Q2 2025 Exelixis Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the Exelixis, Inc. Q2 2025 Earnings Call.
Second quarter, 2025 Financial results conference call.
My name is Towanda, 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, Miss Susan Hubbard, Executive Vice President of Public Affairs and Investor Relations. Please receive.
Thank you to Wanda and thank you all for joining us for the X Alexis second quarter, 2025 Financial results conference call.
Joining me on today's call are Michael Morrissey, our President and CEO; Chris Senner, our Chief Financial Officer; P.J. Healey, our Executive Vice President of Commercial; Amy Peterson, our Chief Medical Officer; and Dana Aftab, our Chief Scientific Officer. They will review our progress for the second quarter of 2025 and the period ending June 30, 2025.
Include statements about possible developments regarding Discovery product, development regulatory, commercial financial and strategic matters, potential growth opportunities, and government drug pricing policies. Initiatives, actual events, or results could, of course, differ materially. We refer you to the documents we file from time to time with the SEC, which under the heading "Risk Factors" identify important factors that could cause actual results to differ materially from those expressed by the company, verbally and in writing today, including, without limitation, risks and uncertainties related to product commercial success, market competition, regulatory review and approval processes, 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. And with that, I will turn the call over to Mike. All right. Thank you, Susan. And thanks to everyone for joining us on the call today.
Thanks Alexis, had a strong second quarter, accelerating our progress and building momentum across all components of our business.
Driving growth of the co-antidote franchise now, catalyzed by the early stage of a successful net launch, is our top priority while we execute on our R&D strategy to build a multi-compound, multi-franchise oncology business.
All corporate activities are aligned on a single focus: to improve the standard of care for patients with cancer.
The institute of our future success will be determined by increasing the number of cancer patients we seek to serve and, ultimately, the impact we have on their disease with current and future excellence medicines.
By driving for success across all components of our business, we hope to solidify our leadership in oncology drug discovery, development, and commercialization to intensify innovation and collaboration.
He highlights for the second quarter include, first, the robust performance of the Cabometyx business with strong growth in demand and revenue from our commercial activities. Cabometyx continues to build on its leadership position as the leading TKI for RCC.
In the second quarter of 2025, U.S. Cabo franchise product revenues grew by 19% year-over-year to $520 million, compared to $438 million in the second quarter of 2024. Cabo's second quarter growth is noteworthy, since it relates solely to commercial demands, with negligible benefits from clinical trial sales and significant gross-to-net headwinds.
Importantly, we saw brisk full-quarter sales for the recently approved net indications and have already built a leading share in the oral second-line plus net segment, which contributed to approximately 4% of our second quarter 2025 net product revenue.
P.J. will provide more information and commentary about our second-quarter franchise performance and the encouraging dynamics of the net launch in his prepared remarks. And just last Thursday, our partner received approval for net from the European Commission. Revenues from this important new indication, as it rolls out across Europe, will add to our royalty stream.
We will continue to evaluate further updates to our 2025 financial guidance as we build momentum on the net launch and gain further clarity on additional revenue opportunities for the second half of 2025.
Second, as outlined previously, Zanzil is rapidly advancing as our next oncology franchise opportunity and the subject of numerous ongoing and soon-to-start pivotal trials.
We're pleased with the positive topline results from Stellar 303 and CRC, and we look forward to engaging with regulators, with the intent of filing for approval in this indication as quickly as possible. Stellar 304 in non-clear cell RCC is fully enrolled and continues to progress with topline results expected in the first half of 2026.
Pending event rates.
Based on evaluation of the data from STELLAR 305 and head and neck cancer, and the competition in this indication, we made the decision to not advance this trial into Phase 3. This decision was further supported by our assessment of the commercial opportunity of new Zanza indications on the horizon that we believe have a higher probability of success, little to no competition, and potentially an approximate 3-fold greater commercial value compared to the STELLAR 305 opportunity.
Now, for Stellar 305, you can expect the same level of rigor from us and all in the future across all components of the business.
We continue to prioritize existing and new Zanza indications as the most promising path to a second Exelixis oncology franchise that we believe can eclipse the size, scope, and impact of our Cabometyx franchise.
Third, the X Alexis early stage pipeline is advancing quickly, with a range of new and potentially differentiated biologics and small molecules heading into and through early clinical evaluation.
As the highlight of the last quarter, we're not looking to just build a big pipeline, but carefully and quickly identify the winners for advancement into full development. As top investment priorities, early evaluation of EXCEL, 309 and XBO, Ando continue to advance quickly, and we're pleased to have the bicep-specific XB6A and our second-generation Tissue Factor targeting ADC, XB371, moving into the clinic.
Finally, we remain committed to carefully managing Capital allocation, while we advance our R&D and Commercial priorities, our balance sheet and expected free cash flow, provide us with the opportunity to advance our pipeline priorities, access new high, conviction assets and continue to repurchase shares when we believe they are undervalued.
Mr. Development activities continued in earnest, and we're focused on doing the right deals for the right assets at the right valuations. So with that, please see our press release issued an hour ago for our second quarter of 2025 financial results and an extensive list of key corporate milestones achieved in the quarter. I will now turn the call over to Chris. Thanks, Mike. For the second quarter of 2025, the company reported total revenues of approximately $568 million, which included Cabo antidote franchise net product revenues of $520 million.
Capital Medic, net product revenues for $518 million included approximately $600,000 in clinical trial sales, which is significantly lower than the $12 million in clinical trial sales we had in the first quarter of 2025.
As a continued reminder, clinical trial sales have historically been choppy between quarters, and we expect this to continue into the future.
Growth in net for the Kavos incident franchise in the second quarter of 2025 was 30.2%, which is higher than the gross in net we experienced in the first quarter of 2025. This increase in gross and net deductions in the second quarter of 2025 is primarily related to higher 340B volume in the quarter.
Over the past several quarters, we have experienced a continued increase in the percentage of our business that is related to 340B volume, which is now over 24% of our total volume.
Which one, compared to the second quarter of 2024, is 4 percentage points higher?
Great inventory. At the end of the second quarter, 2025, it was approximately 2.2 weeks on hand.
Which was higher when compared to the first quarter of 2025, the increase in trade inventory weeks on hand was partially due to the timing of the July 4th holiday week, which had lower volume than the preceding four weeks.
Total revenues also include approximately $48.2 million in collaboration revenues, which includes approximately $43.4 million in royalties earned from our partners IPS and Dakada on their sales of Cabo in their respective territories.
Our total operating expenses for the second quarter of 2025 were $355 million compared to $369 million in the first quarter of 2025.
The sequential decline in these operating expenses was primarily driven by lower manufacturing costs for drug development, lower clinical trial costs, and reduced general and administrative expenses.
Provision for income taxes for the second quarter of 2025 was approximately $45.6 million compared to a provision for income taxes of approximately $46.1 million for the first quarter of 2025.
Additionally the 1 big beautiful. Bill Act was signed into law on July 4th 2025 which among other Provisions, permanently permanently repealed the requirement to capitalize domestic R&D expenses.
For federal income tax purposes, for taxable years beginning after December 31, 2024, it allows for the accelerated deduction of any remaining unamortized domestic R&D expenditures.
Foreign R&D expenditures are still required to be capitalized and amortized over 15 years.
Tax benefit for previously unamortized domestic R&D expenditures is estimated at $147 million, with no corresponding impact to the federal income tax provision.
And $0.75 per share diluted.
Non-GAAP net income excludes the impact of proxy, $28 million, for stock-based compensation expense, net of the related income tax effect.
Cash and marketable securities for the quarter ended June 30, 2025, were approximately $1.4 billion.
During the second quarter of 2025, we repurchased approximately 302 million of the company's shares, resulting in the retirement of approximately 7.5 million of the company's shares at an average price per share of $400.10.
As of the end of the second quarter of 2025, we had approximately $204 million remaining under the $500 million stock repurchase plan authorized by the company's board in February 2025.
And finally, we will continue to evaluate further updates to our 2025 financial guidance as we build momentum on the net, launch, and gain. Further clarity on additional revenue opportunities for the second half of 2025.
We are rooted. We are reiterating our full year 2025 financial guidance, which is detailed on slide 14 of our earnings presentation. And with that, I'll turn the call over to P.J.
Thank you, Chris. The Cabo Medics business was very strong in the second quarter of 2025, and importantly, the launch in neuroendocrine tumors is off to a great start.
Bo continued to show growth in terms of revenue, demand, and new patient starts, and notably performed well relative to the competition.
The team continued to execute at an extremely high level with CaboMedic, continuing to be the number one prescribed TKI in renal cell carcinoma, as well as the number one TKI plus IO combination in first-line RCC.
The commercial team is delivering on the launch in NETs with greater urgency, with the goal to rapidly establish Cabo Medics as a small molecule market leader in the NET space.
We are pleased that prescribers are responding positively to the data and are excited to have a new therapy available to address the unmet need in neuroendocrine tumors.
As we look to build on the strong momentum of the Cabo Medics business,
The prescription data and the oral TKI market basket of Cabo, Lenvatinib, and Pazopanib convey the strength of Cabo relative to the competition.
Looking at the TRX comparison of Q2 2024 to Q2 2025.
Cabo Medics grew 4 sharp points, from 41% to 45%.
Cabo Medics TRX volume grew 18% in this time period, outpacing the growth rate of the market by 10 percentage points.
Importantly, the Cabo Medics RCC business remains strong and continues to grow.
The new indications for previously treated NETs are providing our experienced sales team great access to customers.
We're able to discuss both the cabinet data as well as the RCC Checkmate, 9er, and 5-year follow-up data with relevant physicians.
These nine ER data presented at Gusco in February resonate with prescribers in the RCC space and help our team continue to drive differentiation from the competition.
And first line in the first line RCC market.
Turning to neuroendocrine troopers, we are thrilled that the launch is off to such a strong start.
The team has been working tirelessly to execute tactics across channels and customer segments since approval, including personal promotion, targeted non-personal, digital, and social media tactics.
Peer-to-peer education, a comprehensive patient support program, as well as patient and allied health care professional education.
Team is working to rapidly establish Cabo Medics as a new standard of care in second line, plus net patients.
Our market research and feedback from customers demonstrate the prescribers.
Excited for a new treatment option for their neuroendocrine tumor patients.
The first broadly applicable new oral small molecule therapy in nine years.
Physicians are responding favorably to the Broadnet label and the contemporary trial design, and perceived the efficacy and tolerability of the Cabo data as favorable relative to other small molecule therapies in the space.
Prescribers envision using Cabo broadly across patient and tumor characteristics, including patients with neuroendocrine tumors arising in the pancreas, GI tract, and lung.
Emotional and SSTR status for those who have received prior treatment with Luda Thera.
As we look at early utilization in our market research,
We are pleased to see the positive perception data from prescribers.
We're seeing rapid uptake of Carbomedics in both second and third line nets across all the relevant patient and tumor characteristics.
Encouragingly, this uptake is similar in both academic and community settings.
The launch in NETs is both expanding our prescriber base and increasing prescriptions for legacy Cabo prescribers.
Turning to the new patient market share for second line plus neuroendocrine tumors in Q2.
We are pleased that Cabo Medics has rapidly become the market leader in the segment.
For the approximately 35% new patient share of oral therapies.
This year is very encouraging so early in the launch, as Cabo Medics was approved on March 26.
Hence, we believe that new patient share should continue to increase, and importantly, patients will have the opportunity to benefit from being prescribed this therapy.
Over time, more patients start therapy with Cabo and receive refills. We believe demand will continue to increase.
Neuroendocrine demand contributed just over 4% to total demand for Cabo in Q2, and we expect that contribution to increase going forward.
Finally, the second quarter market research indicated that Cabo Medics was used as the best-in-class oral therapy in neuroendocrine tumors.
We are pleased that this perception was achieved so rapidly after the approval.
This perception is typically a leading indicator of prescribing behavior. It gives us confidence that CaboMedics’ new patient market share will continue to increase in the coming quarters.
This research finding aligns well with the anecdotal feedback our experienced sales team is receiving from their customers.
Many of whom are saying they will prescribe Cabo for their net patients once they progress and need a different systemic therapy.
Taken together, the data and customer feedback give us a high degree of confidence in the growth of Cabo Medics and neuroendocrine tumors.
As this can be a more indolent tumor type, new patient starts for Cabo are governed by patients progressing on their current therapy.
In closing, we are excited by this opportunity to serve net patients, and our enthusiasm is matched by physicians' excitement to have a new and effective option for their patients.
In general, prescriber C, Cabo Medics, is a more favorable choice versus other previously approved small molecule therapies.
Additionally, the competition in the oral segment of the net market includes generic therapies.
This puts Cabo Medics at a significant advantage with a full commercial organization energized to support the launch.
All of this taken together drives our conviction that the net market will be a substantial opportunity for the Cabo Medics business.
With that, I will turn the call over to Amy. Thanks, P.J. Starting first with Stellar 3033 on June 22nd, we announced positive topline results in which the combination of Zanza, LNA, plus Aesel ISM map demonstrated a statistically significant improvement in overall survival versus regular rapid in the intent to treat (ITT) population.
As a reminder, Stellar 303 is our Phase 3 study comparing zanel and implicit diesel. ISAB 2 regular rapid rapid inpatients who have received multiple prior therapies for their advanced polar. The trial has dual primary endpoints designed to assess survival outcomes more broadly in the ITT population.
And more specifically, in the population of patients without liver metastases referred to as NLM.
Secondary endpoint.
Or 303 include progression free.
Subgroup of patients, as well as overall survival and progression-free survival in the subgroup of patients with liver metastasis.
These topline results represent the final OS analysis in the trial, and it will proceed to the planned final analysis of the other dual primary endpoint of OS in the NLM patient population, the timing of which is event-driven.
And again, an active standard of care control arm.
We plan to discuss these positive data with regulators, with the intention to file a new drug application.
We also look forward to sharing these results at an upcoming medical conference and will be more specific when abstract titles become available.
Stellar 304.
Our pivotal study, evaluating the combination of zanzil Lita plus navala map versus sunitinib in patients who have not yet received systemic therapy for their locally advanced or metastatic non-clear cell RCC, is based on the current event rate. We are now anticipating topline results in the first half of 2026.
So, let's go next to Stellar 305.
Our Phase 23 study compares zanza, letina plus pembrolizumab to placebo, plus pembrolizumab, in patients who have not yet received systemic treatment for their advanced PD-L1 expressing squamous cell carcinoma of the head and neck.
As Mike said in his opening remarks, we have made the decision not to proceed into the Phase 3 portion of the trial and are in the process of study closeout.
We will share data at a future time and our shifting, our focus into new development opportunities for Zanza Litin.
Speaking of which, I'd like to now turn to our first pivotal trial evaluating Zanza as monotherapy.
I'm pleased to announce the initiation of Stellar 311, which will compare Zanza and LNIB to several Imus as a first oral therapy in patients with neuroendocrine tumors.
We're also excited about the recent initiation of the Zenza fan cohorts in the Phase 2 umbrella study being conducted by Merc.
In this study, the combination of Bella fan plus Zanzil lit. Nib is being tested in patients with previously treated metastatic kidney cell carcinoma.
Progress also continues with regard to the two pivot studies that Merck is running in clear cell carcinoma, evaluating zanzilnib in combination with belantamab. We anticipate these studies could start towards the end of 2025.
As we think about the aforementioned studies representing Wave 1 in the Zanza development program, I want to convey that we are moving full steam ahead into Wave 2, pivotal trial planning, to continue building on the franchise.
In light of the positive data from Stellar 303 in metastatic colorectal cancer, we are considering how best to move earlier into the CRC treatment landscape.
We're specifically investigating the postoperative setting where patients have received maximal care with surgery and, in many cases, chemotherapy; yet, they still have a high risk of recurrence.
These patients have nothing else available to them.
The only option available being frequent scanning and basically entering a watch-and-wait period until a distant or local recurrence is found, at which point they are mostly rendered incurable.
Given the profile of zanzil lib and its ability.
Inhibit targets, like meaty and Vega well known for their role in metastatic spread and local establishment of tumor growth. We believe there's reasonable probability that treatment was zanza lnib, could lower these patients risks of recurrence improving disease-free survival and unmet need in this setting.
There's also interesting data coming out of an IST investigating khabaz antibody in patients with high-grade and/or recurrent meningiomas.
We're the only treatment options: surgery and radiation.
Given their central location, neither of these modalities is considered optimal salvage modalities.
Offering patients an oral agent like Zanzil Lib that could impair further growth and potentially reduce tumor size could represent a breakthrough in the treatment paradigm.
We will continue to assess the landscape to consider other areas where Zanza Nib could be developed, leveraging data from our Khabaz Antib experience, as well as emerging data from our ongoing clinical trials.
I look forward to sharing more details of these important opportunities that we believe could enhance the reach of Zanzibar, closer to launching those studies.
I'll now turn the call over to Dana.
Thanks, Amy, and good afternoon, everyone. Today, I'm giving a brief update on our recent progress regarding the early clinical compounds in our pipeline.
Pounds to development candidate status.
Regarding the early clinical pipeline for the most advanced molecules in this space, EXEL-309 is a selective inhibitor of USP1, and XB01 is a CD47 targeting antibody-drug conjugate.
Both of which have first-in-class potential.
The Phase 1 studies for both compounds have been progressing well, and importantly, in patients. Both compounds have achieved exposures that are associated with efficacy in pre-clinical human tumor xenograft models in mice.
We've also made good progress in the Phase 1 study for XB-628, our bispecific antibody targeting PDL1 and NKG2A.
Despite finding the IND for XB6 28 so recently, we have already seen brisk enrollment in this Phase 1 trial, reflecting a high degree of enthusiasm at the clinical sites for this novel molecule.
On the new IND front and the second quarter, we filed our second IND this year, which is for XB-3712, targeting an ADC that carries a topoisomerase inhibitor payload.
XB371 has a nominal drug-to-antibody ratio (DAR) of 8 and utilizes Silence Smart Tag technology, which employs site-specific conjugation of the linker payload to the antibody. This innovation increases control over the DAR species during manufacturing, among other benefits.
The technology also takes a belt-and-suspenders approach to prevent inappropriate payload release outside of the tumor by utilizing a dual tandem cleavage mechanism that occurs inside the tumor cells.
First, by glukhar enzyme, which then exposes a protease site for the ultimate release of the free payload from the antibody.
Our presentation at AACR this year showed deep and durable regressions of human colorectal, lung, and pancreatic xenograft tumors in mice after a single dose of XB37, underscoring the significant potential for this molecule to address unmet needs.
So the team is excited to now be focused on enrolling the Phase 1 clinical trial for this molecule.
In terms of new development candidates, we are continuing to advance exciting new programs, including some innovative small molecules and antibody-drug conjugates. I look forward to sharing more details about those programs at the R&D Day event, which training.
For later this year.
So with that, I'll turn the call back over to Mike. All right. Thanks, Dana. We'll wrap up here with a big thank you to the Exelixis team for helping make our second quarter so successful. As you've heard me say previously, we work in a tough business and I'm pleased to see our resilience and drive as we progress important projects across our Discovery, Development, and Commercial activities in the first half of 2025.
As we said last quarter, we're never satisfied or content with the status quo and look to improve our efficiency and performance on a daily basis. As we make every hour count to excel in our mission to help cancer patients recover stronger and live longer, we look forward to updating you on our progress in the future. Thank you for your continued support and interest in excellence. We're happy to now open the call for questions.
Thank you.
Ladies and gentlemen to ask a question, please press star, 1, 1 1 on your telephone, then wait, for your name to be announced to withdraw your question. Please press star 1 on 1 again.
We ask that you limit yourself to one question only.
Please stand by while we compile the Q&A roster.
Our first question comes from the line of David Lipowitz with City. Your line is open.
Thank you very much for, uh, taking my question. Um, I know it's early and we haven't really seen, uh, the data yet. But any particular takeaways?
That we have from head and neck that can be extrapolated or not extrapolated to future studies.
Maybe. Yeah, thanks for the question. So let me just back up a second and remind everybody that Angela Nib is a franchise molecule, and there's much more to be done than what we have contemplated in the initial six pivotal trials that we've been discussing. Rigorous drug development requires continuous assessments of internally and externally emerging data, and we have multiple areas to continue developing in.
Um, we're not going to share any.
of the data at the,
Future Point.
Thank you.
Please stand by for our next question.
Your line is open.
Uh, thank you. Uh, hi, Mike and team. Hope everyone's well, uh, just thinking a little bit longer term, the 3 billion, uh, Pete Revenue guidance for for carbo. It looks like I think, looking at guidance for this year probably do around about 2.1 x, uh, any and, and other Revenue opportunities. Um, just looking at the market share gains you had, I'm just wondering sort of how long, how enduring do you think? Such share gains can be and the second part would be, do you think you can achieve these same market share in net as what you, you've seen in in RCC?
Yeah, why don't I start with that? And I'll pass it off to PJ for some color commentary. So, you know, we have, um, built a very strong franchise with Cabo over the years uh, seeing consistent growth in market, share and revenue. Uh, first in the RCC realm where we've been focused primarily with 9, ER, and then having that data, Propel us forward over the last last 4 or 5 years of market, share growth, I think, as PJ mentioned, uh, year-over-year, Q2 24 to Q2 25, we saw a 4 Points of market share growth, uh, well into the launch which underscores our ability to commercialize and generate, you know, at least talk about new data from existing trials, that help us frame the opportunity for patients and we think we can do exactly the same thing in the net space.
So again, we have one quarter behind us now with a net market share of 35%. That is a great place to start. Best-in-class in the oral therapy space is a great place to start, both within literally months of launching the drug post-approval. So, early days— we're very excited. Um, you know, as you...
I'm sure you're aware. Sean, the first quarter is usually the NPS quarter where new patients come on, and you start to stack with refills later as you're growing NPS. So, um, we're very excited and I think very confident that we can continue to drive the business forward by growing the base business driven by our CC and then this net opportunity, which we think is large and substantial going forward. DJ, any comments? Yeah, I mean, uh, thanks, Mike. Just a slight color maybe on the net launch beyond that. Um, you know, as I said, we're certainly pleased with RCC that continues to grow in terms of net, uh, very early innings. Um, you know, we really are, um, excited by the 35% share growth in the second line plus, um, oral market. That's, um, just really strong for the first few months of launch. Um, and I think importantly, as we look beyond that, the fact that we're already seeing as the best in um, best-in-class, oral therapy in neuroendocrine tumors. That's.
Really great that we've done it so quickly, and our research actually indicates it's not even close. We're sort of well out in front of the pack there, and that's important because that's a metric that is typically a leading indicator of physician behavior. So, kind of, as I mentioned in my prepared remarks, we really do think that we'll continue.
Um, you know, to to increase in new patient market share there. And and as Mike kind of mentioned, you know, first quarter quarters of launch, you're getting a lot of new patients on therapy and it takes, um, time to really get the benefit of refills for those patients. So we we anticipate that as patients continue to come on therapy, we have more and more patients on therapy will uh, will start to sort of Stack, those refills driving demand. Um and finally, you know I mentioned that this is a more indolent disease. So a lot of what we're seeing in hearing from our our sales force, uh, advisory boards. Etc is Physicians. Really like the data. Um, and they have patience on on other therapies and neuroendocrine tumors who are are stable. Um, and when those patients need, uh, progress and need another therapy, uh, they're they're planning on using Cabo for that choice. But obviously, um, you know, it's great, if patients are stable with metastatic cancer. And so, there is an element of time that, uh,
you know, we need, um,
Kind of the growth governed by patients coming off therapy, but we anticipate all these dynamics giving us really strong growth in nets going forward.
Thank you.
Our next question comes from the line of Michael Schmidt with Guggenheim. Your line is open.
Relative to other new treatment options including long-term bath which we hear is making some inroads in the market. And um, yeah, question number 1 and then question number 2, um, obviously the trial hit hit the ITT analysis. So, at this point, how important is succeeding on the nlm subset? Uh, later on, uh, in terms of regulatory approvals or or, or commercial marketing, ability down the road. Thanks so much.
Great. Thanks, Michael. Amy, please have at it. Sure, I'll try to answer both of those. Um, so, stepping back, I appreciate the recognition of the importance of an OS benefit in colorectal cancer, which is the fourth leading cause of cancer-related deaths in the U.S.
Um, and O's is unequivocal in that it is the gold standard in oncology drug development.
Also noting that this is the only iot Ki uh positive phase 3 study for have failed uh, in before us. Not not exclusive to imblaze LEAP relativity and I think key form is the other 1. Um, so we're also excited about the the data and we're excited about the fact that this did hit in the, it patient population. It's really important to be able to continue to bring novel therapies to patients, so it would be the only other potential doublet available to patients if it gets approved.
Uh, including Lawn Service, Bev, um, how we think about the NLM subgroup, you know it.
It's a different prognose prognostic subgroup. We know that their survival is longer. Uh, it's a dual primary endpoint. So we did hit on OSS and the ITT. So we have a positive study. Uh, we will continue to follow though as per the, uh, statistical design for the nlm patient population. Um, and I think it's important to show that there's benefit equally across all subgroups. Um, so we're looking forward to waiting for that data, which, you know, we will know more about later when we, as we get closer when we have it, but we're really um, looking forward to discussing with The Regulators, the top line data in the it, as well as sharing the data to the broader community, in a medical conference.
Thank you.
Please stand by for our next question.
Our next question comes from the line of Esta Gone Wardini with Truist Securities. Your line is open.
Hi guys, thanks for taking my questions. Um, I want to uh layer on to uh to Michael's previous question. Sounds like we we we're having some of the thoughts about this too often that I've invested discussions. Maybe if you can tell us, you know, we sell at 303 the language and the press release was a little bit, maybe on the conservative side. So could you maybe tell us if you have a view, whether it be data in the itg
Action is, uh, is clinically meaningful. Um, I think that's been a debate point here, um, in our discussions with investors. Um, and secondly, do you have plans to advance Xander in combinations in early lines in CRC? And could you maybe tell us what looks most attractive to you? Thanks, guys.
Amy, please. Yeah, thanks for the question. So the language, uh, Africa in the press release is purposely conservative. We are in a new and highly dynamic regulatory environment. So.
Warranted. And
Facilitative interpretation is by definition subjective, but let me please be very clear. Overall survival (OS) is unequivocal as an endpoint and is the gold standard for approvals. The combination of Zenza and Tezo demonstrated an improvement in overall survival against an active comparator, and it was statistically significant. We look forward to sharing the data with the broader community regarding additional studies with Zenza and LNIB, and moving into earlier lines of therapy. I did talk a little bit about an area that we are keenly interested in, which would evaluate monotherapy Zenza LNIB in the Adu setting in patients who have really exhausted all available care to them, which typically includes surgery and sometimes includes.
As potentially prevent the recurrence of disease, we think that would be a really meaningful impact to patients.
Thank you.
Our next question comes from the line of Silvin Turken with Citizens. Your line is open.
Yeah. Thanks so much for taking my question and congrats uh on the uh execution this quarter. Um, I just want to see if you could comment, please on the pricing Dynamics with capital that um, especially with respect to 340 B volume and and they reimbursement, the their uh in the near future and post the big beautiful Bill, thank you.
Yeah, thanks. Silvin. Chris, want to take that? Yeah, so, and thanks for the question. Yeah, you know, I mentioned that we saw a 4-percentage point increase in our volume shifts, you know, towards the 340B segment of the population or segments of our customers. And you know that payor segment is highly discounted segments, so it's having an impact on our growth today.
You know, from an overall and and that's also from an overall industry perspective, you know, there are a lot of companies are seeing how do you higher utilization in the in this payer segment. Um, but you know, from from a Cabo perspective, what we're seeing is our continued success that being becoming the standard of care.
We're also seeing that the sites of care are spending and so you know, we have more or a greater number of 340b facilities. Um, you know, utilizing uh Cabo. So you know, based on what we know today, um we're projecting gross, net will probably come in closer to the 30% range versus what I had previously provided in the 29 to 30% range.
Thank you.
Our next question comes from the line of
Euron Weber with T.D. Cohen. Your line is open.
Right. Um, thanks for taking. I have a couple of of interrelated questions, um, maybe the first 1 on 304, the the primary endpoint is PFS and or, um, do you have to hit them both? Or is it 1 that it's a dual? You can 1 of them can can over sway over the other. Uh, because I imagine RR might be earlier than PFS, and then maybe second they just on on on 303 against true. If I go in the past, did like 6 months, you know, 10 years ago and then 9 months more recently, how would you expect that control to sort of, you know, um, perform given the the best and LF does about 10.8 months? So it's the Howard does historically, is is a bit relevant? Thank you.
Yeah, thanks Chiron. Amy want to take those? Yeah, thanks for the question to clarify for Stellar 30 or it is a dual primary endpoint PFS and o r. So hitting on either 1 of them would uh constitute a positive study. The endpoints are also assessed by blinded independent Radiology committee. Uh so these are not investigator assess endpoints
When it comes to the control arm and 303, I'm not going to really talk about the data. I'm looking forward to sharing it with you at a future time, and as I mentioned, we will be discussing it as well with regulators, with the intention to file a new drug application.
Thank you.
Please stand by for our next question.
Our next question comes from the line of Akash to worry with Jeffrey's. Your line is open.
Hey, thanks so much. So Mike, I think when we had caught up at ASCO, you had described the head and neck go/no-go decision to be a relatively low bar to proceed, and your team was confident you could have a competitive profile despite some of the emerging single-arm data from bispecifics. I think Cabo Neo is showing historically a response rate over 50% in that setting. Can we offer that the Zanza data looks similar or worse to Cabo, and that's what drove your decision to not move that forward? And what were you expecting from a clinical profile there relative to what was shown from an event rates perspective? Thank you.
The franchise.
Thank you.
Please stand by for our next question.
Our next question comes from the line of Jason Gerber with Bank of America Securities. Your line is open.
Hey guys, thanks for taking my questions. Um, so I just want another follow-up on Stellar 303 and the extent that you could comment on on the enrollment demographics. And, you know, maybe if there were any variables that helped, um, lead to a different outcome than Leo 17, I believe that you could have enrolled up to 40% of patients with non- liver met so, pretty much highly similar to Leo 17 but potentially, that could have gone a little bit higher, so I don't know if you're if you're able to comment on directionally, uh the enrollment skew with uh patients with non liver met and and the the opportunity with 303 in the Adrian CRC setting. Um, do you have a rough sense of what the US patient number is for that market? I imagine there's some proprietary um, Market segmentation data that maybe goes into sizing that. But any any idea if you can give us a sense on sizing there
Yeah, Jason, thanks for the questions. Amy, take the first part, and then I'll let Little Pine handle the second part. Sure, sure. So, you know, this was a global registrational study. We enrolled 900 patients. Whenever we're designing these studies, we need to make sure that the study is relevant to the various areas of the world so that we can maintain equipoise in the enrollment and ensure that there's consistency of benefits.
I'm not going to go into any details but I'm looking forward to sharing those with you in the future. Yeah. And in in terms of future studies in earlier lines of CRC as Amy spoken to about a potential. Um add event type study or postage event type study with zanza monotherapy. We'll get into the details later as we're closer to launching that trial. Uh, we're really excited about it. We think it's a large opportunity, both from a patient point of view and a potential Revenue, point of view, again, low to no competition. And the 1 that we think zanza, uh, based upon his profile could do, um, you know, could do really well and so, stay tuned. We'll talk about it tomorrow as we go forward, but this is the beginning of Wave 2. And, uh, we're certainly excited to be able to prioritize our investments as we go forward. I think that's the key thing look, look at the 305 decision is really simple and prioritizing how we're going to invest in terms of high PTS.
High commercial, um, potential opportunities as we go forward.
Thank you.
Please stand by for our next question.
Our next question comes from the line of Lyonnais Tamaev with RBC Capital Markets. Your line is open.
Hey guys, it's Anish on for Leonid. Thanks for the updates this quarter and for taking our questions. Just with Zanza not moving forward and head and neck, how are you thinking about balancing Zan's potential as a life cycle play to Cabo in indications like RCC or NET versus in broader indications? As we think about leveraging an existing prescriber and patient base and the work required to broaden that beyond what Cabo touches, how are you framing your priorities there? Thanks so much.
Yeah, I guess the, I guess the status quo in terms of wave 1 and Wave 2 is, is still, um, moving forward with thinking. Um, again, we're looking to maximize success with zanza, by impacting more patients as possible. Uh, and making that having the impact on their disease. The maximal impact, we could have on their disease. So, when you think about the overlap with Cabo, uh, we're looking at newer indications in terms of, um, zanza combinations with bell. Sudaan with the studies that work are doing. Amy talked about 311 today, uh, launching that study against, uh, in in in, in net zanza monotherapy against, uh, evolus head-to-head. So a win there would really Define a superior product in terms of a, you know, head-to-head study. Uh, and then the second wave in terms of reinforcing, the success we've seen so far clinically uh in 303 and CRC by moving up in therapy is certainly
Very important and then new indications that we talked about as well further getting beyond the the Cabo reach. So again the whole the whole story here, the whole Focus here is to reinforce the the expertise that we have the strength that we have in the tki franchise to go beyond combo to build a larger franchise in terms of scope, impact for patients and revenue. And that, that plan is only being reinforced today uh, with the overall uh, schemes that were pushing forward.
Thank you.
Taking our questions so uh, maybe 1 epidemic, question. So, so what percentage would you characterize? Um, as high risk post admin in the, uh, in the CRC setting and and maybe 1 that's uh, potentially read across Forum. 303 is the, the duration, um, I guess in in RCC, most of the adjectives, um, therapy trials, were 1 year in in duration and thinking about, if that's something that, uh, that you're thinking about as well, and whether the 303 tolerability profile and safety profile could also uh, inform that that treatment duration to thank you.
So Amy, take the second question first and then I'll follow up on the edge of it. Yeah, so I appreciate the question with regard to duration, which, you know, defines how long obviously, how long patients are on therapy. Um, I think we have to take that in the context of colorectal is still the fourth leading cause of cancer related deaths in the US. Uh, so duration, plus population, uh, of patients, I think brings a potential to make a difference in a lot of people's lives. Um, and
When we think about moving it earlier in lines of therapy and an agent, you know, the duration. Uh, there would be obviously defined by probably a longer period of time. Uh, and the patients that were talking about who have higher risk of disease, you're looking at, you know, stage 2, 3 patients, uh, who have whose risk of recurrence is is measured more uh, in months early months, not not years.
as for the number,
Yeah, let me, let me take that. So, again, Andy, we'll, we'll give you more details about the, the, uh, banza post agent, um, study, uh, as we get closer to launching what. I'll what I'll say is the following is that we look at, um, at, at the commercial opportunity, uh, we have a great, uh, Team within commercial that does that analysis for us? We think the, uh, the, the combined opportunities, uh, that is represented by the post agent study, as well as the men. And genomics, study is probably around 3x higher than what the head and neck study was. So again, from the standpoint of how we're prioritizing Investments and allocating resources, both in terms of capital as well as resources Human Resources, we think it makes a lot of sense to move forward in these, uh, these new indications as quickly as possible because the, again, the need is there. The competition is very low to none and the commercial opportunity is very, very high.
Thank you.
Our next question comes from the line of Andrew Barons with Lee Partners. Your line is open.
Sorry, thanks. Um, a couple more questions on the CRC program and Stellar 303. Um, the FDA has made demonstrating contribution to parts of priority. Just wondering if you think that Stellar 303 has met that bar and then some. Concerns I've heard from investors are that the intent to treat overall survival benefit may have been driven by an improvement in the non-liver mets patients that are part of the cohort. Um, and the impact on checkpoint inhibitor efficacy. I know that the overall survival analysis is not right out yet, which is probably contributing to this concern, but is there anything you can say to address this? How important is it that you demonstrate a definitive benefit in the patients that have liver mets? Thanks.
Amy. Go ahead, please. Yeah. Yeah, thanks for the question. So, the contribution of components of some...
That, uh, we have long recognized as an important factor for this study. I will remind you of ASCO GI earlier this year, where we showed Stellar 001 colorectal cancer cohorts Zanza versus Zanza plus a Thibault. Also, across all efficacy parameters—overall response rate (ORR), progression-free survival (PFS), overall survival (OS)—the addition of A to Zanza was there. So we have contributions of components coming from a separate study.
Um, and in terms of the nlm, um, and subgroups, I'll share it, you know, again, I'm not going to get into any of the data. We have a positive OS readout in the intent to treat patient population as you yourself pointed out. We continue to follow or Os and nlm. Uh and uh, we look forward to sharing all the data as soon as we can.
Thank you.
Our next question comes from the line of Derek Aella with Wells Fargo. The line is open.
You know, the next couple of quarters will be more bullish, like before steadying off, you know, as you need to roll over these indolent patients that become candidates for therapy and then just follow up. You know, just can you discuss the breadth of prescribing that you're seeing among the target physicians so far? Thanks.
Yeah, thanks for the question. Look, we're not going to give. We're not going to give quarter to quarter guidance. Obviously, we don't do that. So um, so we're very excited about where we stand in the second quarter which is again, is our first full quarter of launch all the uh, you know, all the narratives that we've been talking about in terms of what that means, uh, I think are pretty clear. I won't repeat those here. PJ, you want to add some color, commentary on the second part of that question. Yeah, you know, as far as the, the prescriber base, I'd say, we're, we're pleased generally. We're seeing um, you know, prescriptions broadly, as I mentioned, in in terms of academic, in terms of uh community.
We're seeing prescriptions. Um,
From Cabo naive prescribers as well as Legacy Cabo prescribers. So basically, we're seeing, you know, activation and/or sort of, um, you know, more prescriptions from prior prescribers. So we're pleased with those kinetics, um, across the board.
Great.
Thank you.
Our next question comes from Milan of student Logan, Nathan with Stevens. Your line is open.
Hi excellent. Excellent team. Thank you for taking my question. Uh my first 1, you know, in regards to the uh positive timeline uh release that you had for the OS benefit, instead of 303, uh, does the Dual endpoint give the opportunity to at least get approval for 1 or 1 of the patient populations. If there are any nuances with either the nlm or the liver Mets population that makes it not as um favorable uh when fighting with the FDA and then, secondly, we want to squeeze in if you can all pine at the current reiterated, uh, guidance ranges includes contributions from net.
Go ahead, Amy.
thanks for uh, the
Approval. The dual primary endpoint is designed such that you can be positive on one.
Chris take the second 1. Yeah, so thanks for the question. Um, you know, as as Mike mentioned last quarter, you know, we we increase guidance or when we increase guidance by about 100 million dollars to the, to the midpoint sum of, that was related to net, but a lot of that was related to the base business.
Thank you.
Our next question comes from the line of Peter Lawson with Barclays. Your line is open.
Chris, just following up on the details around the guidance. Is there any way we should think about our clinical trial revenues in the second half?
Thank you.
Yeah, Peter, thanks for the question. I mean, as we've said, probably.
A couple of years now they clinical trial sales are choppy. You know that we we have some visibility occasionally but not we don't have very, you know, good line of sight to win the clinical trial sales are coming through so it's hard to it's hard to say and
so that's about it.
Thank you.
Our next question comes from Milan of Steven Willie with Stifel. Your line is open.
Yeah. Thanks for taking the questions, and congrats on the Stellar 303 readout. Just, I guess, a quick clarification question on the 305 decision. So, I think I remember you guys were blinded to the data and that a DMC would be, I guess.
Evaluating some threshold level of efficacy metrics and then allowing you to proceed on a blinded basis and potentially upsize the study.
Can you just kind of talk through the cadence of the decision in terms of assessing the competitive landscape? And then seeing the data, were those two things done in lockstep?
Did the former precede the latter? Thanks.
Go ahead, Amy, please. Yeah, thanks. So, um, you know, I'm not going to go into a whole lot of detail here. The trial was designed with a gate. Um, we reviewed the unblinded data.
We may have a path forward in head and neck, and we'll determine if additional studies are warranted. But for now, we're prioritizing other indications and allocating resources accordingly. Head and neck is a unique population, and we'll share the data at a future time.
Thank you.
Please stand by for our next question.
Our next question comes from Milan of Ash Verma with UBS. Your line is open.
If this ID data can come at a medical conference this year, or do we wait until next year? Just, uh, another way to ask the same thing. Can you still present the ITD portion of the study without reaching the final analysis on NADM?
Thanks.
Go ahead. Yeah, uh, thanks for the question. Uh, we're not discussing the venue for the data presentation, but we'll provide the data once the abstract titles are made publicly available. Um, we presented the dual primary endpoints before, where we've hit on one and are still waiting for the other.
Thank you.
I'm showing no further questions, so I will now turn the call over to today's host, Susan Hubbard.
Yeah, thank you to Wanda, 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.
Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.