WBC Global Healthcare Conference. My name is Greg Renz. I'm one of the biotech analysts, and we're pleased to be joined by Exelixis today. Representing the company is Andrew Peters, Head of Strategy, Senior Vice President. Andrew, always great to see you. Thanks for being here. Thank you for the invite. Certainly a lot to talk about Exelixis reporting last week. Want to get into some of the recap there and also what's going on with Cabo and the Zanza, and of course the pipeline. Maybe, Andrew, before we start, we can just have you provide us with a brief introduction to the company, the commercial, and the pipeline. Yeah, thank you again for the invite, and glad to be here. Great day of meetings so far, and looking forward to the afternoon. Just as a reminder, I'm going to be making some forward-looking statements today, so please see relevant risks and disclosures in our regulatory filings. Exelixis, I think, is in a little bit of a great position, fun position to be in, in that we're really kind of smacking that transition of the Cabo business really humming along, looking forward to a couple of pivotal Zanza readouts later this year, and then really investing in the pipeline. What we talked about on the last earnings call last week was really kind of a good summary of all of those dynamics, where really strong quarter from Cabo in the base business in RCC, really kind of just executing full speed ahead, all cylinders in the net launch, and then looking ahead to first Zanza and Colorectal, as well as non-clear cell RCC, executing on the other four pivotal studies that we've announced, and then really kind of from a pipeline perspective, identifying what that next big drug is going to be that we want to invest in. One of the things that I think unfortunately differentiates us from a lot of our peers is we always say that we run Exelixis like a business and not a biotech. What we mean by that is we want to be thoughtful about expense management, thoughtful about the programs that we invest in. Are they going to be differentiated? Are they going to have that through line that we think kind of runs through Cabo and Zanza and that they are successful or hopefully successful because they are generating differentiating data? Ultimately, our job as drug developers is to help patients and is to establish new standards of care in really devastating diseases like kidney cancer. We believe that if we are able to right-shift the survival curve, right-shift the PFS curve, that is how we create value for patients, and that is how we create value for shareholders. We want to do that again and again and again. We have done it with Cabo. We are going to have a couple of card flips this year for Zanza. As I mentioned before, we want to understand and generate data quickly enough to identify what's that next program that raises its hand and says, "Invest in me." Whether it's internal in our early stage program or whether it's external from a business development perspective, we have the ability to execute. We have the financial capability, certainly, and we have the right people, we have the right team to then say, "Okay, let's kind of run full speed ahead." It is a great time to be at Exelixis, a lot of momentum. I think walking down the halls at the company right now, people are just really excited. We come in every day doing exactly what I mentioned, trying to establish a new standard of care, and we want to make sure that we're doing everything we can to be successful in that mission. Yeah. Yeah. With the history and with the momentum that you've garnered from not just 2024, but prior to that, maybe it's a disservice to start with this recent quarter, but as you mentioned, you've come off a strong quarter with the top line strength, some good, nice EPS performance as well. This, as you alluded to, is really driven by, I think, a core strength with Cabo and RCC. Maybe walk us through what's working here, what's driving that growth to continue to accrue the market share. Yeah, certainly not a disservice to talk about Cabo. I mean, it's what has defined us as a company, and we have a saying, Cabo's kind of the gas of the Exelixis engine. As Cabo continues to be successful commercially, that's what fuels our ability to invest in Zanza and our ability to invest in the pipeline, our ability to buy back shares. All of those dynamics are certainly driven by kind of the continued success that we've had in those tailwinds from Cabo. As PJ and Mike and Chris talked about on the earnings call last week, really strong quarter, we were able to raise guidance on, frankly, the strength of that base business, looking ahead then to kind of the continued launch in our endocrine tumors with that new indication. Depending on who you ask, it's either the data or the team, but it's really both. When I meet with P.J. and his team, and it's one of the things that really jumps out is we think we have a best-in-class commercial organization, not even necessarily in biotech, but in biopharma. What we've shown is the ability to continue to gain market share, continue to spread a message, spread a data set that resonates with patients and physicians, and really make sure that we're maximizing that opportunity in RCC. Why is that? One, the data obviously help. ASCO GU, we had a five-year update from the CheckMate 9ER study, which again, we believe continues to show that the combination of Cabo and Nevo has generated best-in-class data of an IO-TKI that offers a lot of favorable dynamics around that overall survival signal, continuing to remain strong in things like quality of life and key secondary endpoints. Those are the sorts of things that have resonated and continue to resonate. The other thing that we're doing, and kind of we get this question a lot, is most drug launches tend to hit steady state between five and seven quarters after approval, and now 9ER launched in 2021, so we're well past that. It really comes back to the data and then the team. We have a team that is out there in the market, seeing physicians, seeing customers every single day with a singular focus on how do we make sure, how do we maximize the patients who are getting Cabozantinib? It was part of their journey at RCC. That kind of singular focus of the team, not letting up, not kind of moving to this thing and this thing and this thing, and kind of that shiny new toy dynamic that I think happens a lot in the industry, this is something that we're particularly proud of. When we reflect on kind of the success we've had with Cabo, it's certainly about the data, but it's certainly about the team as well. We are going to continue to kind of go full speed ahead and make sure that that message continues to be out there. Yeah. Now, Mike, you and the team talk about being in the business of P-values and building that data that's sort of rooted in building that competitive moat. We see the demand as a small molecule that folks want to understand the pricing dynamics and think about the contributions of how you are navigating price and volume. Maybe provide either reassurance or at least some degree of color on those contributions for this current quarter and as it sort of translates to that increase in. Yeah, certainly. As PJ has talked about in the last quarter and prior calls, the vast majority of kind of the success we've had is demand-based. If you look at the dynamics kind of post-IRA, pricing tends not to be as much of a contributor historically just because we're kind of capped at the rate of inflation. It is again kind of a demand-based story. Certainly, it's everything that we just talked about, kind of gaining four market share points on TRX. Four points of TRX growth is something that I think if you would have asked us two, three years ago, we'd be pleasantly surprised, let's say, that we're still doing that. We want to do everything we can to make sure that kind of demand-based growth that really reflects patient and physician preference for Cabo, we want to just continue that. Yeah. Great. Great. Let's segue into neuroendocrine tumors then with the indication expansion. As you mentioned, you're full steam on the launch. The horizon of the guide increase does not include that from our understanding as far as that opportunity. Maybe it's upside potential. Maybe just starting with the Cabometyx results, how the results have suggested the competitive potential for Cabo in second line plus. Yeah. PJ on our earnings calls has a really nice slide, kind of a checkbox slide that I like to refer to when I think about the opportunity set for Cabo and Nets. It really shows that with such a heterogeneous disease and kind of the pNET and the epNET, Cabo has a label and an NCCN guideline recommendation that's relatively broad. Because of that, we have an opportunity to, again, be a standard of care for these patients as part of their journey with neuroendocrine tumors. The breadth of that indication, the breadth of that opportunity set, we think aligns well kind of with the commercial opportunity. If you look at some of the oral options that are available to patients, they have probably more of a limited utilization, whether it's pNET, epNET, or some of the other dynamics there. I think the other thing to keep in mind is voice share. With both Sutent and Everolimus and Captem all being generic, we're really going to be kind of the dominant player from a physician education, from a just market dynamic perspective. I think that's going to be, again, an opportunity for us to really go out and provide that compelling message to customers, to physicians, to patients about the cabozantinib data, the breadth of the activity, the overall clinical benefit, the fact that candidly, anytime you see a PFS HR with a two and four in front of it across those two subsets, that's a good thing for patients. That voice share is something that I think is going to be increasingly important as we think about the launch. Again, it's about the data. The CABINET data was a particularly strong data set, and it's one that as we kind of go out to the market and ahead of the launch, we did a lot of market share. It was a data set that, frankly, really resonated. We've talked in the past about a lot of the dynamics ahead of the launch around physician familiarity with Cabo. Unlike a lot of drug launches, about 75%-80% of prescribers already write Cabo, net prescribers already write Cabo for another indication. You have that inherent familiarity with Cabo, and you do not have that kind of learning curve, so to speak, of how to manage toxicities, how to think about different doses, the 40 versus the 60, all of those things that can sometimes slow a launch or just inherent part of any new product launch that is built into the opportunity that we have with Net and why it has been such an all-hands-on-deck exercise for us. When PJ talked about on the last earnings calls that we have seen something like 70% of the prescribers already, it is because our field force has already been out in front of those customers and have those relationships built in. The other, say, 20% who have not written Cabo previously, the vast, vast majority of those are actually co-located in sites that our reps were already seeing. Just walking down the hallway and seeing a new physician and, "Here's something new to talk about." "Oh, by the way, making sure that you saw that five-year update in RCC." When we go out to talk about Net, we also see that as an opportunity to reinforce and emphasize kind of our messaging in kidney cancer. Great. So we've got the data, we've got the familiarity. How do those components translate into the revenues? Maybe remind us of the base assumptions on Cabo's revenue opportunity in Net. And also just getting a better sense of that contribution. It sounds like the briskness with which the familiarity can actually and the execution can translate to utility. Walk us through that contribution for 2025 in the following years of that peak opportunity. Yeah. What we said on the last call is, one, we don't give guidance on guidance, but we want to make sure that we understand kind of the trajectory and slope of that launch curve before we give kind of a formal update about how it's going. Kind of stay tuned there. I think what we've talked about in the past is that kind of later line neuroendocrine tumor opportunity set, if you look at the utilization of the oral options right now, using contemporaneous pricing, it's about a billion-dollar market. The key question for us and for our stakeholders is how much of that kind of billion-dollars can we take? On the third quarter call last year, after we had gotten kind of all of the ANDA dynamics behind us, we used this as an opportunity to kind of level set how we see the business. We talked about Cabo, and we talked about Zanza. On the Cabo side, we said that we expect it to grow by 2030 to a roughly three billion-dollars franchise. Certainly, a key part of that is continued momentum in the base business, but obviously, launching a new indication like neuroendocrine tumors is going to be a key contributor of that as well. That is kind of how we see the business evolving, and it's just about execution at this point for kind of that Cabo piece. I'm sure we'll get to Zanza later on. Let's do it because on that call, you also spoke about the clinical strategy and Zanza's development. I think the aspiration was maybe $5 billion in projected peak for Zanza. Maybe this is a good time for us to ask you to highlight Zanza's differentiation from Cabo and other TKIs and just the strategy that's supporting that confidence of that 2030s $5 billion number. Yeah. Kind of the key insight or kind of the genesis of Zanza, and I always get a kick out of this and all of the naming dynamics. Cabo's XL184 originally, Zanza's XL092, and half of 184. It really kind of plays into what we were focused on. Cabo, as successful as it's been and as many patients as it's helped. As a quick aside, I was in a meeting earlier this week or last week, and I really heard a stat that jumped out to me that our supply chain team had talked about that I think 100 million Cabo tablets had been given to patients, or we'd made 100 million tablets. It just kind of jumped out at me at just how important of a product Cabo has been from a patient perspective in helping people live longer, better lives with cancer. Cabo's kind of one Achilles heel, so to speak, is that it has a relatively long half-life of around 100 hours. The way that that translates to clinical management for patients is any patient who's on a VEGF targeting TKI or any TKI candidly ultimately sees adverse events. What you need to do is dose hold, dose reduce until resolution of symptoms. Because of that long half-life, it can be somewhat challenging from a practical clinical management of patients, especially when you're giving it in combination with other things. That dose hold period can, with that four-day half-life and accumulation of plasma, be 10 days, two weeks, even longer. You can imagine that patients with active late-stage metastatic cancer, that can be challenging. Zanzalintinib was designed really to improve upon that half-life profile. We were able to engineer a metabolic liability into that core Cabo scaffold in kind of the non-active portion of that TKI to take the half-life down from around 100 hours to a little under a day, 23 hours. While phenocopying the kinase inhibition profile and all of the efficacy that we think really drives the Cabo success, the insight there was we thought we were pretty dialed in from an efficacy perspective, but from a user-friendliness, from a combineability, and from hopefully and potentially a tolerability perspective, can that shorter half-life translate? That was kind of the core genesis of the Zanza program. All the data to date that we have shared, whether it is the dose escalation or all of the emerging data sets, has really shown that we have been successful from that perspective. Really kind of when we talk about differences between Cabo and Zanza, it's primarily around that half-life. Unsurprisingly, when you change half-life, we have seen differences in things like tissue distribution into the tumor versus healthy normal tissue. Is that potentially a driver for some of the early tolerability differences that we've seen? Maybe we'll see in kind of the full data, pivotal data when it's out. That is kind of when the cosmic truth for these things tends to show its head. That was kind of the genesis of it. When we thought about where we wanted to develop Zanza, what we recognized was that we had seen activity for Cabo either as a monotherapy or in combination in something like 20-21 different tumor types. Given our either financial constraints or operational constraints, we had chosen not to develop Cabo there, which is why we saw an opportunity then with Zanza to move into what we think are areas of high-end met need, like third line plus colorectal cancer or front line head and neck that had prior Cabo data sets that pointed us in the direction of, can a Cabo-like molecule with a shorter half-life have the potential to be a new standard of care? If you look at the six ongoing or planned pivotal studies that we've had, 303, third line colorectal cancer, 304, non-clear cell RCC, 305, front line head and neck, two studies with Merck in combination with Belzutifan, and then an earlier study in neuroendocrine tumors compared against Everolimus. Those are all areas that actually aren't necessarily overlapping with Cabo. We get this question a lot about, oh, how does Cabo versus Zanza differentiate? If you look at kind of that $5 billion market set, there's really not a whole lot of overlap between the two. It is a strategy kind of by design and partly by luck that as we look ahead to kind of the Cabo LOE in January 2031, we think that with Zanza, we have the opportunity to kind of grow through that. Yeah. That's a great summary, Andrew. When it comes to upcoming 002 STELLAR data, looks like ASCO presentations, maybe just talk about the de-risking philosophy and when we think about benchmarks to de-risk Zanza's development in clear cell, how maybe that can be parlayed or leveraged when you think about design for the Zanza Belzutifan study that you mentioned in collaboration with Merck. As you've laid this out, how do we think about the sequencing of de-risking and data-informing next steps? Yeah. I mean, certainly excited to share the ASCO data. What you'll clearly see is it's a very active drug. From a de-risking perspective, I'll come back to you quoted Mike earlier saying, "We're in the business of P-values." Ultimately, when we think about Zanza, not only in CRC or really Zanza is a franchise molecule that we want to invest in, those de-risking events candidly are the pivotal trials. ASCO is certainly going to be important for us this year, but we do have two pivotal readouts. First in colorectal cancer, event-based, so we'll always see. Also with 304 and non-clear cell RCC. We're going to get two phase three randomized readouts from that program this year. I think that's ultimately going to be the key de-risking event for how we think about that franchise. What we want to do is we have the six studies ongoing right now, and we want to define that next wave of Zanza studies to say, "Okay, what are the opportunity sets that we think we have the ability to either in monotherapy or in combination define new standards of care with what we think is a differentiated and clearly or hopefully best-in-class TKI, user-friendly, combineable, all of that stuff?" What we will see with those pivotal readouts this year is kind of that first de-risking of how we think about the next wave and the next wave and the next wave. On that point, what we have talked about is either looking at the Merck collaboration as example or prior versions of that, either with the Contact trials or CheckMate with Bristol. We like that model of having clinical collaborators where we can risk share, where we can cost share, and so we can be capital efficient as we think about R&D. Coming back to 9ER, we always joke that's in the ROI hall of fame. We were doing around $750 million a year when that study read out. We've obviously been able to grow it from there. The key point is that Bristol paid half, and IPSEN and Takeda paid half of our half. That capital efficient investment, we want to continue with Zanza and hopefully kind of with the pipeline going forward. Yeah. Of course, always the number one question I want to spare you, but it's in the wheelhouse for you. I just have to close with taking the value that's created with Cabo, investing in Zanza, but also the pipeline and, frankly, external innovation. Just, Andrew, a word on capital allocation. I know you've got the pitch of how you position that, but maybe one specific question is what comes around to Exelixis's approach to differentiation. How can Exelixis and you out-compete other strategics? We know that you want high conviction assets, so do others. What makes Exelixis's search and eval different such that you can convert on those goals? I think we have slightly different goals. There's a difference between, say, a numbers game and a quality game. We want to make sure we have a quality game with a differentiated perspective. One of the things we've talked about is we got Cabo back twice. Our larger pharma, biopharma peers don't necessarily have a perfect crystal ball, but we think we have the ability to have a differentiated lens on, say, what a market opportunity is or what a biological hypothesis around a particular mechanism is. We want to make sure that we're investing in the right things, asking the right questions, running the right studies, because we don't want to bring in just another me too because commercially, those tend not to be successful. We more want the next Cabo versus the next ninth of whatever. We'll leave it there. Andrew, thank you for joining. Thanks, everyone, for joining. Look forward to ASCO. Yep. Thanks again.