Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff 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. Jeff, good to see you. Great seeing you. Thanks for having me. So, maybe for those who are not as familiar with Exelixis, can you provide a brief introduction to the company? Yeah, absolutely. Again, thanks for the invite. Always great to be in New York at Morgan Stanley. The weather's been fantastic, so great fall day. Before I begin, I'll remind you, 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 is a commercial stage oncology company focused on really moving the needle for patients and shareholders by improving standard of care for patients with cancer. Our lead agent is cabozantinib, a molecule that we discovered and developed and now commercialized with a broad label of indications approved for kidney cancer, liver cancer, thyroid cancer, and hopefully others in the future. It's what's been driving our business for the last, really the last decade, as we've invested then in building a pipeline of next gen agents, to be able to do that, in a very hopefully, very similar way, for patients with cancer. You know, the beauty of being a one-product company that's successful is that you have free cash that you can then reinvest in R&D, and we're doing that, I think, very effectively, and have an exciting pipeline ahead of us, so happy to talk about all that today. Great. Well, let's start with cabozantinib. Obviously, multiple developments recently. The sNDA has been accepted for advanced neuroendocrine tumors. You know, can you just remind us what you saw in the CABINET study that was presented at last year's ESMO? Yeah, for sure. So CABINET is a study that was done by the Alliance Cooperative Group, and it was enrolled probably over a 6 or 7-year period. Jennifer Chan from Dana-Farber had generated some very interesting phase II data earlier, which showed that cabozantinib therapy improved progression-free survival in a variety of patients with neuroendocrine tumors or NETs. And so the alliance did a pivotal trial both in pancreatic and extra-pancreatic NET patients. So a very compelling data in terms of progression-free survival. The hazard ratios by their kind of both investigator and somewhat blended independent review was in the you know in the 0.25- 0.4 range for those two different subpopulations. These were relatively advanced patients. They were experienced in seeing most, if not all, different options for therapies, including Lutathera, certainly SSAs as a primary backbone, but also sunitinib for the appropriate patients, everolimus, as well as CAPTEM. So it was a very, I would say, contemporaneous population, being that I would say about half the patients received Lutathera. And again, when you consider that the last approval for small molecules was in the 2015, 2016 timeframe, I think it was a very, very timely data set that was presented at ESMO last year. And then we'll have an updated look at the complete blind, independent review coming up next week at ESMO. That was the basis for the filing. We're excited about that opportunity, especially in the context of, you know, the kinda base cabo business. Again, we had a very, very strong Q2. You know, we grew 16% Q2 over Q1. I think it was about 7% or 8% Q2 2024 versus Q2 2023. Global net product revenue was, look at all of the revenue that we generated in dollars. Dollars was $618 million. We're vectoring at a, you know, $2.5+ billion run rate for cabo globally. So it really, you know, very strong franchise performance. And you know, that part of that triggered the Ipsen additional $150 million milestone. So having that momentum from the quarter and the base business we have in renal, where it's the top molecule for RCC and liver and thyroid, then building on hopefully another GU and a GI indication would be a great way to go, for sure. And you're preparing for potential launch in both patients with previously treated advanced pancreatic NET and previously treated advanced extra-pancreatic NET. Are there any particular considerations for reaching these two patient populations? I think there are. Again, it's a relatively heterogeneous disease. When you look at the tissue of origin and, you know, kind of how that plays out relative to what's a very long course of disease, very indolent disease. So I wouldn't think that we're going to look at them differently as besides just the data that we have in those two different subsets, which is, I think, somewhat unique. I think more importantly is that we've got a really strong set of insights into now, having had the data for a year, done a lot of market research, a number of ad boards in both the kind of KOL community and the, you know, the overall, I would say, you know, broader population of prescribers. We have a very good sense of how these prescribers operate and how the disease is treated. And it's for us and certainly for me, it's very gratifying to hear that they, you know, they know Cabo. They've used Cabo before in their practices. When we do blinded independent research, you know, we get very good feedback on the data. And then when we talk about, "Well, it's Cabo," it even makes them more relaxed and more comfortable with the idea that they can use this potentially effectively with their population of patients. So we're excited about that. If you look at the kind of the drug treatable population, there's about 9,000+ new patients every year, so that incidence is relatively high. And we think this is a very very important new indication for us, right? So in some ways, very analogous to what we saw with renal back in the 2014, 2015 timeframe. We think we can really grow here. Most of the prescribers have used Cabo before. I think the number I'm seeing is 75%-80% of prescribers for NETs have used Cabo previously. So it's a pretty strong population of prescribers. They're familiar with Cabo. They've used it extensively, so I think the activation barrier, once we have approved, have a label, have approval, is going to be pretty low to have it be used. So given the high proportion of prior experience among the treaters of Cabo, can you just talk about what kinds of incremental investment you're making for the launch and what kinds of activities might be gated until? Yeah, so I would say it's a relatively incremental spend. You know, thinking tens of millions of dollars in terms of kind of getting the team ready to go. Again, we've got a fully enabled sales force. We've added a few marketers. We're going to add a few more reps to fill out a few territories. Relatively small. Certainly makes us stronger and helps really then focus the team. I think the investments we're making on the marketing side are key, and certainly building that infrastructure for the NETs, as it has for certainly for kidney cancer, for liver cancer, we expect to pay off dramatically. I think that's part of our special sauce relative to, you know, how effective we've been in the kidney cancer space specifically. I think about it, we're Cabo’s the number one TKI for RCC, in an area where we're competing with, you know, Pfizer, Merck, BMS, Novartis. So, we've really had to, you know, kind of claw our way up to the top and, you know, really fight, I mean, literally every day to build market share. And in fact, in Q2, we actually built market share. We actually gained a point, relative to the overall market basket, which, you know, 14 quarters into the 9ER launch, I think is pretty interesting, right? So, it's a, it's a constant investment. You know, we don't take these things lightly, and I think for a little bit extra money, we can really invest, I think, broadly in the next space and have that be a growth opportunity for the future, for sure. You talked about this, but in the next couple of weeks, the updated results from the CABINET study will be presented at ESMO. I guess in addition to the final PFS data, what should investors look for in the results? Yeah, I would say broadly, you know, it's the consistency of the data. It's the benefit across subgroups. I think it'll be a very compelling story. It's already compelling based upon some of the early ESMO data, but I think now this is the final blinded independent review for PFS and response rates and DCRs, and, you know, they've got all the, you know, all the, AE tables cleaned up and all the forest plots cleaned up. So, I mean, this is the data that's basically gone into the filing. So you can everybody can see firsthand kinda how strong that data set looks. So, so we're thrilled to be able to have another opportunity to talk about this publicly. You know, as we march towards, hopefully, an approval sometime in early 2025, you know, be able to, you know, hit the ground running. So we, you know, we're really. We take this stuff really seriously. We always prepare very, very heavily for any kind of launch scenario. You know, we have to make every day count, right? So we're doing that right now, for sure. And then for metastatic castration-resistant prostate cancer, you intend to submit the sNDA this year, following that final OS analysis from CONTACT-02. Can you just remind us what you saw, and how are you thinking about the OS data for potential approval? Yeah, sure. So, so CONTACT-02 looked at a very unique population of patients with first, second-line metastatic prostate cancer, CRPC. It was probably the most prognostically challenging population that's ever been studied in this kind of, in this indication or this sub-indication. Every patient had measurable disease. About 1/4 of patients had liver mets. I think 40% of patients had visceral mets. So it was a very, very late-stage disease. And we wanted to do that because we wanted to ask the question very specifically for PFS in a population that, either by standard RECIST 1.0 or, or Prostate Cancer Working Group criteria, we could actually objectively look at PFS without any kind of hand-waving. And that was the case. So hazard ratio was, for PFS, is in the 0.65 range. We saw, you know, probably about a 50% improvement in the median PFS. Compelling data for both patients with liver mets, which is a very, very important underserved population, as well as patients with both measurable disease and bone mets. So data looks encouraging. As again, the overall survival at the time of the primary analysis, the hazard ratio was 0.79. So it didn't pass that critical threshold for significance. Final analysis was in a similar vein, if you will, in terms of favoring the doublet, but not being statistically significant. We'll have all that data at ESMO as well. Again, we think we have potential benefit for patients. Obviously, we have to engage with regulators on that. We're excited about the data, and we feel we have a lot of conviction that we can really help patients who, if you look at all the data, say they don't really want to get chemo this late in their lives and go through all those side effects. So, it's a worthy goal to pursue. Obviously, better if you have survival. We don't have that. We talked about that. So we'll move forward like this. Yeah. Great. Well, let's shift to zanzalitinib. For those who may not be familiar with Zanza, can you just talk about how it's different from Cabo, the advantages it provides, and what is the overall vision for Zanza? Yeah, for sure. So Zanza is a next-gen, we think, best-in-class TKI. The whole goal here behind the design and early development of Zanza was to really highlight its shorter half-life. Very similar target inhibition profile, similar activity, both preclinically, both in vitro and in vivo, and early clinical data that we had last year, really, I think reinforces that. We're seeing early signs of potential differentiation, and I'll underscore potential, from a safety point of view. It's still early. You know, we have thousands and thousands of patient studies with Cabo. We have hundreds now with Zanza. We're seeing what appears to be a better kind of early tolerability profile. We'll see if that plays out as these pivotal trials that are much larger and globally kind of run, pan out or not. But nonetheless, we've certainly excited about that molecule from the standpoint that that's always been the one, I think, feedback from clinicians that they would say: "You know, if you could just do this to Cabo, it would be a better drug, and it's always around the four- or five-day half-life that Cabo has and the washout period." Every patient that gets any TKI that targets VEGF will eventually get dose-reduced, and Cabo and Zanza are in that class. So if you can make it more clinically user-friendly by making it a shorter half-life, and this in the case of Zanza, now it's down to about a day, it's just easier to then dose adjust as needed for individual patients. So that was the case. So we did that. Again, we had very, I think, compelling data in an RCC last year at the IKCS meeting that really reinforces the idea that this molecule has the I would say requisite level of activity, might even be better than Cabo, and that it can rescue patients who have become refractory or resistant to Cabo, which is, I think, pretty unique amongst TKIs. So we've got... Right now, we've got four pivotal trials ongoing, three ongoing, one that will start early next year, and then several more that are being planned. The first one is STELLAR-303. That's looking at third line colon cancer, microsatellite stable or MSI high. Actually, MSI low. Very interesting population, underserved by the variety of molecules that are out there right now. We're looking at Zanza plus atezolizumab versus regorafenib. Primary endpoint is in the non-liver met population, so we're enrolling both non-liver met populations and liver met populations. And then the full overall analysis, the full ITT would be in the overall population, but very exciting, I think, opportunity there. We ran a small randomized study as part of STELLAR-001, looking at Zanza, atezo, in this case, versus Zanza, to be able to document contribution of components. We'll have that data out early next year. That's, I think, pretty exciting in that I think in my mind it really validates what we're hoping to see in the pivotal trial. Small numbers, obviously, all the caveats that go with that, but certainly helps us feel good about where that's going. So that's first up. Probably, we'll have that fully enrolled now, and we expect to read out sometime in 2025, depending upon event rates. STELLAR-304 is in non-clear cell RCC. That's Zanza nivo versus sunitinib. That should have full enrollment next year. Again, non-clear cell RCCs, you know, 15%-20% of the overall population, so it would be our first stake in the ground for RCC and with Zanza, and certainly expect to see more there, you know, in the near future as well. So stay tuned for that. And then STELLAR-305 is in PD-L1-positive head and neck cancer, looking at, in this case, Zanza plus pembro, nivolumab versus pembro, right? Again, that's a very, I think, very interesting opportunity in both the non-clear cell RCC study as well as the head and neck study. We have strong, really phase II data with Cabo, Cabo pembro for head and neck, Cabo nivo, with non-clear cell, which really, really supports the idea that you know, those combinations could really bring some benefit to patients. So, so strong, I would say, early POC with Cabo that we're then using then to kind of piggyback off of with Zanza, which we think we have the opportunity for Zanza as well. That is looking at a, again, an early NET indication with Zanza versus everolimus, really as the opportunity to have the first oral therapy. Again, we went head-to-head with everolimus in METEOR- 1 there. Feeling pretty good about that study, too. It's a big indication. If you're the first oral therapy, that could be a very, very important indication to kind of keep the top-line growth for Zanza going, and it's one that we think we can enroll pretty quickly. So those are the four pivotal trials that are either ongoing and/or kind of expected to start in early 2025. We'll talk about a few more as we wrap up those details. Again, we expect to have a lot of presentations and data coming out early twenty-five. Stellar in RCC, different combinations, Stellar in CRC. I'll mention that we have an ongoing collaboration with Arcus in STELLAR-009, looking at the combination of Zanza plus their AB521 molecule, which is a HIF inhibitor. The parties have agreed to stop that collaboration because we're going kind of in different directions relative to potential pivotal trials, so that will wind down going forward, and we're certainly excited about what Zanza can do in RCC, working off the strength of Cabo going forward, so a lot to do there, a lot more to do there. We think that's going to be a franchise molecule of the future, but again, the goal is to, you know, go from Cabo to Zanza plus molecules in the pipeline. It's not just a Cabo to Zanza story, but it's the pipeline story that we're really excited about. Right. So 2025 is going to be an important year for Zanza. Can you just talk about what you need to see in STELLAR-303 to be clinically meaningful? Yeah, we need to have a win, right? The P-value's, we're in the P-value business, right? So, you know, I think the colon cancer population is one that, you know, is ripe for innovation. You know, we're all in the business and we focus on this, of improving standard of care for patients with cancer. That's the special sauce of Cabo, is that we move the needle for patients in a very competitive area, to be able to give prescribers an option for what is arguably a better therapy. So that's the goal here with Zanza atezo in this CRC indication, right? You know, standard of care right now is a mix of single molecule, single agent TKIs, Lonsurf plus minus Bev. You know, they're all effective against I would say kind of low-performing control arms. We think we have an opportunity here to change that narrative dramatically, both in the non-liver met population, but the overall population. So I won't get into stats and details and that kind of stuff, because the data will speak for itself soon enough. But again, our goal is to move the needle for patients and to change standard of care. If we can take the benefit they're currently receiving and improve upon that, then patients win, shareholders win, the company wins, and that's the goal for everything that we're doing. And then for STELLAR-311 that you talked about for neuroendocrine tumors, I guess based on Zanza's profile and the data you've generated, do you have a sense for the improvements that can be achieved with Zanza over Cabo in that indication? I think it's clear that going head-to-head against an active control and winning there is the way to get people's attention, right? The regulator's attention, the payer's attention, prescriber's attention, and patient's attention. And everolimus is used pretty often, even though the feedback we get from market research is that nobody really likes it, but that's the best thing they've got right now out there in terms of options for patients with NET. So, you know, when you look at the opportunity within the NET space, you know, I would say about the small molecule component of that, which is everolimus, and sunitinib and CAPTEM, is about half of the overall kind of market basket within the NET space. And those are relatively old, relatively, you know, I would say, modestly effective molecules, right? So if you can, if you can, again, change that equation and change that narrative for patients, you can add a lot more benefit to their opportunities in terms of their therapeutic intervention, but also drive top-line growth. So we're excited about that. Again, you think about the CABINET trial looking at SSTR positives and negatives, pre-Lutathera, post-Lutathera, a variety of different therapies. You know, we really have an opportunity here with STELLAR-311 to really now focus our efforts and focus really prescribers' attention with positive data head-to-head against everolimus. So that's the goal. We're excited about that. Hope to do more there. I view, you know, the Cabo CABINET data and then STELLAR-311 as the first two kind of pillars, and then we'll build upon it as we go forward to combinations, maintenance, et cetera. Lots of opportunities there, right? Now, for CABINET, the 5-year survival rates were higher in GI NET and lung carcinoid tumors versus pancreatic, but the study was stopped early due to the dramatic improvement in efficacy at the interim. Mm-hmm. Do you have a sense for how long in the treatment course you need to go with STELLAR-311 to detect a similar or better improvement? You know, would you expect it to be a similar length of time, or might it be even quicker? Yeah, I think we can probably enroll faster. Again, CABINET was only enrolled in the U.S. STELLAR-311 will enroll globally, and there's even, as you would imagine, with this level of prevalence and incidence, there's just you know a lot more patients to access if you do it globally. So we're hoping to be able to enroll this quickly. I won't give a timeframe right now. I think the people back in Alameda would not be happy with me if I started giving projections on timeline, but it'll be one that we can enroll pretty fast. Our development organization under Amy Peterson's leadership is really, I think, pulled together and really executing at a very high level right now. So I'm excited about that. You know, look, we have to make every day count, right? And I think everybody understands that, and everybody feels that urgency relative to, you know, patients need better drugs and need better data to support the algorithms that prescribers use to be able to treat them. So we're really focused on that. Excited about what Zanza can do here and again, there's certainly more to come. Think about, you know, we've done some. We're doing a lot of market research right now, but I won't go into proprietary research 'cause we'll save that for after we get a label and talk about guidance. But you know, we've looked at the kind of a smattering of syndicated data sets and done a lot of quality control on kind of, you know, what makes sense and what doesn't. But if you look at some of this early data, you know, the 2023 NET global market was about $2.5 billion. And some of the syndicated data, if you look at it through the right filter, can probably lead you to believe it can be a, you know, $4-$5 billion market, you know, in 2030. And we think that could even be a little bit light. Right? So we want to be able to play in this space and actually be leaders in this space going forward. We did that with renal, with a very, very clear set of objectives, great execution, and built a team that could then deliver clinically and commercially in that regard, and we think we can do the same thing here. So to have that kind of one-two punch with Cabo and then Zanza, and then maybe Zanza combinations going forward, I think would be a really, really attractive way to go. So we're thinking growth, but through that Cabo lens, where the conviction that we have on the commercial opportunity is strong. You talked about how it's not just from Cabo to Zanza, but Cabo, Zanza, and pipeline. So maybe let's talk a little bit about the early-stage pipeline. You recently announced that you're discontinuing development of XB002. Can you just remind us what drove this decision? Yeah, it actually was, you know, pretty straightforward. You know, we're in the business of moving the best molecules forward and prioritizing aggressively and appropriately, and doing that in, when we're, you know, we have a high degree of certainty that whatever decision we're making with imperfect data is the right decision. And the Cabo story, you know, if you look at how that all the ebbs and flows there reinforces that. So we brought in XB002, and we developed that with a clear set of criteria, and I would say priorities, right? We knew we weren't going to be first in class because Tivdak was already there. And while we were developing initial stages of XB002, Tivdak not only did they get approved, but they actually saw overall survival benefit in a pivotal trial in cervical cancer. So out of the box, while we were licensing and bringing that molecule in, but also during the evolution of that development for with XB002, we were clear that we had to be not only best in class, but we had to improve upon the activity profile of Tivdak. And as we developed over the last, you know, block of time, it was clear that was going to become more and more challenging to do, right? So once we could lock in on the idea that the probability of us improving upon Tivdak's profile was going to be relatively low, we stopped it, right? It's purely a prioritization game. Where do we put our money? Where do we put our effort? Where do we put our resources to have the highest chance of success, and again, in improving standard of care? If we couldn't improve standard of care in that tissue factor-derived ADC approach, then we shouldn't be doing it and once we got to that conclusion, we stopped. Next, which has indicated that there should not be read-through to other ADCs with development ongoing for XB371. You know, what gives you confidence that there aren't read-throughs to other candidates like XB371, and is a big factor the difference in payload, for instance? We think it's all about the payload. Look, we're in the high risk, high attrition, you know, you fail more than you succeed business, right? So, nobody should be surprised when things don't work, and whether it's us or somebody else, you stop developing molecules and you allocate resources appropriately. We like the approach. We like tissue factor as the address to have a binder kind of focus on. We certainly like the overall approach we have with the binders that we have that are designed to be non-competitive with Factor VII, so not get in the middle of the coagulation cascade. We think it's very interesting, and that was, again, the goal of that collaboration, was to look at multiple potential molecules to be able to ask the question upfront: "What's the best way to go? Go with a modified auri statin, go with a te can- derived, go with something else," because we had the ability to mix and match, and merge and purge as we went, and that's exactly what happened. So we have very, as you heard from Dana, on earnings, we have very compelling data with XB371 preclinically. You know, that's great, but proof's in the pudding and once you get to man. So we're going to push that forward. We put an IND there next year, and we'll get data, and we'll make data-based decisions based upon how that looks. So there's no guarantees in this business, as we all know, but we'll do the right experiments at the right time, at the right pace, and we'll get the right data to make the right prioritizations about how we invest going forward. Now, you have multiple early-stage programs advancing towards clinical development later this year, including PKMYT1 inhibitor XL495 and the PD-L1, NKG2A bispecific XD628. What excites you about these programs? Yeah, they're all really cool molecules. I love the biology behind them. I think the way we've gone about constructing the right probes, if you will, the right inhibitors, the right antibodies, the right ADCs, to be able to you know, interrogate the biology in the clinical setting makes a lot of sense. I'm excited about that. I'm glad to see our discovery operation kind of back in, you know, completely crank mode on the biologic side, you know, whether it be ADCs or bispecifics or small molecules going forward. We've invested a lot on the small molecule side in the synthetic lethality space, and certainly with XL309, USP1, with PKMYT1, others coming down the pipeline, say PLK4. They're all great molecules. Again, we're kind of at the cutting edge of the biology and the pharmacology in NAD. So again, I would expect some will go forward, some will, you know, some will stop early based upon either lack of data or whatever. But certainly pre-clinically, they all look really, really compelling. We're moving pretty, pretty strong into the RAS space as well. We've got some, I think, really great technologies and great approaches there. You know, we're fully enabled on the structural side, on the screening side, on the library side, so we're bringing together a lot of different discovery tools that we've always had a lot of depth in to be able to bring, I think, some interesting concepts forward and test those rapidly. Cryo-EM has really changed the landscape for us. We just installed our own instrument in the last few weeks now and getting that up and running. So we're able to basically do, you know, kind of structure activity relationships, really structurally in terms of using cryo to kind of drive that forward and to, you know, take some of the guesswork out of the chemistry that we do. On the biologic side, it's fascinating to see how fast we can move to construct next gen ADCs, novel linkers, novel payloads, and the bispecific side as well. So it's really fun and, you know, we have the opportunity then to be able to generate data and prioritize. That's what we do well. That was the, you know, if you look at XL, what, 2.0 or 3.0, you know, us focusing on Cabo, even with all the drama that took place afterwards, was the right move because we had the data that gave us the conviction that if we were successful here, we could again move the needle for patients, and that's what happened. So I'm very confident we can do that again and again and again here as we go forward. Great. Maybe one last question in the last few minutes. You know, obviously, Exelixis has a lot going on already in its pipeline, but has your thinking on external development evolved over the last year, whether from internal updates like discontinuing development of XB002 or external factors like new technologies or more reasonable prices to get deals done? Yeah, you know, it's always about conviction, if you will. You know, I would say prices and value are secondary to our conviction in being able to again generate the appropriate clinical data that can then drive commercial success. I mean, that's. When you look at Exelixis and cabozantinib versus you know a large number of molecules, 30, 40 different molecules that have been approved in the oncology space over the last decade, what stands out, what's different with us is that we had the right, arguably, the right conviction and placed the right bets on what could drive generation of the right data that changed standard of care for patients, which then was adopted and then drove commercial success. And I think that's what we're doing again and again here. Obviously, we'd like to be able to bring in, and we talked about this publicly, late-stage assets, end of phase II, in phase three, those kinds of kind of molecules in the GU or GI oncology area. You know, it's the ultimate, you know, finding the shiny needle in the haystack, and I think we've burned the haystack down. We understand a small number of assets that we're interested in, and we'll figure out how to navigate those. If we transact or not, we'll find out, but we think there's lots of opportunity in a very narrow window. And we again, the beauty of us is that we have a very asymmetric view, and Cabo, that Cabo wins that we keep talking about really informs that, right? Cabo was given back to us twice. Right, people left it for dead, left us for dead, and I think we're doing very well right now because we had the conviction and the fortitude to be able to stick with that conviction to drive success for patients and for shareholders, and hopefully, that will continue. Great. Always a pleasure. Thank you much. Okay. Yeah. Good to see you. Thank you.