETs, that percentage is higher, with 40 to 60 percent being SSTR-negative. Most NET patients will receive many lines of therapy, in part due to the more indolent nature of the disease relative to other solid tumors. We have conducted preliminary market research which reveals that oral therapies account for approximately 50% of the utilization in this market in the second line plus setting. The cabinet study had a diverse population, including pancreatic, extrapancreatic, and lung net patients, SSTR positive or negative patients, as well as previously treated with Lutathera. Regulatory approval for CABNET would potentially position CABO to help a broad range of NET patients. Metastatic castration-resistant prostate cancer is a large market with significant unmet medical need where the primary therapeutic options remain novel hormonal therapy, chemotherapy, and radioligand therapy. There is a significant unmet need in this patient population particularly for patients progressing on an NHT and who wish to delay chemotherapy. Many patients receive an NHT before they become metastatic and castrate resistant. CABO plus Atezo represents a potential option for many of these patients with novel mechanisms of action and convenient administration in the metastatic CRPC setting. Furthermore, the commercial organization would be well-positioned to leverage the RCC team infrastructure to achieve synergy in a new GU oncology indication. In summary, regulatory approval in these additional indications with significant unmet need would provide the opportunity for continued growth for cabomedics in the coming years. I would also add that the commercial team is extremely excited about the progress in the pipeline, particularly zanzalitinib as we look forward to having another product to help patients with cancer. With that, I will turn the call over to Amy.

Thanks, BJ. Today, I'll provide a high-level update on our clinical stage pipeline. The team is continuing the momentum across all of the programs we highlighted during our R&D day last December with laser focus on execution for the Cavozantinib franchise as well as for our clinical pipeline. Our pipeline is broad, both in terms of modalities and targets, representing a variety of development opportunities, which, combined with our robust translational and clinical development capabilities, provide an exciting and high-potential platform for growth. Today, I'll share the progress we are making towards executing on our clinical trials across the development pipeline and on our potential regulatory submissions for cabizantinib. So let's start with cabizantinib and cabinet. which is a Phase III study that evaluated CAVO versus matched placebo in patients with previously treated advanced or metastatic pancreatic or extrapancreatic neuroendocrine tumors, which I'll refer to as PNET or EPNET, respectively. The study was conducted by the Alliance for Clinical Trials in Oncology, and data was presented by Dr. Jennifer Chan at ESMO 2023. The study had two independently powered cohorts, one for PNET and the other for ePNET. Notably, the PFS hazard ratio for each cohort strongly favored CAVO with hazard rates of 0.27 and 0.45 in the PNET and ePNET populations, respectively. The safety profile of monotherapy CAVO was consistent with its known profile and no new safety signals were identified. This initial analysis was based on local assessments with limited data available from the Blinded Independent Radiology Committee, or BIRC. The compelling results triggered an IDMC recommendation and Alliance decision to stop enrollment, unblind the study, and allow patients to cross over from placebo to cabozantinib. The final analysis by BIRC will be shared at a conference later this year and support our intention to file in the coming months. As PJ mentioned in his section, we are very excited about the potential to bring cabozantinib to patients with neuroendocrine tumors. The cabinet data are quite impressive and robust, and if approved, support CAVO as a potential new standard of care in a population that is in dire need of effective treatment options. Turning now to CONTACT-02, our randomized open-label Phase III study of CAVO plus atezolizumab versus second novel hormonal therapy, or NHT, in patients with castration-resistant prostate cancer and measurable extra pelvic soft tissue disease. We believe the data from this study support a favorable risk benefit to patients and are intent to file. Remember, this is a unique study population given the requirement for measurable disease, which we deliberately chose to ensure a robust assessment of PFS by Burke. Contact had dual primary endpoints of PFS by Burke and OS. We anticipate having the final OS analysis in the coming months. So what does a dual primary endpoint mean? It means that for a study to be considered positive from a statistical standpoint, we only have to hit on one of the endpoints. Dr. Neeraj Agarwal presented the significant and robust PFS results at ASCO-GU. The PFS hazard rate in the pre-specified PFS population was 0.65, with a p-value equal to 0.0007. So, statistically significant, hence a positive study. The PFS hazard rates, medians, and Kaplan-Meier curves in the ITT population by Burke were nearly identical to that in the PFS population. This was also true for PFS according to the PCWG3 criteria, which includes bone imaging also assessed by Burke. A PFS benefit was observed in all subgroups, notably in those with the poorest outcomes, that is in patients with liver metastases and in patients who've already received both an NHT and docetaxel. At this analysis, OS demonstrated a trend favoring CAVO-ATISO. Contact O2 enrolled a uniquely aggressive clinical subset of MCRPC, one that is typically highlighted for having the worst prognosis, which is reflected by the limited activity with second NHT. The toxicities reported with CAVO plus ATISA were higher than those with second NHT, and this is not surprising given NHTs are very well tolerated, especially in those who've already demonstrated good tolerance to prior NHT. And remember, the median duration of prior NHT was one year in contact O2. The tolerability profile CAVO-ATISA was consistent with the known tolerability profile of each monotherapy agent and with the doublet from other studies, as well as with other approved IOTKI combinations. Putting this together and based on the input we've received from many in the GU oncology community, from patient advocacy groups and patients, We firmly believe these findings represent an acceptable risk-benefit profile, and we are committed to filing this year. So there's quite a lot of excitement with CAVO in 2024, but I'm going to turn now to zanzalitinib, where our excitement continues to grow. Our Phase I studies have multiple expansion cohorts and a variety of tumors and combinations. Data generated from these cohorts has and will continue to support our expanded development for ZANZA. At the IKCF conference and R&D day last year, Dr. Monty Powell presented promising data with Zanzibar monotherapy where compelling and durable responses were observed in 32 patients with treatment refractory clear cell kidney cancer, all of whom had received prior IO and the majority of whom, or 81%, had received prior VEGFR TKIs, including 51% who previously received CAVO. The ORRs of 38% in the ITT and of 24% in patients who had received prior CABO are very encouraging, especially given that Zanza shares the target kinase profile of CABO but a shorter half-life, which you will hear about in more detail from Dana and which seems to result in differential partitioning into tissues, including tumor tissue, potentially explaining the emerging differentiated activity and tolerability profile. We're not the only ones excited about ZANSA's potential. The GU community was very receptive to the data presented at IKCS, and discussions around collaboration opportunities are ongoing. Turning now to our pivotal studies, we currently have three phase three studies with ZANSA, and we're evaluating additional pivotal studies, including opportunities for collaboration with other companies. Our most mature study is Stellar 303. This study will evaluate the combination of zanza plus atezolizumab versus regorafenib in patients with non-MSI high, non-DMMR, metastatic and refractory colorectal cancer. The primary endpoint is OS in the population of patients without liver mets or NLM, followed by an evaluation of OS in the ITT population should OS in the NLM population be statistically significant. So this is not a dual primary endpoint. The sample size for both NLM and LM patients is capped to ensure adequate number of events in each of these analyses. PI excitement about the potential of this combination, especially in patients without liver mets, has resulted in rapid uptick in enrollment, and enrollment to the liver met cohort is basically complete. Enrollment to the NLM cohort should be complete in the coming months. Stellar 304 says, is our Phase III trial, which compares the combination of Zanza plus nivalumab to sunitinib in patients with previously untreated metastatic non-clear cell kidney cancer. This has dual primary endpoints of progression-free survival and overall response rate. OS is a secondary endpoint. The probability of success of a study is a key strategic lever when we consider how to prioritize our portfolio. given that VEGFR TKIs work in non-clear cell kidney cancer, that TKI-IO combos work in non-clear cell kidney cancer, that CAVO monotherapy beats sutent in kidney cancer, and that ZANZA has a best-in-class potential for a VEGFR TKI, we believe this study has a reasonably high PTS. Investigators are also excited about this combination, and enrollment is ongoing in multiple countries. Cellar 305, is our Phase 2-3 trial, which will evaluate zanzalitinib in combination with pembrolizumab versus pembrolizumab alone in patients with untreated PD-L1-expressing advanced or metastatic squamous cell carcinoma of the head and neck. This study was activated late last year, and we are full steam ahead into site activation mode. Given the emerging favorable activity and tolerability profile of ZANSA and its mechanism of action that results in an immune-permissive environment, we believe this combination of ZANSA plus PEMBRO could result in improved outcomes versus single-agent PEMBRO and has the potential to offer patients a chemo-free option. Of course, we are intrigued by the LEAP 010 data, and just as we did with Stellar 310, we'll make necessary or appropriate modifications to Stellar 305 to increase the probability of success. We are always evaluating data from ZANSA and CABA studies, emerging data from our competitors, and the evolving treatment landscape to inform the design and initiation of the next pivotal studies for ZANSA. an asset that we believe has potential for best-in-class as a VEGFR TKI with commensurate improved activity in patients that ultimately transfer into value for our shareholders. I'll now briefly touch on our early clinical pipeline assets, XB002 and XL309, before passing the call over to Dana. XB002 is our tissue factor-directed antibody drug conjugate incorporating a modified or a statin as a payload. Enrollment into the cohort expansions in the JUUL 101 study is robust, and as the data matures, will allow us to understand the initial benefit-risk profile. We will provide updates when we have data maturity. Finally, last and certainly not least, is XL309, which we are very excited about. Dana will talk more on why we remain optimistic about this particular USP1 inhibitor. So in the interest of time, I'll just state that dose escalation cohorts are enrolling, and we hope to open combination cohorts with PARP inhibition a little later this year. In summary, we're advancing a robust pipeline of clinical stage molecules while maximizing the potential benefit to patients from our flagship asset, cabozantinib, in high unmet medical need indications. We remain very optimistic about what we can do for patients who, despite significant advances, still need better treatment options. And with that, I'll turn the call over to Dana.

Thanks, Amy, and good afternoon, everyone. Today, I'm giving a brief update on our progress in the first quarter of 2024 toward our goals for preparing for IND filings and for advancing new compounds to development candidate status. And then I'll wrap up with some preclinical updates on our USP1 inhibitor XL309, and our next generation VEGF receptor tyrosine kinase inhibitor zanzalintanib. On the IND front, we are making good progress on all of our pre-IND programs and are on track to file up to three this year. The first one we expect to file this year is for XB010, our 5T4 targeted antibody drug conjugate that carries the cytotoxic antitubulin payload MMAE. IND preparation is wrapping up soon, so we expect that one to file around mid-year. The second IND we expect to file this year is for XL495, which is a small molecule inhibitor of PKMIT1 that shows synthetic lethality in the context of increased cyclin E levels, which occurs across a wide range of tumors. IND preparation is progressing, and we are on track to also file this one around mid-2024. The third IND we expect to file this year will be for XB628, our bispecific antibody that targets PD-L1 along with NKG2A and displays NK cell engager activity in preclinical models. The GLP TOC study for XB628 is now complete, and manufacturing and other activities have us on track for IND filing in the fourth quarter of 2024. Each one of these programs has a solid rationale for generating differentiating data in the clinic, So we're excited to get these INDs filed and to get the trials up and enrolling quickly. In terms of new development candidates this year, we are currently on track to achieve our goals of at least two this year with some exciting new programs, including a small molecule inhibitor targeting PLK4, which is synthetically lethal in cells with amplified TRM37, and a novel antibody drug conjugate program. Both of these programs represent first or best-in-class approaches with potential to generate differentiating results in the clinic, so we're certainly pleased that we remain on track for putting these additional assets into the preclinical pipeline this year. So now I'd like to shift gears a bit and describe some exciting preclinical data we generated for two of our small molecules in the clinical pipeline. I'll start first with a brief update on XL309 and then describe some preclinical data we've generated comparing zanzalitinib and cabozantinib. We recently tested the combination of XL309 with the selective PARP1 inhibitor, seruparib, in the preclinical breast cancer xenograft model, MDA-MB436, in which the BRCA1 gene is mutated. The data we generated with the combination showed that, at doses of both compounds, that alone showed minimal tumor growth delay, when given in combination, resulted in very strong tumor after dosing had ceased. The other data I'm sharing with you today I think will help to shed more light on the underlying basis for an emerging benefit-risk profile for zanzalitinib that appears to be improved compared to cabozantinib. You may recall that zanzalitinib retains the target kinase profile of cabozantinib, but with a PK profile that's more optimal for dose adjusting to manage tolerability. And as you just heard from Amy, we're seeing what appears to be an overall improved benefit-risk profile with ZANSA, with responses in some patients who progressed on CABO and lower rates of certain AEs with ZANSA, such as hand-foot syndrome, diarrhea, and fatigue. We now have some preclinical data which we think help to explain these differences between the two molecules. First, we've continued to explore potential differences in the biological target profiles of the compounds. And both were recently run side by side in the same experiment in a prism screen at the Broad Institute. This is a large scale diverse cancer cell line screen that determines the effects of compounds on cell viability across approximately 900 distinct cell lines representing over 45 cancer subtypes. The results we got back from the screen showed the compounds were remarkably similar in terms of their ability to impact cell viability. which largely confirms the hypothesis that the key biological target profiles of CABO and ZANSA are essentially the same. Given the similar target profiles, we hypothesized that a potential rationale for the improved profile we're seeing in the clinic with ZANSA might be related to differences in tissue drug concentrations between tumors and normal healthy tissue when compared to CABO. Therefore, we conducted tissue distribution studies in both rats and mice and observed that, compared to cabozantinib, zanzalintinib showed higher free drug concentrations in tumors and lower free drug concentrations in normal tissues. This translated to more potent on-target activity for inhibition of MET in tumors by ZANZA. These results were a bit surprising as we had not expected such differentials in tissue partitioning between these two molecules, But the results certainly are consistent with, and I think help explain, the apparently improved benefit-risk profile that's emerging with Zans in the clinic. So with that, I'll turn the call back over to Mike.

All right. Thanks, Dana. I'll close by highlighting that two longstanding Exalexis executives are retiring after serving our company for nearly two decades. First, Peter Lam, EBP of Scientific Strategy, was with Exalexis for nearly 25 years. And as you all know, made an outsized impact on our drug discovery efforts during his tenure at the organization. Additionally, Laura Dillard, our EDP of Human Resources, spent nearly 20 years leading our HR efforts to ensure we are keeping pace with the evolution and growth of the company. On behalf of the entire Exalexis team, I'd like to thank both Peter and Laura for their friendship, dedication to Exalexis, and most importantly, commitment to cancer patients on a global level. We wish them all the best as they start their retirement. So with that, I want to thank the entire Excel team for their efforts to support our discovery, development, and commercial activities. We're off to a great start in 2024 and expect this year to be critical for our science and the patients we hope to serve in the future. We built and are constantly fortifying Exalexis as a big, small company with all that we do every hour of every day. the ExoLexus team is highly motivated to exceed expectations in our mission to help cancer patients recover stronger and live longer. We look forward to updating you on our progress in the future, and thank you for your continued support and interest in ExoLexus, and we're happy to now open the call for questions.

Thank you. Ladies and gentlemen, to ask a question, please press star 11 on your telephone and then wait to hear your name announced. To withdraw your question, please press star 11 again. In the interest of time, we ask that you limit yourself to one question only. Please stand by while we compile the Q&A roster. Our first question comes from the line of Joe Catanzaro with Piper Sandler. Your line is open.

Yeah, hi. Thanks for taking my questions, and I appreciate you taking the time here. So I'm wondering if you could... elaborate a bit on your earlier comments and the events of a positive outcome with regards to MSN patent litigation and sort of interest in looking for later stage assets in GU, GI, oncology. I guess, you know, how would you define later stage? Is this sort of modality agnostic? And what size deal do you think you could execute with the balance sheet and clarity around the CABO revenue tail? Thanks.

Yeah, Joe, it's Mike. Thanks for the question. Yeah, this isn't really a new approach. We talked about this earlier in the year as we were implementing the restructuring, focusing our BD efforts on later stage assets in terms of new modalities that are either in or entering pivotal trials, as well as their focus on helping us find collaborations with ZANZA and other molecules in our pipeline to collaborate on in terms of cost and or compound sharing efforts. arrangements. So look, we're very interested in building a pipeline. We've got a great discovery, development, and commercial organization, and late-stage assets fit well into that overall approach. Whether they be already in pivotal trials or about to enter, we think we can add a lot of value as we go forward. So wouldn't want to comment on size, wouldn't want to comment certainly on individual targets. We're modality agnostic in terms of small molecules and biologics. We have, I think, a very good eye for good data and good compounds. Again, the Cabo lens, if you will, really informs that. We talked about that at R&D Day back in December. So we're all in in terms of finding potential assets to be able to bring into our pipeline, and that will continue as we go forward.

Thank you. Please stand by for our next question. Our next question comes from the line of Jason Gerberry with Bank of America. Your line is open.

Hey, guys, thanks for taking my question. So mine, I just wanted to follow up on the NET commercial opportunity slide. I'm just curious how you guys think an indication like that could ramp, you know, the second-line incidents. It's a decent-sized number. I just wonder about the availability of an established oral TKI, which wasn't studied head-to-head, again, if that creates a barrier at all or... might slow the launch versus the launches we're accustomed to seeing, like TechMate 90R, just given the need to potentially retrain physicians or educate them about your data. Thanks.

Yeah. Hi, Jason. This is PJ. Thanks for the question. You know, I'd say we're really excited about the data that, you know, Amy went into a little more detail on. As I mentioned, we've kind of conducted some preliminary market research. We've certainly had some advisory boards. I guess what I'd say at a high level is, you know, there's a lot of enthusiasm for the data. You know, I don't think there'll be anything significantly different than prior launches. You mentioned 9ER in terms of kind of trajectory or uptake or sort of retraining physicians per se. I think they're very comfortable, obviously, with TKIs and, you know, even in this setting. So, you know, we think this is a really nice opportunity potentially should we receive approval. For Cabo, you know, as I spoke to, I think the broad population that was studied with regards to pancreatic, extra pancreatic, site of origin tumors, including lung, which is a little bit different from some of the other agents which weren't studied as broadly, as well as the fact that, you know, were studied in SSTR positive and negative, as well as kind of having a modern data set, which included a lot of patients treated with Lutathera before the study, really gives us, you know, the potential to be broad and I think, in a sense, very user-friendly for oncologists who are really looking for something new in this setting.

Thank you. Please stand by for our next question. Our next question comes from the line of Michael Schmidt with Guggenheim. Your line is open.

Hey, guys. Thanks for taking my questions. I had one for Amy on Stellar 305, and so just wondering, how the enrollment criteria in the study compare to that from Keynote 048 or LEAP-10, to what degree you feel like you may need to adjust the trial based on the LEAP-10 data that was presented recently, and what your confidence level is in demonstrating a positive overall survival trend, which was obviously not the case in LEAP-10. Thanks so much.

Yeah, thanks for the question, Michael. It was very interesting to actually get a chance to see the results from the presentation earlier this year in terms of LEAP-10. Notably, you know, an ORR and a PFS that favored len-PEM, but an OS that didn't. And, you know, an interesting duration of response with monotherapy PEM favored over the doublet. So, you know, this is a different population, frontline head and neck, a little bit more frail than other patient populations. And, you know, we're interested in trying to uncover as much as we can around the dose of Len, the dose reductions, and how much that may have abrogated a patient's ability to receive full PEMBRO dose. So we are busy deeply trying to understand that and if need be, make a change to the 305 study with regard to dose in the context of a frailer patient population, if you will. I think that there's a differentiation between ZANZA and LEN in that ZANZA does inhibit the TAM kinase family which is implicated, if you will, in favoring an immune permissive environment. So the mechanism of action of ZANZA is different from LEN and because of that could very likely have a differential outcome and we believe it will. We'll see what ultimately needs to be changed and we'll keep you posted on those changes as they're made. Right now the eligibility criteria for the most part are posted on clinicaltrials.gov and where we need to make an update, we will. Thank you.

Please stand by for our next question. Our next question comes from the line of Gregory Renza with RBC Capital Markets. Your line is open.

Great. Good afternoon, Mike and Tina. Thanks for the updates, and thanks for taking the question. Mike, maybe just to ask a little bit, building on the neuroendocrine tumor opportunity, certainly nicely in context with respect to CABO, but as you do think about ZANSA and the combo optionality there and the white space that you have, I'm wondering if you could just comment a bit about ZANSA in this indication Is there opportunity and what are the potential development paths as you think about combos? Would potentially Zanzibar and Lutathera be something to explore? Thanks again.

Yeah, Greg, thanks for the question. That's a great one. I can punt over to Amy and PJ to opine upon. Amy?

Yeah, sure. As I mentioned during the call, we're always assessing what is the next best thing to think about for Zanzibar. We look at all things that are strategic in our assessment. So I talked about the probability of technical success. That's a big one for us to consider, as well as the time it takes to conduct the study and the competitive and evolving landscape and the value proposition. And I would say that neuroendocrine tumor is high on the list for ZANZA, and we are very interested in it. I'll let PJ comment a little bit on the commercial.

Yeah, I mean, I think just at a high level, you know, if I go back to kind of the opportunity here, certainly a large unmet medical need, as I mentioned, with not many new therapies, really any oral therapies being approved since 2016. So I think there's a lot of room to maneuver in this tumor type in particular. You know, the orals, as I mentioned in my remarks and on the slide, account for approximately 50% of the Second Line Plus population. So if you think about Lutathera, for example, you know, which is doing over $400 million in revenue annually, basically a Second Line Plus population, they have the NETR2 data. at ASCO GI this year, but, you know, those revenue kind of predate that. So that's a pretty significant opportunity in less than 50% of that market. So I think this is a big space that's really, there's a high appetite for, you know, new therapies, for new trials, and really an opportunity for this market to grow over time. So I see it as very exciting.

Yeah, that's great, PJ. You know, I would just add, I think the way we talk about NET here, and we're really excited about certainly the cabinet data and the opportunities to go forward with Zanza. You know, we think net is similar to what we saw with RCC back in the 2014, 2015, 2016 time. And there's lots of similarities between the two, even though they're obviously very different indications. So we're excited about this. We hope to invest more as we go forward. Lots of opportunities with Zanza and other potential combinations. So stay tuned. As that evolves, we'll keep you in the loop.

Thank you. Please stand by for our next question. Our next question comes from the line of Yaronn Weber with TD Cohen. Your line is open.

Yaronn Weber Hey, guys. This is Joyce on for Yaronn. Thanks for taking the question. Maybe just another follow-up on the NET market opportunity. I think you guys have previously said that the prevalent population is about five times the size of the second line plus incident population. or about 40,000 patients. Just wondering how much of that market you think you can capture or pull into this opportunity with CAVO and or ZANDA. Thank you.

Yeah. Hi, Joyce. This is PJ. Thanks for the question. I think, you know, as I mentioned, the 8,000 patients, those are kind of new incident patients in a given year. And as you mentioned, the prevalent population is is much larger. I think I wouldn't want to speculate before we get to a label on the potential upside or where it might play out in the marketplace. But I think when we think about the 8K patients, et cetera, that's kind of the baseline. And there certainly could be many more patients given that this is an indolent disease where patients receive many lines of therapy. that might be kind of out there. But, you know, again, I think we need to wait until we get in the market to really get a good sense of that. But we're very confident and comfortable in the 8,000 patients as it is being a really significant potential opportunity for CAVO.

Thank you. Please stand by for our next question. Our next question comes from the line of Andy C. with WEM Blair. Your line is open.

Oh, great. Thanks for taking our questions. Two quick ones, if you don't mind. One financial, one scientific. In terms of Medicare D exposure, Chris, do you mind reminding us your exposure there for the Cabo franchise? Several companies, including Gilead, kind of called out the potential impact next year stemming from the Medicare Part D redesign. So that's part one. Part two, very provocative differential partitioning data, CABA versus ZANZA. I am curious, one, how was that determined? Was it based on kind of radio labeling experiments? And then perhaps from a hypothesis perspective, do you have any sort of, you know, initial working in terms of why that is? Is that kind of a difference in passive diffusion or maybe transporters are involved? So those are the two questions. Thank you.

Yeah, thanks, Andy. It's Mike.

Dana, why don't you take that second question first, and then we'll punt over to PJ for the Medicare Part D question.

Sure. Okay. Thanks for the question, Andy. Yeah, so in terms of the partitioning, We generated data in rats, and this is really data for preparing for the mass balance studies in humans. That was the first sort of view into differential partitioning into normal tissues that we got, so that was using radiolabeled drug. So, of course, that measures everything, metabolites and anything else that's attached to the radioactive tracer. In terms of the tumors, and actually the data that I showed on the slide came from sort of a side-by-side experiment in mice where we were determining the compound concentrations by mass spectrometry. And at doses that generated similar free drug concentrations in the plasma, which again were determined by doing protein binding experiments, et cetera, we saw those free drug concentrations in normal tissues and tumors. And that was just one of several representative normal tissues. So we're still generating a lot of data. There's obviously a lot of different components that go into how drugs distribute within a living animal or person, including things like protein binding, tissue binding, which involves other components other than protein, membranes, lipids, and whatnot, transporter effects, pH-dependent effects. There's so many different pieces of the puzzle that go into understanding how this happens. So we're still gathering data to try to understand the full model that's driving these differences and what i would just say is you know stay tuned as we generate more data and publish those data uh that that will uh hopefully lay out the full uh mechanism of how this happens but i must say that it was it was a surprise to us to see this happen we had not anticipated or predicted that this would happen with these drugs a priori great thanks dana pj yeah so hi andy uh you know our part d

Medicare Part D accounts for approximately 40% of the business. And as you know, with regards to the IRA, that will continue to evolve in 2025. So the out-of-pocket cap for patients will be even lower next year, around $2,000. And also it will be spread out over a monthly basis. So, you know, the thinking is that could potentially reduce the burden on patients even further.

Thank you. Please stand by for our next question. Our next question comes from the line of Jay Olson with Oppenheimer. Your line is open.

Oh, hey. Thank you for providing this comprehensive update and for taking our question. For Zanza, can you talk about when we should expect to see some combination data? And Bristol recently mentioned the initial clinical proof of concept for Opdualag and non-small cell lung cancer. What's your thinking and interest level in the combination of ZANZA with OpDuoLAG and Stellar-002? Thank you.

Sure. Thanks for the question. I'll take that. This is Amy. So you saw on the slides we do have a variety of cohorts that we are expanding in both Stellar-001 and Stellar-002 and in combination with PD-1 in addition to other IO agents, including CTLA-4 and LAIG-3. We will present the data when it is mature. Some of these are early line cohorts. It just takes a while because you want to get ORR, you want to get DOR, you want to get PFS. Some of them actually also have OS. They're event-driven, and we just have to wait for those events before we can report on that. When it comes to interest with combination partners, You know, I also presented the various combinations that we're doing, not only IO, IO, IO, but also, you know, we have the collaboration with HIF-2-alpha, and we're looking at other combinations. So, I would say that we're data-driven, and we'll go where the combinations tell us we should go, but we are, you know, we remain open. I think that the What we're continuing to identify and uncover is that the ability for ZANZA to combine with all of these other agents is actually rather straightforward. It's reasonably well tolerated at full doses, and so we don't think that there's an issue in terms of ZANZA's ability to combine with any of these agents. It just has to be The decision to move forward into additional studies just has to be made upon the data that we see as it matures in the 001 and 002 cohorts.

Thank you. Will you stand by for our next question? Our next question comes from the line of Akash Tewari with Jefferies. Your line is open.

Hi, this is Cathy on for Akash. I just wanted to follow up on the Medicare Part D question that was asked earlier, and specifically on how will the restructure of the catastrophic coverage component impact Cabo in the coming years, and also how does Exflexis specifically plan to mitigate these pricing impacts? Thank you.

Thanks for the question. This is Mike. Yeah, I certainly wouldn't want to comment on what's going to happen in the years ahead.

We have a pretty good idea about what to expect relative to 25 and beyond. So, again, I wouldn't want to opine beyond what's happening in 2024. And we have a high degree of confidence that we've got that really good sense of where that's going and how to navigate those different changes. So moving full steam ahead, and when we get to 25 and beyond, we'll talk about those changes then. Okay? Thank you.

Thank you. Please stand by for our next question. Our next question comes from the line of Chris Shabritaney with Goldman Sachs. Your line is open. Thank you.

Great, thank you very much. Perhaps you could help us understand your prioritization of capital allocation between the share of purchases and the business development activity. I think Joe had tried to ask earlier and recognizing that you aren't necessarily thinking of sharing specifics, but it sounded as if it was contingent upon the outcome of the MSM IP decision. for you to perhaps lean in more intentionally on the BD front. I just wanted to make sure I understood because you also include in your release that you plan on completing the share of purchase allocation that the Board approved for the full year 2024. Thank you.

Yeah, thanks for the question, Chris. Yeah, I would not certainly assume those two activities are mutually exclusive. We have plenty of cash. We're generating free cash every quarter. We've been profitable for years. I think we have the appetite to do both, as Chris and others have all talked about previously. The share buyback between last year and this year will be $1 billion. The idea that we want to add additional late-stage assets to our portfolio certainly makes sense in the context of growing the business in terms of both top line and bottom line growth by having a diversified offering of products that we can use in the context of our development and commercialization platform. to move the needle for patients and shareholders. So we are certainly very excited about the options we have ahead of us. Getting beyond, getting certainty with the ANDA is the first priority. Once we have that in place, then I think the next steps are relatively straightforward with how we want to maneuver the business. So thanks for the question and happy to follow up at a later time if you want.

Thank you. Please stand by for our next question. Our next question comes from the line of Derek Archela with Wells Fargo. Your line is open.

Hey, guys. Thanks for taking the question. So just, I guess, one from us. How do you envision the CABO approvals in both prostate and neuroendocrine tumors? How does that, you know, change the volume growth profile of CABO relative today? How much acceleration could we potentially see in the future effects?

Yeah. Hi, Derek. This is PJ. So certainly wouldn't want to, you know, you know, give guidance beyond this year specifically on revenue or volume. I guess I'd kind of reiterate some of my earlier comments with regards to NET, obviously, and CRPC for that matter, both significant areas of unmet medical need. You know, as I mentioned, NET is 8,000 patients in the Second Line Plus setting, and we're broadly We have the potential to really have a broad opportunity in that marketplace. CRPC, obviously a really large market. Again, ultimately with limited treatment options with regards to primary treatment options being chemo, NHT, radioligant therapy, but you're talking about tens of thousands of patients. So we're very excited about the opportunities. And, you know, should we have the opportunity to bring them to market and help patients, we think there'll be a really significant opportunity for growth.

Thank you. Please stand by for our next question. Our next question comes from the line of Sylvan Turkin with Citizens JMP. Your line is open.

Yeah, thank you. Congrats on the quarter, and thanks for taking my question. I just want to ask about the overlap in sales force and call points between RCC and a potential sales force for prostate cancer. And basically what I'm trying to get to is, can you tell us what's kind of the incremental cost for potentially launching NETBIT and prostate cancer?

Yeah, Sylvan, thanks for the question.

PJ, why don't you address both in terms of prostate, RCC, and then on the GI side, NET and HCC? Yeah, happy to, Mike.

Thanks for the question, Sylvan. So I'll start with RCC. You know, we see really significant overlap in terms of geo-oncologists, right? So whether it's in the community setting or even in academia, in particular, you know, geo-onc focus are really treating the majority of GU indications so again significant overlap there which is you know potentially great for a number of reasons one we really as I mentioned my prepared remarks we can leverage our existing RCC infrastructure so you know without having to invest significantly to to build that for a potential prostate cancer launch and two you know these are physicians who are very familiar with with cabozantinib in RCC managing side effects, et cetera. So that could be, you know, certainly something that would be in our favor as well. With regards to NETs, you know, a lot of these, you know, as 50% plus, really 60% plus are GI related. We have, you know, another sort of sleeve of our team, if you will, is GI focused and there's a heavy overlap there as well with our call points both in the community as well as again in academia of physicians who are treating NET as well as those GI tumors. So again, it's a really nice potential for us to leverage our existing infrastructure as well as launch into a market where a lot of the prescribers have existing comfort and familiarity and, frankly, you know, positive experiences according to all our market research tumors, whether it's HCC, thyroid cancer, DTC, or, you know, in many different settings in renal cell carcinoma.

So that's certainly something we look forward to.

Thank you. Please stand by for our next question. Our next question comes from the line of David Lebowitz with Citi. Your line is open.

Thank you very much for taking my question. When you discuss the strategy Zonza versus Cabo going forward, it seems it's clearly an effort to focus on different overall indications. Does that strategy evolve in the event of an unfavorable MSN2 ruling?

Yeah, David, thanks for the question. Yeah, I wouldn't want to, we wouldn't want to speculate on that right now.

So, you know, I think we've made the commitment to evolve the overall approach in terms of how we're developing TKIs, veg up our targeting TKIs over to Zanza. And that's still the plan going forward. We think we have what looks like to be an emerging improvement in overall activity and safety, the totality of data. It's still early. I would suggest that. So we're all in on ZANZA, and there's a lot of excitement there in the community. And we're having, I think, a lot of very interesting, productive discussions about how we might combine with ZANZA. So lots of opportunity, lots to do there. So stay tuned.

Thank you. Please stand by for our next question. Our next question comes from the line of Jeff Hung with Morgan Stanley. Your line is open.

Thanks for taking my question. Following up on the neuroendocrine tumor prevalent population, given heterogeneity of tumors, are you planning to stratify the prevalent population to focus on specific subgroups initially? I appreciate any details you can provide.

Thanks. Yeah, Jeff, this is PJ. Thanks for the question. You know, generally what I would say is as we focus Coming out of the gate, given that, as I mentioned, we kind of really have broad inclusion criteria in our study of whether that's site of origin, SSTR receptor status, what patients have been previously treated with, we really believe we have the opportunity to, you know, go right out of the gates. should we be approved and launch this very broadly? And I think that will be in, you know, what we're hearing in ad boards, et cetera, very much appreciated and adopted well from a physician community perspective, because, you know, they need new options for really all of these patients. And in some cases, you know, like right now, for patients who have been on a variety of therapies. So I think it would be a broad opportunity and we would certainly position it to, as such.

Thank you. Please stand by for our next question. Our next question comes from the line of Edsel Durault with BMO Capital Markets. Your line is open.

Hi, this is Luke Chamoyan for Edsel. Thanks for taking my question. For the prostate and NET filings, what are the key factors that are going to influence the timing of those filings? What are you waiting on for those? And are those only going to be US filings? Are we also looking for ex-US? And are there any other gating factors for filing those?

Thanks, Lucas. This is Amy. I'll take that question. So I can't comment on what our partners are going to be doing with regard to ex-US filing. CAVO is in collaboration under a collaboration agreement with Ipsen for non-US, non-Japan. and with Takeda for Japan. What we're focused on and what I mentioned in the call is that we needed the data by Burke in order to complete the dossier for a filing and we have the data and we're in discussions and we really are hoping to be able to submit in the coming months for the cabinet study. For contact, I also mentioned we have final OS which we're anticipating in the coming months. The study was a positive study. Statistically significant OS is not required. In order for the study to be positive, we showed a really nice trend favoring Cabo Atezo, which I will point out, given what else is going on in prostate cancer in terms of radioligand PSMA4 assets, where initially hazard ratios for OS were above one. Novartis just announced there's a less than one, probably very close to one. The fact that we had a nice trend, I think, is also supportive of a risk benefit profile that favors the patients. And so, you know, stay tuned. We'll let you know how conversations and filings progress with the agency.

Thank you. Please stand by for our next question. Our next question comes from the line of Peter Lawson with Barclays. Your line is open.

Thanks for taking the questions. Chris, just a question on the share buyback and thoughts on expanding that, especially if there's a negative outcome around IP. Would that be something you would expand or accelerate?

Hey, Peter. Thanks for the questions. Yeah, I'm not going to speculate on what we're going to do, depending on the different variables around outcomes on the MSN trial. You know, as I mentioned in our prepared remarks, we're committed to executing on the $450 million.

You know, we did $191 million in the first quarter, and we're committed to getting the rest done this year.

Thank you. At this time, there are no further questions, and so I would now like to turn the call back over to your host, Byron, for closing remarks.

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

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