Our next company presenter, Exelixis, joined by Mike Morrissey, CEO. President and CEO. Wow! I am Jason Gerberry. I am one of the mid-cap biotech analysts here at B of A, joined by my colleague, Chi Fong, as well. So Mike, yeah, thanks again- Great. for swinging by. Anything topical you wanna touch upon before we jump into specific questions? Yeah, sure. Just, you know, coming out of the quarter and- Yeah ... you know, just the evolution of the pipeline. Yeah, for sure. So, thanks again for the invite. Yeah. Always great to be here, chat with you guys. And before I start, I'll just mention that we'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 with that in there, yeah, look, 2024 is a really important year for Exelixis. Really excited to be where we're at with, with Cabozantinib, with Zanza, with the pipeline evolving. I thought we had a strong year in 2023, and the momentum, that we took from that, is, I think, palpable from the standpoint of where we're going and all the different levers we're pulling and pushing to move the, move the business forward. You know, we have just an incredibly solid foundation around really focusing on helping patients with cancer, and really redefining standard of care, improving standard of care with everything we're doing every single day. So the team is strong. We've had a good year so far. Lots of momentum going into the mid-year, if you will. Lots of things that we'll cover today, but I'm really excited to be here and excited to talk about the company. Yeah. All right. Maybe we'll just start with just general corporate strategy, Cabo IP, business development, those sorts of things. Obviously, no ruling yet. The commentary on the Cabo IP, which is just very top of mind for obvious reasons- Sure ... is spring, which I mean, gives us about a month. Mm-hmm. There's kind of sounds like kind of crickets just with the judge and waiting to get an update there. So we hear what you hear, the dockets, the docket. When rulings appear, we don't get a chance to preview before they go live on the docket. So- Mm-hmm. So we are like you, waiting for him to deliver his ruling. Again, we feel really good about the data, about the supporting facts at trial, around how the trial went. So we are excited to be able to, you know, get certainty on this topic, and move forward. But we have a lot of pieces of the company, of the enterprise that we're executing on, and to have this behind us is a really important part of the story. Yeah. I think we're all, we're all looking to have this in the rearview. Thinking about, just, on the one hand, because you have a composition of matter patent that's in place, that gives you sort of a floor support, if you will- Mm-hmm ... in terms of the range of scenarios, which is, I think, August 2026. Is there pediatric extension onto that August 2026, such that, like, worst case is really early 2027? Yeah. So that's all in progress right now. Wouldn't want to comment on that till it's done, but certainly, we have a lot of activities going on there to be able to get that additional- Mm-hmm ... kind of time. The good news is that gives time to fully play out any appeals too, right? Yeah. So that- Yeah. Good. And I guess the one thing that caught our attention and maybe some others is just the, on your 1Q update, a slide about BD, and maybe what was maybe a little bit unique for the first time was there was a reference to Cabo IP- Mm ... impacting, but an appetite to potentially do late-stage M&A for the company. Yeah, so that wasn't really new. I was, I was... I got that feedback as well after, in some of the after calls. So I think at, at, in December, at JPM, in January, you know, the, the success of, of the discovery and early development group in building the pipeline, that we highlighted at our R&D day in, in, in, in December, I think really framed, the opportunity for us to focus later stage, not early stage, right? The pipeline in terms of, development candidates, pre-INDs, INDs, early phase I assets, is actually pretty deep. Mm-hmm. So, you know, when you look forward to the back half of the decade, you know, if we're successful, you know, label expansions with Cabo, get Zanza over the goal line numerous times, potentially with what we have going on now and additional trials that will start later this year, early next year. You know, even with normal attrition, you know, one of the early-stage compounds, 309, 002, get over the goal line as well in that timeframe and start launching. You know, we have, I think, a really robust pipeline of things moving downstream. Mm. But to be able to add, later stage assets, that play well with Zanza, play well with oh oh two, play well potentially with 309, that are in our therapeutic sweet spot of GI and GU oncology, just makes a lot of sense to us. So that's been our focus for the last year or so. We highlighted that, early in this year in terms of we're gonna spend less time really thinking and worrying about the early-stage pipelines- Mm-hmm ... which are still full, and then move forward. And, you know, so it's kind of business as usual, but with the real, I think, a real sense of urgency on both bringing in compounds that we wanna do, right, number one, but also then looking at these kind of—not transactions, but deals that we've done with various biopharma players, like with BMS, with 9 ER, with Roche- Mm-hmm ... with the contacts to be able to, you know, combine and conquer, right? Mm-hmm. And that drives the cost down of those trials. We can do more of them then, take more shots at where we think we can have a big impact for patients. So, business as usual, I think the spin was obviously having certainty on the end is a good thing. Mm-hmm ... in terms of, having the conviction and having the full momentum behind that going forward, so. Yeah, so the way to think about it, I guess, with the late-stage appetite is more to do with the evolution of the internal pipeline, and less to do with any externalities or how maybe the external landscape for deals has evolved. Oh, 100%, right? So we are focused, obviously, we wanna do good deals from a value point of view. Yeah. Right? But number one priority is conviction in the asset. Yeah. Will anything that we access through partnering through M&A, does it have the opportunity to generate clinically differentiating data? Uh-huh. for patients with cancer, that we can then translate into commercial upside for shareholders and for the company, for the enterprise, right? That's the Cabo story, right? Yeah. I think the lens that we have from that experience and, you know, six indications, hopefully a couple more on the way, really informs how we want to do that. So yeah, nothing has changed in our view. We're certainly very interested in can we fortify our emerging efforts in NET, that we have with CABO, with, from the CABINET data? We're thinking a lot about that with Zanza. Can we do more there? Build out a, you know, kind of a franchise in the NET space alone. Same thing with prostate, but those both fall under the GU GI space that we're already strong in. Yeah. And so definitionally, late stage could mean anything from, phase III de-risked, but lots of opportunities to interrogate it- Yeah in combination with your other mo- Yeah, the way I see it- modalities ... you have proof of concept in the clinic. You can have clear proof of developability in terms of having strong phase Ib, phase II data. It can be ready to go into a phase III, it can be in a phase III, right? But it's that you're on that last lap, if you will, before- Mm-hmm. You have potentially label-enabling data to generate, right? Yep. So. I guess the point about Cabo IP really then gets to conviction and sizing things up, right? It's just, it's just certainty, right? Yeah. It's just certainty. Yeah. Which is, I mean, we're - we're on that glide plane to land the plane anyway, so I think it's just a way of framing people's attention towards really the middle of the year and beyond then, when we, if, you know, we expect to win, if we win, as that goes forward, you know, that we become a different, a different opportunity for a lot of people in a lot of different ways, right? So having that certainty there is key. Yeah. Yeah. Okay. Yeah. Well, then, you talked a little bit about Cabo label expansions and NET, which is a seemingly pretty interesting opportunity where there's some space here. I think you talked about half of these 8,000 second-line patients- Mm-hmm receiving oral therapy. Just wondering kind of what the market share dynamics look like in that second-line setting, you know, and how you'd think about potentially, you know, if Cabo's approved there, what are the keys to kind of, like, making inroads there? Yeah ... with those agents? Yeah. That's really interesting, and it's one of those, one of those indications that we weren't hyper-focused on, until, until we were, with the, with the CABINET data, and that's, that's part of the, part of the nuance by doing having a big IST and cooperative group program, is that these things kinda travel, travel with you, but they're kind of on the side. You have no control. You have minimal insight. One day you get a phone call, and it's like, "Oh, wow, that's great!" So, so the, the interesting thing is, now that we've done, we're I would say we're kind of, you know, early to mid-stage market research in terms of kind of a launch dynamics and parameters for NET, where we were to if we were to be approved, in that space. You know, it looks really, really interesting. It's a, it's a large prevalence, large second-line plus incidence. These patients have relatively indolent disease until they don't, right? And then they need really good therapies fast. It, it just, it looks a lot like k- you know, kidney cancer, RCC did back in the 2013, 2014, 2015 timeframe. Mm. Especially when you look at the main small molecule players, everolimus and sunitinib, also played in the space for RCC. That we actually went head-to-head with both separately and with Cabo and won in METEOR and CABOSUN. So all the analogies of that opportunity back to RCC, but then as the market research evolves, looks really encouraging, right? So we think the second line plus market could be a billion-dollar-a-year opportunity in the U.S. Lutathera has about half the market already, and they're doing, you know, $425 million-$450 million in 2023. It's, I think, a bit surprising to us how much sunitinib and everolimus are used first line, second line, and third line in that space. The SST-negative patients are, you know, 20%, if you will, of that population, maybe higher in patients with lung mets. So lots of different ways to be able to slice and dice this. So it's early in terms of our market research, and I don't wanna get ahead of the game because obviously- Yeah ... we need to get approved, we need to get a label, we need to understand the indication statement. All those details are really important, but, but we are really, we're really ramping up here, with momentum across the organization, and, it's, it's a super, super high priority for us relative to getting everything done as quickly as possible with the highest quality possible, so we can - if we're successful from a regulatory point of view, we can launch with, you know, with the Exelixis kind of brand, power and, and, and, and diligence, and just the commercial focus that we've done so far- Yeah ... with Vimal and others. So we're excited about it big time. Yeah. So no obvious. I guess the summary maybe is no obvious pockets of where you'd be looking to take share be it either Sutent or everolimus second line versus third line, and the sequencing- Well, I would say there's. That's all- I would say there's lots of obvious things. I'm just not ready to, I'm not ready to share it yet. Mm-hmm. Okay? I wanna complete the market research, and it's all label dependent, right? So to be able to frame kind of details, I think we just need some more time. So let's stay in touch as obviously as things evolve. But I think from a high level, from the macro point of view, it's a big underserved population that we think we have, you know, really important data to be able to share with and educate prescribers if we're approved, and then move forward in a way that drives growth for the company and helps a lot of patients, which is what we're all about. Have you had FDA interactions on this dataset at all? Like, I know you're filing this year. Yeah, I would say, you know, look, we won't comment on any specifics, but we talk to the agency all the time. Yeah. I mean, I guess the question is, like, how OS data will sort of play into this. This is a secondary endpoint. Yeah. Um... Yeah. Yeah. So I won't, again, no, no commentary on regulatory discussions, but I think if you look at the historical data, the octreotide analogs for the radiolabeled peptides, for other small molecules, chemo in the mix, nobody has survival. There's really no survival here because these patients just live a long time, and- Mm-hmm. It's not something that you really study per se. Right? Yeah. So, it's really PFS, tumor control, symptomology control is, are all the important parameters, right? So, survival is less, less of an issue here because these are just, it's a relatively indolent, relatively indolent disease. These patients live a long time. You mentioned $1 billion, $1 billion dollars potentially in peak revenue, but you also mentioned that Zanza is an agent you might look to evaluate in this setting. Like kidney cancer, is the thinking maybe you might explore combination strategies? Yeah. with Zanza in the setting? So what I said was the second line is a billion-dollar-a-year opportunity, right? Generally speaking. Zanza, we think could play a very important role here. And certainly with the knowledge we have from CABINET and the activity we're seeing with Zanza broadly, it's an area that we're looking at very, very closely. And I mean, the nice thing about having kinda doing early market research, talking to KOLs, having ad boards, is it's pretty easy to, you know, socialize the existing data, talk about patients, talk about the opportunity for Cabo, and then shift to the next question. "Okay, we have Zanza, which we think is an improved version of Cabo. Here's the data. What do you think about these trial designs? What do you think about these population approaches? Yeah, so we're getting a lot of enthusiasm there, too. Okay. So, I would look at NET as an active area for clinical development with Zanza, and as that evolves and we finalize our plans and launch trials, we'll keep you informed. All right. Do you want to talk about the prostate stuff? Yeah, sure. Hi, Mike. Hi. On the prostate, can you talk about sort of where you're at with sort of the cadence of update you would expect to bridge you to filing for the supplementary sometime in 2024? Yeah, so, so great question. So prostate's the other pivotal trial that read out recently, and we had data at ASCO GU this spring. Super excited about the data. Clearly a positive study. Just to refresh your memories and people listening online, people here in the room, it's probably the most, how do I say, the poorest prognosis population that's been studied in a first, second line CrPC trial. Every patient had measurable disease. That, by itself, puts them at higher risk. We had 25% of patients having liver mets. About half the patients had visceral disease mets. So, so it's a very, very poor prognosis population, and we had a strong, strong win in PFS, with a very strong trend in overall survival as well. So, we're excited about the data. We have to get the final OS analysis, which we've guided to take place later this year. And with the data we have in place, and the assumption that as we go forward, we won't see a decrement in survival, we intend to file. Right? So, that's the plan going forward. The cadence of how we communicate that, et cetera, we will let you know as we do that. I don't want to kind of proactively guide on what you'll see there, but we are very excited about that data, and we're committed to those patients who need better therapies, and to getting that moving forward from a regulatory point of view. Some of the swirl at ASCO GU around second NHT as a comparator, or why not chemo, you know, measurable disease, bone mets, blah, blah, blah. I think there was just a lot of noise in the system. There's really no available data from any randomized study that supports the idea that a second NHT is inferior to chemo, number one. If you look at all the meta data that's been generated over the last few years, in fact, it's the exact opposite, right? Second NHTs do better when you look at them from a large meta point of view, than chemo in terms of both PFS and OS. And tolerability, most patients will choose a second NHT over a chemo anyway, right? So, that all that data really supports the idea that a second NHT is a viable option for patients that already progressed on their first NHT, and this combination, Cabo with Tezo, actually performed better than that. So, we're excited about it. We're gonna push it forward. We're gonna, you know, dot the I's and cross the T's to make sure that the approval has all the data in that filing, but we're full steam ahead. How large do you think the second-line plus prostate is in terms of opportunity and dollar value, and how might you see Cabo fit into the evolving treatment algorithm, assuming that PSMAfore is coming as well? Well, that's, that's interesting. So we're doing a lot of market research there. And again, that's always dependent upon the label that we get and, you know, any any nuances that come out in the indication statement, obviously. So I don't want to get too locked down on the details there. It's a big, it's a big population. Tens of thousands of men every year progress on the, on the first NHT, whether they get it for the, you know, early-stage prostate cancer or the first-line metastatic prostate cancer. So you've got tens of thousands of patients, of men in the U.S. who need additional therapies as they progress. You know, the other therapies in that space, if you talk about the radioligand molecules, they're currently approved front line, third line-... You know, obviously, there's interest in moving them up, up, up to first, second line, based upon some of the PSMAfore data. We can, we can debate that relative to the PFS gain versus survival. I know Novartis has, has signaled now that they've apparently crossed the HR of one threshold, to be able to have no decrement in survival, so we'll see that. KOLs we've talked to often speak about, number one, it's again, it's not the easiest molecule in the world to use or to have received, right? Basically radioactive, and what does that mean, relative to, you know, how you live your normal, kinda activities of daily life, number one. To be quite frank, there's potentially other downstream issues with that from a medical point of view as well. So less so than what you might see in the NETs that have the same issue, right? In In terms of other radioligand therapies. But you know, like with Lutathera, where the patients are much younger, but it's still an issue, right? So we think there's plenty of room to operate here. It all depends upon getting approved, getting a label, and then going forward. But we're excited about the data. This is a clearly underserved population right now. New therapies are needed, and we think we have one that has a lot of good attributes that would be useful for patients. So... Got it. Maybe one more from me before I turn it back to Jason. I know you talk about, you know, potentially having synergy with your commercial existing infrastructure. Mm-hmm. But you've also talked about these are additional tens of thousands of patients between the prostate and the NET indication. Mm-hmm. assuming you get approvals in both of them. Yeah. That's a pretty sizable number. That's a good problem to have, nonetheless. But- It's a great problem, yeah. I'm curious, like, would you expect to expect some incremental to scale up your infrastructure to meet that demand? So we've— I think we've talked about that. There would be a... Incremental is probably a overstatement, but I'll use that word. I would say additions across the commercial group in terms of sales and marketing, probably more in marketing than sales. You know, we, we've built the commercial organization to compete with Big Pharma in RCC, and we've done that, right? And we haven't been— we haven't cut corners, we haven't, we haven't taken any shortcuts. But we acknowledged early on, going back to 2016, right? That if we were gonna compete with them head-to-head, and that was not just one molecule, that was three or four molecules, that we needed to have the right data and the right team and the right depth and the right energy and urgency and intensity to be able to do that. So, again, adding more patients is only one way to look at it because the people who are doing the actual prescribing are more or less the same, right? So the fact that we're calling on a pretty wide cut of GU oncologists right now for RCC, you know, covers potentially any prostate cancer win or indication as well. Right now, within the GI space for liver and for thyroid, we're probably covering two-thirds of the prescribers for NET right now, and they know Cabo, they use Cabo, they like Cabo. So again, it's how you build momentum based upon past success, and then as you add new indications, then it's a matter of educating. It's a matter of really highlighting, you know, where we can bring benefit. But it's, it's not the same heavy lift that we had in 2016 when they were saying: "Well, who's Exelixis? What's Cabo?" It's we're in a very different state right now than we were, you know, eight, seven years ago. Okay. Great. So, I guess if we were to step back and kind of put a bow on the Cabo story, you know, hopefully, the Cabo IP holds up. Mm-hmm. You're kind of maybe hitting a steady state in your largest RCC indication from a market share dynamic perspective. Is that a fair summary? Well, that's what we've said. I mean, we said that- Yeah ... back in January, right? Which isn't surprising. We're on year four of a launch. Normally, you hit steady state within four quarters- Yeah ... maybe five quarters, so it took us, what, 11, 12 quarters to do that. But, we're still targeting in a very surgical fashion, different prescribers based upon their prescribing patterns. So our analytics and our- Mm-hmm ... I I would say, our in-depth knowledge of that market is super strong, so we're continuing to grow. But you're gonna—growth is gonna slow after four years. Yeah. It's not a-- it shouldn't be a surprise to anybody. But, so we guided for that, we explained that, people understand that, but we've got two potential new indications that are potentially big ones that can drive growth for Cabo- Yeah ... right, in the out years, right? Between now and its LOE, potential LOE in 2031, if we win the ANDA, right? So- Right. So while we're doing that, and the cash flows from that, then we can, you know, allocate capital, I think, very effectively around the pipeline, around Zanza, around new molecules, around, you know, basically how we then navigate our future. So I'm really excited about having that basically kinda move forward now as we hit midyear and get through the spring and hopefully get the decision done, the ruling from the judge and move on. So it would. Doesn't really seem like there's much competitively that poses risk to your RCC position, and then second half 2025, when these new indications roll online, you get, you know, best case, you know, five years or so of additional runway then to- Yeah really reap the value. Yeah. Well, so there's, I mean, it's, look, oncology is hypercompetitive, and we acknowledge that. We've, you know, I think we've navigated that well. We reveled in our successes, if you will, but we're not content with that. So there's certainly a lot of, a lot of work going on in RCC. It's just not clear how well it's gonna work, right? HIF is still a question mark in my mind. Mm-hmm. I'm curious about it. I'm interested in it. You know, randomized data is the ultimate equalizer and. Yeah Like the cosmic truth, if you will, about what's what. So we'll find out as some of the existing trials read out. We're certainly interested in Zanza HIF combinations. We've got that, yeah, early collaboration with Arcus. We're talking to other people. There's a lot going on in that space. We think Zanza is a best-in-class TKI. If there's one out there that looks better, that might be a good combination approach, and we're looking for new MOAs. So we're committed to GU and GI oncology. We're very committed to RCC, and then building out from there. Prostate, NETs, liver- Yeah ... et cetera, right? So. Yeah, I mean, I guess ultimately, it doesn't seem like there's anything next five years that I see as disruptive that has a line of sight on, which in oncology is- Yeah ... is an eternity. Yeah. Yeah. It's dog years. Yeah. So for Zanza and the story and how the Zanza story evolves over the course of this year, a lot of focus on colorectal, non-clear cell. How do you see sort of the incremental updates here? Is it more about additional phase I, II updates, some signal finding updates, or just pivotal start initiations for the course of this year? Yes, yes, and yes, and, sprinkle in some potential BD in there. It could be a very busy back half of the year. I don't want to give dates and Yeah ... details and everything else, but we have- When you define BD, though, you mean that like an R&D cost-sharing type of Roche or BMY type of- Yeah ... partnership in Or other stuff, too, right? So, you know, I think that molecule has captured everyone's attention from the standpoint of seeing the value of Cabo, the success of Cabo, and the idea that with the modifications that we've made to get to new matter, which is Zanza, you know, we've made it clinically potentially more user-friendly, and we potentially changed the distribution, as Dana Aftab talked about on earnings, and the overall tox profile. And I think that's as that plays out now on these, you know, a lot more patients, larger trials, it has a lot of, I think, a lot of interest and a lot of potential value as a combination partner going forward. So we're talking to a lot of people right now. It certainly is a, you know, it's a. Again, simple, simple is good, right? In terms of building on success and trying to make it better. Mm-hmm. And I think that's really resonating, right? So lots of moving pieces, lots of, I would say, opportunity in the back half of the year, across the clinical and BD front. And I know, again, I don't want to get into details- Yeah ... but it's, it's just that there's lots of moving pieces right now. Yeah. Sometimes in oncology, you have to make a decision to move forward in phase III with imperfect information. You know- I've heard that. It's like Wall Street. But you know, there's obviously a lot of supportive rationale for PD-1 TKI in front line RCC. Mm-hmm. You mentioned HIF. Mm-hmm. So is there certain information that, you know, is important before making that jump into a pivotal phase III with that sort of combination, which would include a Zanza, HIF, and- Yeah, yeah. Sure. I mean, we're certainly interested in triplets. I would say the interest in the hypothetical MOA that you've mentioned, you know, is something that we're interested in pursuing, amongst other things as well. Realize that a triplet study against an active doublet is a big, long, expensive study, right? Think about- 330 Think about that. Well, and even more so, right? So, it's... Yeah, you have to really have the conviction- Mm-hmm ... that you've got the data supporting that if you're going to make that kind of investment, and it's good to have a partner then, who's bringing, you know, both compounds and money to the table to help share the risk and defray the cost and potentially get it done faster. So yeah, absolutely on the table. We need to look broadly at how we discharge that risk, and then how we build a portfolio of trials to maximize success for patients and shareholders, and we're doing that. Okay, cool. Chi, do you want to ask the USP1? Sure. This is a relatively early program, though it is technically in clinical stage. Yeah. So I'm curious, what underpins your conviction in this program? And secondarily, you know, you have a competitor data presenting- Mm-hmm ... competitor presenting data at ASCO, and so I know you cannot talk about data without seeing the data first, but I'm curious if there are certain things your team might be looking at the competitor, you know, as they present, that might help- Sure ... inform your phase I strategy. Sure, sure. Absolutely. So, so again, we, you know, we're really excited about 309 from a, I would say from a differentiation point of view. Now, that's based on preclinical data that Dana, I think, went to great lengths talking about at R&D Day at our R&D Day in December. I won't reiterate that now 'cause we're getting short on time, but we think we have a superior molecule from an in vitro, in vivo, metabolic, PK, every parameter, right? And we think that has benefit that will differentiate itself in the clinic. Again, first molecule in the clinic isn't always the best, but you'll learn from that. As you, as you said, we're very interested in looking at that, at that first clinical report, and then be able to juxtapose to what we're seeing in the clinic as well, and then modify our plans as accordingly, or continue to push it as fast as we can, knowing that we have, we have room to maneuver based upon what we're seeing at ASCO. So, so it's a really important space. If, if that MOA and the biology actually is as, you know, hypothesized, right? If you can take an existing $3.5 billion RCC market and potentially double that or maybe triple that, if you can go other ways around getting into the whole BRCA space and PARP space, it it could be a big, big upside. So it's early days. I think the potential is large. We have to do our work now and, you know, get that, get the clinical data that we need in place to be able to say it's the right way to go, it's the right molecule to go with, and then, and then hit it hard based upon that momentum that we can generate, right? Great. Thank you. Okay. All right, Mike. Good. Thanks for joining us. All right. Thanks, guys. All right. Appreciate it. Thanks so much.