Q2 2023 Exelixis Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the X Elixir second quarter 2023 financial results Conference call.
My name is to Wanda 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 you may begin.
Thank you Wanda and thank you all for joining us for the epilepsy second quarter 2023 financial results conference call joining.
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 Dana Aftab, Our Chief Scientific Officer, and then he got our Chief Medical Officer, who will review our progress for the second quarter of 2020, 'twenty three and at June 30th two.
Twenty-three Peter Lamb, our EVP of scientific strategy will join us for the Q&A person on the call during.
During the call today, we will be making 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 driving those measures from our GAAP results during.
During the course of this presentation, we will be making forward looking statements regarding future events and the future performance of the company. It's includes statements about possible developments regarding discovery product development regulatory commercial financial and strategic matters actual events or results could of course differ materially we refer you to the documents we file from time to.
A 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 conducting clinical.
Trials compliance with applicable regulatory requirements, our dependence on collaboration partners and the level of costs associated with discovery product.
The 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.
Just had a strong second quarter across all components of our business. We're pleased to see continued growth of the Cabozantinib franchise, while at the same time, we expedited our range of discovery and development programs to build the extra let's just pipeline of the future with the goal of helping many more cancer patients.
Key highlights for the second quarter include first strong performance of the Cabozantinib business with continued growth in demand and revenue in the U S.
<unk> maintained its status as the leading Teekay <unk> for RCC in both the first line Iot Gi market in the second line monotherapy each segment's second quarter 2023, cobbled franchise net product revenues in the U S were approximately $410 million and grew 18% year over year.
Compared to second quarter 2022.
Mobile Cabo franchise net product revenues generated by <unk> and its partners were approximately $577 million in second quarter 2023, and also grew 18% year over year compared to second quarter 2022.
P. J, we'll update our progress in the quarter and provide additional commentary on our financial and commercial activities seconds X L. A top priority and R&D is to deliver a pipeline of clinically and commercially differentiated medicines for large populations of cancer patients with high unmet medical need.
Our singular goal is to improve standard of care for patients with cancer more patients. We hope there are more value we create for patients their families health care providers and their shareholders. We have an integrated R&D strategy spanning drug discovery development and commercialization activities and are developing a pipeline.
Our biologics and small molecules that have the potential to significantly move the needle for cancer patients Jana and Vicki will highlight our second quarter progress later in the call.
I'm pleased to announce that we will present, our R&D efforts at an investor event on December 2nd in New York City.
Third business development activities remain a priority as we continue to seek opportunities to access clinical assets with the potential to generate differentiated clinical data in solid tumor indications. We have several late stage discussions I'm going and while Theres no guarantee of success in closing these transactions.
We will look to continue using this approach to fortify our product portfolio.
Finally fourth excellence has entered into a settlement and license agreement with Teva to resolve patent litigation were extra lets us would grant a license to market. Its generic version of Cabo and <unk> in the U S. Beginning on January one 2031, if approved by the FDA and subject to conditions and exceptions common.
Two of the Miss of this type.
Our attention and resources remains squarely focused on the second MSN case, which goes to trial in October we will continue to vigorously protect our intellectual property rights.
So with that please see our press release issued an hour ago for our second quarter financial results and an extensive list of key corporate highlights achieved in the quarter I'll now turn the call over to Chris.
Thanks, Mike for.
For the second quarter 2023, the company reported total revenues of approximately $470 million.
Which included Cabozantinib franchise net product revenues of $409 6 million.
<unk> net product revenues were $403 3 million and included approximately $21 million in clinical trials.
As a reminder, clinical trial sales have historically been choppy between quarters and we expect this to continue in future quarters.
Gross to net for the Cabozantinib franchise in the second quarter of 2023 was 27, 3%, which is lower than the growth that we experienced in the first quarter of 2023. This decrease in gross to net deductions in the second quarter of 2023.
Primarily related to lower Medicare part D and co pay assistance expenses.
Just on a gross to net in the first half of 2023.
We are projecting gross to net will be between 29 and 30% for the full year of 2023.
Our telematics trade inventory decreased by approximately 340 units when compared to the first quarter of 2023.
Total revenues also included approximately $60 million in collaboration revenues, including approximately $37 million of royalties earned from Ipsen Takeda on their sales of cabozantinib in their respective territories.
Additionally, in the second quarter of 2023, we earned an $11 billion milestone from Takeda for their achievement of cumulative net sales above $150 million.
Our total operating expenses for the second quarter of 2023 and were approximately $392 million compared to $380 million in the first quarter 2023.
The increase in total operating expenses sequentially was driven by higher SG&A expenses in the second quarter of 2023, which was primarily related to costs associated with the 2023 proxy contest.
Provision for income taxes for the second quarter of 2023 was approximately $19 2 million compared.
Compared to a provision for income taxes of approximately $8 $3 million for the first quarter of 2023.
The company reported GAAP net income of approximately $81 2 million or 25 per share on a fully diluted basis for the second quarter of 2023.
We also reported non-GAAP net income of approximately $100 3 million or 31 per share unemployed diluted basis.
non-GAAP net income excludes the impact of approximately $19 million of stock based compensation expense net of the related income tax effect.
Cash and investments for the quarter ended June 32023 was approximately $2 1 billion.
This level of cash and investments supported by our ongoing cash flow from operations provides excellent us with the flexibility to invest in internal discovery activities.
To pursue external business development opportunities to expand our pipeline and allows us to return capital to our shareholders through the $550 million share repurchase program, we announced in March of this year.
During the second quarter of 2023, we repurchased approximately $127 million of exports of shares at an average price of $19 22.
The second quarter share repurchase activity commenced a few days after our first quarter earnings release on May nine we remain committed to fully executing on the $550 million share repurchase program. This year.
And finally, we are reiterating our full year 2023 financial guidance, which is detailed on slide 14 of our earnings presentation I will now turn the call over to Peter.
Thank you Chris the second quarter of 2023 was a strong quarter for the Cabozantinib franchise.
The team continues to execute at a high level, which has resulted in <unk> continuing to be the number one prescribed <unk> in RCC and second line HCC.
Additionally, <unk> in combination with Novo Mab remains the number one <unk> plus <unk> combination in first line renal cell carcinoma.
In terms of the business <unk> T. Rx volume grew by 9% year over year in Q2 2023 relative to Q2 2022.
T Rx volume for <unk> grew 4% in Q2 compared to Q1 this year.
Additionally, new patient starts and demand remained strong in the second quarter.
<unk> continued to perform well in Q2 from both our marketplace and competitive perspective.
<unk> again led the TK market basket and Trs share at 39%.
As we have discussed previously the first line RCC market is extremely competitive and we are pleased with the performance of <unk> in combination with <unk> in this setting.
Q2 was a third full quarter in which <unk> plus of all them out was the number one prescribed <unk> plus I O combination in first line RCC.
Uptake in first line RCC is broad across clinical risk groups and practice settings.
Importantly, physicians continue to report a positive prescriber experience, which is consistent with the balance of efficacy safety and quality of life scene in the checkmate <unk> 90, our data.
These perceptions were reinforced at <unk>, which was a very productive meeting for excellences and provided a great opportunity for us to continue to highlight and promote a 44 month long term follow up checkmate <unk> data.
You may recall, the median overall survival for <unk> plus the ball on that.
Is 49 five months, representing an improvement of 14 months over the comparator arm sunitinib.
<unk> ratio of <unk> seven zero.
The overall survival data are differentiated relative to the Teekay AI, plus Iot competitors and also compelling to prescribers who.
These data is clinically meaningful.
Furthermore, physicians believe that the data support their experience of using the combination in terms of efficacy safety tolerability and quality of life.
Prescribers believed that this balance of data and the low discontinuation rate of Cabo <unk> festival that enable patients to stay on therapy longer to achieve these results.
Additionally, the contact III data presented at <unk> reinforce the body of evidence with regards to Cabo mono therapy, given the strong results of the Cabozantinib controller.
Collectively these data reinforce the leadership position that <unk> has in the RCC marketplace.
We believe these data have positioned <unk> for continued momentum in growth as our entire team works every day to ensure that appropriate patients have the opportunity to benefit from Cabo.
That I will turn the call over to Dana.
Alright, Thanks P J.
So during the last earnings call in May I discussed our overall strategy for drug discovery, which is designed to prioritize targets based on the strength of the <unk>.
Science and to leverage internal discovery capabilities.
Small molecules and bio therapeutics to address the highest priority targets today.
Today, I'm going to go into a bit a bit more detail regarding where we're at in terms of filing an IND for the current development compounds in the pipeline as well as progress towards nomination of new development compounds.
As a brief reminder, our biotherapeutics programs are focused primarily on antibody drug conjugates as well as by specifics and monoclonal antibodies targeting innate immunity.
Our internal biotherapeutics discovery team Leverages, several strategic partnerships and supply antibodies in various site specific linker payload technologies, all of which have contributed to a significant level of productivity over the past several years.
Our small molecule discovery programs are focused primarily on synthetic lethal targets, which are attractive because they present clear patient selection strategies and drugging them. Typically result in a good therapeutic index, but we're not limiting ourselves to this approach and in some cases, we're pursuing drugs that target dominant oncogenic drivers might be.
Hey, Ross.
Patient selection is straightforward and opportunities towards achieving best in class are apparent.
So here's the pipeline beyond cabozantinib with the preclinical assets highlighted at the bottom.
These four biotherapeutics for declared as development compounds last year and are progressing towards IND filings three of which are expected to be filed in 2024.
First we expect to file for these will be for XP 010, which is the next generation antibody drug conjugate that targets <unk> four are broadly expressed tumor antigen and delivers a cytotoxic anti tubular and payload.
<unk> zero and zero uses Cadillac site specific conjugation and proprietary linker payload technology.
And as a result shows improvement in intact antibody drug conjugate pharmacokinetics and reduction in prepay load compared to the most advanced competitor.
<unk> 010 also represents the first five therapeutic that we have had full responsibility for oversight of all stages of chemistry manufacturing and control or CMC.
As I'm sure. Many of you are aware of the manufacturing process for antibody drug conjugate is highly complex and I'm happy to say that our internal CMC team, which comprises highly experienced scientists and leaders from the likes of Genentech, Merck Novartis Astrazeneca as expertly manage that process for XP zero and zero, our GOP compliant toxic <unk>.
Allergy study is underway and we are on track for delivering the GMP material next year, which will enable us to file our IND for that program around mid 2024.
The second expected from these programs as for Xb six to eight a first in class biases bi specific antibody that combines a known pharmacology of PD lone inhibition with inhibition of <unk>, a complementary natural killer cell checkpoint.
<unk> hundred eight is designed to simultaneously address both the adaptive and innate immune checkpoint and to act as a natural killer cell engage or promoting the activity of cytotoxic T cells and the robust tumor sale activity of NK cells.
We expect it to be active in tumors, such as renal and lung that are sensitive to first generation of immune checkpoint inhibitors targeting the PD one pathway alone.
This program is targeted for IND filing in the second half of 2024.
The third program expected to reach <unk> filing is <unk> hundred 71, our next generation tissue factor targeting antibody drug conjugate that follows on from XP easier too.
<unk> hundred 71 also uses catalyst site specific conjugation and linker payload technology and carries a top line summary, one inhibitor payload instead, the microtubule targeted payload on SP zero zero to.
This program is on track for an IND filing in late 2024.
Finally X V zero <unk> four is a bi specific antibody that carries the same PDL one targeting arm present, an XP six to eight.
Mindset with inhibition of CD 47, a complimentary macrophage checkpoint.
This program is progressing more slowly than the others due to a potential safety signal we observed in non GOP toxicology testing, which has required additional modeling and experimentation to determine if we have an acceptable predicted safety margin to move forward with an IND filing.
In addition to these programs we have multiple programs in discovery at earlier stages of maturity, both small molecules and biotherapeutics from which we expect to nominate development compounds. This year.
We are currently on track to reach our stated goal of up to five new development compounds. This year, which will potentially include new antibody drug conjugates monoclonal antibody targeting <unk>, a novel immune checkpoint pathway and small molecule addressing synthetic lethal targets for well defined patient populations with substantial unmet need.
<unk>.
All of these programs represent first or best in class approaches and have the potential to meaningfully contribute toward our mission of helping cancer patients recover stronger and live longer.
And with that I'll turn the call over to Vicki.
Thanks Dana.
Today, I will provide updates on the progress of our clinical stage pipeline focusing on our most advanced program <unk> and <unk> as well as the Cabozantinib Registrational trial.
Bill wanted to continue the dose escalation and we are focused on reaching a go no go.
And later this year as.
As we continue to refine our strategic approach each of our pipeline assets, we retain a strong focus on clinical trial execution to rapidly advance our pipeline molecules with the ultimate goal of improving outcomes for cancer patients.
I'll begin with <unk>, our next generation tyrosine kinase inhibitor, which entered full development last year.
On our last earnings call, we shared top line results for our fully enrolled cohort 30 to pretreat it clear cell renal cell carcinoma patients from stellar a little one demonstrating robust activity with responses in both chemo naive and Cabo pretreated patients.
These data provide evidence for the activity of <unk> net and a cabo sensitive tumor type and provide additional support for leveraging <unk> data to inform the advanced the development program.
An abstract with the complete RCC data set has been submitted to an upcoming medical conference and we will share further details as they become available.
We have also completed enrollment on several other stellar Oman cohorts and looking forward to sharing the data as they mature.
And stellar Elo to enrolment of the Danza plus Evo doublet expansion cohorts is ongoing and we have now completed enrollment of the dose escalation cohorts for the triplet combination of danza, plus Nemo and relentless map and established a recommended dose.
This combination is now advancing into multiple solid tumor expansion cohorts.
Data from stellar over one and stellar our two will inform future registrational plans for that asset.
Turning now to our <unk> phase III studies.
Pillar 303 compares the combination of Sansa with a Tesla lithium app versus <unk> in patients with non MSI high.
Fishing MMR late line colorectal cancer.
We are currently amending the trial based on emerging data, including data presented for the leap <unk> seven trial of Tempur lithium up plus one that net versus standard of care at ESMO Gi last month, which suggest that colorectal cancer patients without liver metastases at baseline appear to derive more benefit from <unk>.
I O combination, including Iot AI combination.
Impaired subjects with liver Mets at baseline.
On recent phase III trials performed in similar settings, the prevalence of liver metastases appears to be around 63% to 74% of late line metastatic CRC patients.
In the amended design.
Total of approximately 874 patients will be enrolled regardless of rap status and including patients with and without liver metastases.
Ratification factors, which already includes the presence or absence of liver Mets will not change.
The primary endpoint will be overall survival in patients without liver Mets with the secondary endpoint of OS and patients irrespective of the presence of liver met which will be statistically tested if the primary is positive.
This will preserve the possibility to demonstrate benefit in all comers, while increasing the probability of success by focusing the primary analysis on the patients most likely to benefit.
Stellar three or four a phase III trial, comparing the combination of stanza and diebold in Massachusetts at Nib in patients with certain non clear cell RCC histologic subtypes, who have not previously been treated for metastatic disease is also enrolling with this these two phase III is now underway. We are also on track.
<unk> for the initiation of additional phase III trials this year.
We are pleased to announce our next planned registration directed study stellar 305.
A phase II, III, which will evaluate <unk> in combination with timberlands, a mab versus parallelism that alone in patients with first line PD lone positive recurrent or metastatic squamous cell carcinoma of the head and neck.
Study will enroll approximately 500 patients in PFS and OS are dual primary endpoints.
<unk> as a single agent received approval in this setting based on overall survival. However, fewer than one in five patients have an objective response.
With a 54% response rate seen for capital in this setting and an investigator sponsor trial.
As well as the favorable emerging safety profile of <unk>. We believe this may provide an opportunity to improve outcomes versus single agent Pembroke with a regimen that is tolerable for this population with multiple comorbidities.
Moving on to <unk>, our first antibody drug conjugate, which targets tissue factor.
We have now established a recommended dose and we are carrying that dose along with the lower dose to fulfil Fda's project optimists requirements for dose optimization into expansion cohorts in multiple solid tumors, which are now open to enrollment I'm pleased to share that the first patient has now been dosed on one of those expansion cohorts.
These signal detection cohorts will inform the drug safety and efficacy profile and allow us to pivot quickly into registration directed trials.
Additionally, we continue to enroll on the dose escalation cohorts within <unk> and Bevacizumab combinations to determine a recommended dose for each combination to carry forward into expansion and we will continue to seek out other promising combination approaches in sensitive tumor types.
For Cabozantinib, we expect a readout of the progression free survival primary endpoint for contact <unk>, our phase III study in combination with <unk> in metastatic castrate resistant prostate cancer. This year. The second interim analysis for OS for Cosmic 313 is also on track for this year.
In summary, we continue to make progress advancing our pipeline molecules and believe that the emerging data for both <unk> and <unk> are encouraging we look forward to sharing the emerging data in upcoming medical conferences as they mature and continue to expect continuing to expedite the development of these promising assets for the <unk>.
<unk> of patients with cancer with that I'll turn the call back over to Mike.
Alright, Thanks, Vicki as you heard on the call today at <unk> is off to a great start in 2023, we're excited to have the momentum from our Cabozantinib franchise drive increased growth across across all components of the business.
As we had extra lets us work to help many more cancer patients as we discover and develop our pipeline of the future.
We look forward to sharing our latest pipeline results and plans at our R&D day in December .
I'll close by thanking the <unk> team for their collective efforts to support our discovery development and commercial activities. The team is highly motivated to achieve our mission to help cancer patients recover stronger than live longer we drive for results every single day with urgency and purpose to build on our foundation of innovation and collaboration.
We look forward to updating you on our progress in the future. Thank you for your continued support and interest in <unk> and <unk>.
Happy to now open the call for questions.
Thank you.
Ladies and gentlemen to ask a question. Please press star one on your telephone you would then her automated message advising Yohan is raised and then wait to hear your name announced.
To withdraw your question. Please press star one again.
Please standby, while we compile the Q&A roster.
Our first question comes from the line of pass the call on awarding with truth. Your line is open.
Hi, guys. Good afternoon, and thanks for taking my question.
First off wanted to congratulate came on just another quarter of consistent revenue growth good to see that.
I guess I've got a bunch of questions for Vicki.
So thinking on your phase one Stella Oh, one study.
You've mentioned on the slides here that you've completed enrollment.
Several dose escalation and expansion cohorts I was wondering if you might be able to tell us which expansion cohorts have you completed enrollment so far and they've got a couple of follow ups.
Yes so.
Yes, so as I mentioned in my remarks that we've completed enrollment on a number of cohorts will be prepared to share more details on that as the data mature.
I think you've seen.
On our last earnings call that we shared the data for the clear cell RCC cohort, which had not only completed enrollment, but also had adequate follow up to make an assessment so more to come on that.
Got it and then maybe at ESMO, sorry at a medical meeting where you will be presenting data later this year will they have multiple cohorts or just one.
Hart.
Yes, those data to clarify that point or specifically the clear cell RCC cohort. The 32 patients will have updated data including.
Both efficacy and safety in that presentation.
Got it Okay, and then I guess at the latter.
Earnings call, you mentioned that and that did you mentioned, the 34% and a 50% or Ars.
And since then I was wondering if you had one patient who was unconfirmed Alaska.
The last time, we spoke in may but that patient end up becoming a confirmed PR.
And any chance you might be able to tell us what.
And Hello to the.
Zander.
If the triplet that your study is that.
<unk> Nikko roller or does it also includes <unk> Evo and <unk> as well.
Yes, so again, we will share the updated efficacy data in the in the presentation. So youll get more details on an updated response rate as well as again the safety data as.
As for stellar or two.
We have ongoing expansion cohorts for.
<unk> in combination with <unk> and we are now advancing the relative triplet into different cohorts as they make sense and the different tumor types.
Got it alright, thanks, a lot guys I appreciate all the color.
You bet. Thank you Scott.
Thank you please standby for our next question.
Our next question comes from the line of Jason <unk> with Bank of America Securities. Your line is open.
Alright, thanks for taking my questions.
Just two for me just wondering quickly if you could.
Roughly 30% gross to net deductions on Cabo like roughly is a big proportion of that the catastrophic coverage costs and doughnut hole cost just trying to get a sense directionally.
Irate implications around Cabo pricing and then just on the Teva settlement that you guys announced that looks like a very positive.
Positive or favorable deal for you guys wondering if theres anything in that that precludes you from giving MSN, you're the lead challenger slightly better terms. Thanks.
Yes.
Yes, Jason Thanks for the questions, Chris can handle the gross to nets and I'll speak to the telephone.
Alright, Jason it's Chris.
From a gross to net perspective, we do.
As we've talked about before we do see higher gross to net.
Donut hole piece, it's not necessarily a catastrophic but don't hold piece has a big impact in Q1.
Particularly when we have those patients that rollover.
The prior year to the current year as they roll through many of them relative to the donut hole when we.
Because of just being uncovered rollover to here.
So a lot of its donut hole and not necessarily on the cat stuff et cetera.
And then on the question regarding Teva.
Probably won't be a surprise to you.
But low to comment in much detail on that settlement.
I would say.
Interrelate ability to other settlements or other things, we might do in the future with <unk>.
Certainly very pleased to have.
The action date that we got in the table in the Teva settlement of January one 2031, and I think thats consistent with some of the messaging we've been sending over time and obviously, we're going to continue to be very aggressive about protecting our IP going forward, so, but as you could imagine can't really say much about how the two.
Interact had to try.
Okay.
David.
Thank you.
Please standby for our next question.
Our next question comes from the line of Michael Schmidt with Guggenheim. Your line is open.
Hey, guys. Thanks for taking my questions.
I had one on the upcoming contact to study data.
Could you remind us what the bar is for a second.
PFS for a second hormone therapy.
Population.
And you, obviously have dual endpoints PFS and <unk>.
Is there a potential opportunity to just based on PFS or would you need both endpoints in order to file for this indication.
Then I had a bigger picture follow up.
Yes, thanks for the question Michael.
Terms of the bar again these are patients.
With metastatic castrate resistant prostate cancer, who have already received our first non hormonal therapy.
So they tend not to have actually quite short PFS on their second line IHT.
And given in advance of chemotherapy, so somewhere around the order of about two and a half tip or months PFS.
In terms of when we file on PFS alone or less what I would say is we're going to evaluate the totality of the data.
As they come in in terms of the overall benefit risk profile.
We see and if appropriate we'll have those conversations with the regulatory authorities.
Great. Thanks, and then.
Thanks for the additional detail on your R&D efforts and pipeline.
<unk>. So obviously you are focusing more now on advancing in Tol program too.
Clinical development to what degree does that affect your.
Business development strategy is that still a priority at this point given your strong balance sheet or are you shifting more towards investing into the internal pipeline capabilities. Thanks, so much yes.
Yes, Michael It's Mike, Yes, no Thats, a great question and thanks for that we specifically added a bullet.
In my intro around BD, and our interest and the priority we have in continuing our business development activities to access.
New clinical assets, so that's a priority for us again.
Not stick to where high conviction assets come from obviously, we're making a lot of progress on our internal R&D efforts, but there is there is still some molecules out there that we like a lot that we're pursuing so that's still an important part of our process and again no guarantee we'll be able to complete those transactions but.
It's certainly a main focus for us right now.
Great. Thanks, so much.
Thanks, Michael.
Thank you ladies standby for our next question.
Our next question comes from the line of Andy <unk> with William Blair. Your line is open.
Thanks for taking our questions I got a couple here so Vicki thankfully update regarding the stellar 303 study.
Just curious about the emerging observation about liver Mets.
Is that dependent on the rash status, whether it's mutated or wild type.
Kind of curious about that too variable kind of two by two matrix.
Yeah.
Yes, thanks for the question so.
The current stellar 303.
Nine.
Did have as a primary endpoint of overall survival in Ras Wild type patients said it just.
Maybe clarify a little bit of detail there under the amended design, we will be enrolling patients without regard to rats status.
We.
<unk>.
We will be <unk>.
<unk> the data without regard to rap status. The change that we're making is really to improve the probability of success of the trial based on emerging data. So.
At least 17 data were presented approximately a month ago prior to that there were some single arm data sets were.
Io combinations, including Iot AI combinations, such as <unk> and O&M.
Had been looked at in terms of response rate than what we'd seen in small datasets and retrospectively with their patients without liver Mets had higher response rates than patients with liver Mets. So what has changed.
<unk> and <unk> 17 data as we now have a phase III trial.
Which read out negative for overall survival. Despite some improvement in response rate and progression free survival.
The OLED hazard ratio was <unk> 83 in the overall population, but the biggest predictor of whether or not there was benefit in the last in the subgroup analyses.
In patients with or without liver Mets, so that the patients without liver Mets.
Hazard ratio for overall survival 0.65, while those with liver Mets. It was 0.91. So we believe that the totality of the data is now in our steering committee and other key opinion leaders. We've spoken to also right that the the weight of the evidence supports moving.
Into a.
Non liver Mets population as our primary endpoint.
And so this is what we what we plan to do again with the primary analysis focusing on patients without liver Mets in a secondary analysis in all comers, which would include patients.
With liver Mets and that ITT and again, regardless of rap status and again. This is an opportunity for us based on emerging data from.
From external to the trial and external to our own programs.
Really increased the probability of success of the study and make sure that the patients are most likely to benefit from therapy have an opportunity to do so.
Got it that's.
That's very helpful.
Guarding.
The tissue factor agnostic opportunity.
I'm just curious about.
How you think about.
Potentially a regulatory strategy there.
And also how big is that.
You factor positive solid tumor opportunity.
Yes. So at this point I think it's too early to talk about our regulatory path. There. This is really an exploratory cohort.
That gives us an opportunity to look at tumor types that were not studying.
Specific tumor directed cohorts.
Based on tissue factor expression. It may help us identify other signals for tumor types outside of the ones that we are currently studying it.
It also may give us some indication on whether tissue factor expression, which we're looking at across the board in this in all patients on study.
Here's to be predictive of response.
Great.
Maybe lastly on Cvs 12.
Just curious about your view on the data presented at <unk> and remind us what.
What are some conditions floor for opt in.
Yeah. So.
So Cvs 12 is continuing in and dose escalation, we're certainly encouraged to see.
Responses that have been emerging in the data.
And the opt in decision really will have to wait and see in expansion cohorts. Once we confirm the activity and the safety profile of the asset.
Okay, great. Thank you so much.
Thank you Andy.
Thank you.
Please standby for our next question.
Okay.
Our next question comes from the line of Jay Olson with Oppenheimer. Your line is open.
Oh, Hey, congrats on the quarter and thank you for taking the questions.
Based on the strong Cabo sales.
Can you just comment on the rationale for <unk>.
Keeping the original guidance and what your expectation is for the growth rate for Cabo in the second half and maybe just some thoughts on the market share at 39%.
Linda.
Had a strong quarter over quarter growth maybe.
Any color on the competitive landscape for <unk> in the RCC market.
Pipeline follow on if I could.
Alright, Thanks, why don't we start with the second part of that question first Pega can talk about the market dynamics in the RCC space and then Chris can briefly comment on guidance.
Yes, thanks for the question.
So with regards to the market as I mentioned, we are.
Now are the market leaders in first line.
<unk> plus I O combinations for the third quarter in a row.
So a lot of strength there in.
In the <unk> market and the market basket were 39% share.
And that market increased quarter over quarter.
So I think we have strong momentum as I mentioned, we're seeing growth.
In both demand and new patient starts and I think what we're really seeing is that the.
Our data, particularly the long term follow up data from checkmate <unk> that with 44 months follow up and strong.
<unk>.
Balance of data, but particularly the overall survival data.
Where were 14 months in the combination beyond Sunitinib, which is really differentiating from the combination continues to.
To really drive.
Positive perceptions of the data so we feel.
We feel good about R. R.
Our continued momentum and opportunity for growth in the marketplace.
Okay, Chris Thanks P J.
From a from a guidance perspective, so you just heard from P. J.
We had a strong quarter, we continue to have strong growth and based on that strong growth that we've seen in the first half of the year.
We think we're confident that Cabo has the ability to grow into the second half of the year and that's why we reiterated the guidance range we did today.
Okay, great. Thank you and if I could squeeze in a pipeline question. Congrats on the <unk> data at <unk> can you just comment on whether or not you'll be starting at Q3 W dosing cohort.
How far away do you think you are from recommending a phase II dose.
Yes, so thanks for the question.
We are moving into every three weekly dosing actually.
I think Brexit has that cohort ongoing now.
Ultimately in terminal.
Selection of the dose.
I think there are multiple factors here in terms of doses different schedules and we have to consider the requirements of Fda's project Optimists and dose optimization.
So we're in discussions now with <unk> on exactly what that might look like but making sure that we have a solid foundation for selecting a dose to go forward with.
Great. Thanks for taking the questions.
Alright, thank you.
Thank you please standby for our next question.
Our next question comes from the line of silver in Chicken with JMP Securities. Your line is open.
Thank you for taking my questions and congrats on a great quarter I've. A question about if you can please outline the scenarios for cosmic 313 with the data upcoming in the second half of the year.
What kind of scenarios and how do we get from the state to a supplemental NDA and then I have a follow up question.
Yes, so cosmic 313 of course, we reported topline results for the progression free survival endpoint.
Just about a year ago.
In which we showed a an improvement in progression free survival for the combination of Cabozantinib with <unk> versus <unk> alone in patients with poor and intermediate risk.
Cell carcinoma.
At that time.
Neil as data were immature and in conversations with FDA. They made it clear that they wanted to see overall survival data prior to considering any fine lines. So with respect to 313.
This is the next interim analysis of overall survival and data dependent to the data.
Seem to support a favorable benefit risk and.
We're going to consider a filing we would have that discussion with FDA.
Is there a way that you could file only on a subset of patients.
I recall, there was a differentially benefit between the low.
A low risk versus medium to high risk patients.
Yeah, I really can't speculate on that I think again based on the data we will have the conversation about filing potential with FDA.
Great well. Thank you so much for taking my question.
And of course, others. Thank you.
Thank you Lee Sandbox, where our next question.
Our next question comes from the line of Ed <unk> with BMO capital markets. Your line is open.
Great. Thanks for taking my question a couple from me both from sort of the pipeline first on stellar 303, I wondered if you could talk at all about performance.
We're off nib.
In patients with or without liver mets and whether or not.
That impacts sort of the performance of the control group at all and then.
The plants that are old five study.
I'm, assuming this will be maybe <unk> 48, with <unk> scores Cps greater than one and I guess.
Is that what the primary analysis would be based on the Cps greater than one population. Thank you.
Yes, sure. So I'll take the 303 question first I mean <unk>.
Response rates are very low.
<unk>, 2% kind of across the board. So we don't really see much differentiation there between liver Mets and non liver Mets from a response perspective.
<unk>.
Again, I think when we look at the data for the various Io combos.
It's becoming increasingly clear that from an Io perspective, the benefit appears to be in the non liver Mets patients and again Thats, where we think we have the greatest probability of.
A successful outcome.
There really is an unmet need in both patient populations and so we are enrolling regardless of liver Mets to give us an opportunity to be able to show benefit if it's there.
In both patients with and without.
Liver Mets again.
It's big unmet need here with <unk>.
Core options in terms of standard of care so.
In terms of 305.
<unk> has again approved in that setting so we'll be studying the population in which <unk> is approved they demonstrated an overall survival benefit relative to.
Standard of care, which led to the approval as you pointed out in.
EPS greater than or equal to one <unk>.
However, the response rates are quite low so we believe there is opportunity.
Again add benefit here and with Kansas safety profile, we believe that we're well poised to do that again based on the activity that we did see with.
With Cabo in combination with temporarily and those data were presented last year at <unk> with a response rate of 54%.
Okay.
Great. Thank you.
Youre welcome.
Thank you.
Please standby for our next question.
Our next question comes from the line of Derrick a chiller with Wells Fargo. Your line is open.
Hey, everyone. Thanks for taking the questions just two from us.
So to piggyback on an earlier question on contact to maybe you can just help frame the market opportunity you see for Cabo <unk> combo in the pre chemo setting and prostate and then the second question.
With the recent changes to the board are there any plans to kind of review the current cost base to identify any efficiencies and if so when would that be communicated. Thank you.
Thanks for the questions PJ will it take the first one about contractor to yeah, I mean, I think a couple of things with.
With regards to the market certainly should we have positive data and approval it would be a market. We're excited about.
Prostate cancer is obviously very large.
Market and even in that kind of second.
Line, plus metastatic CRP setting theirs.
Well north of 50000 patients.
In that setting and I guess, what I'd say more broadly.
And our market.
Market research and conversations with Kols.
Couple of things there is significant unmet medical need in this setting.
Just generally speaking and there is also a strong desire to delay chemo so.
I think.
Combination of.
Checkpoint inhibitor and <unk> would be extremely well received based on the feedback we've gotten in that setting so.
Certainly.
Optimistic about the potential opportunity.
And then in the context, Mike in the context of <unk>.
Board deliberations et cetera around our strategy and our tactics.
<unk>.
Towards been together now for a couple of months, we've met individually small groups committees onboard really pleased with the.
With the tenor of the tone the collaboration the focus on what we're doing both both strategically and tactically as a company again focused on building value for patients and therefore, a good move and value for shareholders.
As you can tell by the content on today's call. We are all in on pushing forward our our.
Our R&D agenda to be able to really enable the full pipeline towards <unk>.
Pivotal trials and eventually.
Now commercialization.
We have traction there are clinically and generating differentiating data and we're real excited about our future and where we're going so.
Stay tuned obviously theres a lot going on with us and we're very excited about that and we think we've got a lot of room to maneuver on a relative to the strength of the balance sheet and the Carlo.
Our commercial opportunity and just the depth you heard from Dana and Vicki today within R&D.
Got it sounds great. Thanks, congrats on the quarter.
Yes, thank you very much.
Thank you ladies standby for our next question.
Our next question comes from the line of Joe <unk> with Piper Sandler Your line is open.
Hey, everybody. Thanks, so much for taking my questions here just two on the pipeline side of things first one on <unk> zero zero.
Dosing, so Tim <unk> approved an every three week dosing, but since done some work with the schedule that generated some interesting data outside of cervical. So I'm wondering how much you've considered the schedule with which you move forward with borrowers there too.
Then second question just wondering if you have any updated thoughts on your efforts in the surf Alpha CD 47 space in light of the recent Maquila Mab failure. Thanks.
Yeah.
Thanks for the question Vicki can handle the question for <unk> and that will pivot over to Dana for discussion around some of our C 47 efforts.
Yes, so in terms of.
X feel too.
The dose that we're taking forward into expansion cohorts is $2 two seismic per keg.
With a lower dose of one seven make protect in the into.
Expansion in order again to meet the requirements of project Optimists, we will be doing.
K modeling to better understand.
Your response across the board I will note with respect to the tip that.
Joe said, we've looked at our our PK profile and carefully.
And what we're seeing there I think is very encouraging said two kind of key points.
One is its premise at the level of free payload, which contributes to off target toxicity.
But not to the efficacy were seeing substantially lower levels of.
A free or a statin.
Compared to Tim deck at the approved dose.
And that seems to be playing out in the safety profile as well so at our chosen higher dose of 225, we have about five fold lower levels of payload relative to tip that in terms of the overall impact ADC correspondingly, we're seeing higher exposure and really compare.
<unk> two <unk> two Meg per kg in our case in doses that.
One five milligram per kilogram and above we're seeing higher exposures of intense ADC and as the selected dose of 225, it's threefold higher than tip that could be approved yet so.
Quite confident that.
We have a solid dose to move forward with in terms of both of our doses and really now it's about exploring the efficacy and safety profile, but the intact ADC really should be driving that.
Response, while the low levels of free payload may help contribute to a differentiated safety profile.
And this is Dana thanks for the question on $3 47.
So as you mentioned Gilead announced fairly recently that.
Our phase III trial.
<unk> or macro which targets $2 47.
Was that a phase III trial and its logic malignancy.
With high risk Mds and that that trial was stopped due to futility.
They didn't make any other announcements on their other programs, which.
We have many which are proceeding in a large array of indications.
So we still have a strong belief in the CD 47 serve alpha.
Halfway our most advanced agent as I mentioned on the.
The call in the prepared remarks that the XP zero at four which we feel is an important next generation approach that was really designed based on the known clinical profile of first generation C 47 targeting agents like macro.
And it also includes a strong preclinical rationale for combining inhibition of PD, one PDL, one, which as you know a key adaptive immune checkpoint with inhibition of the <unk> 47, <unk> Alpha pathway, which is a key innate immune checkpoint. We feel this is silicon pulling mechanism of action in solid tumors.
And we also believe that investing carefully in agents that can target this pathway from multiple angles as prudent including with <unk>.
<unk> zero five years that robot, which as Youre aware is also a next generation approach targeting multiple OBO that serve alpha.
Sure.
Very potently and selectively.
So we're we're still.
Yeah.
Solid R&R.
Strategy to target this pathway.
Okay, great. Thanks, so much for taking my questions.
Alright, thank you.
Thank you please standby for our next question.
Our next question comes from the line of Jeff Hung with Morgan Stanley . Your line is open thank.
Thank you for taking my questions could you provide an update on the 80% <unk> five phase one study and when we might see initial data and then I have a follow up.
Dan are underway.
Yes, so that is ongoing in dose escalation.
We're working closely with the <unk> team on that it's too early to discuss when we'll have the data presentation.
Okay, and then on SB 371, the payload differs from X. These years are too, but given that they share. The same key is targeting as the golden mitigate risk for adverse events, while maintaining productivity and then do you expect $3 71 to behave similarly to <unk> in terms of levels of intact to ADC or free payload. Thanks.
Yes. This is dana thanks for the question.
So again $3 seven one carried the towboat summarize one inhibitor payload on the same antibody that we used for <unk>, two which is the anti tubular payload with 371. It doesn't have the next generation site specific linker payload technology.
It's honestly too early to tell if we will see any specific differences in safety that really remains to be seen once we get into the clinic.
But we.
We're very excited about 371, mainly because of the differentiation of the payload for giving us traction in cancers that are known to be sensitive to help by Sunrise. One inhibitors, but are also known to not be sensitive to anti tubular.
Payloads, so that's really the overall strategy for that molecule.
We'll wait to see where the data.
Need us.
Great. Thank you.
Thank you Jeff.
Thank you please standby for our next question.
Our next question comes from the line of Peter Lawson with Barclays. Your line is open.
Hi, Good afternoon. This is Alex on for Peter Thanks for taking our questions just one just given the.
Our cash position and your plans for BD and internal investments.
Do you see potential to increase your share buyback program potentially thank you.
Alex It's Chris Thanks for the question. So right now we are committed to the $550 million share repurchase program, we got authorized in March and as we.
Time goes on we'll continue to evaluate how we allocate capital across the multiple areas of the business, including <unk>.
The share repurchase but also R&D.
Development development and commercialization.
Thank you.
The next question operator.
Please standby for our next question.
Our next question comes from the line.
I'm Stephen Willey.
With Stifel. Your line is open.
Yeah. Good afternoon, Thanks for squeezing me in.
Just going back to three or three could could.
Could you just speak to the proportion of enrollment that was completed prior to making the protocol amendments that I guess will there now.
Tim Cook preferentially enroll patients just to get a better representation of either RASK status and deliberate about.
And then I guess does the increase in sample size also contemplate a change in your underlying control arm assumption I know the.
The nine plus months control arm, but converge Dod a belief, which I think included both greater output.
The past one or two.
It's a bit higher than what many folks kind of a thought would be the case.
Yes, so in terms of.
303 enrollment.
That's been going well.
We're still in still have a number of sites to activate so we're confident that once we have those sites up and running we'll be able to enroll.
Given the additional roughly 50% increase in patients relatively quickly.
All of the patients that have already been enrolled are certainly relevant to the D.
The patient population so.
We don't have any concerns there about any kind of skewing.
The patient population.
Increased its driven by the fact again coming back to the incidents of patients with liver metastases being quite high so in order to have a representative pace.
Patient population.
That looks somewhere near the incidence.
Of liver Mets, we have to enroll a substantial fraction of patients with liver Mets. In addition to those without so again the primary analysis will be in that smaller population, but again to show a benefit in a smaller population.
While preserving the possibility of showing a benefit in the overall population we have to enroll at a somewhat higher number but again, we think we can make up some time, given how well we've been recruiting to the study.
Great. Thanks for taking the questions.
Yes.
Thank you.
Please standby for our next question.
Our next question comes from the line of Chris Shabby tiny with Goldman Sachs. Your line is open.
Great. Thank you can I just clarify on 303.
The answer to Stephen's question.
Does the amendment have any implications or effect on potential timelines and then just more broadly I guess you have the R&D day planned in December but could you just give us a sense for.
Your plans for disclosing additional data across the <unk> program and.
And of course, the phase III studies.
Is it pretty much going to await for the December analyst day or.
Help us out a little bit with when we can get more data seems a lot of the responses are we'll have to wait and see.
Okay. So when you want to take the first part of that question I'll take the second yeah, I mean, so do.
We've increased the sample size.
By 50%. So of course, we do expect that it will take longer to enroll again the patients that we've already enrolled our remain relevant to the patient population under study and we've had robust recruitment again still some sites that were were still bringing on board lots of investigator enthusiasm.
We think that we can ultimately make up some time there.
Yes, Chris in terms of the R&D day agenda incontinence, I don't want to get too far ahead of ourselves Thats in December it's barely August . So we've got some time to figure that out obviously, we're committed as we have historically to presenting mature data when it's available across not only the Cabo spectrum.
But the entire pipeline so.
Where we are on track to do that this year with Zander and certainly if you have the opportunity with mature data later in the year, we'll find a way to get that out and certainly that'll be the case as this data matures, which in some ways is on its own course relative to how that data matures, but when appropriate so.
Right. Your patients do you understand you've been in this business for a long time. So you understand that some of these things just take longer than you'd like but I think we're very comfortable with the the depth of R&D that we've got across discovery and development and collaborations and other stuff that we're working on right now that will have a very fulsome morning in New York to share.
The latest and greatest data with.
And was there.
Great and then your question thank.
Thank you please standby for the next question.
Our next question comes from the line of Ron Weber with TD Cowen Your line is open.
Great. Thanks for taking the question I got a couple of questions maybe Chris for you first on the tax rate.
It's been.
Terrific really low in the first half when you are maintaining your guidance.
Can you just clarify are you expecting the tax rate to increase in the second half any specific items, you can kind of call out for us.
Secondly on stellar three or three.
Just can you give us a little bit of a 10th of the powering now with the new sort of focus on patients without liver Mets would.
With the expanded study I imagine the power is very high so what's the delta or treatment effect that youre looking for thank you.
Hey, good morning, Chris So, yes, youre right our tax rate is for the first half of the year has been below our guidance range, but there's a lot of things that go into that when you look at the entirety of the year and there is some.
Some expenses that may or may not happen in the second half of the year. So we're maintaining our guidance for that reason okay. Good. Thanks, and then with respect to stellar three three.
In terms of the power for overall survival, we're looking for a clinically meaningful effect.
In both the non liver Mets population as well as in the ITT.
And what do you consider to be clinically meaningful I don't know if you can expand a little bit.
Without getting into the statistics.
I would just say again when when we think about.
Interactions that we have with regulatory agencies as well as with payers and what they're looking for in terms of overall survival benefits.
You can also look to the leap 17 data and see the difference in the <unk>.
OS hazard ratios as I mentioned earlier.
For what they saw in the non liver Mets population.
Thank you.
Ladies and gentlemen, I'm showing no further questions in the queue I would now like turn the call back over to your host Susan Hubbard for closing remarks.
Great. Thanks, I wanted to thank you all for joining US today, we welcome your follow up calls with any additional questions. You may have that we were unable to address during today's call.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect.
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