Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeffrey Hung, one of the biotech analysts. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have Exelixis with CEO Mike Morrissey. Welcome, Mike. Hey, Jeff. How are you? Good to see you. Good. Good to see you. For those who may not be as familiar with Exelixis, can you just provide a brief introduction? Yeah, for sure. So, again, afternoon, everybody. I'm Mike Morrissey. Before I begin, let me just mention that I'll be making forward-looking statements today, so please see our SEC filings for a description of the risks that we face in our business. So Exelixis, commercial stage, biotech company focused in oncology. Lead molecule, which we are, I think, best known for is cabozantinib. The tablets are Cabometyx that are indicated for numerous indications in RCC, HCC, and thyroid cancer. Did about $1.9 billion in global revenues, and you look at our revenues last year, along with those of our partners, Ipsen and Takeda. For the last several years, we've been building a very strong and robust pipeline of anticancer molecules, both with small molecules and biologics to be able to go to the next level with for patients and for shareholders., we view our goal in this regard very simply. We're here to improve standard of care for patients with cancer, and if we can do that, like we did with Cabo, we think we can certainly help a lot more patients as well as drive revenue growth for the years to come. So very excited to be here. We have a long relationship with Jeff and Morgan Stanley, so great to have a chance to chat with you all live. Great. Thanks, Mike. So let's start. This morning, you announced the license agreement for ISM3091. Can you just talk more about this asset what excites you about the program, and maybe some of the preclinical data you saw that you found promising? Yeah, for sure. So again, we've had a strong business development component in our pipeline expansion efforts over the last few years., we think we've got a good eye for science and a good eye for great compounds and certainly Cabo and the pipeline that we've had evolving over the last few years is indicative of that. Really excited about the Insilico molecule again, targeting USP1. It's a molecule that we know well. We've had a great discussion with them over the last several months. Done a lot of work in our own labs with that molecule to understand its preclinical profile, in vitro activity and selectivity in cells, pharmacokinetics, pharmacodynamics in terms of efficacy, both as a single agent and combination. So we really are very excited about the asset. It's in phase one right now, so as we talked about, at the end of last year, we had really strong interest in licensing clinical stage assets. We did two clinical stage deals, as option deals last year, with Cybrexa and Serova, and this is the first one this year. But again, the whole goal is to have a broad pipeline of agents, both small molecules and biologics, to be able to, again, help more cancer patients by themselves or in combination. And we think the USP1 targets we're going to go after in the molecule is potentially best in class. Now, over the last few years, Exelixis has built out and advanced the earlier stage pipeline. I guess, given that, are business development efforts as big of a focus going forward as it was over the last two to three years? And I guess, if so, has your views on the strategy changed, or are there specific areas or components you're looking to further bolster, such as your ADC capability? Yeah, yeah, for sure. So again, we focused primarily on building the platform the first few years, and we did a lot of deals in that regard, both with small molecule platforms, with biologics platforms whether we're binder-focused or ADC-focused. So we feel like we've got that covered. I think the transition last year was more on clinical-stage assets, and that certainly, as I mentioned a few seconds ago the deals that we announced today and previously in the recent past really reinforce that. Looking at, again, potentially best-in-class molecules that help us really expand our repertoire of opportunities we offer to patients, right? That's the goal. And that will certainly... we expect that to continue going forward. We have another many more opportunities we're looking at right now within the BD framework, focusing on clinical stage assets, some early stage, some later stage. But again, I think we have the team and the depth to be able to triage those opportunities, understand value, where it exists, and then maybe have a little bit different view of that. Because I think that's we have a special lens, and certainly that enabled us to see the value in Cabo, for example, when very few people did, and that's become a major franchise in oncology today. So we're excited about that. As we talked about BD for us is a team sport., we have great support from R&D and Discovery and Development. Certainly, the commercial group weighs in on helping us understand not only can we get a molecule over the goal line, but will it then drive uptake? Will it, will it make a difference for us in terms of large enough patient populations to move the needle from a revenue growth point of view? And then our finance colleagues and legal and everybody else gets involved. So, so I like that holistic full approach. It's not just a couple people sitting in a back room saying, "I like this target or that target," but it's a full team effort that then come together and really be thoughtful and pragmatic about how we, how we then could, transact. So again, excited about this deal today, but there's certainly hopefully more to come, in the near future. So... Great. Earlier this year, three new members were elected to your board., how might that impact the strategic plan that had been set previously? Well, based upon today's deal, what do you think the answer is? ... Not very. Yeah, look we had strong support for the deal., I think everybody understands that the only way to be successful in this business is to invest heavily and invest, I would say, with a high degree of both thoughtfulness and pragmatism, but also being aggressive, right?, you can't pull back and expect to win when you're competing against big pharma and the entire ecosystem of small pharma. So we've got a great board., the new board has met now numerous times over the last three or so months, board calls, board meetings, et cetera. So I'm really pleased with the interaction and the support, and we're, look, we're here to win for patients, and if we win for patients, we're going to win for shareholders, bottom line. For your R&D day in December, you indicated that it will focus on discovery and development strategy with pipeline results and plans. Anything more specific that we should expect to see? Any teaser on what programs we may learn more about, or if additional assets might be in there? No, no teasers today, Jeff. Nice, nice question., look, we, we haven't done an R&D day for a while., these are always opportunities to tell the investing world, what we're doing and why we're doing it and why we're excited about it. So we're putting all those plans together right now. Got a lot of things, I would say, in the hopper that if they, let's say, if they get over the goal line, could add additional fuel to the fire. So I'll, I'll reserve further comment to say that, except to say that we're excited about having that, that, that, that meeting on December twelfth here in New York City and hope everybody can join us. Great. Thanks, Mike. So maybe moving on to the pipeline, let's start with zanzalintinib. What differentiates zanzalintinib from other TKIs? So Zanza, for short it's a really interesting molecule, and the way I look at the VEGFR targeting TKI space is really in terms of generations, right? And it's a subjective view, but it's my view, so I kinda like it, right? From the standpoint of first gen molecules Sutent, sorafenib, pazopanib, were all,... They inhibited a variety of class three, four, RTKs, involved in a variety of different processes, mostly focused on the tumor vasculature, but hitting other solid tumor targets as well. Certainly, first big step forward. I remember being at the first ASCO meeting when the sorafenib data was presented in RCC, years and years ago, and it was probably in a room this size., when you think about ASCO today, you're in these huge ballrooms at the McCormick Place. And it was a very different time back then, back in the I guess late 1990s, early 2000s. So but nonetheless, it was a really, really important first step. First gen molecules were effective, had a lot of, a lot of areas of improvement. Second gen molecules like Cabo, like axitinib, lenvatinib, certainly brought into play not only that RAF of class three, four RTKs, but also then a variety of other targets. We were certainly very focused on bringing in targets into the inhibition profile that we were pretty sure drove resistance to VEGF inhibition, MET, AXL, et cetera. And that clearly, I think over time, has played out now in terms of having the clinical data validate that. The question is: how do you then improve upon that? And I think with Zanza, we asked some very simple, fundamental questions about what limits Cabo's utility in the clinic, which is really around adverse events, around dose interruptions, around this. All, all tying back to this long, kind of 4+ day half-life, and ask the question: if we could, if we could shrink that and make it a little bit more clinically friendly to use, would we be able to not only see good, good activity, but actually then keep patients on drug longer, right? Less holidays. If you have a 4-day half-life and you hit an adverse event and you need to wash out that drug, you could spend a week or 2 off drug. And then does the patient go back on Cabo at a lower dose, or do they then change drugs altogether? So, lots of degrees of freedom there by having a 4-day half-life. So, with Zanza, we cut the half-life down to about a day. And I would say early clinical data has been very encouraging, right? And we talked about 1 of the RCC cohorts on the Q1 call in May. And I think this is really instructive, right? Where we're seeing, - Your participation in this conference has been terminated by the host. Goodbye. ... Titus, fatigue seems to be lower than kind of the kind of consolidated combo data. GI effects seem lower. So we're seeing what we believe to be an emerging different and a more tolerable profile of Zanza as well. So that all looks good, right? And certainly, it's that kind of validation of activity, and also seeing activity of Zanza in patients who progressed on Cabo, which is very important too. Seeing a unique profile clinically in a sensitive tumor type, which really grounds us to say, "Okay, we've got something that potentially is better and need to study that further," but then use that to really drive a pretty expansive clinical trial program as quickly as possible. How does that RCC cohort fit into the broader goal of the STELLAR-001 study with ICI combinations? ... Yeah, so I guess I wouldn't focus on the, at least in my mind STELLAR-301 and 302, those are just dose range finding to be able to make sure you've got the right dose in combination with either another checkpoint inhibitor or a combination of checkpoint inhibitors, right? So, I mean, the action starts at phase 3, and we've got three of those going now with STELLAR-303, 304, and 305, and we'll start, hopefully, 306 this year as well, with more to come next year., colon cancer, non-clear cell RCC, 305 is in frontline head and neck. So a pretty, pretty broad range, and again, the goal here is the same. It's to improve standard of care for those different populations by having Zanza be combined with the right checkpoint inhibitor that gives us the highest probability of success in underserved populations that need standard of care improved. That's the goal, and they're big populations, right? So it's pretty exciting. And so mentioning STELLAR-303, you recently announced that the protocol for CRC is being amended. Can you just talk about what changes are being made and how you expect that to help increase the probability of success? Yeah. So, 303, we've... It's really only a slight tweak in terms of the population that we're looking at for the primary endpoint. The original design with all the same stratification factors was looking at a RAS wild type population. Some of the emerging data over the last year or so has highlighted the importance of liver mets versus non-liver mets, the non-liver mets population being one that appears to be better, having a better prognosis, number one, but also, I think very sensitive to both, well, certainly the combination of checkpoint inhibitors with TKIs. So, the LEAP-017 data with lenvatinib and pembro highlighted that as well. That came out earlier in the summer. So it's all kind of converged together to behind the idea that the highest PTS is probably in the non-liver mets population, and the possibility, and we've seen activity of CABO plus ICIs and Zanza plus ICIs in both the liver mets and non-liver mets population, the win in the whole population too. So we did some statistical analysis and added a few patients and are now looking at the primary endpoint, overall survival in the non-liver mets population, with the idea that in a hierarchical sense, if that wins, then looking at the bigger population too, which I'd love to be able to win there because that's a much larger population. Another 70% of the patients live in that liver mets world, and if we can help them, that would be a great advance for patients with CRC. Any update on how enrollment for the increased number of patients is going? Well, enrollment's enrollment, so I would say that's gone well., you think about... And this is why we were comfortable adding those patients. You think about how the I would say, classical hockey stick on pivotal trials go kind of flat for a while. You're activating sites, enrollment is slow, and then as you really get the sites up and the countries up, you can really rapidly enroll patients because everybody's just cranking, right? So and it's always not trouble to me, but it's always been somewhat ironic that when you're enrolling at the fastest rate, you stop because you hit your number. So adding a couple hundred more patients is just adding a few more months on to the enrollment timeline 'cause we're gonna have this whole machinery working really well. So it's gone well. Been very pleased to see things pick up and really, I think, deliver on a global level, and we haven't given guidance on timeline for LPI and top-line data, but that will come as we get into next year, so stay tuned. And then you mentioned STELLAR-305. So I guess in this patient population, what kind of increase in PFS or OS would be clinically meaningful, and what would you need to see to consider that study a success? Yeah, so I think we haven't gotten into the powering, so I wouldn't wanna opine upon the details there. Going again, Zanza pembro versus pembro, so I mean, certainly first and most important focus is to win from a p-value point of view, win with the stats. And if you've sized the trial properly and are looking for a meaningful signal, then if your p-value passes that threshold, then you're certainly gonna be in the clinically meaningful range, so. You, you've seen a 54% response rate with CABO- Mm-hmm ... plus pembro, and then given that less than 20% of patients treated with pembro monotherapy respond, what would clinicians want to see in terms of a response rate with Zanza plus pembro? Well, certainly the CABO pembro benchmark in that IST is a strong number, and that, when that was presented at ASCO, GI, a year and a half ago, certainly raised got people's attention from the standpoint of really asking the question: What could what could a well-tolerated, highly potent, TKI like CABO do in this space? And we think with Zanza, based upon the RCC data we talked about previously, we've got a really good, way to go here that could even be better than CABO, right? In terms of the overall profile. So, again, I wouldn't want to opine specifically on what people want to see. They want to see the trial work, survival increased and benefiting patients broadly, and I think we have the opportunity to do that here, with that doubling. Okay, great. Let's shift to XB002. Can you just talk about how it builds on the experience of tisotumab vedotin, and then how is XB002 differentiated? Yeah. So, again, this is our first, first ADC in the mix. We're excited about that., it's been, it's been a whirlwind for us to be able to dive in there with, kind of both feet into the ADC pond, and we think it's a, it's a very attractive, area to be in, for all the obvious reasons, and certainly going after tissue factor as a, as a address for the binder, is one that is fraught with challenges. So, in terms of differentiation, we focused on..., if you're gonna be second or third, then you have to have some, some view on how to be better, right? That was the driver here from the standpoint that our antibody that we got from Iconic binds differently, so it binds not competitively with factor VII. So we see much, much, much less bleeding, both preclinically and clinically, because we don't inhibit the overall coagulation cascade by having a non-competitive binder. We also use the Zymeworks ZymLink technology for the linker payload and been very pleased with that platform, how it's behaved both pre-clinically and clinically. We see what I think is safe to say is enhanced stability of the ADC, so we see approximately two to threefold higher level of exposure, look at the AUC for XB002 versus Tivdak. And we're well right-shifted when you look at some of their data in terms of where their effective range is. We're well right-shifted, based upon some of that data. So that's actually very encouraging, using that kind of their clinical data as a benchmark. And we see much less free payload in circulation, five to 10-fold less. So it's the right—It's got the right, I would say, kind of phenotypic behavior in man, to help us ask the question now, with that higher exposure and better stability, can we push the dose higher and possibly see tumor types that were marginally sensitive with that first molecule, the first-gen molecule, becoming sensitive with XB002 because we just get more drug on board? So that's the question that we're trying to answer right now. We've got the MTD, and we're now moving into expansion cohorts, 11 different tumor types, asking that simple question: what kind of clinical activity efficacy, safety, et cetera, do we see at these validated doses now across this range of tumor types? So super excited about that. And while we're doing that, we've got a couple of combination cohorts going, too, with one with nivo and one with Avastin as well. So again, envisioning a large program here that we want to be able to get into full development as quickly as possible. If accelerated approval pathways are possible, we certainly want to pursue that and then full development with pivotal trials as well in the near future. You've touched upon this a little bit, but you're studying XB002 and with IO combinations in XL001, and you've established the recommended dose. Can you just remind us where you are in the study and how you chose the tumor types for the expansion cohorts? Yeah. So the tumor types were based on just our knowledge of the biology and how those different tumor types kind of work, and the idea that this isn't the be-all and end-all. It's the first step in the process, and you can envision us doing similar kinds of work across tumor types, across other combinations with different checkpoints and potentially other molecules as well. We'd like to be able to move into a world where we're combining Exelixis compound one with Exelixis compound two. There's real strength and power in that approach, and we're almost there in terms of being able to say do Zanza 002 combinations as a first step in that process. So it's exciting to watch that evolve in real time, for sure. Great. Maybe let's move to cabozantinib. Mm-hmm. , growth of the business has remained strong. What are the main opportunities for continued growth going forward? Well, we had a good week a few weeks ago, right? We had two pivotal trials read out positive, CONTACT-02 and prostate cancer in combination, cabo, in combination with atezolizumab. It's positive in a second and third line, actually, a first, second line, metastatic CRPC population. And then, one of our cooperative group studies, looking at different neuroendocrine tumors, PNET, as well as, carcinoid, was also positive, and, from the, PFS readout. So again, I mean, again, the idea that Cabo continues to be very effective and really the market leader, number one TKI for RCC, continues to be an important part of our story and where we're investing, I think appropriately, to maintain that we can capture every eligible patient that we can, either in the first line in combination with nivo or in the second line, as a single agent. And then we have opportunities to add potentially 3 new filings over the next 9, 12 months or so with the CRPC CONTACT-02, with the whole NET area from CABINET, and then potentially COSMIC-313 from the triplet Cabo Nivo ipi in the frontline RCC trial. So, I think that's the potential for growth outside of what we see with just normal kind of intrinsic growth within the RCC and existing indication format. For COSMIC-313, the second interim analysis of OS is expected by year-end., what kind of growth potential do you see for cabozantinib in RCC with the triplet combination, and how should we think about that opportunity? Yeah, so I think we've talked about that previously, publicly. So that's really a,... It's an incremental opportunity for us in terms of we might gain a point or two market share-wise. I think the opportunity is really on duration more than anything else. So we'll see how that works, and obviously, we don't want to get ahead of that. But again, if it's an opportunity that we can file on and, again, find the appropriate, really, patients for that, that would be awesome. Mm-hmm. Right. And then, as you mentioned, you recently reported positive results from CONTACT-02 in metastatic castration-resistant prostate cancer. As the study continues to the next OS analysis, can you just help frame for us what kind of added survival benefit over a second novel hormonal therapy would be considered clinically meaningful? Well, magnitude is hard to gauge without giving away more than I want to get get into right now. So, look, it's safe to say... First of all, we saw a really strong trend in OS at this early look, when we had the appropriate number of events for PFS, so that's just kind of an automatic. First interim is when you look at your primary endpoint for PFS. Now, seeing a strong trend that early is, I think, a very positive sign relative to what we're seeing in the overall population. We have another interim built in. We have a final built in, if we need it. Look, we understand, all too well, based on METEOR, based on 9ER, based on CELESTIAL, the importance of having survival in your label, both from a regulatory point of view, but also maybe more importantly, from a commercial point of view, right? So, obviously, that's built into the events, and it'll be what it'll be, but we certainly would like to be able to have that and are working towards having that happen when the events are there, right? You can't really make that happen any faster, right? So. Right. Now, you have additional programs in your pipeline and expectations for filing INDs for XB010- Mm-hmm ... XB628, and XB371 next year. Right. Which of these programs are you most excited about, and why? Well, that's asking me kind of like which of my children I like the most, and that will vary hour by hour normally. So, it's hard to frame that one for you. They're all important compounds. We're very data-driven from the standpoint of having a really strong filter for what goes from a development candidate into GLP tox and then into man. So those continue to look good. I'd rather prioritize based upon clinical data, and have a sense of what is getting ahead of the pack, what cream is rising to the top, if you will, metaphorically, to be able to then double down and add resources to help go faster. But I think that's how we play. Look, we are in our rich history. We know how to prioritize. We know how to take data and then put our money and our effort behind the winner, and we did that with CABO years ago when it had been given back twice by two different pharmas. It had been left for dead by Wall Street. We still had the belief and the confidence in the data that we had to keep investing, and it is what it is today in terms of a $2 billion a year global leader in RCC and other indications. So I feel like that's in our wheelhouse. That's really at the core of our DNA, of the company's culture, and we'll keep doing that, right? The best data for the best compounds are gonna win the day, and we're gonna invest heavily. Those that don't look good, we're gonna take out back and bury and move on and not worry about it. And just We're not afraid of failure. We wanna maximize success for patients, and if we do that effectively time and time again, then we will certainly reward shareholders for having the confidence in us and, and helping many, many more patients, which is the ultimate goal here. Great. Let's leave it there. Thank you for your time. All right, sounds good.