We're going to get going here with our next company presenter at the B of A Annual Healthcare Conference. I'm pleased to be introducing Exelixis and Mike Morrissey, President and CEO. My name is Jason Gerberry. I'm one of the biotech analysts here at B of A, and coming off of a nice beat-and-raise quarter, Mike. Maybe, you know, I'm just kind of curious if you can address the latest and greatest at Exelixis, both in terms of the commercial execution story, capital deployment, and pipeline highlights, and then we'll jump into more specific questions from there. All right. Fantastic. Great to be here. Thanks again for the invite. Always great to come out to Las Vegas and see you guys. Totally stacked day today, so appreciate the opportunity to meet with you and investors. Before I begin, I'll be making forward-looking statements, so please see our SEC filings for a description of the risks that we face in our business. Yes, Exelixis. We had earnings yesterday, strong Q1 performance, strong call. Look, we're in the business of improving standard of care for patients with cancer. If you look at cabozantinib's performance, clinically and now commercially, I think that puts our aspirational goals for the future for cabo, for zanza, for the pipeline, in real perspective. We think we have the insight and the perspective, and certainly the team and the process, to be able to execute at a very, very high level, to consistently, you know, exceed expectations that patients have, that shareholders have, and that we have for ourselves to be able to move the needle for patients. Those two parts of our business and our focus around doing right by patients and then being able to build value for patients and for shareholders is, you know, permeates through the organization at every level and everything that we do. You know, I think we've been on the cusp of a breakout now for a while. You're all familiar with the overhangs that we've faced over the last few years. I'm really excited and energized for the team to move forward now in terms of the cabo story, the zanza story, and the pipeline story. You know, I think our commercial organization is literally best in class. I say that in the context of not just biotech, but literally the entire biopharma oncology ecosystem. You know, it's a very experienced, motivated, energized, passionate team. I think what you saw this quarter relative to the base business, I think can really play out well in the context of a NET launch too. Lots of things going on, obviously. Happy you have pages, a book of questions that I doubt we'll be able to get through in the next half hour, but let's try. You're a unique biotech company in that you return capital to shareholders. You know, in the last three years or so, on average, like ballpark-ish, $500 million of share buybacks, right? Your profit stream driven by cabo growth is only going to go up. How should investors think about, you know, share buybacks, you know, on a yearly basis? You know, if you're in the ballpark of your current share prices, that a priority in the past. We've talked about BD. I think last night you talked about, you know, certain sort of structured transactions maybe still appeal to you as a company. You know, I think it's important because it's certainly helped the stock performance. As we think about the expectation with share buybacks on a go-forward basis. Yeah. You're right. We're in a fortunate position to have strong balance sheet, strong free cash flows. We have, and we've always had great discipline in terms of how we run the business and how we use our R&D budgets to drive value creation for cabo and the pipeline, right? I think the, you know, the opportunity, and I think if you go back to, I think the early part of 2023 when we started the buyback program, we bought back about, we repurchased about 19-20% of our float since then, right? And we have another $500 million or so in the latest buyback that was approved by the board back in February. Us buying back our stock when we think that stock is undervalued makes sense, especially in the context of looking at the relative opportunities out there. If we're going to invest in companies that have pipelines that we think are exciting, opportunities for growth that we think could help drive the top and bottom line, then investing in Exelixis makes a lot of sense. I mean, just as a purely objective way of looking at the entire framework of what's kind of in the biotech ecosystem right now. I am, and I know Chris and the board and the entire management team feels that way. This is a smart way to go. You know, we have the ability to invest in our pipeline and the commitment we made back in Q3 to keep R&D at about $1 billion a year, that, that's still a sizable amount of cash that we're spending on developing the internal pipeline. We have been ruthless, historically ruthless, almost maniacal prioritizers on how to build value. There was a time back in 2011, 2012 when we bet the farm on cabo. We focused on cabo because we thought that was the best chance for success, going forward. That mindset still is there today, right? We're looking for, certainly with cabo and zanza, we think we've got two big winners there. We're looking for the third compound, the fourth compound that kind of stands up and says, "Hey, I'm active. Invest in me because I can bring value to patients and to shareholders." The big pipeline that we've got is a means to an end, and that's to find the winners that we can then prioritize our investments on going forward. With $1 billion of R&D funding, we can do that. You know, targeted BD makes a lot of sense to us. You know, I think our view, and we've done very detailed analysis through our FP&A team and Andrew Peters and others, looking at the success of big, even mid-sized M&A over the last 10-15 years. It's really not that effective in terms of building value, right? Yep. And even by some of the definitions that we use for success, which is just, you just make back what you invested, there's a very, very small number of successful M&A transactions that happen in mid-tech, you know, mid-sized biotech up to big pharma. Yeah, we like back-end loaded pay-for-success deals, so we're not carrying all the risk ourselves and then go forward. But, you know, last year we, I think we had $700+ million of free cash flow. We used the majority of that to buy back shares. We will continue to consider that very strongly if we think our share price is undervalued relative to where it could be. I think when you look at cabo and then zanza coming onto wings, we're probably still undervalued, right? From my point of view. It sounds like it's a balance that you feel like you continue to maintain, but you'll be opportunistic and thoughtful about. Yeah. If the cash flows continue to grow, then we just have that much more optionality to look at that very carefully. Yeah. Yeah. Okay. And you reset your operating kind of spend footprint in 2024. It seems like, you know, with layering on NET and even just the momentum you're seeing in RCC, this is a, it seems like you can get a lot of operating leverage over the next few years. Is that how you kind of see it? That's how I look at it. Yeah. And again, keeping spending flat is the plan. Obviously, as we, you know, achieve success with zanza, we may need to invest more from a commercial point of view. If we want to build out a Sales force for CRC, for example, which is much bigger than what we would probably need relative to what we're doing right now with, say, with NET and liver, you know, that's a good problem to have. Again, it's a very focused, very stringent view on, you know, what's the ROI for all these things. If we have the opportunity to grow the top line, then investing a little bit in the SG&A side makes a lot of sense too. Yeah. Yeah. Yeah. On the recent cabo label add-on for NET, my first question is, you know, what we learned last night, my sense was that really, a lot of the outperformance that you're seeing and the guidance raise had more to do with sort of the fundamental performance at RCC and getting more market share there and then leaving for upside as you kind of evaluate how NET will impact the business this year. That's TBD, and you left that TBD. Is that fair? That is exactly what we said, that you captured that. I had to drop off at home 20 minutes early. I'm gratified that that message came across because again, you know, we, you know, Q1 performance in the base business was super strong. TRx grew 4% or four points year- over- year, Q1 2024, Q1 2025. NRx grew five points in that same timeframe. You know, the performance on an absolute basis was super strong, 35% growth year- over- year. Yeah, and we got approved in NET at the end of the quarter, right? Yeah, we're excited about that. Thrilled to see the, you know, all the KPIs trending in the right direction, in terms of how we're looking at the launch. You know, again, with the team that we've got and the data that is there and the general knowledge of the, of cabo relative to that large prescriber base, coupled with, you know, the fact that, you know, unlike in renal, where we're competing with all the big boys, we're basically, we have a generic competition here, right? It's a good setup for success for sure. Are you surprised at all the success you're seeing this far post the CheckMate -9ER launch? Because, you know, as I, you know, typically you think, okay, get two, three years out, the patient stacking is kind of like run its course, but then you talked about the long-term survival data that you, you presented, as an IO- TKI combination, you're getting more market share. That may speak to cabo's tolerability benefits relative to some of the alternatives there. What do you think's driving that? Because you don't see this type of late cycle growth. You normally do not. I do not, I am not sure if that is because sales teams run out of gas or people shift priorities after a certain point in time. I can tell you, we have been really hitting this hard from day one. There has been no mindset that, you know, we are satisfied or we are content with, you know, kind of the plateau that we are on, or the vector that we are on. You know, we have taken a very, I will say, the scientific and very analytical approaches to finding additional market share over time. We are not sitting back and saying, okay, we are doing okay. You know, we are eight quarters in, it might flatten now. That is okay. We do not have that attitude ever, right? We are hungry. It, we really believe that this regimen makes sense for a lot of patients, across the continuum of that RCC journey. The team management, the reps, you know, full- court press every single day. That pays off because these drugs don't sell themselves. You certainly can't educate in a vacuum. You need to get out there. You need to, you know, talk to people. You need to have new data come out. That's all happened. Kudos to BMS. Again, they're the sponsor of that trial. Those annual updates matter and that visibility matters. We've made the most of it for sure. Yeah. So NET, which was where I started out, you know, in this ramble, you know, it was funny enough when we spoke to KOLs, like they said, well, you know, this is the only brand. This, having the only promotional voice in this tumor setting, could actually matter. I kind of laughed it off when I heard it, but then I heard you guys say it yesterday as well. I guess I'm just wondering, like in the end, you know, on one hand, we think about cabo with placebo-controlled data, and then we think about the future with zanza and [NET], presumably an everolimus, you know, active comparator type of study and thinking about the different value. Maybe you feel like you can have the best of both worlds here with the two different approaches, one in the more near to medium term and the other offering you more of a longer- term advantage in the space. Yeah. I look at it as building on success with zanza relative to cabo. I think the situation that we find ourselves in right now as being the only branded drug really in that oral therapy market for NET is super important. Our patient support access program, again, best in class. We've always taken a very white glove service approach here to make sure that we're doing everything we can in a compliant fashion to make it easy for patients to get drug, helping physicians and their practices navigate all the complexities in terms of how they have to operate to, you know, to be able to get patient the drug as quickly as possible when they think that patient is appropriate for cabo in whatever indication. We think the next evolution, and I really want to go back to, you know, renal. In 2016, renal was a $3.5 billion-$4 billion a year market. That pie was significant, but the advent of new therapies, new combination approaches, you know, IO, you know, IO, whatever, IO-TKIs and IO-IO has, over that last eight, nine years, really driven a $4 billion a year market into a $10 billion a year market. We think NET could be exactly the same thing. Investing there with cabo, with zanza, other MOAs that are potentially going to come online at some point in time could really be helpful. We want to be a big player there, not just with, say, cabo-like opportunity for renal, but to get a bigger piece of that pie as we go forward, right? Really move the needle. I think that's part of our approach. We talk about franchises. That's what separates us from a lot of companies. We have a broader view, commercial gets involved very early in terms of helping us set strategy. We have the seamless integration of commercial, of development, of the finance people to be able to really, really play out the best course possible for success. You got a great label, a broad label that certainly helps. Not all doctors want to, or not all patients want [LUTA], right? I get the sense that some of the trade-offs that you have to make going on to [LUTA] is just not everybody's cup of tea. Yeah. And is the other factor here some overlap with your, you know, renal -prescriber base that, you know, hey, I'm very familiar with cabo. I like it. I like the tolerability profile. I'm going to go with it and make this, you know, preferred option for some patients. Yeah. I think that's a great way. In fact, you want to go out in the field for us? That'd be fantastic, right? You're the second CEO to give me a job offer publicly. You know, the opportunity here is to provide, and again, the way cabo was enrolled, we covered all the bases. I mean, there is that checkbox slide that PJ shows on a regular basis where we cover all the bases. I think that is really, really important. The optionality is critical because these patients live a long time. They can sequence through a lot of therapies. They all have different situations in their personal life, in their professional life, what makes sense, what does not. I have to say I was super pleased. You know, we are very analytically focused in commercial, as across the whole company. You know, we are tracking, essentially, how well our reach is with this prescriber base, right? The idea that we could cover 70% of the prescribers in the first few weeks, I think, is just indicative of the kind of energy we put behind these opportunities because you cannot launch a drug twice. The first time has to really count, right? I am thrilled with that and the performance overall. It is just going to come down to now just consistent execution. We have the data, we have the infrastructure commercially on both the marketing side, but also on the patient -support side. Certainly, the fact that 80% of prescribers, as we talked about previously, for NET have used cabo for a previous indication. They know how to use the drug. That is the most important thing in terms of familiarity with what to expect going forward. On the launch, I guess the punchline here is it sounds like you're very bullish, TBD on some of the metrics. Maybe over the course of the rest of the year, you'll kind of start to maybe tell that story in a little bit more of an empiric fashion. Yeah, exactly. Okay. Another obviously update yesterday, around the CRC zanza trial, caught some people's attention. I heard, let's talk about the history here, right? And the focus based on some [Dima KEYTRUDA] data was to focus on non-liver mets as a subgroup, most likely to show OS benefit or, or then to use a hierarchical analysis. Can you talk through the statistical plan changes and why they came about, what you learned, and how investors maybe should read that, right, as it pertains to maybe those pre-existing notions, right, that like the non-liver met, that 30% of CRC kind of was the more low-hanging fruit, and now are you more bullish on the all-comer opportunity? We're bullish on the indication, right? Both non-liver meds, liver meds, ITT in general. I think the ASCO GI data that we had back earlier in the year is a very important data set to look at very carefully from the standpoint of all the caveats. It's a relatively small randomized study, but you know, we saw some, I think, some very encouraging signals in that study that helped us understand the potential opportunity here relative to, you know, zanza data in combination with atezo and zanza by itself for that matter too. I think the simplest way to frame the change, and again, we're not going to get into the SAP. We haven't done that before. We're not going to do that going forward. It's simply a matter of patients with liver mets progress and die faster, right? Patients with non-liver mets, that makes sense physiologically. If you don't have a metastasis in your liver, liver function is better. That's obviously a very important organ that, you know, keeps all of us alive. We're simply counting events and we have been for the last 12-18 months. We're accruing events rapidly in the ITT population. We want to win in the overall population as well as in the non-liver met population. It's simply a matter of looking at the events both that we've accrued, but also that we anticipate accruing in the context of having the right number of events to unwind and then read out to then make this change. Yeah, That's all. It's a really, really simple approach, but it was a little tweak that allows us to potentially capture a lot of additional value during the process. That's all. It seems like you're kind of going for the whole opportunity now. While there may have been some concerns based on some prior Merck data, what you saw at ASCO GI coupled with the event rate progression gives you that kind of broader confidence to make those tweaks. Exactly. It's, again, we're accruing a very large study. So we're not really worried about powering per se because we've got so many patients involved. Yep. Maybe thinking ahead to those data, still similar timeline, right? Second half. You have the direct study win and then you have new modalities like the LONSURF combination. How do you think about, you know, generally speaking, like does that newer modality elevate a competitive bar in your minds or do you think there are certain trade-offs with that, the approach that if data are comparable on the efficacy side that you could still win? Oh, I think it's going to come down to the actual detailed data. Certainly, if you look at the framework of rego, of LONSURF, LONSURF plus bev, you know, certainly effective therapies in terms of statistically, you know, helping patients on those experimental arms do better in those trials. There's lots of room for improvement and don't want to get ahead of that. Certainly, I'm very, very excited about what we saw in the GI data earlier in the year. We have to, you know, we have to open the envelope now and look at the full data set. I think again, we have, I think, proven our ability to take differentiating clinical data and monetize that, and build value for shareholders. Yeah. I think that's the focus. We're thrilled now to be moving into prime time for zanza, right? In terms of 303, 304, 305, this year, you know, the next, you know, next three starting shortly between 311 in NETs and the Merck RCC studies. We have a second wave of pivotal trials that we're, you know, looking at very carefully in terms of planning for the future. You know, the Merck collaboration kind of again reinforces our approach of, you know, combine and conquer. I mean, again, 9ER, I mean, that's in the, you know, ROI Hall of Fame, right? From the standpoint of, you know, we paid $0.25 on the dollar for that study, right? BMS paid half, our partners Ipsen and Takeda paid half of our half. We took revenues from, you know, $750 million a year up to $2 billion+ on that. We like those deals and certainly the, you know, the Merck- zanza deal has opened up a very, I would say, large opportunity of additional deals that we're considering there too. Lots of moving pieces there. Again, we're in the mode of building franchises. That's how you do best by patients and best by shareholders. Yeah. My words, not yours, but maybe a little bit of a shift in terms of being a little bit more commercial and like the second half of last year, putting some peak sales numbers out for both zanza and cabo. I think before historically it was harder to get some numbers out of you in the past. With zanza, I mean, with non-clear cell and CRC now with readouts in the second half, like I believe that that makes up $1.5 billion-$2 billion, I think, of your $5 billion pie. Do I have that right? Approximately. Yeah. Yeah. Okay. Yeah. So, it seems like, you know, now with the study tweaks, you get maybe a larger de-risking data too. Yeah, we'll see, right? Obviously data dependent right now, getting ahead, but at least that's the, you know, what to look forward to potentially. It was important for us last October, after the ANDA was resolved and the Merck deal was announced when we had the Q3 call, to essentially get people's attention because it was hard to get anybody to do any work or really think about zanza or the company beyond the ANDA situation. You know, that's when I started. Today, you know, we've been on the cusp of this kind of a breakout for a while, and I think we're hitting our stride now relative to the value that we can create being recognized, right? The pipeline goes really one step beyond that, right? Certainly, zanza is the main focus, but we are looking for another winner to show itself, to tell us, invest in me because I can move the needle for patients. Having three compounds moving into the commercial realm is better than two and two is better than one. We are all about a pipeline and a portfolio of franchises that can build value. Yeah. The non-clear cell opportunity and study readout, how you think about, or how would you explain to investors maybe why companies have historically maybe not run trials in the space? Do you feel like, hey, if I run the trial in clear cell, I'm going to get access to that population effectively and it's a little bit complicated by the different histologies. Do you think those are some of the legacy factors that maybe led to that? Because on the one hand, it seems like a clinically de-risked study as you go into that. A lot of my questions are more commercial, but I'm just kind of curious maybe those legacy. Yeah. Yeah. I think that's a big part of it, right? Nobody's had to invest the time and money to study non-clear cell because it came along with, you know, came along for the ride with the clear cell studies, right? You know, I guess when I finally realized that nobody had ever actually done a global randomized study in non-clear cell, it just made it that much more sense to actually do it, right? We're essentially, you know, phenocopying the 9ER Framework in non-clear cell and just using, using, using zanza, right? If that works, again, you know, we always aim for the trifecta of response rate win, PFS win, survival win. You know, that's going to be, it's going to be a really strong data set to market on, right? You know, non-clear cells, you know, ±20% of the overall market. To start, put a stake in the ground there with zanza and then have the Merck studies follow up soon after, it's a great way to build, you know, build a franchise, right? While IO- TKI combinations are used in this setting, right? Like that just happens, is the view that, hey, we come in, nobody has level one evidence and that wins the day, you know, much as you think about like coming into NET and maybe, I mean, the only brand voice here just feels like, is the win just getting level one evidence, getting into the NCCN recommendation with a more preferential recommendation to those other options and everything will follow suit. Yeah. Yeah, exactly. It's really that simple. Yeah. The data has to be there obviously, but it's really first mover advantage from the standpoint of having that, having that data set really together in one place. Yeah. Yeah. So, and then I imagine, I don't know if you've ever quantified how much cabo derives from that. In the end, I think it's a, it's a good problem to have if you cannibalize cabo with your longer tailed, you know, zanza franchise, but I don't know if you've kind of broken those numbers out. Yeah, we haven't. It's hard to actually count that in the commercial world. You don't really get that level of transparency and of information into individual scripts. Yeah. And the data update there, does that look like maybe some of the initial 9ER updates where, you know, it took an OS time to evolve and, you know, it's mainly a focus on PFS initially. Hard to say. Yeah. It's in the data. So I wouldn't want to opine there. Okay. Let's see. Second half is when we maybe get more of a reveal on your clear cell RCC strategy with the zanza, [the HIF]. I always felt as I always messed up the pronunciation. The [SUDAFED]. Yeah. From Merck. Yeah. There Yeah. There you go. You know, it seems like you've kind of made some comments, right, around changing standards of care, right? You know, obviously some PD-1s are used in the adjuvant setting and there's going to be some flow through dynamics, right, that you kind of have to work and adapt around, imagine. In the end, these are long dated kind of studies, right? I mean, these take typically what, four, five years to get to data, right? We'll get a reveal. We'll understand the strategy. I guess I wonder, you know, the trials that Merck has ongoing that read out next year with belzutifan, right? Is there, I don't know if you're going to answer this, right? It does seem like an NFS follower approach [on Merck], right? You know, in the end, because it worked in, I guess it's, I shouldn't, you were first in, in 9ER, but you. We were not first. You were close with. [crosstalk] No. We were far behind. You followed the Pfizer one. axi-pem, right? Yeah. Yeah. Which had its issues, but. I mean, you had ipi-nivo and then you had axi-pem, right? axi-pem came first and then ipi-nevo, but yeah. It is all in the data. Look, I'm not going to, you know, I wouldn't want to speculate on, you know, trials that other companies are doing, even my own trials for that matter, right? The opportunity that we've had is to align with arguably, you know, the top oncology company in pharma, around what could standard of care look like, you know, moving into the 2030s, right? That is important because I think looking at that in the context of trials that you're going to run today and investments you're going to make today is the way to look at it, number one. Number two, that's when cabo loses exclusivity, right? The coalescence of those two factors, I think it's really compelling. And the fact that, you know, we're sharing costs with Merck, they're going to run these studies and nobody runs studies better than Merck does. Yeah, it's all compelling. We're sharing their risk, they're doing the heavy lifting and gives us more bandwidth to do other stuff with zanza and the pipeline. I mean, it's the perfect match, right? Yeah. As we get more belzutifan data flow next year from ongoing Merck trials, I guess like maybe the way to think about this is, hey, it doesn't make sense to wait and furthermore we get subsidies, you know, from a partner to run these trials. You know, and ultimately things can be tweaked, you know, once you see kind of the activity of belzutifan and what that ultimately looks like in the clinic. Is that? I would say, you know, at a high- level, combination partners matter, right? You know, I applaud them for continuing to invest in MOAs that they think are valuable, with maybe next- gen compounds like zanza, right? We'll see. All right. We're out of time, but thank you so much for joining. Great to be here. Thank you. All right.