Exelixis Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Asthika Goonewardene - Truist - Analyst : Congrats on the beating the race here. It's very encouraging to see that -- since I'm restricting to just one question, I'll just focus on the Merck collaboration that was recently announced. Can you maybe give us some color on the diligence process that way into that deal? How extensive was it? I know it's hard to comment on that, but that will be useful. And the reason I'm asking is because Merck already has lenvatinib, a drug that were tolerability and half-life has been debilitating to its development. I just want to try to get a sense of how what they did when they did the analysis with zanza.

Question: Chi Meng Fong - Bank of America Securities - Analyst : This is Chi on for Jason. Thanks for taking our question. Congrats on securing a favorable ruling on cabo IP. One on business development. I understand you look to do the right view of the right valuation for the right asset within the GU/GI space. I'm curious if you have a preference for modality, whether it's small molecule, monoclonal bispecific or ADC and whether you have a feeling on the size of the deal, you will consider for BD?

Question: Silvan Tuerkcan - Citizens JMP - Analyst : Congrats on the beat. I would like to know about maybe that there's a gap between -- obviously, between your near-term growth with Canada and then you want to do with BD and then your earlier pipeline, but maybe talking about the earlier pipeline, your synthetic lethality assets. When can we expect some data there? And how have you -- what's your view on the space with all the competitive data that has come out recently here?

Question: Michael Schmidt - Guggenheim Securities - Analyst : Thanks for taking my question. Great to see reacceleration of cabo sales growth to double digits here in the second half of this year. Could you just comment on what's been the primary driver for that? And then on zanza congrats on the Merck collaboration. I'm just curious if you could comment on the two planned Phase 3 studies of zanza and belzutifan in RCC and how you think about positioning that versus cabo and the ARCUS HIF2 inhibitor longer term?

Question: Greg Renza - RBC Capital Markets - Analyst : Great. Mike and team, congrats on the quarter and also on the string of recent great updates. Mike, maybe sticking with zanza and we appreciate the layout of some of the peak opportunity longer term. That's great to see. Just wanted to ask if you could maybe elaborate a little bit further on some of the assumptions there, you certainly mentioned of the patient stacks, which is helpful that the differentiating data that you would expect to get to those numbers and even the unadjusted nature. But as we think about sort of those breakdowns with respect to GU and GI and head and neck, would be great. And certainly, related, Mike, what is the optimal pipeline constructed a portfolio construct for you having gone back -- having lived through the cabo days establishing and defending the competitive positioning is zanza at sort of that single asset to get that full white space and diversity of opportunity, the right way of thinking for Exelixis moving forward?

Question: Yaron Werber - TD Cowen - Analyst : Congrats on the quarter and then the litigation. So Mike, just the one thing that really caught my mind is your comment about potentially looking at late-stage deals. I think you've kind of commented that, but I think this is kind of something you're highlighting a bit more now, at least in our view. Am I thinking about this correctly? And are you open for acquisitions? Or is this like really in-licensing only? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 9:00PM, EXEL.OQ - Q3 2024 Exelixis Inc Earnings Call

Question: Jay Olson - Oppenheimer - Analyst : Wow, congrats on all the progress across so many fronts. Really appreciate the optimism around zanza an impressive $5 billion peak US sales potential. Can you comment on what gives you the conviction at this point in time to share your thoughts on the commercial potential? Is it related to the Merck collaboration or something else? And since you have global rights to zanza, why did you focus your outlook on US revenues? And how are you thinking about the ex US opportunity?

Question: Andy Hsieh - William Blair - Analyst : Thanks for taking our question. Really encouraged to see the durability of cabo's leadership there. Two questions, if I may. One for PJ. So there's a pet imaging agent for C89 for RCC that could get approval potentially next year. I'm just wondering how you view that potentially pulling some patients who otherwise would have gone undiagnosed -- and would that be a potential upside to your $10 billion TAM that you laid out for RCC. Second question has to do with also the $1 billion TAM that you mentioned for the small molecule NET. Just kind of back of the level of calculation, I think you're probably projecting anywhere from a five- to six-month duration. I'm curious if you look at the landscape, especially with like Afinitor label, some of the durations for earlier lines are basically 9, 10 months. So is it unreasonable to assume that if zanza entrenches earlier in the treatment landscape for NET, that duration will be significantly higher, given that it's a more indolent cancer? Thank you.

Question: Stephen Willey - Stifel - Analyst : Congrats on the quarter. So I know you previously characterized STELLAR-305 as a phased I think you're now kind of explicitly referring it to it as a Phase 3. So just wondering if you've completed that formal assessment of Phase 2 data to officially transition into Phase 3. And I guess if so, can you speak to those metrics that you're evaluating to make that decision and just whether you might be disclosing that data at some point?

Question: Ash Verma - UBS - Analyst : So I just wanted to understand the capital allocation priorities from here. You have a pretty sizable buyback program outstanding. Do you think this was the right focus when you were dealing with the IP uncertainty? But now that the IP decision is behind you, why not focus most of your capital deployment on the pipeline build out?

Question: Peter Lawson - Barclays - Analyst : Just I have a question around slide 9 that the guidance around zanza. So should we read that as kind of sounds a $5 billion in 2033 and then what carbo kind of essentially declined to zero?

Question: Luke Shumway - BMO Capital Markets - Analyst : It's Luke Shumway on for Etzer. For the Zanza colorectal cancer update next year, the primary endpoint is OS in patients without liver mets. How readily identify or patients without liver mets in the real world? And would that require a companion diagnostic? Amy Peterson - Exelixis Inc - Executive Vice President, Product Development and Medical Affairs and Chief Medical Officer This is Amy. Thanks for the question. So this is an imaging assessment. All patients, when they're diagnosed with advanced disease tend to get scanned from head to toe and that absolutely includes a liver scan, especially for patients with colorectal because of its predilection to metastasizes to the liver. So all patients with colorectal will have a scan of their liver. And it's pretty straightforward to identify whether or not there is a disease present in the liver or not. So it's an imaging. It's a clinical assessment. It's actually not a companion diagnostic, and it's readily utilized by physicians every day.

Question: Sudan Loganathan - Stephens - Analyst : Thanks for the time to share your quarterly results. So congratulations on all the great quarter and the recent progress on many fronts. With the breadth of clinical program opportunities for cabo and zanza in the GU and GI space, what indications or therapeutic technologies are left out there of interest when you're looking for assets during the BD endeavors? Are you specifically looking for assets primarily for novel combinations with cabo and zanza or monotherapy options out there to cover the GI indications?

Question: Chris Shibutani - Goldman Sachs - Analyst : Thank you, Mike. As you think about how you're staffing your teams and obviously monitoring how you're spending, noting that SG&A, the R&D has come down, what are the areas that you feel are going to be important to expand further? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 9:00PM, EXEL.OQ - Q3 2024 Exelixis Inc Earnings Call

Question: Jose Catanzaro - Piper Sandler - Analyst : I had one on the PK MIT program since it's now in Phase 1. So you mentioned on restorative and that program seems to have honed in a biomarker-selected population in endometrial and ovarian cancer. So maybe can you speak to your strategy around tumor-type selection and biomarkers that you may be using. And then you also mentioned potential cytotoxic combinations for that program. Wondering if maybe you could elaborate a bit more on that. Dana Aftab - Exelixis Inc - Executive Vice President, Discovery and Translational Research and Chief Scientific Officer Yes. Thanks for the question, Joe. This is Dana. I'll take that one. So yes, so XL495 as you're quite as a PM1 inhibitor, which has shown synthetic lethality in tumors that have increased cyclin E levels that can be driven by a number of different actual genetic biomarkers, including CCNE amplification and a few others. So we've certainly identified those biomarkers in our preclinical models. But we've also identified some other interesting biomarkers that we have not yet disclosed, which we're also quite excited about. So we are looking at all of these biomarkers in the Phase 1 study. We have also conducted quite a few combination studies preclinically looking at, as you mentioned, cytotoxics, but also a very expanded range of drugs that have direct or indirect impacts on generating sort of a replication stress type phenotype in the cells. And we have a lot of opportunities there. So we haven't really disclosed details of our Phase 1 program yet. We will do that at some point in the future. But until then, we're looking at quite a few different hypotheses in the clinic for both biomarkers and combinations.