Exelixis, Inc.

Good day, ladies and gentlemen, and welcome to X-Alexis third quarter 2024 financial results conference call. My name is Tawanda, and I'll be your operator for today. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to your host for today, Mr. Varant Shravinian, Director of Investor Relations. Please proceed.

Thank you, Tawanda, and thank you all for joining us for the XLX's third 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, and PJ Haley, our executive vice president of commercial, who together will review our progress for the third quarter 2024, ended September 30th, 2024. Amy Peterson, our Chief Medical Officer, and Dana Aftab, our Chief Scientific Officer, are also on the call today and will participate in our question and answer session. 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 was 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, and estimates and projections from our annual U.S. net product revenues and potential marketing growth opportunities. These estimates and projections involve a number of assumptions and limitations, and we caution investors not to place undue reliance on this information. 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 cost associated with discovery, product development, business development, and commercialization activities. With that, I'll turn it over to Mike.

All right. Thanks, Vrant, and thanks to everyone for joining us on the call today. We'll use our prepared remarks today to provide a strategic perspective on the business, with a forward-looking view of the opportunities for Cabo Zantanib, Zanzalintanib, and the early stage pipeline to maximize success in building a multi-franchise oncology business. The last few weeks have been extremely busy with the positive Cabo ANDA ruling and the Zanza collaboration announcement with Merck. As you saw in our press release issued an hour ago, ExoLexus had a very successful third quarter across all components of our business. I'll start today with a strategic overview to frame our near-term and aspirational vision for the company, followed by financial and commercial updates from Chris and PJ. Amy and Dana are here as well, and we'll address any technical R&D-related questions that come up in Q&A. Exalexis is obviously at an inflection point with the clarity on the Cabo Anda and significant momentum for Zanza. Cabo is having a strong 2024 across literally all commercial metrics that we track routinely as performance indicators for the business, and we remain very bullish on Cabo's revenue outlook into 2030. The Zanza opportunity represents an important component of mid- and long-term revenue growth, starting in the back half of this decade and potentially building into a dominant position in the 2030s. We're pleased to be working with Merck in kidney and head and neck cancers, and that cost-sharing, compound-sharing agreement provides significant validation and momentum for ZANSA while we maintain full global commercial rights. To collaborate with the competition model has been a pillar of our CABO development success, and we're pleased to get the first one moving with ZANSA. We're obviously not done in this regard and aim to expand into other collaborative opportunities in the future. With the ZANSA development plan, including six ongoing and planned pivotal trials, and more potentially on the horizon, we believe ZANSA has the opportunity to surpass CABO in scope and scale with one planned launch per year starting as early as 2026. Exalexis's aspirational goal is to be a market leader in both GU and GI oncology as our main therapeutic focus, Note that we're arguably already in the pole position as a GU oncology leader, so building momentum in the GI space is an immediate priority for both CABA and ZANSA. Additional ZANSA indications outside of GU and GI will be pursued opportunistically. Building, developing, accelerating, and pruning our early-stage pipeline is critically important as we advance towards a multi-franchise business. With three novel compounds in our early stage clinical pipeline, including XL309, XB010, and XL495, and several near-term INDs close behind, we plan to efficiently profile and prioritize potential winners for advancement into full development. As I said before, we're in the pivotal trial and p-value business where clear clinical differentiation is the mandatory prerequisite and the only viable path towards future commercial success. That's the essence of the CABO story, and we're applying that filter to everything we do in R&D. We have a lot of exciting mature data from our early clinical efforts with Zanza, and we expect to present a significant amount of clinical data from stellar 001 and 002 throughout 2025 at major medical meetings. We'll provide more granularity on those datasets as abstracts are accepted and titles published. In addition, we plan to host another R&D day in 2025 as well. With the annual litigation now largely behind us, we expect future business development activities to ramp up. As highlighted previously, we are targeting late-stage clinical assets in the GUGI oncology space, where we have clear conviction that clinical differentiation could drive ultimate commercial success. As we've highlighted previously, most biotech oncology launches since 2016 have been underwhelming, with CAVO being one of the few standouts in terms of indication expansion and revenue growth. So we're very selective as we evaluate the clinical and commercial opportunity of late-stage assets. XOXs could potentially pursue any type of transaction as we advance with a pragmatic, thoughtful, and unambiguous focus. on doing the right deal at the right valuation for the right asset. Finally, we're executing with an ambitious plan for building success as a multi-franchise company. To that end, I want to be very clear that we're committed to running the business and specifically R&D at recent expense levels for the foreseeable future. Our intention is to continue to rigorously and often aggressively prioritize spending and investments towards late-stage molecules to maximize our clinical and commercial success. while we advance the pipeline, generate free cash, and return a healthy portion of that free cash to shareholders. As you all know, clinical success never gets cheaper as compounds advance into late-stage development, so we'll continue to prioritize our spending as we did at previous Exalexis inflection points over the course of the last decade. Our share buybacks over the last two years, totaling $1 billion in commitment of another $500 million to the end of 2025, underscores our balanced and pragmatic approach to investing in the pipeline while returning cash flow to shareholders. So with that background in place, let's review the key highlights for the quarter and drill down into additional details for our near and midterm vision for CAVO and Zanza. First, let's start with the quarter. XLS has delivered outstanding financial performance in third quarter 2024, with top and bottom line growth year over year, driven by the strength of the Cabo San Antonio franchise, including increased demand, new patient starts, and revenue. Cabo Medics maintained its status as the leading TKI for RCC in the U.S. With third quarter 2024, Cabo franchised net product revenues of $478 million, up 9% quarter-over-quarter compared to 2Q 2024, and 12% year-over-year compared to the third quarter 2023. Global Cabo San Antonio franchised net product revenues generated by Exalexa and its partners grew to $653 million in the third quarter 2024. We have increased 2024 full-year net product revenue and total revenue guidance based on these robust results, and we're building on our strong commercial momentum as we wind up the year and head into 2025. Chris and PJ will provide details for the quarter in their prepared remarks. Let's move next to our future. first focusing on CABO to drive near-term upside with strong projected revenue growth through the end of the decade and the potential for ZANSA to drive significant revenue opportunities starting as early as 2026 and accelerating into the 2030s and throughout that decade. We're obviously pleased with the favorable ANDA ruling, which extends our CABO revenue runway into early 2030, subject to Exalexis' potential additional regulatory exclusivity. The district court's judgment is also subject to appeal by either party. I want to remind everyone that to the best of our knowledge, the FDA has not granted tentative approval of MSN's proposed and to product more than five years after their original submission. Building off the strength of CAVO's leadership position in RCC and potential new indications in NET and CRPC, Our midterm projections highlight the potential for Cabo to reach peak sales in the U.S. of nearly $3 billion annually by 2030. With conservative estimates for growth of the base business, capturing a significant market share of the oral net therapy indication, and a limited opportunity in prostate cancer, which is heavily discounted until we get clarity on regulatory traction with our projected fourth quarter filing. Let's turn next to Zanza. ZANZA has been largely under the radar from the street's perspective, with only a little over half of our covering analysts including it in their revenue models. We anticipate it will gain more attention and prominence moving forward now with the positive Cabo and Deruling and the recently announced collaboration with Merck. Specifically, ZANZA is built to expand on Cabo's foundation, and its early development plan provides a framework to surpass Cabo's clinical and commercial success. Our first six ZANSA pivotal trials and four lead indications, including colon cancer, kidney cancer, head and neck cancer, and neuroendocrine tumors, represents a large population of over 100,000 cancer patients annually with overwhelming unmet medical need based on current standards of care with a cadre of generic and established drugs. Critically, recent progress across these trials reinforces our plan to secure our first potential approval for ZANSA as early as 2026, and then in subsequent years, one additional approval per year pending clinical and regulatory success. The ZANSA revenue opportunity with this first wave of label-enabling trials is substantial, with projected greater than $5 billion of top-line sales in the U.S. in 2033, nearly equally split between GU and GI indications. Obviously, a second wave of new trials in GU, GI, and other appropriate indications could advance this opportunity to the next level in the mid-30s and beyond. ZANZA commercialization, XUS, either by Exalexis or a potential new partner, could drive significant commercial and financial upside as well. I'll wrap up here with a few additional comments on the pipeline advancing behind CABO and ZANZA. We're thrilled. but never satisfied with the depth and scope of the early pipeline assets we built and are moving into and through early clinical evaluation. Our small molecule and biologic approaches represent the opportunity to match the best modality with the most compelling tumor pathobiology as either monotherapies or combination partners with checkpoint inhibitors or proprietary exoexis molecules. We're advancing lead molecules in the synthetic lethality space with XL309 and XL495 and a variety of biologics in EDC, bispecific, and monoclonal antibody formats. The ultimate goal for all these programs is to rapidly generate clinical data to prioritize advancement into full development, all with the goal of exceeding expectations as a multi-product, multi-franchise oncology biopharma. So with that, please see our press release issued an hour ago for our third quarter, only 24 financial results, and an extensive list of key corporate milestones achieved in the quarter. I'll now turn the call over to Chris.