I've got some macro questions at the beginning. Yeah, I thought. I'll log it if you want. Yeah. No, it's good. I'll get rid of that. It's very good. Good morning, everyone. I'm Sean Laaman, Head of U.S. Mid-Cap Biotech Equity Research here at Morgan Stanley, and welcome to our Global Healthcare Conference. Before we begin, just to make you aware of some important disclosures. For those disclosures, please visit the Morgan Stanley 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 the pleasure of hosting Exelixis and their President and CEO, Michael Morrissey. Thank you for your time and pleasure to host you. Yeah, it's great to be back. Yeah. Thanks for the invite, yeah. Before I begin, let me just remind, do my safe harbor. I will be making forward-looking statements today, so please see our SEC filings for a description of the risks that we face in our business. Okay. Thank you, Mike. Thank you. You would be actively involved in this first one, I believe. So how is the rise of China-originated innovation changing your competitive positioning, if at all, in your R&D and BD playbook? That is a great way to start the dialogue, and we could probably spend 33 minutes on that topic all by itself. First, let me say again, it is great to be here. Really appreciate, and really value the relationship we have with Morgan Stanley on the research side, on the banking side. It has just been just great. Fantastic. Really appreciate all you guys do for us. Let us talk about China, and it is really a question of, at least in my mind, innovation first and how you maximize the value of innovation, how you access innovation, how you pay, how you value innovation all across the board. No surprise, I think, to me and to us that there is lots going on in that space. If you go back even 10, 15 years, there were the top two or three checkpoint inhibitors, and then there were another 40 being discovered- Sure -and developed in China. I would say that region, that country certainly is investing a lot in biotech right now. There is lots of movement inside China in terms of BD ex- China, in terms of U.S. companies and European companies accessing that. We look at that very closely. I guess our focus is more on novelty than fast followers than kind of me-toos. There is a lot of all those. The question is really how do you parse the risk-reward equation? How do you look at data preferably asymmetrically in terms of what we have in our pipeline, where we are hoping to move our pipeline? We have adopted this multi-product, multi-franchise approach. I mean, cabozantinib is a great example of that from the standpoint of a compound that has been looked at in tens, if not more, pivotal trials, has label with eight indications. We are trying to complement that with zanzalintinib and a full pipeline. Sources of innovation, whether we look to buy, to partner, or to collaborate is really important for us. I think collaborative opportunities makes the most sense, but we are open for business and looking very clearly at trying to expand our portfolio of franchises. Sure. That could certainly include assets ex- U.S. side of the company. Yeah. Fantastic. Thank you, Mike. Next question on the macro side. Are you implementing AI across your business? And if so, can you point to an area where it's changed a decision, a cost outcome? Yeah Even a POS? It's another great question on the macro side. A lot of companies are kind of opening the floodgates in terms of the expense side- Sure -to embrace AI in kind of an uncontrolled, do everything at once framework. That's not how we're operating. Sure. From my point of view and what we've done, I think, within our business units and within our IT infrastructure is really ask the question: where do we have highly curated, very valuable data? Because from our point of view, certainly what I believe in is that AI, if you've got the right data, is a very good way then to be able to understand the value of that data, maximize the utility of that data, analyze that data both faster, but also maybe more deep in the process, right? Sure. We've, again, got decades of data. Certainly, if you think about what we've got within discovery, first of all, but also maybe more importantly within development, but critically in commercial, we have very, very deep data sets of longitudinal curated data that we've invested a lot of time and a lot of money in terms of building on and maintaining the depth and quality. We're using AI. Chris and I, we prioritize for the team where we see the biggest potential impact Sure of AI on our existing kind of data sets, data analysis, data utilization. Then the team we have can execute very quickly. I don't think we're spending a lot of money, but I think we're doing the right level of investments and the right focusing in terms of priorities to maximize impact. I can tell you that some of the things, especially in the commercial world where we're already strong, I think this has the ability and the opportunity to make us even stronger. But it's all around speed quality, and security. Because speed and quality by themselves are great, but if you can't do it in a secure fashion, as we've seen some of the more public examples, it can be a real problem. I think those three kind of pillars are driving us forward, but in a very controlled, kind of prioritized manner. Got you. Thank you, Mike. Last question before we dig into some Exelixis specifics, but which policy variable, is it FDA, Medicare negotiation, MFN, tariffs, or global pricing matters most to your economics? What have you changed, if anything, because of any of those? I guess I would answer yes to all those. That is the bucket list of topics and risks that the whole industry is facing. Certainly us as a very important commercial concern are dealing with on a daily basis. The playing field is shifting. It is very dynamic. I think the way we look at it is there is today, there is tomorrow, and there is the future. You want to be really careful how you navigate today so you do not complicate what you might do or could do tomorrow and what might happen in the future. For us, the timelines are basically real-time today versus even after the midterms in 2026. The time between midterms in 2026, it is just a few months from now, and then the next election cycle, and then new administration in 2028, and then 2028 to, say, maybe even early 30s. I think the dynamics here are super important, and nobody has a crystal ball into what could happen even a couple of months from now or even early 2027. So we have got a great team. We have got a super strong team in D.C. I am in D.C. a lot, on the Hill a lot, talking to members about things that are important to the industry, things that are important to us in terms of whether it be pricing, whether it be regulatory issues, whether it be external innovation and competitive threats, all those things. I would say from an industry point of view, certainly pricing the whole MFN issue are top of mind for us. Lots of noise in that system right now. I am not sure how much content is there. Maybe we find out in 2027, maybe we do not, depending upon who is controlling what within Congress. I think it's just so important for everybody to look at the landscape as it's just not today, because there's so many other moving pieces that could impact our industry and our ability to deliver really novel medicines to patients in the out years, depending upon how this gets played in the short term. Sure. Stay tuned. It's going to be a wild couple of years for sure. Thank you, Mike. Now to get on specifically to Exelixis and cabozantinib. Solid growth at Q2, but kind of macro, kind of not. How are you thinking about the growth of the core cabozantinib franchise before zanzalintinib takes over? Are you managing the two as a deliberate handoff or letting them run independently in overlapping settings? Yeah. The base business with cabozantinib continues to be really strong. Pleased to take a step to look back where we were literally 10 years ago when we launched cabozantinib and the amount of flak we got in terms of how we may or may not be able to compete in the solid tumor oncology setting with another TKI versus kind of where we are today. The run rate based on our Q2, 2026 numbers is north of $3 billion a year globally. So it's a major drug, and certainly we've had a big part of that in terms of how we've focused our clinical and regulatory and commercial efforts to grow the number of patients we serve and to use as a kind of a foundational platform for how we build zanzalintinib. Adding NET on was a super important next step for us relative to building the franchise. It is growing a little bit shallower rate than we thought it would, and that is okay. It does not really impact our view on what, if you use the pharmacokinetic terminology, which Cmax could be, right? It is just going to take a little bit longer to get there and that is fine. Team is doing great, and I think the effort is really understanding that this is a little bit different patient population than what you normally see with metastatic solid tumor opportunities. Zanzalintinib, following up beyond that, look, we have got the opportunity to build a durable second franchise that we think could exceed the CABO opportunity, maybe by severalfold if we are successful with first wave and now looking at about the second wave of pivotal trials. It is one that continues to really get us excited, and the opportunities are broad and deep, and our job is to parse the risk and capitalize on the opportunity for success and make sure that we are serving as many patients we can across lines of therapies, across combinations, across different histologies as we can. Lots to do there. It really plays into how we view building value through franchises. As we talked about at our R&D day last year, CABO was first. We think zanzalintinib is going to be a great second act, if you will, and there is more on the way with the pipeline, opportunities externally to be able to build this multi-franchise view of success for the business as a whole. Sure. Thanks, Mike. Just to touch on some recent patent news. How do you think about the CABO exclusivity runway out to the federal court decision with MSN and on hand to capture? How are you thinking about the potential entry and any competitive pressures on CABO? From our understanding that the product is non-AB related and not substitutable at the pharmacy. Yeah. Look, any successful drug like CABO is going to get challenged. Our job is to be on the offense in terms of adding indications, making sure we are delivering on growth, Q- over- Q, year-over-year, making sure that we are operating at a very high level of expectations for the team. On the other hand, we have to have a strong defense, right? Yeah. From the standpoint of making sure that we're doing the right work from a patent point of view, from a legal point of view to be able to maximize the value within the timeframe that we've got. As you know, we've settled with several generics for an entry date of January 1st, 2031. Those that haven't, we're litigating with. Again, the appellate decision that recently came out was very strongly supportive of our approach, and there's other trials planned to continue to reinforce that. I don't want to speak to those right now, obviously, but we're certainly going to continue to do the appropriate level of investment and prepping to make sure that we can maximize our chance of success there across all challengers. 505(b)(2)s, won't mention any names, but again, we're not too concerned about that as you mentioned in your question. History would tell you that those have a tough time of competing without additional data. The best example of a success with a 505(b)(2) is the ABRAXANE example where Abraxis ran pivotal trials. They went into large patient populations, did the right work to be able to frame the opportunity. Outside of making those big investments, it's really hard for all the obvious reasons to be able to see erosion or penetration. Look, we have to be worried about everything. We think about everything. We track everything. We're not too concerned about that. We've got to keep our eye on the ball in terms of the cabozantinib-based business, growing that, maximizing the value of zanzalintinib, and then pushing the pipeline forward. That's more than enough to occupy my time for sure now. For sure. Maybe moving on to some zanzalintinib questions. Super important for the long-term future of Exelixis, and we're anticipating the metastatic colorectal cancer launch, and that's been pushed back by three months. Just for those that might not be on top of the news, why the pushback, and does it change in any way, shape, or form how you're thinking about the launch and your allocation of resources to do that? Yeah. Again, we had an 8-K Friday morning. Basically, we set into PDUFA to March 3rd. Yep. I can't add more than what was in the 8-K, so I'd certainly refer you and listeners back to that. It's just the way it is, and hasn't diminished our interest or confidence in the opportunity. We are essentially launch-ready right now. As you know, talked about this earlier in the year, we added the full complement of reps to our GI sales team late last year, early this year to kind of pick up the slack on the NET side in anticipation of kind of getting that to a level where at the appropriate time we could then kind of move full force into CRC based on the STELLAR-303 data. That's still the plan. We just have an extra quarter to do it, which is fine. It's a really important first launch for us. Obviously, got to get through the regulatory steps, and we're committed to doing that. I still find very reassuring feedback in our market research. The STELLAR-303 data plays really well in market research, especially in the community. The juxtaposition between what we did in STELLAR-303 and what we're planning to do with STELLAR-316 this post-definitive therapy kind of maintenance approach almost from the standpoint of using the Natera technology to identify high-risk patients. STELLAR-303 and STELLAR-316 play together really well. We talked to investigators about one, and they bring up the other and vice versa. We're all about building franchises across multiple dimensions and certainly going into CRC with zanzalintinib across several different lines of therapy with the opportunity to bring in other molecules, other combinations, maybe earlier lines of therapy could be really attractive. So when we choose to go into an indication, we go all in and we're certainly very excited about being able to hopefully move the needle here for patients. Definitely. Zanzalintinib has been framed as its edge is a differentiated kinase inhibition profile versus other TKI/IO combinations. In practical terms, what does an IO-containing regimen win in third-line plus MSS colorectal, which has been a setting that's historically cold to immunotherapy? What are you hearing from KOLs? Yeah. So certainly, it is the exception to the rule, right? There have been five recent trials using checkpoint kind of platform therapies for third line plus non-MSI high CRC. Four of those have failed. Only one that worked was STELLAR-303 with zanzalintinib and atezolizumab. So the zanzalintinib scaffold, certainly based on some of the cabozantinib data we have generated in the past, but also recent data with zanzalintinib really reinforces the idea that zanzalintinib has the ability to impact all the key cell types in the tumor microenvironment, tumor vasculature, important immune cells, both on the positive side, inhibiting or inducing the positive CD8- positive T cells, and then impacting the negative regulators as well. So it is a full holistic approach in the tumor microenvironment. The fact that we saw a win in the ITT population and in the liver metastases population, I think is pretty compelling. It is the first step when you think about winning in a late-line, heavily disease-burdened population, and then you think about STELLAR-316, where you are looking to basically go after tumor that you cannot actually see, cannot visualize radiographically. It is a pretty compelling connection from one to the other. So lots of enthusiasm there, but data speaks for itself, and we are certainly very excited. We are really motivated by the feedback we are getting. Most of the patients with late-line CRC are treated in the community. They feel somewhat shut out or foreclosed from checkpoints based upon the vast majority of these patients with their genotype. So to be able to, at the appropriate time, bring this option to physicians and the patients is just the most rewarding thing. That is why we do this work, right? Sure. We are super excited to be able to get in that space. Maybe a little bit later than we had hoped, but that is fine. We will get there soon enough and be ready to go. Sure. I think you framed that third-line CRC plus setting is about 23,000 patients, a $1.5 billion opportunity. Yeah. I understand there's significant overlap with the current cabozantinib prescribing base. Can you give us a bit more granularity on your launch prep and maybe some idea how you expect the launch curve to look? Yeah. So look, we launch really well. The effort we have, and it's now really enabled by AI, can't go into the details from a competitive point of view. Yeah It is absolutely fascinating to me if you've got the right data. The data, again, I won't elaborate on, but it's data that has been curated and is really primed for picking, if you will. Look, we have the ability to really maneuver here very quickly. So we see this as an opportunity to really reestablish in a brand new therapeutic area for us our dominance when we choose to go into an indication. The combined sales, marketing, and analytics team is really working as one to be able to not go off independently, but to go in a very consolidated, aligned fashion in a way that will help us win and help us reach more patients. So I'm thrilled with the progress I've seen there and the launch prep that's in place, and we're really excited about being able to get out there. All right. Fantastic. Yeah. Moving on to zanzalintinib and RCC, I am particularly fascinated by the STELLAR-304 and the strategy around here in non-clear cell and how cabozantinib in clear cell and just the bleeding around that strategy over time. I guess to talk about specifics, how are you thinking about the sunitinib control, and what are you hoping to see on efficacy and tolerability against other IO/TKI benchmarks such as cabozantinib and nivolumab? Yeah. So unfortunately, non-clear cell RCC is just understudied. STELLAR-304 is the first global randomized pivotal trial that is being done in this space. Sure. The data for control arms, the data for potential experimental arms is all limited just by a lack of investigation, lack of investment in this population. There is lots of IST data, phase I data. It is old, it is new, it is historical, it is caveats all over the place. So it is actually challenging to actually look at and pick a number, if you will, for a control arm or experimental arm. We want the best data possible. We think we have got the right combination. And certainly excited about being able to do a study that arguably should have been done years ago. But again, we do the hard stuff because that is how you win for patients, that is how you generate level one evidence so that you can get into compendia. Sure. I think really effectively market once you get approved. Yeah, it's a small piece of a big story. Obviously, we have major player existing with cabozantinib and RCC, as you mentioned, with how we view building upon that. We want to have a new standard of care in the 2030s for all elements of RCC. Certainly, with STELLAR-304, the two studies we're doing with zanzalintinib and belzutifan with Merck, super excited about those. Great partner, great compound. Belzutifan is doing great out of the block, so to be able to be part of building on that story makes a lot of sense. We are, and I am personally very scientifically, and I would say clinically interested in asking a different question frontline. As you know, Whitesburg 12 did not work. The question is, my interpretation, and again, I haven't seen the data that will come out at ESMO in a few weeks, but doubling down on the VEGF pathway may not be the most productive way to go here. We're asking some very fundamental questions around can we craft clinical collaborations where we combine zanzalintinib with the appropriately designed and characterized bispecifics that involve unique MOAs. One end's got to be a checkpoint because we know that's important. The other end has to have an impact potentially on the RCC and maybe CRC tumor biology, but it can't overlap with, say, VEGF, because we know what that gives us in this setting, right? But that's an area where we're doing a lot of work from a BD exploratory point of view about what's out there. There's lots of assets out there with bispecifics that have a second handle that's unique, that gives us a different MOA hook that we're excited about exploring. But again, we want to dominate all aspects of that histology with the appropriate combinations and the opportunity to really extend duration of treatment, duration of action, because that's how you bring the maximal value to patients. Sure. Wonderful. We're still on STELLAR-304, so looking forward to receiving the data. But if we look back, zanzalintinib and nivolumab showed 63% in one line clear cell in STELLAR-002. If STELLAR-304 does land well in the harder non-clear cell population, how are you thinking about read-through to the larger clear cell opportunity? Yeah. Well, that would be defined by the data that we're looking at, right? How those connect, we can speculate on that. I'd rather just run the experiment and get the data- Sure -and then operate from there. I'm not a big modeler. I'd rather just generate the data. Certainly, the opportunity with the Merck trials that we're doing talked about first-line opportunities in terms of how we're going to survey what's possible. I think that's how you make big breakthroughs is by asking the question differently. We're just orthogonal thinkers, and I think that asymmetry of thought then translated into action has made us successful so far, and we'll continue to do that. Sure. Thank you. I have a competitive question here on zanzalintinib and in RCC. Moderna and Merck's neoantigen therapy hit an adjuvant melanoma with an RCC readout due 2H 2026 or 2027. Yeah. Positions zanzalintinib as a TKI partner of choice in RCC into the 2030s. If a cancer vaccine starts showing activity in kidney cancer, is that a threat to the TKI plus IO backbone or a combination partner zanzalintinib is in position? Oh, I think it's. Yeah. It's a great question. I think it's a combination partner for sure. We have an active IST with Dana-Farber looking at the Dana-Farber peptide vaccine program that they had science, I think, a year or so ago that Toni Choueiri and Catherine Wu kind of ran and discovered and published. So looking to add zanzalintinib on top of that, number one. But again, thinking about this orthogonal modality approach in terms of frontline, maybe it's zanzalintinib plus a checkpoint plus a cancer vaccine, too. The home run for us would be to move that from adjuvant to metastatic, right? Right. That's a big ask, just from a tumor burden point of view. But the question is could a molecule like zanzalintinib, which has such a rapid onset of action, has rapid tumorcidal activity, can release antigens very effectively, could that be the spark plug you need around that? So again, important question that you can only really answer clinically. But again, we have been taking a very broad look at how to be able to impact that frontline space, and I think PCVs in some shape, manner or form could be a very important part of that. Yeah. Sure. Thanks, Mike. Moving on to zanzalintinib and NET and STELLAR-311. If that wins, how much of that is expanding the NET opportunity versus transitioning existing cabozantinib patients to zanzalintinib? Oh, I think it's more the former than the latter. Again, the CABINET study was done against placebo. STELLAR-311 is going head-to-head against everolimus. So I think if you can beat existing standard of care, that has a big impact on the ability, not only for regulatory success, but then for making it truly the number one choice across the continuum. So again, it's a great study. We're enrolling globally. I'm super pleased with enrollment. We're way ahead of schedule right now. That's a good sign in terms of level of interest. I would say in general, the clinical team is just cranking right now. The meningioma study 201 is enrolling rapidly. Lots of interest there. We have a phase II in bladder cancer, post-pats of pembrolizumab, where there's basically nothing for patients when they progress. That's enrolling really fast as well. So I'm real pleased. As a metric of execution and success, seeing physicians and investigators put patients on trials that they're interested in is a really important sign, and we're seeing a lot of that right now. Great. Thanks, Mike. I want to allow some time for the early-stage pipeline. You've got four phase I programs all moving towards go, no-go decisions. Do you have a view or can you provide a view which reaches a decision first and what's the bar for advancing and how disciplined will you be about stopping the ones that don't appear? Well, we're very data-driven. We have to be. We're scientists first and foremost, and getting to a fast no-go is always beneficial from a, I would say, a pure financial point of view, but it's also just more satisfying. You don't want to pull the trigger too early and leave potential value on the sidelines. We navigate that pretty well. No, we're very effective at killing programs that don't need to go on. I would say that the timing of advancement is purely based on how we see the franchise potential of these molecules developing, whether that's monotherapy, whether that's in combination, whether that's early line, late line, across different tumor types. You've got to find the right dose. You've got to expand to kind of look for signals and then ask the question around combination approaches. A lot going on there right now. We're super diligent in terms of kind of running all these different parts to ground. Our ADC, our small molecule, our bispecific approaches are all really attractive. Now having the opportunity to, on a selected basis, combine with zanzalintinib, right? Yes. Even more attractive so that we don't need to go out and partner with a clinical collaboration for ADC or for a bispecific when we've got our own molecules in-house, too. Keeping that all together is actually a really good way to go. Look, it comes down to franchises, right? Do we have another franchise molecule in our early pipeline? Potentially, and our job is to find that as quickly as possible and then invest appropriately. There's external sources, too, that we're looking at very clearly and constantly. Again, that's the model, is to build a pipeline of franchises that will allow us to build value, outsize value for patients and for shareholders. Sure. Beyond those phase I programs and the two planned INDs, how are you thinking about balancing capital resources between internal innovation versus BD activities? Yeah. I would say capital allocation is always based on data, so I think we're agnostic and really don't think about it from the standpoint of where did the molecule originate from. It's what's the data that we either have or need to have to be able to get to a crisp go, no-go decision. If it's go, then how do we go faster and broader to be able to build these franchises? I think zanzalintinib is a good example of that, where we had hints of activity. We went into the first couple of pivotal trials that developed into the first wave of seven that are all going now, and the next handful, probably six to eight, are kind of lined up to go as well. It's allowing the team to ask the right questions around what's novel, what's kind of in line, what's kind of on the fringes. That's, again, value is created when you ask the question properly and then you execute well, and I think we've been able to do that over the last few years really well. So we've got a lot of interest there, and certainly the early stage pipeline, the INDs kind of pipeline, many of those molecules fail, and that's fine, as long as we have good matter that we're moving forward and investing in. We just need a small number of winners. We don't need a big pipeline of unknowns. I think that's the way we look at it, right? Wonderful. Okay. Well, we're just out of time. It's probably a perfect place to- All right. Awesome. -pass on the conversation. Thanks again. Thanks, Mike. It's great to see you. Thanks for coming. Appreciate it. Great to see you.