Q3 2025 Exelixis Inc Earnings Call
Speaker #2: Good day , ladies and gentlemen , and welcome to the Exelixis . Third quarter , 2020 Financial Results conference call . My name is Sheri , and I'll be your operator for today .
Speaker #2: 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 .
Speaker #2: Please proceed .
Speaker #3: Thank you . Sherri , and thank you all for joining us for the Exelixis third quarter 2020 Financial results conference call . Joining me on today's call are Mike Morrissey , our president and CEO , Chris Senner .
Speaker #3: Our chief financial officer , Dana , our executive vice president of research and development . And P.J. Haley , our executive vice president of commercial , who will review our progress for the third quarter of 2025 .
Speaker #3: And at October 3rd , 2025 . During the call today , we will refer to financial measures not calculated according to generally accepted accounting principles .
Speaker #3: Please refer to today's press release , which is posted on our website for an explanation of our reasons for using such non-GAAP measures , as well as tables deriving these measures from our GAAP results .
Speaker #3: During the course of this presentation , we will be making forward looking statements regarding future events and the future performance of the company .
Speaker #3: This includes statements about possible developments regarding discovery , product development , regulatory , commercial , financial and strategic matters , potential growth opportunities , and government drug pricing policies and initiatives .
Speaker #3: 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 , product , commercial success , market competition , regulatory review and approval processes .
Speaker #3: Conducting clinical trials , compliance with applicable regulatory requirements . Our dependence on collaborative partners , and the level of costs associated with discovery , product development , business development and commercialization activities .
Speaker #3: And with that, I'll turn the call over to Mike.
Speaker #4: All right . Thank you , Susan , and thanks to everyone for joining us on the call today . Exelixis had a strong third quarter .
Speaker #4: Building on our progress from the first half of 2025 , accelerating R&D momentum , coupled with flawless commercial execution , has the potential to transform our business as we bring new treatment options to patients and build value for shareholders .
Speaker #4: The entire team is committed to building a best in class multi oncology business and all corporate activities are aligned on a single focus to improve the standard of care for patients with cancer .
Speaker #4: Our future success will be accelerated by increasing the number of cancer patients served with current and future medicines , and the impact we have on their disease .
Speaker #4: The Cabozantinib business has never been stronger , and we're pleased to see Zanza move to center stage with our first big clinical success in CRC .
Speaker #4: Key highlights for the third quarter include . First continued robust performance of the Cabozantinib US business with strong growth in demand and revenue from our commercial activities .
Speaker #4: Cabozantinib maintained its leadership position as the top TKI for RCC . And importantly , shows consistent growth in the first line segment . US Cabo franchise net product revenues grew approximately 14% year over year to $543 million in the third quarter of 2025 , compared to $478 million in the third quarter of 2024 .
Speaker #4: Global Cabo franchise net product revenues generated by EXELIXIS, INC. and our partners were approximately $739 million in the third quarter of 2025 , compared with $653 million in the third quarter of 2024 .
Speaker #4: launch . In his prepared remarks . Second , Zanza is rapidly advancing as our next oncology franchise opportunity and the focus of seven ongoing and soon to start pivotal trials .
Speaker #4: We continue to prioritize Zanza with existing and new indications and combinations as potentially the most promising and expeditious path to a second Exelixis oncology franchise , and one that we believe can eclipse the size , scope and impact of our Cabozantinib business .
Speaker #4: Importantly , we're engaged in numerous clinical trial discussions for Zanza that could expand the scope and reach of our Zanza pivotal trial efforts .
Speaker #4: We're thrilled with the positive results from stellar 303 and CRC , and intend to file in this indication with regulators as quickly as possible .
Speaker #4: We understand the nuances of the CRC market in the US and believe we can effectively navigate the intricacies of this complicated disease and the current competitive dynamics , pending approval .
Speaker #4: I'll remind everyone of the important messages from the full data set presented at Ismo and published simultaneously in Lancet , Zanza . In combination with Atezo , led to the first clinical success in a non MSI high third line plus CRC population when compared against a contemporary standard of care .
Speaker #4: I want to reiterate that for other checkpoint containing regimens failed to achieve this goal . Market research underscores that late line CRC patients are interested in utilizing immune checkpoint inhibition to attack their disease head on , so the Zanza atezo combo could represent a meaningful advance .
Speaker #4: The absolute magnitude of the overall survival benefit in the ITT population with the Zanza-atezo combination is notable, especially in the context of the offering.
Speaker #4: The potential of a non chemo containing regimen . We're especially pleased with the magnitude of benefit in patients with prior bevacizumab treatment , since the vast majority of CRC patients in the US receive bevacizumab as part of their first and or second line treatment regimens , tolerability and safety of the Atezo combination is consistent with other TKI checkpoint combinations .
Speaker #4: 303 trial continues to accrue survival events in the Nonliver subgroup , and we expect to trigger the final analysis for Non-tolerant patients in midyear 2026 .
Speaker #4: And again , as you'll hear from Dana , seven ongoing and new Zanza pivotal trials are in the queue to address important unmet medical needs for known and new indications across multiple lines of therapy .
Speaker #4: The Exelixis early stage pipeline continues to progress quickly , with a range of new and potentially differentiated biologics and small molecules heading into and through early clinical evaluation .
Speaker #4: Dana will highlight these activities today at a high level , and you can expect additional details on these efforts along with our Zanza pivotal trial update and our upcoming R&D Day on December 10th .
Speaker #4: Finally , we continue to carefully manage capital allocation while advancing our R&D and commercial priorities . Our balance sheet and expected free cash flows remain strong and provide us with the opportunity to advance our pipeline priorities while we return cash to shareholders .
Speaker #4: We plan to repurchase shares when we believe they are undervalued and we're pleased that we have been authorized to repurchase an additional $750 million of our shares .
Speaker #4: So with that , please see our press release issued an hour ago for our third quarter 2020 financial results . And an extensive list of key corporate milestones achieved in the quarter .
Speaker #4: And I'll now turn the call over to Chris . Thanks , Mike , for the third quarter 2025 . The company reported total revenues of approximately $598 million , which included Cabozantinib franchise net product revenues of approximately $543 million .
Speaker #4: Cabometyx net product .
Speaker #5: Revenues were approximately $540 million . Gross net for the Cabozantinib franchise in the third quarter of 2025 was 30.4% . During the quarter , we experienced higher deductions from revenue related to three P-40b discounts , offset by lower Medicare and copay assistance expenses .
Speaker #5: We continue to project that our gross and net for the . Trait inventory at the end of the third quarter 2025 was approximately two weeks on hand , which was lower when compared to the second quarter of 2025 .
Speaker #5: Total revenues also included approximately $54.8 million in collaboration revenues , which includes approximately $46.3 million in royalties earned from our partners Ipsen and Takeda on their sales of Cabozantinib and their respective territories .
Speaker #5: Our total operating expenses for the third quarter of 2025 were approximately $361 million , compared to $355 million in the second quarter of 2025 .
Speaker #5: The sequential increase in these operating expenses was primarily driven by a $19.8 million restructuring charge we took during the third quarter , the increase in restructuring expense was partially offset by lower SG&A expenses , provision for income taxes for the third quarter of 2025 was approximately $58.8 million , compared to a provision for income taxes of approximately $45.6 million for the second quarter of 2025 .
Speaker #5: Company reported GAAP net income of approximately $193.6 million , or $0.72 per share . Basic , and $0.69 per share diluted for the third quarter of 2025 .
Speaker #5: The company also reported non-GAAP net income of approximately $217.9 million , or $0.81 per share . Basic , and $0.78 per share diluted non-GAAP net income excludes the impact of approximately $24 million of stock based compensation expense , net of related income tax effect , cash and marketable securities .
Speaker #5: For the quarter ended September 30th , 2025 were approximately $1.6 billion . During the third quarter 2025 , we repurchased approximately $99 million of the company's shares , resulted in the retirement of approximately 2.4 million shares at an average price per share of $41.69 .
Speaker #5: As of the end of the third quarter 2025 , we had approximately $105 million remaining under the $500 million stock repurchase plan authorized by the company's board in February 2025 .
Speaker #5: On October 31st , 2025 , the company's board authorized an additional share repurchase program totaling $750 million that expires at the end of 2026 .
Speaker #5: We are updating our full year 2025 financial guidance , which is detailed on slide 14 of our earnings presentation . We are narrowing our total revenue and net product revenue guidance to the upper end of our previously provided guidance ranges .
Speaker #5: We are projecting that total revenue will be between 2.3 billion and $2.35 billion , and our net product revenue will be between 2.1 billion and $2.15 billion .
Speaker #5: We are targeting our cost of goods guidance to be approximately 4% of net product revenues . We are lowering our R&D expense guidance range by $75 million to 850 to $900 million .
Speaker #5: We are tightening our G&A expense guidance range to be between 500 million and $525 million , and finally , we are lowering our full year effective tax rate guidance to be between 17% and 18% .
Speaker #5: With that , I'll turn the call over to Dana . Thanks , Chris . First , I'd like to start by saying how excited I am to be leading the R&D organization .
Speaker #5: The energy and engagement across R&D is super high right now , and the momentum that carried us into and through Ismo is continuing to drive our teams with an emphasis on execution and collaboration .
Speaker #5: Our focus in R&D is on maximizing the opportunities for our portfolio , including and our earlier stage pipeline of promising small molecules and biotherapeutics .
Speaker #5: As I mentioned , we have a lot of momentum coming out of Ismo , primarily driven by our presentation of the results from the stellar 303 trial .
Speaker #5: Comparing the combination of Alectinib plus atezolizumab versus regorafenib in patients with non microsatellite instability , high or non MSI high colorectal cancer who have who have received multiple prior therapies as a brief reminder , the trial has dual primary endpoints designed to assess survival outcomes more broadly in the intention to treat or ITT population and more specifically in the population of patients without liver metastases , which we refer to as the NLM patients or population .
Speaker #5: The study met one of its dual primary endpoints , demonstrating a 20% reduction in the risk of death with the combination in the ITT population at the final analysis , with a stratified hazard ratio of 0.80 and 95% confidence interval of 0.69 to 0.93 , and a p value of 0.0045 at a median follow up of 18 months , the median overall survival in the ITT population was 10.9 months , with the combination of Atezo versus 9.4 months with rego , the survival benefit with the combination was demonstrated early and was consistent throughout the Kaplan-Meier curve .
Speaker #5: The overall survival benefit with the Atezo combination was observed across all pre-specified subgroups with similar hazard ratios observed in key subgroups , including liver involvement , prior treatment with anti-VEGF therapy , geographic region , and Ras mutation status .
Speaker #5: Data pertaining to the other dual primary endpoint of overall survival in the NLM population were immature at the data cutoff , but a pre-specified interim analysis showed a trend in overall survival favoring the Atezo combination with a median of 15.9 months .
Speaker #5: With the combination and 12.7 months with rego , with a median follow up of 16.8 months . The stratified hazard ratio for this analysis was 0.79 , with a 95% confidence interval of 0.61 to 1.03 , and a p value of 0.0875 .
Speaker #5: The trial will proceed to the planned final analysis for this endpoint , which our current projections indicate will be triggered around midyear 2026 .
Speaker #5: The safety profile the combination was consistent with other TKI IO combinations with no new safety signals . And finally , we were thrilled to have the trial results published in The Lancet simultaneously with the ESMO presentation .
Speaker #5: Needless to say , we are very excited about these results , which are highly impactful for a number of reasons . First , prior to the stellar 303 readout , there were four phase three clinical trials in colorectal cancer that evaluated immunotherapy containing regimens .
Speaker #5: All of which failed to show an overall survival benefit versus a standard of care in non MSI high patients , which comprised 95% of the overall colorectal cancer population .
Speaker #5: As the first and only phase three trial to show an overall survival benefit compared to a standard of care in these patients , we believe stellar 303 demonstrates clear clinical differentiation of zanza from other tkis and IO partners investigated in this space .
Speaker #5: As a reminder , in addition to VEGF receptors , Zanza simultaneously targets the Tam kinases and Met , which have been shown in preclinical models to drive the ability of tumors to evade anti-tumor immunity .
Speaker #5: We believe this differentiated mechanism of action is a key factor in the clinical differentiation of zanza compared to other kinase inhibitors investigated in this space , and really underscores the franchise potential for zanza .
Speaker #5: Second , it's certainly worth noting that to date , no other regimen has demonstrated a higher median overall survival in this setting . Again , installer 303 , the combination of Zanza plus Atezo showed median overall survival values of 10.9 months in the ITT population and 10.5 months in patients who had received prior bevacizumab .
Speaker #5: And while we are conscious of the caveats associated with cross-trial comparisons , its relative to observe that prior to stellar 303 , the Sunlight trial showed median overall survival for task 102 plus Bev of 10.8 months in the ITT population , and only nine months in the Bev pretreated population .
Speaker #5: We believe these are important data points to note , given that the majority of patients in the US are receiving Bev in earlier lines of treatment .
Speaker #5: And last but not least , being an immunotherapy containing chemo free regimen , if approved , zanza and combination with Atezo could be an opportunity to switch mechanisms to a TKI .
Speaker #5: IO regimen . After receiving chemo . Plus , Bev , which we have heard from investigators and key opinion leaders , is an important potential choice for patients .
Speaker #5: Thus, we certainly believe that the combination of Zanza plus Atezo has the potential for a very meaningful impact in this high unmet need population. That conviction has been driving our internal teams to work nonstop, preparing for a potential NDA filing, which we intend to submit this December, pending the government reopening for business.
Speaker #5: We also intend to complete data collection and analysis for the dual primary endpoint of overall survival in the NLM population , which we anticipate will occur around midyear 2026 .
Speaker #5: Moving on to stellar 304 , this is our pivotal study evaluating the combination of Zanza plus nivolumab versus sunitinib in patients who have not yet received systemic therapy with locally advanced or metastatic non-clear cell , renal cell carcinoma .
Speaker #5: Based on the current event rate , we are anticipating top line results around midyear 2026 . And if positive , those results could lead to the second NDA filing for Allitinib .
Speaker #5: Regarding other clinical development activity for Zanza earlier this year , we initiated stellar 311 , our phase three trial evaluating Zanza compared to everolimus as a first oral therapy in patients with neuroendocrine tumors , and that study is proceeding on schedule progress .
Speaker #5: Also continues with regard to the phase two umbrella study being conducted by Merck , in which the combination of Zanza plus Belzutifan is being evaluated in patients with previously treated metastatic RCC and two pivotal studies that Merck is running in clear cell renal cell carcinoma , evaluating Zanza in combination with bells .
Speaker #5: And we anticipate these studies could start near the end of this year . Regarding the next wave of pivotal studies for Zanza , we expect to start two additional trials in 2026 , one focused on patients with recurrent meningioma and one specifically investigating the adjuvant setting in colorectal cancer , where patients have been treated with surgery and chemotherapy but have a high risk of recurrence given the demonstrated clinical differentiation we've seen with Zanza and its potential to be the TKI of choice for combinations with IO , we're continuing to assess the landscape for additional opportunities for zanza development , and we look forward to sharing more details of these important opportunities as we get closer to launching the trials .
Speaker #5: Now , shifting earlier or early clinical pipeline , we have four molecules in this space that are currently in clinical development , namely XL 309 , XB 010 , XB 628 , and XB 371 , and the phase one studies for these early molecules are progressing well in terms of new development candidates .
Speaker #5: We are continuing to advance exciting new small molecule and ADC programs , to our and I look forward to sharing more details about our early pipeline programs at the R&D day event .
Speaker #5: We're planning for December 10th this year . So with that , I'll turn the call over to P.J. . Thank you . Dana Carbomedics .
Speaker #4: Business remains strong in the third quarter of 2025 . And importantly , the launch in neuroendocrine tumors is .
Speaker #5: Off to a great start .
Speaker #4: Cabo continued .
Speaker #5: To show .
Speaker #6: Growth in terms of revenue , demand and new patient starts and notably perform well relative to the competition . The team continued to execute at an extremely high level , with Carbomedics 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 .
Speaker #6: The prescription data in the oral TKI market basket of Cabo . NIB , nib and Pazopanib convey the strength of Cabo relative to the competition .
Speaker #6: Looking at the TRX , comparison of Q3 2024 to Q3 2025 , Carbomedics grew for share points from 42% to 46% . Importantly , Carbomedics was the only product in the market basket to grow market share year over year .
Speaker #6: Carbomedics TRX volume grew 21% in Q3 2025 relative to Q3 2024 , outpacing the growth rate of the market basket , which was 13% .
Speaker #6: Importantly , Carbomedics 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 , and we're able to discuss both the cabinet data as well as the RCC .
Speaker #6: Checkmate nine er , five year follow up data with relevant physicians igniting our data presented at Asco GU in February resonate with the C space and help our team continue to drive differentiation from the competition and first line RCC .
Speaker #6: In fact , Carbomedics plus nivolumab first line new patient market share in the third quarter was the highest it has ever been . This momentum bodes well for future growth in terms of new patient starts and total demand is for first line patients .
Speaker #6: Receive incremental refills and volume as we look forward into 2026 , turning to neuroendocrine tumors , our market research and feedback from customers demonstrate that prescribers are excited for a new treatment option for their neuroendocrine tumor patients .
Speaker #6: The first broadly applicable new oral small molecule therapy in nine years . Physicians are responding positively to the broad net label and the contemporary trial design and perceive the efficacy and tolerability of the carbo data as favorable relative to the other small molecule therapies in the space .
Speaker #6: Prescribers are using broadly across patient and tumor characteristics . Including patients with neuroendocrine tumors arising in the pancreas , GI tract , and lung .
Speaker #6: Across all tumor grades, functional and sstr status, and those who have received prior treatment with Lutathera, the recent presentation of the lung subset data from the Cabinet Study continues to elucidate the data in a segment of patients accounting for approximately 20% of NETs who have a high unmet need.
Speaker #6: Many of which test SSR negative . Returning to new patient market share for second line plus neuroendocrine tumors . Three . We are pleased that Carbomedics has rapidly become the market leader in the segment with greater than 40% new patient share for oral therapies .
Speaker #6: This share is very encouraging . So early in the launch , we believe that new patient share should continue to increase over time as more patients start therapy with Cabo and receive refills .
Speaker #6: We believe demand will continue to grow . Neuroendocrine tumor demand contributed approximately 6% of total demand for Cabo in Q3 , and we expect that contribution to increase going forward .
Speaker #6: Demand in neuroendocrine tumors increased by over 50% in Q3 relative to Q2 . Finally , market research continues to indicate that Carbomedics is viewed as the best in class oral therapy in neuroendocrine tumors .
Speaker #6: This perception is typically a leading indicator of prescribing behavior and gives us confidence that carbomedics new patient market share will continue to increase in coming quarters .
Speaker #6: 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 .
Speaker #6: Taken together , the data and customer feedback give us a high degree of confidence in the growth of carbomedics in neuroendocrine tumors . As we look at the Cabo neuroendocrine tumor business , the revenue for 2025 is vectoring towards exceeding $100 million .
Speaker #6: This trajectory . Taken together with the market uptake and enthusiasm , provides great momentum for the business heading into 2026 . We think about building on and expanding our GI franchise .
Speaker #6: We are thrilled with the results of stellar 303 pending regulatory approval . We believe that these data would provide Exelixis with a compelling commercial opportunity in colorectal cancer .
Speaker #6: One of the big four tumors we physicians cite is the availability of an immune checkpoint inhibitor for the broader population, which is important for their patients.
Speaker #6: They also view zanza as differentiated given the data and the fact that the combination of zanza plus Atezo was successful in a cold tumor where other TKI plus ICI combinations have failed with all the appropriate caveats for cross-trial comparisons , the median OS for Zanza of 10.9 months is on par with Lonsurf plus Avastin bevacizumab from the Sunlight Study .
Speaker #6: However , in the sunlight study , patients who had received prior Bev had a median OS of only nine months . The Bev pretreated group will be relevant for the US population as approximately 75% of patients have received Bev before reaching the third line , setting , and most of these patients have received Bev in both the first and second line settings .
Speaker #6: Exelixis has had numerous successful launches with Cabo . We are excited to expand on the commercial capabilities we have built over the last decade , and to build on our GI franchise , where we already have experience in hepatocellular carcinoma and neuroendocrine tumors .
Speaker #6: As you know , we already have a significant GU presence . And for Allitinib , we are envision growing our GI infrastructure to a size and scale similar to our GU team .
Speaker #6: As Mike mentioned , we are expediting the build out of our GI sales team as we see a great opportunity to continue to drive growth in the net indication .
Speaker #6: Additionally , having a full GI team in place will provide important experience selling Cabo as well as forming relationships with accounts to be ready for Zanza .
Speaker #6: The incremental sales representatives will enable us to have greater reach in the community setting , which is a segment where our team has typically excelled .
Speaker #6: This build out speaks to our confidence and excitement . Cabo net opportunity as well as insulin tinib . In closing , we are pleased with the Cabo business .
Speaker #6: Both in RCC and Nets in neuroendocrine tumors . Prescribers see Carbomedics as more favorable choice versus other previously approved small molecule therapies . Additionally , the competition in the oral segment of the net market or generic therapies , which puts cabometyx at a significant advantage with a full commercial organization energized and supporting the launch .
Speaker #6: All of this taken together , drives our conviction that the net market will be a substantial opportunity for the Carbomedics business . We are pleased that cabometyx plus nivolumab has achieved the regimen highest market share ever in first line RCC setting .
Speaker #6: As this sets up , the brand for continued growth in kidney cancer and with that , I will turn the call back over to Mike .
Speaker #4: All right . Thanks , P.J. . We will wrap up here with a big shout out to the team to thank everyone for helping make our third quarter .
Speaker #4: So successful . I'm pleased to see our collective commitment , focus and urgency continue at a high level as we advance our priorities across discovery , development and commercial activities .
Speaker #4: On a personal note , after more than 35 years in the biopharma industry , Susan Hubbard our EVP , Public Affairs and Investor Relations has decided to retire to pursue her passions outside of her profession .
Speaker #4: We are incredibly fortunate that Susan joined us in 2014 with her depth of experience and broad expertise in both clinical and commercial , as she provided strong leadership and guidance to help us navigate all the twists and turns we've encountered over the years .
Speaker #4: As we grew into the company we are today . And I personally , again , I'm very grateful for Susan as she's been my my go to thought partner for framing the narrative to all our various stakeholders , and we wish her all the best .
Speaker #4: Susan will be with us by the end of the year , and I'm confident our investor relations and Public affairs teams are well equipped for the future .
Speaker #4: Moving forward into 2026 . Andrew Peters , currently senior vice president and strategy , will add investor relations to his responsibilities , reporting to Chris Center .
Speaker #4: This is a natural move for Andrew , who joined Excel in 2018 following 12 years as a biopharma equity research analyst to both Susan and Andrew .
Speaker #4: So we'll close here and look forward to updating you on our progress in the future . And thank you for your continued support and interest in Exelixis , and we're happy to now open the call for questions .
Speaker #2: Thank you . To ask a question , you will need to press star one one on your telephone to withdraw your question . Press star one one again due to time restraints , we ask that you please limit yourself to one question .
Speaker #2: Please stand by while we compile the Q&A roster. And our first question will come from the line of Sylvain Turcan with Citizens.
Speaker #2: Your line is open .
Speaker #7: Yeah . Thank you . And congratulations on all the progress . Maybe if you could just summarize the post ESMO feedback that you had on on the enzalutamide results and how they match up with those points that you unveiled today regarding how you plan to position this product in the market .
Speaker #7: Thank you .
Speaker #4: Yeah . Thanks , Sylvan . Yeah , PJ , you want to start with that one and then maybe Dana and I can provide some color commentary as needed .
Speaker #4: Sure .
Speaker #6: Thanks for the question , Sylvan . You know , we've conducted extensive market research with the with the data that was presented in Ismo , which has really been very positive .
Speaker #6: You know , physicians are seeing the overall survival benefit as very important . They're certainly seeing the fact that we're bringing an IO to bear in one of the biggest tumors , one of the big four tumors .
Speaker #6: As I said , where where IO hasn't been available , where TKI plus IO has failed in the past , is also very important to physicians , as well as the fact that this is a chemo free option .
Speaker #6: So, what we've seen is, I think about this market, and as we see the market now, it's a very fragmented market.
Speaker #6: As you look at it , about a third of the market is Lonsurf . Bev . A third of the third line plus market is TKI , and the final third of that market is really sort of a smattering of different chemos as well as various targeted therapies .
Speaker #6: So fragmented market really is one that provides opportunity . Should we be approved in the setting and our market research clearly indicates that we'll take market share from all the competitors in the space .
Speaker #6: So that's been certainly very , very positive as well . And you know , as I mentioned , we're we're excited to build out our GI franchise capabilities , our sales team as we're , you know , the net launch is going well .
Speaker #6: This gives us the opportunity to reach further in the community and , you know , continue to drive uptake in net as well as to be really fully prepared and optimized .
Speaker #6: Should we have the opportunity to launch Zanza in the near future . So just very exciting all around .
Speaker #4: Great . PJ , thanks .
Speaker #2: One moment for our next question . And that will come from the line of Shawn Lehmann with Morgan Stanley . Your line is open .
Speaker #8: Hi , this is Catherine on for Shawn . Thanks so much for taking our question . We had one looking at Sansa and NCC , RCC ahead of the readout for seller 304 .
Speaker #8: In mid-year 26 . Could you help provide more color on why sunitinib is the right control , given the various physiologic subtypes that make up this population ?
Speaker #8: Thanks so much .
Speaker #5: Thanks for the question . This is Dana . Yeah . So the comparator in 304 is sunitinib , which is a standard of care in this setting .
Speaker #5: We think it's a highly relevant comparator , especially given the overlap in target profile with Zanza . And it's used quite extensively , especially ex-US .
Speaker #5: But a number of patients in the U.S. are also treated with this. So it's a standard of care and thus is a good comparator to go with for the Phase 3 pivotal trial.
Speaker #2: One moment for our next question . And that will come from the line of Paul Choi with Goldman Sachs . Your line is open .
Speaker #9: Hi . This is Karishma on for Paul . Thank you so much for taking our questions and congrats on the quarter . So given the performance in the stellar 303 initial cut of data from ESMO Helpless Level , set expectations for the MLM , MLM coming out early next year and particularly we were interested in the idea of powering with relation to this study .
Speaker #9: Given that lawn serve Bev had approximately 500 patients in their phase three study . Can you speak to your decision to enroll roughly 900 patients in stellar 303 and the overall implications ?
Speaker #9: Thank you .
Speaker #10: I also want to ask , I know that .
Speaker #4: Yeah , it's kind of it's kind of hard to hear your question with all the background noise . So Dana , can you can you navigate that one .
Speaker #5: Yeah , sure . So you know , the study started out or , you know , in the prior iteration before it was had dual primary endpoints .
Speaker #5: It had a single primary endpoint in patients with Non-liver metastases . We a scientific rationale to look at that , especially with emerging data coming from the Leap 17 trial and other studies showing that those patients without liver metastases seem to do better with IO .
Speaker #5: But as the trial evolved and as we were accruing , patients and events , we realized that we had , you know , an important opportunity to potentially bring the the the , the , the results in earlier with the it population , meaning with the , the strong contribution of events from the patients with liver metastases , it's a much poorer prognosis with those patients .
Speaker #5: They the disease is much more aggressive . They progress faster , they achieve events for overall survival , faster . So that's where we realized we we really needed to change the trial so that we could get endpoints in both the non liver Mets and the full ITT population .
Speaker #5: So the result that we presented in Berlin a couple of weeks ago includes both , you know , the it's a combined analysis of both liver Mets and non liver Mets .
Speaker #5: The entire ITT population that population is a little bit skewed toward non liver Mets patients in that we put a cap amount of patients with liver metastases that could enroll in the trial .
Speaker #5: So typically a trial population that doesn't manage liver Mets the way we did will be about 80% liver Mets . And 20% , 20 to 30% non liver Mets .
Speaker #5: We had about 38% non-liver mets. So that's certainly changed the dynamics of the trial. But the result that we achieved was in the entire population.
Speaker #5: So as we said because the non liver Mets progressed a little more slowly . We expect to see results in that subgroup sometime next year around the middle of next year .
Speaker #2: One moment for our next question, and that will come from the line of Ashtekar Gunawardene with Truist. Your line is open.
Speaker #11: Hi, guys. Thanks for taking my questions. I want to offer my congratulations on both the top and bottom line growth that you guys are really impressive.
Speaker #11: So I have a question on this . Merck announced light spark 011 was positive . And one could assume that they'll be putting effort into marketing Bellevue plus Lenvatinib combination in second line RCC patients .
Speaker #11: We all know that Zanza is a better drug than Lenvatinib , but there could be a lot of population overlap between light , spark , or one one and the Zanza cohort in key makers u03 .
Speaker #11: So does that reduce the probability that Merck will want to pursue a pivotal second line study with Bellevue and Zanza ? And then if I can sneak one in an extra in here , what was the clinical trial contribution for Cabo sales in three ?
Speaker #11: Q thanks , guys .
Speaker #4: Chris , take that second question first . Real fast .
Speaker #5: Sure . So asks Chris .
Speaker #12: There were actually there were no clinical trial sales in the in the quarter .
Speaker #4: And yeah it's Mike . The the first question was a long drawn out question . Lots of twists and turns . We are confident that the Merck trials that we've been discussing for the last year will continue .
Speaker #4: And start later this year. So, we don't want to say more than that. The speculation will want to. We don't want to speculate on other people's data, especially when there's only a press release.
Speaker #4: We're excited about that collaboration and we'll see that moving forward .
Speaker #2: And one moment for our next question that will come from the line of Akash Tewari with Jefferies. Your line is open.
Speaker #13: Hey , this is Anastasia on for Akash . Thanks for taking the question . So do you see any risk to your stellar 303 trial approval ?
Speaker #13: Given that Vinay was publicly apprehensive about the usefulness of cabinet ?
Speaker #3: I'm sorry . Do you mind repeating the question ? I don't think we got all that .
Speaker #13: Yeah , for sure . So , do you see any risk to your Stella hundred and three trial ? Specifically its approval ? Given that Vinay has been publicly apprehensive about the usefulness of cabinet .
Speaker #4: Yeah , I wouldn't want to comment on that . Thank you .
Speaker #2: One moment . For our next question . And that will come from the line of Andy Shay with William Blair . Your line is open .
Speaker #14: Okay . Thanks . Well , first and foremost , it isn't . Congrats on the illustrious career in the biopharma industry . You've been a mentor to so many of us and really happy for you .
Speaker #14: And I'll miss working with you dearly . So my question has to do so . So my question has to do with the the NEP population .
Speaker #14: Obviously very , very successful launch . And and I'm just curious , as you look forward to these three trial . I'm curious about the strategy in terms of navigating the potential , the potential of cannibalization as , as cargo is being used later .
Speaker #14: The way the line potentially infringing in the in the , in the in the earlier line , settings . Thank you .
Speaker #4: Yeah PJ go ahead .
Speaker #6: Yeah . Thanks for the question , Andy . You know , in terms of . Net you know , as you mentioned , we're having really pleased with the launch .
Speaker #6: It's going well. As I mentioned, we have seen kind of 50% demand growth quarter over quarter. We're pleased with this, and certainly the broad utilization across all the relevant demographics in the population.
Speaker #6: And , you know , kind of very early innings here as we're still building new patient share and obviously only approved at the very end of March , a lot of opportunity for these patients to get refill and continue .
Speaker #6: You know , the business with regards to , you know , demand going forward . You know , as we think about Xianzu in the long term , it's just a very different study in terms of having an active comparator .
Speaker #6: And it's , you know , really designed to to position that very competitively and upfront in the market . But that's far down the road .
Speaker #6: I think in the near term , in the near term , there's just so much room for Cabo in nets to really become a key player .
Speaker #6: There .
Speaker #2: One moment for our next question. And that will come from the line of Sudan. Loganathan with Stephens, your line is open.
Speaker #15: Hi . Thank you for taking my question . Apologies if this was already asked in a different capacity , but I believe I heard that the other subgroup , part of the dual primary endpoint for stellar 303 , my only come to maturity .
Speaker #15: Maybe as sometime early next year . Yet with the NDA submission that you guys are planning for by year end 2025 , could we still expect , like a broad label for CRC , including both subgroups to be in play ?
Speaker #15: Or will there be some sort of rolling submission that needs to happen to include that cohort of the primary endpoint ? And then just secondly , a follow up was the need for both subgroups being split up as a result of guidance from regulators , you know , to achieve having both of those Non-liver Mets and liver Mets included on the initial label for Zanza thanks .
Speaker #5: Sure . Thanks for the question . This is Dana . So the we can file and we will file based on the the single hit on one of the dual primary endpoints in the ITT population .
Speaker #5: And I just want to clarify the it population is not a subpopulation . It is the entire population of the trial . So that would give us , in our view , the broadest label , the NLM subgroup is a subpopulation within the trial .
Speaker #5: It's just a second . It's a second dual endpoint primary endpoint in the trial . So we're we're proceeding with our filing . And as we said we will be we expect to get that in very soon pending the government reopening for business .
Speaker #2: And one moment for our next question that will come from the line of Yaron Werber with TD Cowin , your line is open .
Speaker #16: Hi , guys . Congrats on the quarter . This is Sarah on for Yaron . Quick question from us on your early stage pipeline .
Speaker #16: I know you mentioned you have an R&D day coming up , but if you could just give us a quick sneak peek of you now , have four phase one programs .
Speaker #16: Can you maybe prioritize among them , which one you expect to transition next into pivotal development ? And maybe if you could speak a little bit on SB 371 in particular , which is your tissue factor , Topo one ADC , maybe just discuss a little bit how it's differentiated from other topo ones .
Speaker #16: Thank you .
Speaker #5: Sure . Thanks for the question . You know , I don't want to preempt what too much around what we're going to say next month .
Speaker #5: What I can tell you is that 309 and 010 , 309 is our Usp1 inhibitor . 010 is our T4 targeting ADC . Those have been in the clinic longer .
Speaker #5: So those have accrued more patients . Obviously SB 6 to 8 are bispecific IO molecule targeting Pd-l1 and started its phase one trial a few months ago .
Speaker #5: So that's enrolled . That's been enrolling . Well . And then 371 , which is as you mentioned , the tissue factor targeting ADC with the topoisomerase one inhibitor payload that is our most recent IND filing .
Speaker #5: That phase one trial got up and running very recently, but it's already enrolling patients. And what's exciting about that molecule, since you asked specifically about what differentiates it, is that it utilizes a differentiated antibody that has no impact on the coagulation cascade.
Speaker #5: And also has the the the tandem mechanism release linker that we licensed from catalyst to release the payload . So it's sort of a belt .
Speaker #5: And suspenders approach for stabilizing the payload in the circulation . So it requires both glucuronidase cleavage and then a tandem cleavage by peptidase inside the cells for payload release .
Speaker #5: So we think that's what differentiates it. Plus, we also feel that we are kind of ahead of any others in terms of investigating a molecule like this in the clinic.
Speaker #2: One moment for our next question . And that will come from the line of Michael Schmidt with Guggenheim . Your line is open .
Speaker #17: Hi , guys . Thanks for taking my questions . I had one on Zanza , specifically the opportunity based on a stellar 3 or 4 study .
Speaker #17: Just help us understand the size of this . This commercial opportunity in Non-clear cell RCC and how much cap use is driven in non-clear cell right now .
Speaker #17: And then lastly , just the the minor delay to mid mid 2026 from the first half . Is that based on event rate slowdown or is there something else going on there ?
Speaker #17: Thanks so much .
Speaker #6: Yeah . Hi Michael . This is P.J. . You know , certainly excited about the opportunity , you know , to get a readout from stellar 304 and then the potential to get approved in the kidney cancer space .
Speaker #6: Obviously space we know really well . Non-clear cell , you know , accounts for approximately 20 to 25% of the of the patients in the space .
Speaker #6: And , you know , Cabo has utilization there , as do many other agents that , you know , certainly we think that a phase three study , you know , having a positive result would really move the needle in that space to demonstrate , you know , with greater level of evidence and support benefit for patients .
Speaker #2: One moment for our next question . That will come from the line of Jason Gerberry with Bank of America . Your line is open .
Speaker #18: Hey guys . Thanks for taking my question . And , Susan , you'll be missed . My my question is on the net .
Speaker #18: Cabo launch . Just wondering , you know , a pretty impressive share of I guess it's second line oral therapies . Was just curious .
Speaker #18: Are orals getting a greater share relative to Lutathera or is the dynamic between orals and Luta ? In second line relatively stable ? And if I could just squeeze one in the MSN patent appeal , is there a timeline on that ?
Speaker #18: Thanks .
Speaker #6: Yeah . With regards , P.J. , thanks for the question , Jason . As you mentioned , we're very pleased with the net launch .
Speaker #6: And as we look at the second line , plus oral share , we've already exceeded , you know , 40% new patient share there , which we're pleased with .
Speaker #6: And , you know , as I mentioned , those are patients just coming on therapy . So we think certainly have room to benefit from the duration of therapy that those patients would achieve .
Speaker #6: And we think we can continue to we believe we can continue to grow , share in the space , you know , with regards to Lutathera in the second line , plus setting broadly , orals constitute a greater portion of that market .
Speaker #6: But , you know , we're lutathera is utilized . Cabo really is the preferred treatment post lutathera as ours is really the only study that had patients in it who were pre-treated with Lutathera , which is why that sort of broad study base and contemporary setting is really benefiting us in the marketplace .
Speaker #4: Yeah , Jason , it's Mike on the on topic , don't have anything to offer up on that today . Okay .
Speaker #2: One moment for our next question . And that will come from the line of Leonid Timashev with RBC . Your line is open .
Speaker #19: Hey , thanks for taking my question . I wanted to ask a little bit on the meningioma . Meningioma opportunity . Just curious sort of how you're thinking about the emerging investigator sponsored data with Cabo and how that applies to Zanza and your confidence there ?
Speaker #19: And then ultimately , what you think the size of that opportunity may be . Thanks .
Speaker #5: Sure . This is Dana . Thanks for the question regarding the what was seen with Cabo . So you probably know the story , but there's a published case report where a patient with thyroid cancer treated with Cabo had meningioma , and they noticed a very substantial reduction in the size of that tumor .
Speaker #5: And that's not a common occurrence with targeted therapies . A number of different studies noted response rates for targeted therapies , especially VEGF or VEGF , targeted therapies in the single digit range , 3% or less .
Speaker #5: So these investigators got very excited and launched an investigator sponsored trial where they looked at a number of patients treated with Cabo , and they saw response rates depending on on the criteria that are used anywhere in the 25 to 75% range .
Speaker #5: So that was quite exciting to us . And showed the impact of the target profile of Cabo . And as we've said , we feel that Zanza is sort of a best in class molecule with a combo like target profile .
Speaker #5: So it was a natural progression for us to look at for white space targeting trial with Zanza. So we're very excited about that trial.
Speaker #5: And as I am as I indicated , we expect that trial to get up and running in 2026 .
Speaker #2: One moment for our next question. And that will come from the line of Steven Willey with Stifel. Your line is open.
Speaker #20: Yeah . Good afternoon . Thanks for taking the question . Maybe a similar question just on the planned phase three trial . And post chemo adjuvant CRC and so I guess when I look at the stellar 303 Byzantine dose intensity , I guess it was it was pretty low in .
Speaker #20: Just curious if you're intending to do any additional dose exploration work just to make sure that dose intensity doesn't become the rate limiting factor in the setting where tolerability tends to be prioritized .
Speaker #20: Thanks .
Speaker #5: Yeah . So this is Dana . I'll take that . Yeah . So in the in the our plans for further exploration in colorectal , we're really you know this really comes from the result from stellar 303 .
Speaker #5: It's the first demonstration of a positive result in non MSI high patients with an I o containing regimen . So it's natural for us to want to bring that earlier in lines of therapy for patients .
Speaker #5: And this is some white space in colorectal cancer that we identified as a high unmet need . So in patients with high risk of recurrence , the the median disease free survival is in the six month range .
Speaker #5: So we think we can get an answer from this study quite quickly . Now in terms of dose , it's it's natural . And as we've seen with other agents , for example , with carbo that as you move up earlier lines of therapy , you often will look at other doses .
Speaker #5: So we certainly are intending to look at other doses with zanza . And just I would just say stay tuned for more information around that .
Speaker #5: When we finally , you know , kind of launch the trial and divulge more details .
Speaker #2: One moment for our next question . And that will come from the line of Jay Olson with Opko . Your line is open .
Speaker #21: Oh , hi . This is Sean on the line for Jay . Thanks for taking the question . And congrats on the quarter .
Speaker #21: I also want to thank Susan for all the help over the past years. And congratulations on your retirement! Just wanted to note that.
Speaker #21: The as we are seeing like several bispecific programs are now actually being developed in the first line CRC . So how are you thinking about the potential impact of those like novel agents and how will the how will that impact the later line uptake of .
Speaker #21: The senza . And if I could sneak in one clarification question for the three things you can file based on population . Just wondering why couldn't you file earlier ?
Speaker #21: Because the topline results were like a few months ago . Thank you .
Speaker #4: Yeah , we were having a hard time understanding you . You know , we're filing again . Nobody's filing new NDAs right now with the government being closed .
Speaker #4: So you'd be aware of that . And whether it be a new NDA or a new Bla , there's no filings currently with with the government shutdown .
Speaker #4: So just keep that in mind . And we're hoping to file ASAP when the government reopens . In terms of the bispecifics and that emerging landscape , certainly interesting science , early clinical data kind of hard to opine on how that's going to change the marketplace without a pivotal trials even being started , much less reading out .
Speaker #4: So I think we should just stay tuned on that . And understand that it's a moving landscape across the board . And obviously data drives the process and we'll keep our data certainly moving as well .
Speaker #4: And we'll always be able to layer in our data with whatever emerging data is available .
Speaker #2: One moment for our next question , and that will come from the line of Asheesh Verma with UBS . Your line is open .
Speaker #22: Oh , hi . Thanks for taking our question . So I just wanted to come back on the CRC market dynamics that you mentioned that Lonsurf plus Teva is roughly one third of this third line market right now .
Speaker #22: But just the physician feedback that we've been getting is that that is a growing part . So by the time that you get to the market with Atezo , like , what is your assumption that what , what , how much would that share be ?
Speaker #22: And then yes , there is some subtle difference in the sunlight study based on the prior exposure . But has that been slowing down the adoption of of that regimen ?
Speaker #22: Thanks .
Speaker #6: Yeah , thanks for the question . You know , I'll say we've been we've been conducting market research in CRC for quite some time .
Speaker #6: And I will say that what we've seen is that the share of the sunlight regimen has actually been relatively stable . So , you know , if that continues moving forward , the market certainly remains fragmented .
Speaker #6: As I said , about a third sunlight , a third TKI , a third other , which really represents great opportunity for us , particularly in that our our research with , you know , numerous physicians .
Speaker #6: And we're talking, when we do research, we're talking over 100 physicians in the community, as well as academia, to get a really good sample size.
Speaker #6: And we're seeing we're hearing from them that we'll get uptake , you know , in this third line plus setting and take share from all competitors .
Speaker #6: So we're optimistic about that . This is why we're increasing . You know , one of the reasons , in addition to to driving more net with Cabo why we're increasing our sales force .
Speaker #6: Because CRC is treated heavily in the community . This is a very common tumor type . So , you know , lots of prescribers here .
Speaker #6: So we're going to get ahead of that and really be able to have a strong reach into the community setting.
Speaker #2: One moment for our next question . And that will come from the line of Christopher Liu with Lucid Capital Markets . Your line is open .
Speaker #23: Hey guys . Thanks for the question . Maybe one that is more around capital allocation and financial strategy . With the share buybacks that have already been done and that are planned going forward , how are you thinking about incremental buybacks versus things like business development or clinical investment opportunities ?
Speaker #23: And do you feel like there's going to be a point where share buybacks would be less favored for some of these other potential value generators?
Speaker #12: Yeah , this is Chris . So you know , generally we think a capital allocation in the three elements right . It's R&D it's business development .
Speaker #12: And share repurchases . And you know we we think with with the revenue growth , we're generating and with the continued prudent expense management , we're including R&D expense in the billion dollar range .
Speaker #12: We think that we will be able to fund all three of those elements. And we'll continue to invest in R&D, invest in BD, and invest in share repurchase.
Speaker #2: Thank you . At this time , there are no further questions . And so I will turn the call over to today's host , Susan Hubbard .
Speaker #2: Miss Hubbard .
Speaker #3: Thank you , Sherry , and thank you all for joining us today . We certainly welcome your follow up calls with any additional questions you may have .
Speaker #3: Thank you .