Q3 2022 Exelixis Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the extra Lexis third quarter 2022 financial results Conference call. My name is Chuck and I'll be your operator for today as a reminder, this call is being recorded for replay purposes I would now like to turn the call over to your host for today Ms. Susan Hubbard Executive Vice President of public Affairs and Investor Relations.
Please go ahead ma'am.
And thank you all for joining us for the Xbox is third quarter 2020 financial results Conference call.
Joining me on today's call are Mike Morrissey, our president and CEO , Chris Senner, Our Chief Financial Officer P. J Haley, our executive Vice President of commercial sticky Goodman, our Chief Medical Officer, and Peter Lamb, Our Chief Scientific Officer, who together will review our progress for the third quarter of 2022 ended June 32022.
And subsequent events, including the two business development announcements made today.
The call today, we will refer to financial measures not calculated according to generally accepted accounting principles. Please refer to today's press release, which is posted on our website for an explanation of our reasons for using such non-GAAP measures as well as tables deriving these measures from our GAAP results. During the course of this presentation, we will be making forward looking statements regarding future events and the <unk>.
Performance of the company does include statements about possible developments regarding discovery product development regulatory commercial financial and strategic matters.
Actual events or is there.
Of course differ materially we refer you to the documents we file from time to time with the SEC, which under the heading risk factors identify important factors that could cause actual results to differ materially from those expressed by the company verbally and in writing today, including without limitation risks and uncertainties related to product commercial success market competition.
Regulatory review and approval processes.
In clinical trials compliance with applicable regulatory requirements, our dependence on collaboration partners and the level of costs.
Associated with the discovery product development business development, and commercialization activities and with that I will turn the call over to Mike Alright. Thank you Susan and thanks to everyone for joining us on the call today <unk> had a strong third quarter of 2022 across all components of our business. We saw continued growth of the cabozantinib.
<unk> in the U S. While expanding our diverse portfolio of clinical and discovery programs with new collaborations to build the <unk> product portfolio of the future.
Key highlights from Q3 include first.
We saw strong performance of the Cabozantinib business with significant growth in demand and revenue in the U S. Cabo <unk> maintained its status as the leading Teekay I for RCC Cabo franchise revenue, 39% year over year compared to third quarter 2021, marking its eighth consecutive quarter of growth.
Importantly, global Cabozantinib franchise net product revenue generated by Exelon and its partners were $497 million in the third quarter 2022.
Second we continued to advance the <unk> development pipeline with new potential Cabo indications and our growing pipeline of clinical compounds in additional candidates in non clinical development.
Important clinical updates for <unk> and <unk> E N. A highlight recent progress to lay the foundation for moving these compounds into late stage development.
Third this is business development activities continue to be a critical focus for <unk>. We're pleased to announce two new option deals with <unk> today, which highlight our strategic efforts to access clinical and or near clinical stage assets that have the potential to provide differentiated benefits to patients with cancer.
You'll hear more about these two deals from Peter shortly.
The option deal framework is ideal for us to employ as we can generate clinical proof of concept data with a wide range of experimental agents and then financially just financially disciplined manner and only pay for success, if and when that data is available.
With that please see our press release issued an hour ago for our third quarter financial results and an extensive list of key corporate milestones achieved in the quarter I'll now turn the call over to Chris.
Thanks, Mike for the third quarter of 2022, the company reported total revenues of approximately $412 million, which included Cabozantinib franchise net product revenues of $366 $5 million <unk>.
<unk> net product revenues were 361 4 million and included approximately $13 million in clinical trial sales.
Gross to net for the Cabozantinib franchise in the third quarter of 2022, with 26, 1%, which is lower than the growth that we experienced in the second quarter 2020.
This decrease in gross to net deductions in the third quarter of 2022.
Primarily related to lower Phs, Medicare part D and co pay assistance.
Our cosmetics trade inventory increased slightly when compared to the second quarter 2022 to approximately $2 three weeks on hand.
Total revenues also included approximately $45 million in collaboration revenues, which includes approximately $30 million of royalties earned from Ipsen and Takeda on their sales of Cabozantinib.
And finally, Chris.
Nickel trial sales have historically been choppy between quarters and we expect this to continue in future quarters.
Our total operating expenses for the third quarter, 2022, or approximately $329 million compared to $336 million in the second quarter 2022.
SG&A expense was the primary driver of the decrease in total operating expenses, which was primarily related to lower legal and employee related expenses.
Provision for income taxes for the third quarter of 2022 was approximately $19 million compared to approximately $18 million for the second quarter of 2022.
The company reported GAAP net income of approximately $73 million or 23 per share on a fully diluted basis for the third quarter 2022.
The company also reported non-GAAP net income of approximately $102 million or <unk> 31 per share on a fully diluted basis.
non-GAAP net income excludes the impact of approximately $29 million of stock based compensation expense net of the related income tax effect.
Cash and investments for the quarter ended September 32022 was approximately $2 $1 billion. This level of cash and investments supported by our ongoing cash flow from operations provides extra left us with flexibility to invest in internal discovery activities.
And also allows us to pursue external business development opportunities to expand our pipeline.
And finally, turning to our financial guidance for the full year 2022.
Given where we are in the year, we are tightening our revenue guidance and we are increasing our R&D and SG&A expense guidance. The increase in R&D expense guidance is primarily to reflect the two deals we announced today an increase in SG&A expense guidance is primarily related to increase in stock based compensation.
Please see slide 12 of our Q3 earnings presentation for further detail that I will turn the call over to P. J.
Thank you Chris the third quarter of 2022 was a strong quarter for Cabozantinib as we continued to build on the significant momentum of the franchise.
The team continues to execute at a high level has resulted in Cabo <unk> continuing to be the number one prescribed <unk> in RCC and second line HCC.
Furthermore, Cabo medics total prescriptions were T. Rx has now grown for eight consecutive quarters.
Demand growth is being driven primarily by the longer duration of therapy for patients on Cabo <unk> in combination with <unk> in first line RCC.
Prescription trends remain strong in Q3 2022.
Year over year <unk> growth in Q3, 2022 was 23% relative to Q3 2021.
Given the clinical data from the Checkmate <unk> study, we anticipate the first line patients to receive therapy for approximately a year and a half on average and driving significantly longer treat treatment duration for Cabo medics.
Turning to the Tpa market basket of Cabo medics, and lighter Sutent votary bema.
<unk> T Rx market share has increased every quarter since Q1, 2021 and its share in Q3 2022 was 38%.
As we've discussed previously first line RCC market is very competitive and we're pleased with the performance of the Cabo <unk> in combination with the whole amount in this setting.
Furthermore, we are still not seeing any significant competitive impact on our share.
Uptake in first line RCC setting, it's broad across clinical risk groups and practice settings and prescriber experience to date continues to be very positive.
Additionally in contrast, the data from public sources are internal data showed that Cabo medics at the highest level of new patient starts ever in Q3.
Furthermore, within the quarter, we saw particular strength.
<unk> demand and new patient starts in September .
We view this as encouraging and it aligns with the feedback we received from customers about a significant level of vacation and travel this summer coming out of Covid.
We believe all of this taken together positions Cabo medics for continued growth moving forward.
Looking beyond the six current U S indications for Cabozantinib, we continue to plan for lifecycle expansion opportunities as additional phase III studies read out in the near future.
We look forward to having the opportunity pending data and approval for Cabo medics to many more patients in need of additional treatment options. Our team remains highly focused and motivated to compete every day to bring the benefit of Cabo medics to all eligible patients as we continue to build the franchise in certain patients.
That I will turn the call over to Vicki.
Thanks P J.
Today I will provide a brief update on the progress of our clinical stage pipeline as well as our east coast expansion in the greater Philadelphia region.
I'll begin with an update on our Cabozantinib Registrational trials in early July we reported positive top line results cosmic.
Cosmic 313, evaluating cabozantinib in combination with Nikola Mabin Epilemma map in intermediate and poor risk renal cell carcinoma.
These data were presented by Dr. Tony Cherry in a presidential symposium at ESMO.
And the primary analysis of progression free survival Cabozantinib in combination with Nikola, Matt, but if a lemon that significantly reduced the risk of disease progression or death, compared with the combination of Nicola.
Matt.
With a hazard ratio of 0.73 and P value of 0.01.
Overall response rate was 43% in the triplet arm and 36% in the doublet arm.
A prespecified interim analysis for the secondary endpoint of overall survival did not demonstrate a significant benefit for the cabozantinib arm compared to the control arm and therefore, the trial will continue to the next analysis of Iowa.
The safety profile observed in the trial was reflective of the known safety profiles for each single agent as well as the combination regimen used in the study and no new safety signals were identified.
Following discussion with the FDA, we do not intend to submit a supplemental new drug application based on the currently available data and plan to discuss the potential regulatory submission with FDA. When the results of the next OS analysis are available.
For context, one the phase III pivotal study sponsored by Roche, which is evaluating cabozantinib in combination with a tenant with a map versus docetaxel in patients with metastatic non small cell lung cancer, who had been previously treated with an immune checkpoint inhibitor and platinum containing chemotherapy.
The final analysis of the primary endpoint of overall survival is on track to occur before the end of this year.
Contact Joe to our phase III study in combination with the peso was a map in metastatic castrate resistant prostate cancer, we are projecting that enrollment will be completed in the first half of next year.
I would also like to share a brief update on contract of three the global phase III pivotal trial evaluating cabozantinib in combination with the Tesla lithium map versus Cabozantinib alone in patients with previously treated advanced renal cell carcinoma.
For guidance from Roche the study sponsor topline data is now anticipated in the first half of 2023.
Now turning to progress on our pipeline molecules.
The first clinical data for XOMA 92 from the stellar or one dose escalation cohorts were presented at a poster at ESMO.
These data showed early evidence of clinical activity, particularly in heavily pretreated patients with RCC, including many who had previously received cabozantinib and demonstrated a manageable safety profile with no unexpected toxicities, providing support for the recommended dose of 100 milligrams.
In June we initiated the first phase III study of <unk> two in non MSI high colorectal cancer, and we expect to initiate an additional phase III trial this year.
Hello, 92 is also being explored in combination with several checkpoint inhibitors in Io combinations.
In October we announced that we had expanded our partnership with BMS to study the combination of XL O nine two with a fixed dose combination of the Io doublet, the whole of map and rollout with map.
We look forward to evaluating this novel combination across multiple solid tumors.
We also continue to evaluate additional potential combination opportunities with novel agents.
S. B O O two our first antibody drug conjugate, which targets tissue factor without interfering with the coagulation pathway in preclinical models continues in dose escalation.
In October 2022, we announced promising initial dose escalation results from Joel one O. One the ongoing phase one trial evaluating <unk> in patients with advanced solid tumors during the antibody drug conjugates poster session at the 34th E N a symposium.
The data demonstrated that <unk>, two was well tolerated at multiple dose levels.
Pharmacokinetic analyses showed that ex vivo to total antibody and intact a D. C. P K were similar.
<unk> X P O. It was stable after infusion. Additionally.
Additionally, at the two milligram per kilogram dose X P. L. O two demonstrated approximately two fold higher exposure with one hence the free payload relative to levels seen at the same dose so to map it out.
As of the data cutoff no bleeding events are corneal toxicities were observed at doses of up to two milligrams per kilogram we.
We expect to complete dose escalation and move into the multi cohort dose expansion phase later this year.
Dose escalation is ongoing for the combination of X T O two with Nikola map and we expect to initiate dose escalation in combination with Bevacizumab before the end of the year.
Our phase one study of excel one of two our oral CDK seven inhibitor is expected to move into both single agent and combination expansion cohorts. After completion of the ongoing dose escalation and determination of a phase two deaths.
Preliminary data from dose escalation have been accepted for publication as opposed to or at the upcoming San Antonio breast cancer Symposium in December .
Finally, we are making progress with hiring to our site in king of Prussia outside of Philadelphia for roles, both within and outside of development as well as growing our existing presence at headquarters in Alameda.
Within the development organization key hires include three executive level leaders, who are based at King of Prussia, and we've seen an uptick in east coast based candidate awareness and enthusiasm for the new site.
We continue to seek to attract and retain the best talent across both coasts to meet the needs of our growing pipeline.
We also continued to progress plans for a long term build to suit space of over 200000 square feet mixed office and lab space close to our intermediate term offices in King of Prussia.
I am pleased by the progress we are making to create a bicoastal presence across two biotechnology hubs operating as one team focused on the singular mission of developing medicines to improve the lives of patients with cancer with that I'll turn it over to Peter.
Thanks Vicki.
As we've discussed on previous calls we've been actively engaged in a process of assessing late preclinical and early clinical efforts with the aim of identifying multiple multiple opportunities to invest in.
Since failure rates for oncology drugs remain high food strategy is to make multiple smaller auction investments before clinical proof of concept rather than making more substantial investments based on inadequate or inconclusive clinical data.
The deals we announced earlier today with Brexit and so irobot represent the initial outcome of this strategy.
Starting with Zyprexa Gabelli.
Well it is being mechanisms for preferentially delivering cytotoxic compounds to two months, it's been a long standing goal with antibody drug conjugates, representing the most validated and successful mechanism for doing this.
The ADC approach relies upon having an antibody to a cell surface protein that is exclusively or preferentially expressed on tumor cells, and then covalently conjugated a cytotoxic payload to that antibody.
But an antibody drug conjugate binds to the tumor cell expressing the target protein. It is an internalized and the payload is released resulting in tumor cell killing.
Since normal tissues have low or no expression of the selected target they do not pick up the payload minimizing side effects.
The success of this approach depends upon appropriate target selection and with any target. There is variable levels of expression, both within and between tumor types, leading to some heterogeneity of clinical response.
In addition, the stability of the patch payload varies between the Adcs with liberation of free payload contributing to a adverse event nonetheless.
Nonetheless development of Adcs has undergone a renaissance with multiple approvals over the last few years <unk> has invested significantly in the area, both internally and via multiple collaborations to develop our own pipeline of differentiated adcs.
The slight breakthrough agreement announced today around <unk> 12 represents a further extension of this general approach and relies upon a novel tumor targeting mechanism.
So Brexit, we're developing a novel peptide equity can conjugate PBX 12 selectively inserts into tumor cell membranes as opposed to northern cell membranes do deliver ph conditions present in the tumor microenvironment.
It is well established that many tumors have an altered metabolism that results from them, excluding lactic acid into the tumor microenvironment, thereby reducing the local ph.
The peptide component of <unk> 12 is designed to be sensitive to ph.
Adopting a disordered structure under normal physiological ph, but assuming an unwanted alpha helical structure at lower ph, which allows it to insert into the tumor cell membrane and bring any attach payload with it.
And Phebe X 12, the payload is the potent topoisomerase inhibitor equity can which gets released inside the tumor cell by Cleveland with iPhone five bond.
So the peptide.
In preclinical models <unk> shown that following administration of <unk>.
Both <unk> 12, and <unk> can accumulate in tumors, where there's extra T can levels in bone marrow cells remain very low.
Notably this is a tumor selective payload delivery mechanism.
Yes.
That does not depend on expression of tumor antigen. Unlike the standard ADC approach so it could be broadly applicable.
Vessel.
PBX 12 excuse.
Excuse me.
Yes.
<unk> 12 is currently in phase one dose escalation trial that were exploring a number of dosing schedules.
Data from this trial was recently presented in the plenary session at the Triple meeting in Barcelona.
So it breaks were explored three IV dosing schedules.
Five consecutive days every three weeks.
Three consecutive days every three weeks and once weekly.
Data from 33 patients was presented.
The most frequent treatment related adverse events with Gi related cytopenia.
<unk> elevation.
This is consistent with the known profile of exiting Canada.
Best response in the 18 evaluable patients with a Fiat in ovarian.
Our indirect and 13 patients with stable disease, including the second EPR embraced.
Initial tumor biopsy assessment should deliver you'll see big swells and exit you can into the tumor.
Since escalation continues in the once weekly cohort and cohort expansion is ongoing with 45 millimeter squared three consecutive days and weeks weeks cohort.
Yeah.
Yes.
We have an option to license <unk> 12, after reviewing the totality of the data from the completion of the ongoing once weekly dose escalation trial.
Full phase won't be monotherapy expansion cohort of about 40 patients in each major solid tumor types at the recommended phase two dose.
And completion of a dose escalation combination cohort with pepper Elysium health.
All development will occur under a joint steering committee.
Okay moving on to the <unk>.
The agreement this represents an expansion of our approach to addressing the myeloid macrophage component of the tumor microenvironment tumor associated macrophages, along with other myeloid cells represent a significant and often major component of the solid tumor microenvironment and as prominent in tumors, such as colorectal cancer ovarian cancer.
Cellular cancer renal and breast Carcinomas for example.
It's well established that these cells contribute to a two N immuno suppressive environment in these tumors. We have a number of ongoing programs that are aimed at addressing this aspect of tumor biology, including XP <unk> four or PD L. One CD 47 by specific currently in early preclinical development and our collaboration with bio event aimed at.
Identifying antibodies against novel myeloid targets.
Yes.
Preferentially in the tumor microenvironment.
With Sorel, but provides us with another potential way of addressing this potentially impactful mechanism of action.
<unk> is developing a monoclonal antibody <unk> 18 O five targeting serve alpha one of the Lai hands preceding 47.
This has been a pathway of interest to us and others for a number of years and there is now a degree of clinical validation for blocking the pathway along with an understanding of some of the issues associated with various therapeutic approaches.
The CD 47, sharp alpha axis, modulates macrophage, phagocytosis and antibody dependent cellular phagocytosis.
Depression of CD 47 on tumor cells inhibits backup backup.
Atlas intelligence of tumor cells, and thereby limit tumor antigen presentation by macrophages contributing to immune suppression.
Blockade of <unk> hundred seven itself, which has been the favorite approach historically leads to anemia and thrombocytopenia due to CD 47 expression on red blood cells and platelets. This also resulted in a significant PK sink effect.
In contrast to serve alpha expression is restricted to primary to myeloid cells and antibody targeting sharp alpha do not suffer the same PK sink effect or costly and opinions.
This has been validated clinically in phase one with an anti <unk> alpha monoclonal antibody being developed by Boehringer Ingelheim.
This antibody has limited PK sink does not cause.
Cytopenia or anemia, and then Shawn preliminary evidence of clinical activity, including a PR in HCC as a single agent and three P ours in combinations with a checkpoint inhibitor.
<unk> 18 O five.
Similarly shown limited PK schenken, no anemia thrombocytopenia in preclinical safety studies.
It is important to note that there are 10 served off of wheels in humans with their frequency is bearing by population and antibodies vary in their ability to bind different of wheels, <unk> 18, or five binds to <unk>, meaning that patients can be treated without being genotype in contrast to the <unk> antibody, which binds tightly to <unk>.
Only the B, one allele, meaning that patients must be genotype to assess which allele they can carry prior to treatment.
In the case of the <unk> antibody patients must be homozygous for the V. One allele to enroll and are currently recruiting clinical trials.
A D U <unk> five has also been optimized to preferentially bind to sharp alpha versus other family members, which may enhance its ability to stimulate immune cells.
This is another point of differentiation from CD 47 targeted therapies, which block all interactions with all sharp family members.
Finally, <unk> five is an E G. Two antibody, which has been shown to allow maximum phagocytosis.
In vitro assays and.
In summary, the antibody has been constructed in a way that maximizes the potential benefit for black and sharp Alpha CD 47 checkpoint, while minimizing potential toxicities.
<unk> for treatment of the broadest population of appropriate patients. We believe this represents a differentiated and potentially best in class approach to this pathway.
<unk> are on track to file an IND for this asset in Q1 2023.
We have an option to license <unk> 18 O five after completion of our single agent dose escalation cohort a single agent expansion cohort completion of a dose escalation combination cohort with embolism Mab and a 60 patient Simon two stage Pember limited pember Elysium and combination expansion cohort in major solid tumor.
Types.
All development.
Will occur under a joint steering committee.
We're happy to have completed these two agreements and are continuing to assess a broad variety of late preclinical and early clinical assets with the aim of making additional investments in the future to provide further options for expanding our clinical pipeline.
So as you heard on the call today, the exel team continued to execute across all components of our business in the third quarter with significant progress across our business development clinical development and commercial activities as we enter Q4 of 2022, we're excited about the potential for the multiple growth drivers ahead of us, including our Cabo development.
<unk> and expanding pipeline of diverse clinical opportunities that we hope will enable <unk> to help even more cancer patients.
I'll close by thanking the <unk> team for their individual and collective efforts to support a range of discovery development and commercial activities.
And to give our broad team focused on business development activities are huge but for their great work and collaborative efforts over the past few years and certainly the last few months to get the same Brexit and threw up in deals over the goal line.
This is development is a team sport here next Lexus and I'm proud of the closely aligned team from BD R&D legal finance commercial CMC and public affairs coming together to move these important initiatives forward individually and collectively our team embodies the vision urgency and expertise.
To move excel towards becoming a multi product enterprise and expand our reach to serve cancer patients across the globe. We look forward to updating you on our progress in the future. Thank you for your continued support and interest in extra Lexus and we're now happy to open the call for questions.
Please go ahead. Thank you.
We will now begin the question and answer session.
To ask a question you May Press Star then one on you touched on it.
If youre using a speakerphone please pick up your handset before pressing the keys and twist. Your all your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
Okay.
And the first question will come from S. Speaker Buena War Dean with <unk> Securities. Please go ahead.
Hi, guys. Thanks for taking my questions and congrats on a nice quarter.
Just a couple of questions simple ones here.
Two P. J I was just wondering if you could quantify the gross to net.
The impact for the quarter and maybe.
How much the slight increase in inventory contributed to sales.
Vicki I was just wondering if you could maybe give us.
Given the run rate of events when we could expect the next look at OFC take place. The Cosmic 313, and then just one off my congrats to the Biz Dev team for the deals that were announced today in particular this deal CBS 12 looks quite interesting and the recent data just wondering when we can expect the next update on the dose escalation.
And when do you expect the dose escalation to complete thanks, okay. Thanks.
Thanks for asking lots of questions. There so let's start with Chris on the inventory and gross to net and then we'll go to Vicki and then Peter Thanks, Mike So that took us from a gross to net perspective as I mentioned on the call where we came in around 26, 1% for Q3. If you go back to Q2 were around 28, 2% overall for the Cabozantinib.
And our franchise.
It's come down as you as we've come through the year. It was higher in Q1 and come down in Q2 and come down in Q3 and so.
As I mentioned on the prepared remarks too that was that decline was really driven by lower Phs Medicare part D. And then also co pay assistance.
As we talked about the year previously I said, we think will come in the range to come in around 29% I think we're probably now thinking we're going to come in the range of 28% to 29% for the year.
From an inventory perspective.
This quarter, we came in around $2 three weeks on hand last quarter were around $2. One weeks on hand, so its about a day and I'm not going to quantify quantify it from a sales perspective, but that's it's not a significant increase by any means.
Okay. Good thanks Vicki.
Yeah, so with respect to the overall survival from cosmic <unk>.
Just a quick reminder, on the study design here. So this is the triplet combination is nivola mab and nimble Linden lab cabozantinib versus a control.
Control arm of Nikola Mabin, Epilemma, Nab, which has become.
Standard of care on the basis of demonstrating an overall survival benefit relative to Sunitinib and.
In intermediate and poor risk patients and as you may recall from the pivotal trial of new billing at the Checkmate <unk> 14 on the updated survival data demonstrated a survival median survival on the order of about four years. So.
Not unexpected that at this time with the primary PFS analysis, the overall survival would still be immature there.
The next analysis will be event driven.
And so we'll be providing updated guidance.
As we get a better sense of when those events might come in for all of us.
There was a question in there I believe on dose escalation was at X P. O L. Two notch records.
Yes. It correctly, yeah that was a question about cyber extra Peter you want to take that Oh I'm sorry.
Yeah. Thank you yeah. Thanks, Thanks for your comments on <unk> 12.
It is a pretty interesting and differentiated mechanism I mean, obviously, they just presented the initial data at the plenary session in the Triple meeting. So we'll leave it soon to say when the next data release will be in.
Dose escalation is ongoing so it's kind of it's hard to predict.
When that will top out when when will be in a place to have a recommended phase II dose. So so stay tuned we're certainly eager to see the next set of data as well.
Great. Thanks, guys.
You bet Africa.
The next question will come from Michael Schmidt with Guggenheim. Please go ahead.
Guys. Thanks for taking my questions I had a couple of pipeline question. One also on the <unk>.
<unk> two data from the Triple meeting so I mean, the ADC look pretty safe.
Do you have any plans to go higher than the the two milligram per kg.
Dose cohort just in context of the safety profile and.
How do you think about the potential of this antibody in and other cancers outside service call. For example, perhaps where a T F. Maybe express and then I had a follow up question.
Hey, Brett do you want to take that one.
Sure so dose escalation with XP O O. Two continues at this point.
We do have broad plan to look at this across a number of different solid tumors, including outside of cervical cancer.
Mono therapy and potentially in combination with both Nikola Mab.
And with Bevacizumab and you.
You know among the.
The dose expansion cohorts in the in the current study include tumors, such as non small cell lung cancer head and neck and breast cancer among others. So again, we're going to see.
Tablets, it does move quickly into expansion cohorts.
Where we demonstrate activity and then plan to move quickly into Registrational trials. We do believe that this asset again has some potential advantages over the competition given that the impact in D. C is stable, we're seeing low levels of of.
Free payload.
As far as that seems to be playing out in terms of a potentially differentiated safety profile and may impact, what we see with efficacy as well as well as what seems to be reduced.
Reduced bleeding risk with no bleeding events haven't been seen at the time of the data cut off. So we are we're excited about this asset and eager to move it into expansion and ultimately registrational trials.
Okay, great. Thanks, and then a question on XO, one or two.
CDK <unk> inhibitor, just wondering if you could help set expectations for the scope of this update here at San Antonio and.
Did that dose escalation, perhaps biased towards recruiting breast cancer patients.
How should we think about potentially achieving single agent activity with his target if there's an area where you might.
Consider implementing biomarker selection noises something that could have a broader potential without a selection in breast cancer. Thanks, so much.
Yeah, so on the X L. One O two again it will be presented at the San Antonio.
Breast cancer symposium in about a month.
As far as the details on the content and I'd say stay tuned both for the abstract in the presentation, but it will be data from dose escalation cohorts.
Thank you.
Thank you Michael.
The next question will come from Mike King with E. F. Hutton. Please go ahead.
Hey, guys. Thanks for taking the question and let me add my congratulations on a nice quarter.
I'm wondering if you could talk a little bit more about your.
Optimism about contact of one because it just seems to me if you mentioned it in every call, but I wonder what your thoughts were.
Thoughts you could share with us on the probability of success here, because even a small piece of the second line non small cell market is a pretty big commercial opportunity and that could create a interesting inflection for.
For Cabo I would think so I just wonder if you could expand on it without given.
Too many of those secrets away.
Sure happy to.
Oh, Okay, yes, so so contact one again this isn't a post checkpoint inhibitor post.
Platinum chemotherapy setting in non small cell lung cancer patients without an actionable mutation.
It's an area of huge unmet need right. There's no well defined standard of care Docetaxel is a common treatment and you know as we know from even the pre checkpoint inhibitor days response rate. There is you know on the order of 10% and survival median overall survival expectation is less than a year. So it really it isn't it.
[noise] area of unmet need.
And here, we're evaluating whether cabozantinib, which.
Can induce a more immune permissive environment might help overcome some of the resistance to checkpoint inhibition in this case with the Tesla lithium mab and whether that combination can improve overall survival again in a setting where the survival expectation is quite low. So we do look forward to these results, which as I said will be.
We will have in hand before the end of the year.
Are you in charge of the data release or is that a roche decision.
It is a Roche sponsored studies that we're working very closely with Roche on.
How and when those data will be released.
Thank you.
Mike.
Yes.
The next question will come from do Kim with Piper Sandler. Please go ahead.
Great. Thanks for taking my questions and congrats on the quarter.
Just trying to understand the updated guidance you raised the lower end of the range, but it's still suggested a decline in net product revenues quarter over quarter. Just wondering if it's because of the choppiness of clinical trial cells that you see do you exclude that potential.
To clinical trials or is there something else you're seeing in demand or gross to net that keeps guidance at the lower level.
Yes. This is Chris.
So the guidance the tightened guidance range is $30 75 to <unk>.
One more point through 75 billion to $1 4 billion.
You look at that range versus where we are year to date.
The top end of that road the middle to the top end of that range gives you gives you growth for the next quarter and we continue to see strong growth coming out of Q3 as P. J mentioned in September we we ended September and a very strong fashion from demand.
Patients' perspective.
There's also a lot of variables around gross to net that we have to we have to take into account, but overall you know.
The top end of the middle to the top end of that range expects growth.
Okay great.
And then regarding your newly announced deals.
It looks like the platform technology drove the Brexit deal and the target.
Surpass surpass drove the Roper deal is that how you think about it and do you prioritize potential deals by a certain novel drug technology or looking at clinically validated targets.
Yes. Thanks, Thanks for the question.
Yeah.
I think I somewhat agree with your characterization I think we would view the breakfast <unk> 12, it's really a first in class a type of asset.
Yes, let's comment in the script, it's really an extension or expansion of.
Kind of overall ADC approach, but importantly in a sort of tumor target agnostic way you don't need to express a particular tumor target in this in this case, which means it could be broadly applicable.
So I wrote both and it was really more of a best in class opportunity. Obviously, there's been a fair amount of activity around the whole CD 47 soap alpha.
Macrophage checkpoint area are much more on the CD 47 side.
This particular asset looks really.
Really attractive to us just because we thought it was very well thought out in terms of maximizing the potential full blocking this checkpoint from.
From a <unk> point of view from a potential efficacy point of view and from an addressable patient cohort patient population point of view. So yeah in general we look broadly, but a lot of things small molecules and biologics.
I wouldn't say, we bias more towards <unk>.
This is a platform and probably see us do a mixture of things going forward.
Great. Thank you.
You bet. Thank you.
The next question will come from Sylvie, Turkey with JMP. Please go ahead.
Well, thank you very much.
My questions and apologies for my voice and congrats on the quarter.
I have one question.
You mentioned that you have seen the highest levels of new patient starts were supposed to what's available on public sources could you. Please comment on that and what does the new patient starts in frontline RCC, mainly in what we know about the time on treatment.
Now in frontline renal cell versus what we've seen in the trial. Thank you very much.
Yeah. Thanks for the question Silvan. This is P J.
Yes, we are really pleased with the quarter.
As you pointed out.
Maybe just highlight three things in the quarter.
In terms of its strength, we have the highest ever net product revenue the highest ever demand and.
As you mentioned the highest ever new patient starts.
What we're seeing there primarily is those new patient starts are driven by.
Renal and specifically primarily first line.
Combination use with <unk> and we've seen that in multiple.
Market share data that we have.
With regards to that that does give us.
Yes. It is encouraging as I mentioned also with the fact that we had good momentum in September .
Coming out of the quarter.
With regards to.
Sort of the duration of treatment as I mentioned in the prepared remarks.
As our mix has shifted over the last year.
Year, and a half seven quarters with the launch of 90 or in first line.
Combination utilization, we're seeing that mix shift in our duration increase over time, what we saw in the 90 our trial is patients.
PFS of the ballpark of a year and a half.
It's really too early to get a good.
Read on duration for those particular patients commercially because we just haven't been on the market long enough.
And duration is something you have to have a lot of data and look at retrospectively, but.
I'm very pleased with what we're seeing the team is executing.
At a very high level, we're happy that things are opened up with regards to offices and medical meetings et cetera. So.
We're very engaged and excited to continue to help patients.
With Cabo medics.
Great. Thank you very much.
Okay, you bet tell them feel better.
The next question will come from Jason Your Berry with Bank of America. Please go ahead.
Hey, guys. Thanks for taking my questions.
One quick follow up on the Brexit deal.
The language is there is there a phase one contingency regarding the upfront and moving forward with the transaction just curious if you can elaborate on that.
Commentary and I would assume that the next steps would be similar to what <unk> communicated which was a phase II ovarian breast and non small cell lung cancer as next steps, but just curious if you can elaborate there and then just the other question are you still expecting a ruling in the Cabo patent trial for that first case.
In the near term I think fall 2022 was the last communication, but just kind of curious anything that we should know there. Thanks.
Yeah with respect to Zyprexa.
The way its structured right.
And upfront payments and then.
There's a certain amount of clinical work.
It needs to be completed up to the point at which we can exercise.
We have the ability to take the asset the asset on.
Commented, we still really in dose escalation on one of the schedules, which is the once weekly schedule. So that dose escalation will continue there's a dose being expanded on one other schedule, which is kind of the three consecutive days every three week schedule and then it was again provision for I think it was four expansion cohorts.
In major solid tumor types at a recommended phase II dose. So that's basically the package of clinical information that would be.
Collected upfront auction plus a dose escalation in combination with member Elizabeth.
Yeah.
Yeah.
And Jason it's Mike on the on the end up front, yes, we still expect ruling sometime this fall.
To be determined by the judge so stay tuned.
Alright. Thanks.
Yes, thanks, Jason.
The next question will come from Andy <unk> with William Blair. Please go ahead.
Yeah.
Oh, great. Thanks for taking my questions and congratulations on all fronts strong commercial Cabo sales clinics.
Clinical update and then <unk> of course.
Peter I hope you're feeling okay.
Hope you feel better soon.
Got a question about the CBS 112.
So I remember from the the Triple meeting the data.
It was mostly generated from.
Either the.
Three consecutive day in five consecutive day schedule.
And as you think about moving to the weekly schedule just curious about the the PK profile.
For that though.
<unk> schedule.
For the.
Pete ph.
Mike tumor microenvironment is pretty interesting.
I am curious if theres a way too.
Either through a biomarker or potentially F 18 F D G to really select for patients who might.
Benefit from this kind of therapy.
Yes, Thanks, Andy.
Just to your questions.
Yes. So there was there was data presented on the five consecutive days every three weeks and then three consecutive tank will be three weeks and I think the first dose which is 20 Meg for me to stand on the once weekly dose I think what was encouraging there.
Looked at the data you would have seen that the partial response in breast was actually on the once weekly dose schedule.
Okay.
By that.
The overall PK for this molecule is pretty interesting what we understand from the preclinical data is you gave a dose you start seeing accumulation.
<unk> 12 and <unk>.
In the tumor with tumor microenvironment, and then a release essentially of extra T Campbell builds up over time.
How that's going to play out clinically of course is still being analyzed they did present a little bit of data that was encouraging certainly sharing.
Pretty reasonable free extra T can levels in some in some tumor biopsies.
Was there another question I think the words right.
Yes.
Yeah, Yeah exactly biomarker, yes.
So generally speaking the approach does rely on the tumors being metabolically active which.
Typically in this case being glucose utilizing although not completely unnecessarily so in principle FDG pet could be used.
However, I would suggest that this is such a broad phenomenon that it's probably not necessary to preselect patients.
Got it okay.
I also have a quick question about maybe how youre thinking.
In terms of XL to the ability of salvage Cabo pretreated patients in RCC I guess.
We probably saw that in HCC, where.
Ordinated Sorafenib was able to salvage sorafenib patients I don't know if you have any comments on that phenomenon as well.
Yes.
Yes, it's certainly interesting, we certainly seen activity with <unk>.
Post cabozantinib in that setting.
And.
The exact reason for that I think mechanistically owned entirely clear.
Sometimes it's a phenomenon as you rightly point out that's been seen with a number of not just <unk>.
You kind of have a kind of risk period of time off you can get re responses.
If you re dose.
Not completely fully understood.
Certainly encouraging from a clinical activity point of view.
Great and maybe perhaps last question for P. J.
Oh, two very encouraging signal no neuropathy or bleeding events are very very very young.
After a great start just maybe for a physician feedback standpoint, do they prefer to kind of push it does and with very hands on.
Ocular toxicity management protocol, or perhaps a little little bit hands off and.
By providing just intrinsically safer profile just curious about how you think about it from a product development standpoint.
Yeah, Andy Thanks for the question I think at this point, obviously with our our products. So early in development I'll just speak generally about.
Kind of what we see across the board in different.
Tumor types and Mark I think really what it would come down to is the specific.
Specific.
Details of the toxicity profiles of the.
The competitive environment, so to speak or the standard of care in the in that particular, setting. So I think it's really hard to generalize but.
Obviously generally speaking in oncology where.
There are many options and where is the unmet medical need is high.
Physicians are willing to tolerate greater.
Toxicity profiles, but.
Really too early I think to.
To take too much about that kind of have to get data and understand the settings that were talking about in detail.
Okay great.
Thank you so much.
Okay you bet. Thank you.
The next question will come from Jay Olson with Oppenheimer. Please go ahead.
Oh, Hey, congrats on the quarter and thank you for taking the questions.
Can you talk about what we should be looking for in the stellar O two data at <unk>.
As you build on the expectations that were set with the initial stellar one data you presented at ESMO and maybe any.
Any comments you have on the next pivotal study indications for excel at 92.
Yes, so stellar O two still in early days. So we are in dose escalation for the combination with Nikola Mab in naval them up and hit the Linden lab and of course, we will soon be adding that the knee, though a relapse.
Out of that as well so no data to be presented.
Quite yet.
Looking forward to being able to give an update on data timing when that's available.
Sorry, I just forgot your other question I apologize.
Any comments you could share on the next indications you tend to not do any pivotal study.
Yeah. So.
As mentioned earlier, we started the first phase three stellar three of three which is the CRC trial earlier this year.
Focusing now on our second phase III trial, I'd say stay tuned for the indication.
Coming soon but we do hope to initiate that one by the end of the year.
Okay, great. Thank you that's helpful and then.
Congrats on the business still development progress.
I was curious if you could comment on any appetite for late stage BD deals and also congrats on the on the U S geographic expansion and I was wondering any any comments you could share on ex U S geographic expansion.
Just to comment on the late stage deals.
There's a comment at the beginning here, we hope that we've been looking at a lot of late preclinical early clinical deals and we're going to continue to do that.
Being said, absolutely we would look at later stage clinical assets.
But there just has to be that confluence of you know us having feeling there's a solid scientific rationale.
Compelling clinical data have been generated to date.
Yeah.
A good clinical and commercial future for the asset so all those things have to happen for us to kind of pull the trigger on a latest stage deal.
This is Chris on an ex U S and ex U S expansion, so from a U S perspective that could make you talked about.
We're expanding in king of Prussia and well.
Eventually have a.
Larger building there with both office for the development organization and other G&A type organizations, but also labs for discovery from an ex U S perspective, as Mike said and J P. Morgan 2020.
All the the compound going forward.
Coming out of our pipeline are we in license, we're going to watch those globally. So when we get closer to.
Launch well.
We will expand.
We'll expand internationally.
Great. That's super helpful. Thanks for taking the questions.
You bet.
D J.
The next question will come from Edward or out with BMO. Please go ahead.
Great. Thanks for taking the questions and congrats on the quarter I.
I guess first question for me if you could just kind of speak to maybe the balance of the R&D spend.
Full year guidance sort of beyond.
The fund you indicated for the two deals announced today and then.
<unk>.
Early data for.
Cvs Cvs.
<unk> 12 was pretty interesting in a interesting technology as well in terms of this ph dependency I guess I wondered if that delta.
Between healthy and tumor cells for ph in terms of you know where this may make more sense in terms of the tumor types and if that sort of correlate with the tumor type that the bricks.
<unk> is pursuing right that delta in terms of ph for LTE to tumor cells.
Yes. So this is Chris so from an R&D expense guidance perspective, I mean it was.
As I mentioned is primarily to reflect the two deals we announced today and then also just our continued investment in the pipeline.
And throughout the fourth quarter.
Yeah, Hey, it's Mike on the <unk>.
So breakfast side I don't think it's it's.
It's well documented from a tumor to tumor level the <unk>.
Relative ph difference between individual tumors or tumor types and normal cells, I think thats, probably cutting it a bit in terms of what's what's actually known.
So the.
The general phenomenon I think has been well validated as Peter mentioned from that point of view of the lactate. That's involved but I think on a case to case basis. Our view is that the overall approach with CBS 12 gets us into a game. If you will that allows us to target.
Any tumor potentially without having to have an address as you would normally see with an ADC Peter would you agree with that.
Yes, exactly I think that's.
Yes, I guess the intriguing part of the platform target agnostic way of enhancing delivery of a cytotoxic to potentially a broad variety of tumor cells.
Great. Thanks.
Congrats again on the quarter.
Thank you Matt.
The next question will come from Peter Lawson with Barclays. Please go ahead.
Hey, Thanks for taking my questions.
Stella through three.
In.
CLC.
When can we see data around that is the interim analysis and the second phase three could could that generate data sooner than the three or three trusts.
So we're in the very early days of enrollment for the.
For stellar three out of three.
I would say stay tuned for more information about when.
You know when we expect to read out as we're able to better project advances. It is an event driven analysis.
We are evaluating other additional indications, including potential for early registration path and.
And so you know certainly.
Looking across a range of different solid tumors, I would say, where we have data with with Cabo.
And given the shorter half life with X L. O 19, even looking at you know settings, where we were unable to take Cabo as well as of course, the the novel combinations, they're really looking for maximizing that opportunity and looking for a rapid path to registration across multiple tumor types.
Thank you and then just a follow up for Chris around.
Revenues in the quarter, just what was the benefit from if there was a benefit from clinical trial sales in the quarter.
And it's.
Your expectations for Q4 by any chance.
Yeah, Peter Thanks, Yeah, So as I mentioned in the prepared remarks, we talked about having clinical trial sales of about $13 billion. In Q3, I also mentioned that there has been choppiness over the last year.
A year or so going from 8 million to $17 million.
And any given quarter. So we think that towards that sort of choppiness will continue going forward in future quarters.
Got you and then you would expect that to go through 'twenty three as well.
It's not a kind of a.
Peter it's not it's not that that was not up to US right. I mean, we're getting orders from from other companies that are doing trials with Cabo with Cabo medics. So yes.
Up to the trial and their ordering patterns.
Perfect. Thank you.
Okay Peter.
The next question will come from your own Werber with Cowen. Please go ahead.
Great. Thanks for taking my question I got it maybe just a couple of P. J maybe for you just the first one in terms of growth for Cabo.
Is it share gains from what is it still moving away from the old T. K I S or is it potentially are continuing to make them into the naval EP.
Opportunity.
And then secondly in terms of gross to net as you think about next year I know you can't give guidance, but is it 28% to 29% range.
Were you anticipating based on what you know now and then just finally in context, Oh three co primary of PFS and OS is it you need to hit both or can you do either or thank you.
Yeah, So I'll start off.
This is P J talking about the growth what we've said and what we're seeing with regards to growth for Cabo medics is a couple of things.
As I mentioned, we had our highest new patient starts ever and what we're seeing there is.
Primarily driven by first line combination patients.
The sources say that our market share has been growing certainly at the expense of other competitors.
So we've seen that across the board.
But growth also is being strongly driven by the increasing duration of therapy from Cabo <unk> overall as more and more of our patients over time, our first line combination patients switch.
Have a have a profile of a longer duration of therapy as I mentioned 90 or PFS in the ballpark of a year and a half. So those are kind of the two elements of growth as we see it.
Yes, Chris So yes as.
As I mentioned answering <unk> question. We think this year is going to be closer in the range of 28% to 29%.
We talked about earlier too we've seen gross to net come down quarter to quarter from.
From Q1 to Q3, we've seen that in other years and it's right now.
We're not providing guidance.
Our recommendations for 2023, yet, but you know we could talk about that on the Q4 call in February .
And for context, III, so PFS and OS like dual primary endpoints, we will be looking at mature PFS data and an interim OS.
Essentially the trial need to hit one of the endpoints to be declared a successful trial.
Yes.
Thank you Ron.
Operator, do you have any more questions.
Yes, ma'am. The next question will come from Chris Shipley Tawny with Goldman Sachs. Please go ahead.
Great. Thank you very much on the business development. Congratulations on some activity. There can you just elaborate a little bit on what the decision would be for you to go ahead and acquire CBS 12, what would that be based on what kind of clinical data.
You consider encouraging enough for you too.
Advanced that acquisition.
Yeah, Chris This is Mike Katz based on probably good data.
We'll know it when we see it so I wouldn't want to preempt that now but yes.
Obviously, we're in the game of generating data that we can use to differentiate and build upon the platform that we've got to help patients. So.
Obviously, the better the data the more likely we are to trigger any milestone that drives us to move forward with any collaboration.
Okay, well certainly that makes sense and then as we think about and Peter asked this question earlier in.
In terms of your interest you certainly built.
Building cash $2 billion and it's a question really about capital allocation priorities. It seems from the activity that's been heightened on the business development front.
And as you outlined in the opening sentence in the press release for the quarter that you have a focus on things that are sort of clinical or near to clinical.
As I think about the possibility of the timeline for these to become commercial it's a little bit more on the intermediate to longer term range and as I juxtapose that against kind of the potential duration of combo as an asset can you help give a sense for.
Your confidence in this strategy going with these clinical stage assets more that might write them towards the back end of the decade, but may not be at the level of the revenues that are certainty.
Demonstrated by the success with Cabo thus far I'm, just trying to think about the longer term profile of revenues as we go through the balance of the decade with the decisions that you're making now on the BD front.
Yeah, I would say, we probably don't share your view on timelines to secure.
Shuffle implementation and execution around getting to pivotal trials, having those.
Brian and readout. So our view is we're doing BD on a pretty pretty aggressive scale based upon the conviction we have in the asset pool, that's available broadly within oncology.
Small and mid cap Biopharma. Our view is we have to do deals with and for assets that we have conviction can actually work and then we get to a point where.
In the case of both assets, we can move forward pretty aggressively once we have proof of concept data. So I think our view on timing and your view on timing are different then it will be up to up to us to prove that as we did with Cabo in the past obviously, we have a pretty strong wins here with the Cabo experience not only in navigating the development and regulatory.
Success, but having having a molecule that has a global run rate based upon Q3 of almost $2 billion a year. So I think we have a lot of confidence and a lot of certainly record of success. There. The team is growing we certainly have a broad net for additional assets going forward. My my guess and my projection would be these won't.
The last two asset deals or option deals youll see for novel assets and that will continue over time and the goal is and has been for the last couple of years to build a diversified portfolio of assets that we can drive growth in the out years and Thats still the plan.
Great and then as a complement to that naturally then the operating expense levels with your confidence in advancing through clinical is as I think about 23% to 28, just say the next five years do you believe that consensus is forecasting your opex in particular R&D levels correctly to mirror your confidence in the ability to advance.
The clinical them to generate revenues at that scale, certainly seems as if youre doing a great job of expanding your footprint, but just in terms of level of spend on opex in particular on the R&D front any color there would be helpful.
Yeah, Chris I don't know, how we could possibly give you guidance on that.
Upon that guidance that you're speaking to is that those models based upon what's happening.
Our world today, obviously, we're running a business where we can generally we have a lot of cash we generate free cash on a regular basis, we've been profitable for.
Many years going going back in time, so our job is to obviously balance manage the P&L carefully and build for the future growth of the revenue base that we're trying to do so so we will do that well, but certainly can't opine. Upon models that are going out to later years in the decade right.
Okay I appreciate your perspective, thank you.
Okay. Thanks, Brett.
This concludes our question and answer session I would like to turn the conference back over to MS. Susan Hubbard for any closing remarks. Please go ahead.
Thank you Chuck and thank you all for joining US today, we certainly welcome any follow up calls with questions that you may have.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
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