Q3 2024 Exelixis Inc Earnings Call
Thank you.
[inaudible]
Thank you.
Twanda: Good day ladies and gentlemen, and welcome to Exilexus, 3rd quarter 2024 by Natural Results Conference Call. My name is Twanda and I'll be your operator for today. As a reminder, this call has been recorded for replay purposes.
Speaker Change: I would now like to turn the call over to your host for today. Mr. Vorot, Shribinian, Director of Investor Relations. Please proceed.
Vorot Shribinian: Thank you to Wanda and thank you all for joining us for the X-Lexes 3rd Quarter 2020 4 Financial Results Conference Call.
Vorot Shribinian: Joining me on today's call, our Mike Morrissey, our President and CEO, Chris Senner, our Chief Financial Officer, and PJ Haley, our Executive Vice President of Commercial, who together will review our progress for the third quarter, 2024, and its September 30, 2024.
Vorot Shribinian: and Amy Peterson, our Chief Medical Officer and Dana Aftab, our Chief Scientific Officer, are also on the call today and will participate in our question and answer session.
Vorot Shribinian: During the call today, we will refer to financial measures not calculated according to generally accepted accounting principles.
Vorot Shribinian: Please refer to today's press release, which was 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.
Vorot Shribinian: During the course of this presentation, we will be making forward-looking statements regarding future events and the future performance of the company.
Vorot Shribinian: This includes statements about possible developments regarding discovery, product development, regulatory, commercial, financial, and strategic matters, and estimates and projections from our annual U.S. net product revenues and potential market and growth opportunities.
Vorot Shribinian: These estimates and projections involve a number of assumptions and limitations, and we caution investors not to place undue reliance on this information. Actual events or results could, of course, differ materially.
Vorot Shribinian: We refer you to the documents we file from time to time with the Securities and Exchange Commission, 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.
Vorot Shribinian: 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 development, business development, and commercialization activities.
Vorot Shribinian: With that, I'll turn it over to Mike. All right. Thanks, Ferrant, and thanks to everyone for joining us on the call today.
Mike Morrissey: We'll use our prepared remarks today to provide a strategic perspective on the business with a forward-looking view of the opportunities for Cabo Zantinib, Zanzalintinib, and the early stage pipeline to maximize success in building a multi-franchise oncology business.
Mike Morrissey: The last few weeks have been extremely busy with the positive CABO ANDA ruling and the Zanzibar Collaboration announcement with Merck.
Mike Morrissey: As you saw in our press release issued an hour ago, Exelexis had a very successful third quarter across all components of our business.
Mike Morrissey: I'll start today with a strategic overview to frame our near-term and aspirational vision for the company, followed by financial and commercial updates from Chris and TJ.
Mike Morrissey: Amy and Dana are here as well and will address any technical R&D related questions that come up in Q&A.
Mike Morrissey: X-Alexis is obviously an inflection point with the clarity on the Cabo Anda and significant momentum for Zanza.
Speaker Change: CABO is having a strong 2024 across literally all commercial metrics that we track routinely as performance indicators for the business, and we remain very bullish on CABO's revenue outlook into 2030.
Speaker Change: The Zanza Opportunity represents an important component of mid- and long-term revenue growth starting in the back half of this decade and potentially building into a dominant position in the 2030s.
Speaker Change: We're pleased to be working with Merck in kidney and head and neck cancers, and that cost-sharing compound sharing agreement provides significant validation and momentum for Zanza while we maintain full global commercial rights.
Speaker Change: Collaborate with the competition model has been a pillar of our Cabo development success and we're pleased to get the first one moving with Zanza. We're obviously not done in this regard and aim to expand into other collaborative opportunities in the future.
Speaker Change: Thank you for watching. This is a production of the Center for Autonomous Vehicles. All rights reserved.
Speaker Change: With the Zanza development plan, including six ongoing and planned pivotal trials, and more potentially on the horizon, we believe Zanza has the opportunity to surpass Cabo in scope and scale with one planned launch per year starting as early as S-2026.
Speaker Change: Exelexis' aspirational goal is to be a market leader in both GU and GI oncology as our main therapeutic focus.
Speaker Change: Note that we're arguably already in the pole position as a GU Oncology leader, so building momentum in the GI space is an immediate priority for both Cabo and Zanza.
Speaker Change: Additional ZANZA indications outside of
Speaker Change: Thank you for watching. I'm Chris Hurt. I'll see you next time.
Speaker Change: Building, developing, accelerating, and pruning our early stage pipeline is critically important as we advance towards a multi-franchise business.
Speaker Change: With three novel compounds in our early stage clinical pipeline, including XL309, XPO1L, and XL495, and several near-term INDs close behind, we plan to efficiently profile and prioritize potential winners for advancement into full development.
Speaker Change: As I said before, we're in the pivotal trial in p-value business, where clear clinical differentiation is the mandatory prerequisite and the only viable path towards future commercial success.
Speaker Change: That's the essence of the Cabo story and we're applying that filter to everything we do in R&D.
Speaker Change: We have a lot of exciting mature data from our early clinical efforts with Zanza, and we expect to present a significant amount of clinical data from Stellar 001 and 002 throughout 2025 at major medical meetings.
Speaker Change: We'll provide more granularity on those datasets as abstracts are accepted and titles published. In addition, we plan to host another R&D Day in 2025 as well.
Speaker Change: and Dana Aftab.
Speaker Change: With the ANDA litigation now largely behind us, we expect future business development activities to ramp up. As highlighted previously, we are targeting late-stage clinical assets in the GU-GI oncology space, where we have clear conviction that clinical differentiation could drive ultimate commercial success.
Speaker Change: As we've highlighted previously, most biotech oncology launches since 2016 have been underwhelming, with Convo being one of the few standouts in terms of indication expansion and revenue growth. So we're very selective as we evaluate the clinical and commercial opportunity of late-stage assets.
Speaker Change: XOXs could potentially pursue any type of transaction as we advance with a pragmatic, thoughtful, and unambiguous focus on doing the right deal at the right valuation for the right asset.
Speaker Change: Finally, we're executing with an ambitious plan for building success as a multi-franchise company.
Speaker Change: To that end, I want to be very clear that we're committed to running the business, and specifically R&D, at recent expense levels for the foreseeable future. Our intention is to continue to rigorously, and often aggressively, prioritize spending and investments towards late-stage molecules to maximize our clinical and commercial success.
Speaker Change: While we advance the pipeline, generate free cash, and return a healthy portion of that free cash to shareholders.
Speaker Change: As you all know, clinical success never gets cheaper as compounds advance into late-phase development, so we'll continue to prioritize our spending as we did at previous ex-alexis inflection points over the course of the last decade.
Speaker Change: Our share buybacks over the last two years, totaling $1 billion, in commitment of another $500 million to the end of 2025, underscores our balanced and pragmatic approach to investing in the pipeline while returning cash flow to shareholders.
Speaker Change: So with that background in place, let's review the key highlights for the quarter and drill down into additional details for our near and mid-term vision for Acavo and Zanza.
Speaker Change: First let's start with the quarter. XOX has delivered outstanding financial performance in third quarter 2024 with top and bottom line growth year-over-year driven by the strength of the Cabo Santander franchise including increased demand, new patient starts, and revenue.
Speaker Change: Tableau Medics maintained its status as the leading TKI for RCC in the U.S.
Speaker Change: With third quarter 2024, Cabo franchised net product revenues of $478 million, up 9% quarter-over-quarter compared to 2Q 2024, and 12% year-over-year compared to the third quarter 2023.
Speaker Change: Global Composite Antenna Franchise Net Product Revenues generated by xLexus and its partners grew to $653 million in the third quarter of 2024.
Speaker Change: We have increased 2024 full-year net product revenue and total revenue guidance based on these robust results, and we're building on our strong commercial momentum as we wind up the year and head into 2025.
Speaker Change: Chris and PJ will provide details for the quarter in their prepared remarks.
Speaker Change: Let's move next to our future, first focusing on Cabo to drive near-term upside with strong projected revenue growth to the end of the decade and the potential for Zanza to drive significant revenue opportunities starting as early as 2026 and accelerating into the 2030s and throughout that decade.
Speaker Change: We're obviously pleased with the favorable ANDA ruling, which extends our CABO revenue runway into early 2030, subject to Ex-Alexis's potential additional regulatory exclusivity.
Speaker Change: The district court's judgment is also subject to appeal by either party. I want to remind everyone that, to the best of our knowledge, the FDA has not granted tentative approval of MSN's proposed ANDA product more than five years after their original submission.
Speaker Change: Building off the strength of CABO's leadership position in RCC and potential new indications in NET and CRPC, our midterm projections highlight the potential for CABO to reach peak sales in the U.S. of nearly $3 billion annually by 2030.
Speaker Change: with conservative estimates for growth of the base business, capturing a significant market share of the oral net therapy indication, and a limited opportunity in prostate cancer, which is heavily discounted until we get clarity on regulatory traction with our projected fourth quarter filing.
Speaker Change: Let's turn next to Zanzibar. Zanzibar has been largely under the radar from the streets perspective with only a little over half of our covering analysts including it in their revenue models.
Speaker Change: We anticipate it will gain more attention and prominence moving forward now with the positive Cabo-Anda ruling and the recently announced collaboration with Merck.
Speaker Change: Specifically, Zanzibar is built to expand on Cabo's foundation and its early development plan provides a framework to surpass Cabo's clinical and commercial success.
Speaker Change: Our first six Zanza Pivotal Trials and four lead indications, including colon cancer, kidney cancer, head and neck cancer, and neuroendocrine tumors, represents a large population of over 100,000 cancer patients annually with overwhelming unmet medical need based on current standards of care with a cadre of generic and established drugs.
Speaker Change: Critically, recent progress across these trials reinforces our plan to secure our first potential approval for Zanzibar as early as 2026 and then in subsequent years one additional approval per year pending clinical and regulatory success.
Speaker Change: HAZAN's revenue opportunity with this first wave of label-enabling trials is substantial, with projected greater than $5 billion of top-line sales in the U.S. in 2033, nearly equally split between GU and GI indications.
Speaker Change: Obviously, a second wave of new trials in GU, GI, and other appropriate indications could advance this opportunity to the next level in the mid-30s and beyond.
Speaker Change: Zanza commercialization ex-U.S. either by ex-Alexis or a potential new partner could drive significant commercial and financial upside as well.
Speaker Change: I'll wrap up here with a few additional comments on the pipeline advancing behind behind Cabo and Zanza. We're thrilled, but never satisfied with the depth and scope of the early pipeline assets we built and are moving into and through early clinical evaluation.
Speaker Change: Our small molecule and biologic approaches represent the opportunity to match the best modality with the most compelling tumor pathobiology as either monotherapies or combination partners with checkpoint inhibitors or proprietary exolexes molecules.
Speaker Change: We're advancing lead molecules in the synthetic lethality space with XL309 and XL495, and a variety of biologics in EDC, bispecific, and monoclonal antibody formats.
Speaker Change: The ultimate goal for all these programs is to rapidly generate clinical data to prioritize advancement into full development, all with the goal of exceeding expectations as a multi-product, multi-franchise oncology biopharma.
Speaker Change: So with that, please see our press release issued an hour ago for our third quarter 2024 financial results and an extensive list of key corporate milestones achieved in the quarter. I'll now turn the call over to Chris.
Chris: Thanks, Mike. For the third quarter 2024, the company reported total revenues of approximately $539.5 million, which included Cabo Zantider Franchise Net Product Revenues of $478.1 million.
Chris: Alamedic's net product revenues were $475.7 million and included approximately $6.6 million in clinical trial sales, which is similar to Q2 2024.
Chris: Gross to net for the Cabo Zante franchise in the third quarter 2024 was 26%.
Chris: which is lower than the gross to net we experienced in the second quarter 2024. This decrease in gross to net deductions in the third quarter 2024 is primarily related to lower Medicare Part D and DOD and TRICARE expenses.
Chris: We are now projecting that our gross net deductions for fiscal year 2024 will be between 28 and 29 percent.
Chris: Thank you.
Chris: Our COBMEDX trade inventory was flat at 2.1 weeks on hand when compared to the second quarter of 2024.
Chris: As a continued reminder, clinical trial sales have historically been choppy between quarters, and we expect this to continue into the future.
Chris: Total revenues included
Chris: Silver revenues included $60.2 million of licensed revenues for the third quarter of 2024.
Chris: The largest contributor to our licensed revenues was $42 million from the royalties we earned from Ipsen and Takeda on their sales of cow bosantinib in their territories.
Chris: Additionally, we recognize approximately $11 million in licensed revenues for a regulatory milestone resulting from Ipsos filing of their application for a potential net indication with the European Medicines Agency.
Chris: Our total operating expenses, including restructuring and impairment charges for the third quarter 2024 were approximately $352 million compared to $361 million in the second quarter 2024.
Chris: The sequential decrease in these operating expenses was primarily driven by lower general and administrative expenses offset by higher clinical trial and licensing costs in the third quarter of 2024.
Chris: After evaluating our near-term needs for both lab and office facilities on our Alameda campus, we put certain of our unoccupied lease facilities on the market for sublease. As a result, we recorded a non-cash impairment charge of approximately $52 million related to these lease facilities.
Chris: Provision for income taxes for the third quarter 2024 was approximately $37 million, compared to a provision for income taxes of approximately $67 million for the second quarter 2024.
Chris: The company reported gap net income of approximately $118 million or $0.40 per share on a fully diluted basis for the third quarter of 2024. The company also reported non-gap net income of approximately $136 million or $0.47 per share on a fully diluted basis.
Chris: Non-GAAP net income excludes the impact of approximately $18 million of stock-based compensation expense net of the related income tax effect.
Chris: Action Marketable Securities as of September 30, 2024 were approximately $1.7 billion.
Chris: In the third quarter of 2024, we repurchased approximately $12 million of Exelixis shares at an average price of $25.61 as part of the $500 million share repurchase program authorized by the Board in August 2024.
Chris: And finally, turning to our financial guidance for the full year 2024, we are increasing and narrowing our total revenue and net product revenue guidance, given Kabba Matic's strong net product revenue performance in Q2 and Q3 of this year.
Chris: We are increasing our total revenue guidance to $2.15 billion to $2.2 billion.
Chris: Additionally, we are increasing our Net Product Revenue Guidance to $1.775 billion to $1.825 billion, which increases the midpoint of our Net Product Revenue Guidance range by $100 million when compared to our previously provided Net Product Revenue Guidance.
Chris: Given where we are in the year, we are tightening our R&D and SG&A expense guidance ranges.
Speaker Change: Please see slide 20 of our Q3 earnings presentation for further detail. And with that, I'll turn the call over to PJ.
PJ Haley: Thank you, Chris. The third quarter of 2024 was a very strong quarter as the team continued to execute at a high level, which has resulted in Cabo Medics continuing to be the number one prescribed TKI in RCC.
PJ Haley: Additionally, automatics remains the number one TKI plus IO combination in first-line renal cell carcinoma.
PJ Haley: PavloMedx TRX volume grew 9% year-over-year in Q3 2024 compared to Q3 2023.
Speaker Change: In the same period, did TKI market basket volume decline by 1%?
Speaker Change: Importantly, the business continues to grow in terms of demand and new patient starts, both of which were at an all-time high for Cabo Medics in the third quarter.
Speaker Change: Thank you.
Speaker Change: Cabo Medics continued to perform well
Speaker Change: Tableau Medics again led the TKI market basket with TRX share increasing to 42%.
Speaker Change: As we had discussed previously, the first-line RCC market is extremely competitive and Q3 was the 8th full quarter in which Cobomedics plus Novolumab remained the number one prescribed TKI plus IO combination in first-line RCC.
Speaker Change: In particular, we're continuing to see strong growth in the community oncology setting.
Speaker Change: Looking forward, the commercial team is excited about the positive results from the cabinet study in neuroendocrine tumors, as Exelixis aims to become a leader in the NET space.
Speaker Change: We believe the RCC market provides a blueprint for how the net market could develop and grow in the coming years.
Speaker Change: The global RCC market grew from approximately $3.7 billion in 2016 to approximately $10 billion in 2023, driven by new therapeutic launches,
Speaker Change: improved outcomes for patients leading to longer treatment durations and longer survival with patients receiving more lines of therapy.
Speaker Change: Similarly, early projections for the global net market show it could almost double, going from approximately 2.5 billion dollars in 2023 to approximately 4.6 billion dollars in 2030.
Speaker Change: Based on the cabinet study, Cabomex is well positioned to capture a significant portion of this market pending regulatory approval.
Speaker Change: Beyond Cabo.
Speaker Change: The STELLAR 311 study positioned Zanziwell in the neuroendocrine tumor space. However, it is not included in these early projections.
Speaker Change: Thank you. Thank you.
Speaker Change: The cabinet data were enthusiastically received at this September's ESMO meeting and simultaneously published in the New England Journal of Medicine.
Speaker Change: As we talk to KOLs and physicians in market research,
Speaker Change: The efficacy data from cabinet is viewed favorably by prescribers in terms of progression-free survival, overall response rate, and disease control rate.
Speaker Change: They view the cabinet data as clinically meaningful and there is excitement for the potential for CABO to become available to NET patients.
Speaker Change: The vast majority of physicians in our neuroendocrine tumor market research have experience with CABO in RCC, HCC, or DTC, which is consistent with CABOMedic's utilization data.
Speaker Change: These oncologists cite their experience with carbometics in these tumors as a positive factor.
Speaker Change: particularly when it comes to comfort with dose modification and toxicity management.
Speaker Change: and Dana Aftab.
Speaker Change: The feedback and research clearly demonstrate that a regulatory approval for CaboMedx based on the cabinet study would have the potential to help build, excuse me, to help a broad range of net patients and address a significant unmet medical need.
Speaker Change: The cabinet study had a diverse population that included patients regardless of site of disease origin, tumor grade, prior lutethera, SSTR status, or functional status of the tumors.
Speaker Change: In our market research and KOL feedback, physicians cite the study design as a positive and that it covers a wide range of NET patients that they see in their practice.
Speaker Change: as well as the fact that it is a contemporary data set and is inclusive of patients.
Speaker Change: who have received prior LUDA therapy.
Speaker Change: The potential broad utility of CABO and NETS is a differentiator in this setting relative to other approved agents.
Speaker Change: Although may have the opportunity to be the easy choice to use in neuroendocrine tumors, given that it was studied in all relevant clinical segments.
Speaker Change: Thank you for watching.
Speaker Change: In our analysis of the neuroendocrine prescriber universe, we see the vast majority of net business potential in approximately 3,500 prescribers.
Speaker Change: We are thrilled that about 80% of these prescribers already have experience writing carbometics.
Speaker Change: Of these 3,500 NetTreaters, 2,800 are already current on-label targets for the Salesforce.
Speaker Change: indicating that access to them would be efficient.
Speaker Change: Also, of the 700 NET prescribers who are not currently called on, the vast majority, 550, are co-located with current Cabo Medics targets.
Speaker Change: Thank you. Thank you.
Speaker Change: Ending FDA approval, we are confident that we will be able to rapidly reach and educate this net prescriber universe efficiently, given the overlap with current sales targets and the fact that we expanded our GI sales team.
Speaker Change: Turning to the net market, we have conducted market research which shows that oral therapies account for approximately 25% of the first-line market and 50% of the utilization in the second and third line plus settings.
Speaker Change: Currently available oral options do not have the same breadth of data across all disease characteristics, including site of origin, grade, and functional status.
Speaker Change: Also, in market research, physicians do not view the toxicity profile of these agents in a favorable manner.
Speaker Change: The majority of NET patients will receive multiple lines of therapy.
Speaker Change: And there is lack of optimal sequencing data in this setting, particularly in patients previously treated with Lutathera.
Speaker Change: All of this taken together underscores the need for a contemporary data set that is broadly applicable to address the unmet medical need for this heterogeneous patient population.
Speaker Change: Looking at the small molecule market for NETs in 2025 using contemporary pricing.
Speaker Change: The small molecule opportunity would be approximately $1 billion in the U.S.
Speaker Change: Additionally, upon approval, Cabo Medix would be the only branded small molecule therapy competing in the neuroendocrine tumor market.
Speaker Change: This is a critical point as Cabo would have a clear advantage in promotional share of voice and be the only oral therapy with comprehensive patient support services.
Speaker Change: With the cabinet data and a focused launch strategy that leverages the positive prescriber experience with Cabo.
Speaker Change: Exelixis is well positioned to rapidly penetrate this market.
Speaker Change: Furthermore, as Xelixx aims to become a leader in the neuroendocrine tumor market, we are excited about the Planned Stellar 311 trial of Zanza and Nets.
Speaker Change: The commercial team is excited and motivated by the launch planning and preparation for the opportunity in NETS.
Speaker Change: and Dana Aftab. Thank you. Thank you.
Speaker Change: The Cabo Franchise is closing out 2024 with significant momentum in our currently approved indications.
Speaker Change: and a potential regulatory approval of Cabo Medix and NET would provide the opportunity to continue the growth and momentum in the coming years.
Speaker Change: Looking through the CABO lens, it is clear that great data with a great team behind it can significantly help patients and expand markets.
Speaker Change: We have seen this in RCC as the oral therapy market has expanded by nearly 40% since the beginning of 2021.
Speaker Change: We are extremely excited about the portfolio of announced phase 3 Zanza trials. We are motivated to expand the CABO franchise to a kinase inhibitor franchise with Zanza having the potential to help patients in tumors where CABO has demonstrated activity such as NETs and RCC.
Speaker Change: as well as new tumors such as colorectal and head and neck cancers.
Speaker Change: So we can continue to help more patients with cancer as we strengthen our GU and GI franchises.
Speaker Change: And with that, I will turn the call back over to Mike. All right, thanks, TJ. I'd like to close our call today by thanking all of our very talented and dedicated employees who are unwavering in fulfilling our mission to help cancer patients recover stronger and live longer.
Speaker Change: Successfully litigating the ANDA with the results of extremely hard work and perseverance over literally years, led by our excellent legal team in partnership with outside counsel Wilmer Hale.
Speaker Change: I'm grateful to the numerous internal employees who were interviewed, deposed, and otherwise engaged in supporting this litigation, including scientists in discovery and manufacturing, leaders and members of the commercial and medical affairs teams, as well as finance and public affairs.
Speaker Change: I'd also like to recognize the team involved in successfully negotiating the Merck Clinical Development Collaboration, which was another cross-functional effort led by our business development colleagues.
Speaker Change: With this collaboration, we're on our way to helping many more cancer patients with Zanza.
Speaker Change: And finally, I'd like to recognize our entire R&D organization who have propelled our pipeline efforts forward at a rapid pace.
Speaker Change: Ladies and gentlemen, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question, please press star 11 again.
Speaker Change: As a reminder, we ask that you limit yourself to one question only.
Speaker Change: Thank you.
Speaker Change: and Dana Aftab.
Speaker Change: Our first question comes from the line of ASTHCA, awarding with choice. Your line is open.
Speaker Change: Hi guys, thank you for taking my questions and congrats on defeating the race here, it's very encouraging to see that.
Speaker Change: Since I'm restricted to just one question, I'll just focus on the Merck collaboration that was recently announced. Can you maybe give us some color on the diligence process that went into that deal? How extensive was it? I know it's hard to comment on that, but that'll be useful. And the reason I'm asking is because Merck already has lendetinib, a drug where tolerability and half-life has been debilitating to its development.
Speaker Change: what they did with the analysis for JANJA. Thanks.
Speaker Change: Yeah, I asked the catch, Mike. Thanks for the question.
Speaker Change: Yeah, you know, it's a hard question to answer. You know, we don't want to speak for Merck. We certainly want to respect the process that took place over many, many, many months. We are, you know, we're thrilled to be working with
Speaker Change: It's just awesome from our point of view, and we're certainly excited to work with them going forward with these first set of trials with Zantac.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Jason Gerberry with Bank of America Securities. Your line is open.
Speaker Change: Hi, this is Chi. I'm for Jason. Thanks for taking our question, Congress, on securing a favorable ruling on capital IP. One on business development, understanding you look to do the right deal at the right valuation.
Speaker Change: for the right answer within the GU-GI space. I'm curious if you have a preference for modality, whether it's small molecule, monoclonal, but specific or ADC, and whether you have a ceiling on the size of the deal you would consider for BD. Thanks so much.
Speaker Change: Yeah, thanks for the question, MBD. Look, we're agnostic to, I think, almost all those factors. We're focused on active molecules, as I mentioned in our prepared remarks.
Speaker Change: that we have conviction on in terms of having the ability or the opportunity to generate differentiating clinical data that we can then convert into commercial success. I mean, again, that's the learning from Cabo. That's the Cabo lens that we base everything on. So we obviously want to be able to work in the GU, GI space because we're really set up to execute very well there, both clinically and commercially. But in terms of modalities, we're open. We're looking for active molecules that we think we can build into a franchise.
Speaker Change: number one, and then get over the goal line numerous times from a regulatory point of view with the obvious upside in helping more patients and then having that translate into commercial success.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Sylvan Turkin with Citizens J&P. The line is open.
Sylvan Turkin: Yeah, thanks, Tim. Thanks for taking my question, and congrats on the...
Sylvan Turkin: the beat.
Sylvan Turkin: I would like to know about, maybe that there's a gap between, obviously, between your near-term growth with Carol and Zander, and then that you want to show with BD, and then your earlier pipeline. But maybe talking about the earlier pipeline, your synthetic lethality assets, when can we expect some data there, and how have you...
Sylvan Turkin: What's your view on this space with all the competitive data that has come out recently here? Thank you so much.
Speaker Change: I want to take that one first from a competitive point of view and then I think both Amy and I can provide some color commentary as well. Sure. Sure. So, thanks for the question. Just regarding, so let's just be clear, we've got
Speaker Change: to compounds in the clinic now that are in the synthetic lethality space, Excel 309, which targets U.S. design.
Speaker Change: And as we announced in the press release, XL495 has now been filed and the Phase I trial is running. As I highlighted at our R&D Day presentation in December, both of those molecules are substantially differentiated.
Speaker Change: from the other molecules that are in the clinic.
Speaker Change: regarding XL309. We now believe we are the front runner in the clinic with Roche pulling back.
Speaker Change: on their molecule to rework and work through some PK issues. They really hit a ceiling in terms of exposure. So we're quite happy with our position now in the clinic with that compound. And then with 495, the PK met one inhibitor.
Speaker Change: The main competition there is from Repair with Lunar Assertive.
Speaker Change: And as we presented at R&D Day in December, our compound, we believe, has a PK advantage as well as a selectivity advantage. With our PK modeling, we believe we can hit
Speaker Change: well into the efficacious range of exposure with once-daily dosing, and we also have
Speaker Change: We also hit about 33 or 35% fewer kinases in a broad selectivity panel compared to that competitor compound. So we think there might be a safety advantage as well.
Speaker Change: Amy.
Amy Peterson: Yeah, so I know we spent a lot of time talking about Cabo and Zanza because they're sort of the newer term things but
Amy Peterson: Trust me, Dana's keeping the development team very busy with some of these assets in the pipeline as they advance, and they are, you know, we really are focusing on best-in-class, and with the
Amy Peterson: modality that we have around USP-1 and single-stranded break repair, there's really an opportunity to not only extend the reach of
Amy Peterson: of PARP inhibition and BRCA mutations, but potentially also
Amy Peterson: take it beyond BRCA mutated patients into HRD and potentially other indications.
Amy Peterson: And, you know, we have the XBL-10 ADC with the MMA payload that targets 5T4.
Speaker Change: advancing. And now, as Dana just pointed out, FPI to 495. So we are busy with the pipeline. There's a lot coming. There's more to come. And we are really focusing on that just as much and as intensely as we are focusing on Zanza and maturing it.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change: Thank you.
Speaker Change: Thank you for watching. This is a production of the Center for Autism and Related Disorders.
Speaker Change: Our next question comes from the line of Michael Schmidt with Guggenheim Securities. Your line is open.
Michael Schmidt: Hey, thanks for taking my questions. Great to see a re-acceleration of Cabo sales growth to double digits here in the second half of this year. Could you just comment on what's been the primary driver for that? And then on Zanza, you know, congrats on the Merck collaboration. I'm just curious if you could comment on the two planned phases.
Michael Schmidt: three studies of Sansop and Dazurifan in RCC and how you think about positioning that versus CABO and the ARCOS HIF-2 alpha inhibitor longer term. Thanks so much.
Speaker Change: Okay, PJ take the first one and I'll comment on the second one. Okay. Great. Yeah. Thanks for the question Michael. We're certainly very pleased
Speaker Change: As I mentioned with the quarter and the significant momentum we have with Cabo now and the franchise, you know, as I've mentioned previously, we were sort of continuing to see new highs in both demand and new patient starts and really primarily driven
Speaker Change: by Firstline RCC.
Speaker Change: We maintain our market leadership position there. And as we see increasing new patient starts here, we continue to see patients stacking and sort of demand moving forward. So very pleased with that. And really it comes down to, we've got great data.
Speaker Change: across the board there, and then a great team really focused on executing at a high level and just, you know, continue to see that moving forward.
Speaker Change: Thank you.
Speaker Change: In terms of Zanzibar,
Speaker Change: with Mark again. We've agreed with Mark
Speaker Change: to ourselves for now, as I'm sure time goes on and trials are moving forward. Merck, again, who's running those trials, will communicate the design and those kinds of issues.
Speaker Change: Stay tuned on that. I don't have much stuff much to say in terms of
Speaker Change: Other competitive programs, we're very, very happy to be partnered with Merck, which has the only FDA-approved
Speaker Change: and they are the only HIF inhibitor on the market right now. With the momentum we've got with Zanza and certainly with their firepower, we're very excited to be moving forward here with them going forward.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change: Our next question comes from the line of Gregory Renzo with RBC Capital Markets. Your line is open.
Speaker Change: Thank you. Thank you.
Gregory Renzo: Great, good evening, good afternoon Mike and team. Congrats on the quarter and also on the string of recent great, great updates.
Speaker Change: The differentiating data that you would expect to get to those numbers and even the unadjusted nature But as we think about sort of those breakdowns With respect to GU and GI and head and neck would be
Speaker Change: would be great, and certainly related, you know, Mike, what is the optimal pipeline construct and portfolio construct for you, having gone back, having lived through the Cabo days, establishing and defending the competitive positioning, is Vanza, sort of that single asset to get that full white space and diversity of opportunity, the right way of thinking for xLexus?
Speaker Change: Thank you for tuning in.
Speaker Change: Thanks so much and congrats again guys.
Mike Morrissey: Yeah, thanks, Greg. Appreciate the comments and the questions. Look, as we talked about previously, Cabo provides the foundation for which we're building future opportunities with Zanza going forward. We've learned a lot with Cabo.
Mike Morrissey: 15 plus years developing that molecule. We've had a string of successes. We've done, I think, a lot of really great science.
Mike Morrissey: at the lab bench in the clinic, been able to learn a lot as an organization to be able to maneuver. So I think we're applying all those learnings from all those different lanes into how we view the Zanza opportunity. In terms of details on assumptions, we have a very sophisticated commercial organization that does modeling professionally. I mean, this is what they do. So we'll share those assumptions and that data in time. I think it's,
Mike Morrissey: I think it's important for, you know, the South Side now, to be quite frank, to, you know, roll up their sleeves, sharpen their pencils, and, you know, look at these, look at these opportunities, start doing your own modeling, and we can, you know, we can talk about that together when some of that data, some of your modeling is more mature in the future, but we're thrilled about having Zanzibar's app to have a molecule at this stage in six
Mike Morrissey: ongoing or planned pivotal trials. We think there's more opportunity on the way. You know, collaboration with Merck, you know, top-line data in 3.03 and 2025, potentially first launch in 26.
Speaker Change: The momentum is palpable right now, coming off the strength of Catalyst. So we're excited to be, again, to be past the ANDA so everybody can focus on the business moving forward, positive direction forward, without having some of the overhang that we've had with ANDA and other stuff in the past. So happy to engage with you going forward and looking forward to making this happen.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change: Our next question comes from the line of Yaron Warburg with TD Cohen. Your line is open.
Yaron Warburg: Great, thanks for taking my question. Congrats on the quarter and on the litigation.
Yaron Warburg: Mike, the one thing that really caught my mind is your comment about potentially looking at late stage deals. I think that you've kind of commented on that, but I think this is kind of something you're highlighting a bit more now, at least in our view.
Yaron Warburg: Am I thinking about this correctly and are you open for acquisitions or is this like a really in licensing only? Thank you
Yaron Warburg: Thank you. Thank you.
Mike Morrissey: So thanks for the question and the commentary. Look, we've been talking about late-stage opportunities for a while now, as you heard from Dana and Amy.
Mike Morrissey: You know, we have a very full early stage pipeline. We like these molecules. We think they're best in class. We have a lot of work to do to interrogate and then prioritize what moves into full development. So to be quite frank, we don't need more development candidates, more INDs, more phase one molecules because we've got, you know, our plate's full, right, in terms of what we're doing internally.
Speaker Change: We're interested in building XOXOS into a multi-product, multi-franchise.
Speaker Change: oncology business. That's the goal and to do that and you know obviously we have Cabo going full steam, Zans have got great traction, but if we can find the again the right asset that has the right level of gives us the right level of conviction on being able to generate differentiating clinical data that can then drive commercial performance
Speaker Change: We're very interested in finding a way to bring that molecule or those molecules into the organization. As I said in my prepared remarks, you know, we have any number of different potential, you know, business development opportunities.
Speaker Change: Going forward, we can do virtually anything we think makes sense, but it's got to be for the right deal, the right valuation with the right asset.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change: Our next question comes from the line of Jay Olson with Oppenheimer. Your line is open.
Jay Olson: Wow, congrats on all the progress across so many fronts.
Jay Olson: Since you have global rights to Zanzibar, why did you focus your outlook on U.S. revenues and how are you thinking about the ex-U.S. opportunity? Thank you.
Speaker Change: Yeah, Jay, thanks for the question. You know, it's really the right time. I said in my kind of my early comments this afternoon, right, we're at this inflection point organizationally where, you know, we're past
Speaker Change: We're past the end. We have that that overhang finally removed. We want everybody, all of our various stakeholders, to look at us today as we're going forward with a successful product in Cabo, an asset in Zanzibar that has
Speaker Change: multiple, I would say, high PTRS shots on goal in terms of new indications.
Speaker Change: where we're at and where we're going. So to get you guys, everybody off the sidelines and looking at us in maybe a new light with the momentum we've got right now I think is super important.
Speaker Change: multi-franchise business because that's where the value is for patients and for shareholders. And with the momentum we have with Cabo and with Zanzibar and the pipeline, lots of optionality BD-wise, we're super excited about our path going forward.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change: Our next question comes from the line of Andy Shea with Grimbler. Your line is open.
Speaker Change: and Dana Aftab.
Andy Shea: Thanks for taking our questions. I really encourage you to see the durability of Cabo's leadership there.
Andy Shea: Two questions, if I may. One for PJ. So there's a head imaging agent for C8-9 for RCC that could get approval.
Andy Shea: potentially next year. I'm just wondering how you view that.
Andy Shea: you know, potentially pulling some patients who otherwise would have gotten
Andy Shea: have gone undiagnosed.
Andy Shea: And, you know, would that be a potential upside to your $10 billion TAM that you laid out for RCC?
Andy Shea: Second question has to do with the also the 1 billion TAM that you mentioned for the small molecule NET. Just kind of back to the level of calculation, I think you're probably projecting anywhere from a five to six month duration.
Speaker Change: Thank you. Bye.
Speaker Change: I'm curious, if you look at the landscape, especially with like a spinotaur label, some of the durations for earlier lines are basically 9-10 months. So, is it unreasonable to assume that if Zanza entrenches earlier in the treatment landscape for NETs, that duration will be significantly higher, given that it's a more indolent cancer?
Speaker Change: Thank you.
Speaker Change: Yeah, Andy, thanks for the questions. You know, briefly with regards to RCC, you know, I think a lot of patients are in the funnel and we're certainly
Speaker Change: As I mentioned, pleased with our performance there and our leading TRX market share, which continues to grow.
Speaker Change: Now up to 42% in...
Speaker Change: in that market basket.
Speaker Change: And, you know, I think that market, most of the patients are being treated. And I think, you know, the bar for
Speaker Change: Success, particularly in the first line, and really even with Cabo in the second line, is quite high. So, you know, I view that market as relatively, you know, stable in the near term vis-a-vis other mechanisms of action.
Speaker Change: You know, in thinking about NET, as you mentioned, yeah, as I mentioned, you know, about a quarter of the patients in first-line NET are getting oral therapies, approximately 50% in the second, third-line settings getting orals. And, you know, we basically use, I won't go into the details,
Speaker Change: using durations that we see from that. I certainly think you're correct. Obviously, the earlier you do go, the longer the durations of therapy, particularly in neuroendocrine tumors.
Speaker Change: which is a bit more indolent than some other solid tumors. And I think there is the potential for Zanza in the long-term pending.
Speaker Change: trial results, regulatory approval, etc., of having earlier utilization.
Speaker Change: and therefore a longer duration. I think, you know, that's certainly right, but what I'd say in the near term, we're really excited about Cabo and the potential approval that we're, you know, looking at.
Speaker Change: with the PDUFA date of April 3rd. And, you know, as we think about that market and that billion dollar market in 2025 that I mentioned, we think we're incredibly well positioned to not only, you know,
Speaker Change: penetrate it and achieve a lot of that market but do it rapidly, you know, really the more we think about it is we're the only branded oral therapy.
Speaker Change: In the space, it really gives us a big advantage in terms of the promotional share of voice and really just the ability to help patients, comprehensive patient support services, we think will be really important. So we're really excited about that opportunity in the near term.
Speaker Change: Thank you.
Speaker Change: Will you stand by for our next question?
Speaker Change: Our next question comes from the line of David Liebowitz with City. Your line is open.
Speaker Change: Hi guys, John for David. Thanks for taking our question.
Speaker Change: For combo and neuroendocrine tumors, I know you know you just you're touching on some of the commercial considerations for this market, but what sort of work still needs to be done before a potential launch?
Speaker Change: assuming approval, how should we be thinking about initial launch cadence? Are there any existing indications that might serve as sort of a, you know, sort of a proxy for how we should get thinking about early uptake? Thanks.
Speaker Change: Yeah, thanks for the question, Jonathan. You know, our team, as I mentioned, we're incredibly excited and motivated across the board getting ready for this launch.
Speaker Change: We will be ready to go on day one, as we always are, for launching a new indication. And frankly, the more we do it, I think the better we get at it.
Speaker Change: You know, what I would anticipate here, as I mentioned, not having really the amount of competition that you have in RCC, which is, for example, very competitive. We would anticipate, you know, a very strong uptake.
Speaker Change: right from the beginning. And we believe our data is very strong. I went into some detail on the prescriber universe, the Salesforce.
Speaker Change: has been expanded and we're frankly really ready to go. And we believe we can really move into the market rapidly and efficiently. And really, we're very excited about the opportunity to help.
Speaker Change: potentially a lot of patients with neuroendocrine tumors.
Speaker Change: Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com.au
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change: The next question comes from the line of Akash Tewari with Jeffreys. Your line is open.
Speaker Change: Hi, this is Anastasia on for Akash, congrats on the quarter and on the recent IP decision.
Speaker Change: Just a couple on my end. The first is about the potential to expand Merck partnership beyond RCC and Heavy NEC. Do you think that's possible as we get more data from the PD-L1 FedRef-5 specifics?
Speaker Change: And then the second question is, do you think that your head and neck data would compare well versus mirrors in the PD-L1 refractory population, or do you see it as kind of better or worse on that front?
Speaker Change: Anastasia, thanks for the questions. Amy, why don't I start with the head and neck question and then I'll address them work.
Speaker Change: Yeah, yeah. So, you know, when it comes to Zanza, we're obviously interested in developing it broadly, as it's a best-in-class, and we have multiple
Speaker Change: collaborations to that end with other IOs including Atizo and including Navalumab and now recently with Pembrolizumab in head and neck.
Speaker Change: So whether or not there's expansion beyond head and neck I would say we're always looking and of course we're interested in getting Zanza into as many indications as possible. What we combine with remains to be seen.
Speaker Change: Space, I'm not quite sure, you know, we're competing with them. We have about a year lead time
Speaker Change: with Bicara, against Bicara in the frontline space, and Maris. And we are leveraging that lead time very aggressively to ensure sites, you know, that we can enroll and read that study out. How...
Speaker Change: It plays out in the PD-1 refractory space. Maybe I didn't understand the question, but I'm not sure I'm able to answer that for Bicara.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you. Bye.
Speaker Change: Thank you.
Speaker Change: Will you stand by for our next question?
Speaker Change: Thank you for joining us.
Speaker Change: Our next question comes from the line of Stephen Willey with CFO. Your line is open.
Stephen Willey: Yeah, good afternoon. Thanks for taking the questions and congrats on the quarter. So
Stephen Willey: I know you previously characterized Stellar 305 as a Phase II-III. I think you're now kind of explicitly referring to it as a Phase III.
Stephen Willey: Just wondering if you've completed that formal assessment of Phase 2 data to officially transition into Phase 3. And I guess if so, can you speak to those metrics that you're evaluating to make that decision, and just whether you might be disclosing that data at some point? Thanks.
Speaker Change: Please go ahead. Yeah, quickly. Thanks for the question. It is a phase two, three, we are still enrolling and we'll disclose data when it is mature.
Speaker Change: and Dana Aftab. Thank you.
Speaker Change: Thank you. Please stand by for our next question.
Speaker Change: Our next question comes from the line of Ash Verma with UBS. Your line is open.
Ash Verma: Thanks for taking our question. So I just wanted to understand the capital allocation priorities from here. You have a pretty sizable buyback program, outstanding. Do you think this was the right focus when you were dealing with the IP uncertainty? But now that the IP decision is behind you, why not focus most of your capital deployment on the pipeline build out? Thanks.
Mike Morrissey: Yeah, thanks for the question. It's Mike. Yeah, I think with our cash flows we can do all the above. So, as I mentioned in my prepared remarks, we're committed to being very disciplined as we go forward in terms of expense levels, kind of keeping them, keeping expense levels kind of where they are currently for the foreseeable future. With the cash flows that we have in project, we think we can continue investing in the pipeline, doing VD, and then returning cash to shareholders.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change: Our next question comes from the line of Peter Lawson with Barclays. Your line is open.
Peter Lawson: Great. Thanks for taking my questions. Just I have a question around slide nine, the guidance around ZAMHSA. So should we read that as kind of ZAMHSA $5 billion in 2033 and then what Carbo kind of essentially declines to zero?
Mike Morrissey: Peter, it's Mike. I think the CABO LOE is in the 2030 timeframe, so as outlined on slide 9, that is a 2024 number, and we see Zanzibar growing dramatically over the next several years as these pivotal trials readout, and if successful, it could drive a lot of upside growth for Zanzibar.
Peter Lawson: Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change: Thank you for watching. Thank you.
Speaker Change: Our next question comes from Alana Etzel-Durrout, DMO Capital Markets. Your line is open.
Speaker Change: Hey, it's Luke Schimeling, I'm Spencer. Thanks for taking my question. For the Zanza colorectal cancer update next year, the primary endpoint is OS in patients without liver meds. How readily identifiable are patients without liver meds in the real world? And would that require a containment diagnostic?
Amy Peterson: Hi Lucas, this is Amy. Thanks for the question. So this is an imaging assessment.
Amy Peterson: predilection to metastasize to the liver.
Amy Peterson: So all patients with colorectal will have a scan of their liver, and it's pretty straightforward to identify whether or not there is a disease present in the liver or not. So it's an imaging. It's a clinical assessment. It's actually not a companion diagnostic, and it's readily utilized by physicians every day.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change #100: Our next question comes from the line of student Logan Nathan with Stevens. Your line is open.
Speaker Change #101: Hi, thank you for taking the time to share your quarterly results this evening. Congratulations on the great quarter and the recent progress on many fronts.
Speaker Change #102: With the breadth of clinical program opportunities for CABO and ZANZA in the GU and GI space, what indications of therapeutic technologies are left out there of interest when you're looking for assets during the BD endeavors? Are you specifically looking for assets primarily for novel combinations with CABO and ZANZA
Speaker Change #102: or monitor the options out there to cover all the GUGI indications.
Mike Morrissey: Yeah, so yeah, thank you for the question. It's Mike. Yeah, I would say simplest answer is all of the above.
Mike Morrissey: Our conviction is around clinical differentiation that can drive commercial success.
Mike Morrissey: If those assets combine with Zanza, other XL molecules in the pipeline, great. If they're standalone agents or combined with checkpoints, great.
Mike Morrissey: That's fine, too. So again, we're agnostic when it comes to modality, MOA, type of transaction. We're focused on really high level of conviction on clinical differentiation that then drives commercial success.
Speaker Change #103: Thank you.
Speaker Change #104: Thank you.
Speaker Change #105: Please stand by for our next question.
Speaker Change #106: Our next question comes from the line of Chris Chabutaini with Goldman Sachs. Your line is open.
Chris Chabutaini: Thank you, Mike. As you think about how you're staffing your teams and obviously monitoring how you're spending, noting that SG&A, the R&D has come down, what are the areas that you feel are going to be important to expand further?
Speaker Change #108: Thank you for watching!
Speaker Change #109: You know, if we have, in the out years, continued clinical success,
Speaker Change #110: And we need to augment what we've got commercially. That's a relatively easy and incremental growth, as we've seen so far in our planning for the net space. But in terms of the company, we have...
Speaker Change #110: 1100 plus employees. We are
Speaker Change #110: I think we're lean and mean in terms of what we are aspiring to do organizationally in terms of building this multi-franchise oncology business.
Speaker Change #110: but we've got a lot of momentum in the organization from a R&D point of view, from a commercial point of view, with the right size G&A to make it all work so so we're excited about where we are and we think we've got the right team and certainly the right horsepower both talent wise as well as energy wise to make that happen as we go forward.
Speaker Change #111: Thank you.
Speaker Change #112: Please stand by for our final question.
Speaker Change #113: Okay, great. Thanks for taking my question. Congrats on the quarter. I had one on the PK-MIT program since it's now in phase one. So you mentioned loan restorative and that program seems to have honed in on
Speaker Change #114: biomarker-selected population in endometrial and ovarian cancer. So maybe can you speak to your strategy around tumor type selection and biomarkers that you may be using? And then you also mentioned potential cytotoxic combinations for that program. Wondering if maybe you could elaborate a bit more on that. Thanks.
Speaker Change #114: Thank you.
Speaker Change #114: Thanks for the question, Joe. This is Dana. I'll take that one.
Speaker Change #114: Yes, so XL495, as you're quite aware, is a PKMAT1 inhibitor, which has shown synthetic lethality in tumors that have increased cyclin E levels. That can be driven by a number of different...
Speaker Change #114: actual genetic biomarkers, including CCNE amplification, and a few others.
Speaker Change #114: So, we've certainly identified those biomarkers in our preclinical models, but we've also identified some other interesting biomarkers that we have not yet disclosed.
Speaker Change #114: which we're also quite excited about. So, we are looking at all of these biomarkers in the Phase I study. We also conducted quite a few combination studies preclinically, looking at, as you mentioned, cytotoxics.
Speaker Change #114: but also a very expanded range of drugs that have direct or indirect...
Speaker Change #114: and we have a lot of opportunities there. So we haven't really disclosed details of our phase one program yet. We will do that at some point in the future, but until then, we're looking at quite a few different hypotheses in the clinic for both biomarkers and combinations.
Speaker Change #114: Thank you for watching. I'm Chris Haley. I'll see you next time.
Speaker Change #115: Thank you.
Speaker Change #116: Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to your host, Buront, for closing remarks.
Speaker Change #117: Thank you, Tawanda, and 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.
Speaker Change #117: Thank you. Thank you. Thank you.
Speaker Change #118: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change #119: Dana Aftab Michael Morrissey Michael Morrissey Michael Morrissey Michael Morrissey Michael Morrissey Michael Morrissey Michael Morrissey Michael Morrissey
Speaker Change #120: Thank you for watching!
Speaker Change #120: Dana Aftab Dana Aftab Dana Aftab Dana Aftab Dana Aftab Dana Aftab Dana Aftab Dana Aftab
Speaker Change #120: Music
Speaker Change #120: Thanks you for watching!
Speaker Change #120: [music]
Speaker Change #121: Good day, ladies and gentlemen, and welcome to Ex-Ilexis 3rd Quarter 2024 Financial Results Conference Call. My name is Tawanda, and I'll be your operator for today.
Speaker Change #121: As a reminder, this call is being recorded for replay purposes.
Speaker Change #122: I would now like to turn the call over to your host for today, Mr. Varun Shabinian, Director of Investor Relations. Please proceed. Thank you. Thank you. Thank you.
Varun Shabinian: Thank you, Tawanda, and thank you all for joining us for the Axel Axis 3rd Quarter 2024 Financial Results Conference Call.
Varun Shabinian: Joining me on today's call are Mike Morrissey, our President and CEO, Chris Senner, our Chief Financial Officer, and PJ Haley, our Executive Vice President of Commercial, who together will review our progress for the third quarter 2024, ended September 30th, 2024.
Varun Shabinian: Amy Peterson, our Chief Medical Officer, and Dana Aftab, our Chief Scientific Officer, are also on the call today and will participate in our question and answer session.
Varun Shabinian: During the call today, we will refer to financial measures not calculated according to generally accepted accounting principles.
Varun Shabinian: Please refer to today's press release, which was 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.
Varun Shabinian: During the course of this presentation, we will be making forward-looking statements regarding future events and the future performance of the company.
Varun Shabinian: This includes statements about possible developments regarding discovery, product development, regulatory, commercial, financial, and strategic matters, and estimates and projections from our annual U.S. net product revenues and potential marketing growth opportunities.
Varun Shabinian: These estimates and projections involve a number of assumptions and limitations, and we caution investors not to place undue reliance on this information. Actual events or results could, of course, differ materially.
Varun Shabinian: We refer you to the documents we file from time to time with the Securities and Exchange Commission, 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,
Varun Shabinian: 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 development, business development, and commercialization activities.
Mike Morrissey: With that, I'll turn it over to Mike. All right. Thanks, Ferrant, and thanks to everyone for joining us on the call today.
Mike Morrissey: We'll use our prepared remarks today to provide a strategic perspective on the business with a forward-looking view of the opportunities for Cabo Zantib, Zanzibar Zantib, and the early stage pipeline to maximize success in building a multi-franchise oncology business.
Mike Morrissey: The last few weeks have been extremely busy with the positive CABO ANDA ruling and the Zanzibar Collaboration announcement with Merck.
Speaker Change #124: As you saw in our press release issued an hour ago, XOXO has had a very successful third quarter across all components of our business.
Speaker Change #124: I'll start today with a strategic overview to frame our near-term and aspirational vision for the company, followed by financial and commercial updates from Chris and TJ.
Speaker Change #124: Amy and Dana are here as well and will address any technical R&D related questions that come up in Q&A.
Speaker Change #125: X-Alexis is obviously an inflection point with the clarity on the Cabo Anda and significant momentum for Zanza.
Speaker Change #126: Cabo is having a strong 2024 across literally all commercial metrics that we track routinely as performance indicators for the business, and we remain very bullish on Cabo's revenue outlook into 2030.
Speaker Change #126: The Zanza Opportunity represents an important component of mid and long-term revenue growth starting in the back half of this decade and potentially building into a dominant position in the 2030s.
Speaker Change #126: We're pleased to be working with Merck and Kidney and Head and Neck Cancers and that cost-sharing compound sharing agreement provides significant validation and momentum for Zanza while we maintain full global commercial rights.
Speaker Change #126: Collaborate with the competition model has been a pillar of our Cabo development success and we're pleased to get the first one moving with Zanza. We're obviously not done in this regard and aim to expand into other collaborative opportunities in the future.
Speaker Change #126: with the Zanzibar Development Plan, including six ongoing and planned pivotal trials.
Speaker Change #126: and more potentially on the horizon.
Speaker Change #126: We believe Zanzibar has the opportunity to surpass Cabo in scope and scale with one planned launch per year starting as early as S-2026.
Speaker Change #126: Hexalexis' aspirational goal is to be a market leader in both GU and GI oncology as our main therapeutic focus.
Speaker Change #126: Note that we're arguably already in the pole position as a GU Oncology leader. So building momentum in the GI space is an immediate priority for both Cabo and Zanza.
Speaker Change #126: Additional ZANZA indications outside of GU and GI will be pursued opportunistically.
Speaker Change #126: Thank you for watching. I'm Chris Haley. I'll see you next time.
Speaker Change #127: Building, developing, accelerating, and pruning our early-stage pipeline is critically important as we advance towards a multi-franchise business.
Speaker Change #127: With three novel compounds in our early-stage clinical pipeline, including XL309, XB01L, and XL495, and several near-term INDs close behind, we plan to efficiently profile and prioritize potential winners for advancement into full development.
Speaker Change #127: As I said before, we're in the pivotal trial and p-value business where clear clinical differentiation is the mandatory prerequisite and the only viable path towards future commercial success.
Speaker Change #127: That's the essence of the Cabo story, and we're applying that filter to everything we do in R&D.
Speaker Change #127: We have a lot of exciting mature data from our early clinical efforts with Zanza, and we expect to present a significant amount of clinical data from Stellar 001 and 002 throughout 2025 at major medical meetings.
Speaker Change #127: We'll provide more granularity on those data sets as abstracts are accepted and titles published. In addition, we plan to host another R&D Day in 2025 as well.
Speaker Change #127: With the end of litigation now largely behind us, we expect future business development activities to ramp up. As highlighted previously, we are targeting late-stage clinical assets in the GU-GI oncology space, where we have clear conviction that clinical differentiation could drive ultimate commercial success.
Speaker Change #127: As we've highlighted previously, most biotech oncology launches since 2016 have been underwhelming.
Speaker Change #127: with Convo being one of the few standouts in terms of indication expansion and revenue growth. So we're very selective as we evaluate the clinical and commercial opportunity of late-stage assets.
Speaker Change #127: XOXs could potentially pursue any type of transaction as we advance with a pragmatic, thoughtful, and unambiguous focus on doing the right deal at the right valuation for the right asset.
Speaker Change #127: Finally, we're executing with an ambitious plan for building success as a multi-franchise company.
Speaker Change #127: To that end, I want to be very clear that we're committed to running the business, and specifically R&D, at recent expense levels for the foreseeable future. Our intention is to continue to rigorously, and often aggressively, prioritize spending and investments towards late-stage molecules to maximize our clinical and commercial success.
Speaker Change #127: While we advance the pipeline, generate free cash, and return a healthy portion of that free cash to shareholders.
Speaker Change #127: As you all know, clinical success never gets cheaper as compounds advance into late-phase development, so we'll continue to prioritize our spending as we did at previous ex-alexis inflection points over the course of the last decade.
Speaker Change #127: Our share buybacks over the last two years, totaling $1 billion, in commitment of another $500 million to the end of 2025, underscores our balanced and pragmatic approach to investing in the pipeline while returning cash flow to shareholders.
Speaker Change #127: So with that background in place, let's review the key highlights for the quarter and drill down into additional details for our near and mid-term vision for Convo and Zanza.
Speaker Change #127: First, let's start with the quarter. XOX has delivered an outstanding financial performance in Q3 2024, with top and bottom line growth year-over-year, driven by the strength of the Cabo Santana franchise, including increased demand, new patient starts, and revenue.
Speaker Change #127: Tableau Medics maintained its status as the leading TKI for RCC in the U.S.
Speaker Change #127: With third quarter 2024, Cabo franchised net product revenues of $478 million, up 9% quarter-over-quarter compared to 2Q 2024, and 12% year-over-year compared to the third quarter 2023.
Speaker Change #127: Global Composite Antenna Franchise Net Product Revenues generated by Exelexis and its partners grew to $653 million in the third quarter of 2024.
Speaker Change #127: We have increased 2024 full-year net product revenue and total revenue guidance based on these robust results, and we're building on our strong commercial momentum as we wind up the year and head into 2025.
Speaker Change #128: Chris and PJ will provide details for the quarter in their prepared remarks.
Speaker Change #128: Let's move next to our future, first focusing on CABA to drive near-term upside with strong projected revenue growth to the end of the decade and the potential for Zanzibar to drive significant revenue opportunities starting as early as 2026 and accelerating into the 2030s and throughout that decade.
Speaker Change #128: We're obviously pleased with the favorable ANDA ruling, which extends our CABO revenue runway into early 2030, subject to Ex-Alexis's potential additional regulatory exclusivity.
Speaker Change #128: The district court's judgment is also subject to appeal by either party.
Speaker Change #128: I want to remind everyone that, to the best of our knowledge, the FDA has not granted tentative approval of MSNs proposed and to product more than five years after their original submission.
Speaker Change #128: Building off the strength of CABO's leadership position in RCC and potential new indications in NET and CRPC, our midterm projections highlight the potential for CABO to reach peak sales in the U.S. of nearly three billion dollars annually by 2030.
Speaker Change #128: with conservative estimates for growth of the base business, capturing a significant market share of the oral net therapy indication, and a limited opportunity in prostate cancer, which is heavily discounted until we get clarity on regulatory traction with our projected fourth quarter filing.
Speaker Change #129: Let's turn next to Zanzibar. Zanzibar has been largely under the radar from the streets perspective with only a little over half of our covering analysts including it in their revenue models.