Good afternoon, everybody, and thank you once again for joining us for the 6th Annual Oncology Innovation Summit. I'm Yoran Warber from the TD Cowen Biotech Team, and it's a great pleasure to have with us today, really needs no introduction, Andrew Peters, Senior Vice President of Strategy and a former very well-esteemed Wall Streeter. Andrew, thanks for joining. We appreciate it.
Yeah, thanks for the invite. You know, love doing these sorts of things.
So, lots to cover. We were just talking. We only have 25 minutes, and with Exelixis, there's really a lot going on these days. Let's kind of dive right into—let's talk about commercial first. Cabo had a very strong Q1, you know, driven by several things. Number one, prescriptions continue to go up. It's obviously continuing to capture share in RCC. There was a $12 million clinical trial order, but for the audience, historically, that's ranged between $4 million-$22 million per quarter. In the last two years, it's kind of ranged between $4 million-$12 million. So, you know, it kind of fluctuates up and down a little bit. There was very little, you said, on the NET approval, the neuroendocrine tumors. It was only approved a week. There was a week left in the quarter. And the gross to net was mostly in line.
I guess the first question is, IQVIA, the trackers really didn't do a good job tracking this quarter. Usually, they do. I know there was usually a gross to net benefit or a part D. The part D reset, I think, was also a tailwind. You don't have to pay under SG&A for the copay support, but that's an SG&A line. That's not a revenue line. I guess the question is, what else are we missing? Did something happen on the 340B channel, or why wasn't IQVIA tracking it well this quarter?
Yeah, so, you know, great set of questions there. So, kind of we'll jump right into it. I guess before I start, actually want to, as a reminder, we're going to be making some forward-looking statements today. Please see relevant risks and disclosures in our regulatory filings around any of the forward-looking statements today. You know, obviously, a couple of weeks ago, we reported one key results. Very strong results. Couldn't be more excited about how kind of the business is shaping up. As we've talked about, you know, we think we've been on this cusp of a breakout for a while, not only kind of with the core Cabo business, but everything we're going to talk about later with Zanza in the pipeline and all of that.
But really, at the heart of it is the continued success and momentum we have with kind of that core Cabo-based business and then the newly nascent neuroendocrine tumor launch. You know, so within that, we think really kind of there are a bunch of components to keep in mind. You know, the first one is all drugs and their success commercially come down to two things: the data and the team. And as it relates to kind of Cabo and this continued momentum that we've had, it really is an outlier. If you think about most drug launches tend to hit steady state, you know, five to seven quarters post new indication launch, and we're now four years plus into Cabo Nevo and frontline RCC based on the back of the 90R data. We are clearly an outlier there. The question becomes, why?
You know, a big chunk of that, as I mentioned before, is the data. At ASCO GU in January, we actually had the five-year kind of final survival data, five-year update. You know, kind of the key message from that data set is something that resonates kind of on the KOL side, resonates on the physician side, certainly resonates on the patient side, is that erosion that oftentimes you see as trials progress really hasn't been seen in the 90R study. The data continues to remain robust. That's really why we think it remains the number one IO TKI combo, and then also kind of the number one TKI as a monotherapy as well. Data. The second part, you know, and as Mike likes to talk about, as I like to talk about, it's really about the team as well.
If you think about kind of who Exelixis is, we describe ourselves as a big small company. The big side of that dynamic is that our team, we think, you know, is not only the best in biotech in our little sea of the world, but really the best in biopharma. We have the ability, with just focusing on kind of that GU oncology solid tumor landscape, to go out and really excel. We do not have distractions from other drug launches. We do not have distractions from being kind of in that big pharma ecosystem that can have various pulls on all the reps. We have a team that is focused on the Cabo data, that is focused on the Cabo mission of really kind of making sure that Cabozantinib and CABOMETYX is part of the patient journey for every patient who has RCC.
Kind of those two dynamics really kind of what we think kind of drive results. As to kind of the dynamics around IQVIA, you know, I think the reality is, is it's an imperfect metric. It's an imperfect tool to try and help, you know, everyone, us included, get a sense of kind of how real-world data are tracking. You know, the asymmetric information here, kind of the challenge is, is, you know, we see every day kind of that real-time sales. And IQVIA essentially uses really sophisticated algorithms to take a little sliver of the overall pie and try and extrapolate as to kind of what the pie looks like. Directionally, it can be accurate, but there's certainly some seasonality, you know, seasonality or kind of changes within that that can make it, you know, somewhat challenging. You mentioned, you know, gross to net as Chris talked about.
Gross to net was a little bit higher in the first quarter, but one of the dynamics that we did not see this year was actually kind of relative to one Q24, that phase-in of the rebate period of the IRA change really was something that was new and novel for a lot of practices last year. January was kind of chaos. February was a little bit better. March was a little bit better than that. By April and the rest of the year, these practices understood kind of how the new rebate rules and changes around IRA actually worked in practice. That kind of impacted some of the year-over-year dynamics as well. You know, one Q results ultimately, I tend to think about a lot of that stuff as the noise.
It's really much more, and as PJ talked about, kind of a demand-based, you know, team-based, data-based results that we're seeing that continued momentum in the base business and what drove, you know, not only kind of our increased guidance, but, you know, frankly, the enthusiasm that Mike and PJ and Chris and all of us talk about around how we see Cabo growing from, you know, kind of the $2 billion plus-minus franchise now to $3 billion by 2030, not only on the back of the NET launch, but certainly continued momentum in that base business.
Okay. Yeah, that's terrific. Maybe let's just focus on the biotech small manufacturer rebate, that phase-in, because that's not, you know, we don't hear that mentioned often. That's about a 1% rebate. Can you explain what that is? Is it when one looks it up, it talks about Part B, like boy. You're obviously much more part D, you know, like dog. It has to do with rebating over of price increases over the CPI, but you've not been really, so maybe talk about the recent price increases and why you qualify.
Yeah, I mean, there's a lot in there. You know, to kind of get into the weeds, get into the minutia of it, would probably take, you know, the rest of the time. I think in general, you correctly highlighted, it's a 1% rebate phase-in this year. We qualify simply because there's certain thresholds and metrics around percent of revenue dedicated to, you know, essentially Medicare business. You know, we qualify under that metric. You know, one of the things that I often joke about is anytime you try and kind of extrapolate as to what's going to happen in the future as it relates to what government programs are going to do, you know, no one knows.
I think, you know, the best way to think about it is for this year, it's kind of that 1% rebate as opposed to kind of the differences that pharma faces either in the phase-in or the catastrophic period. That's around that kind of 80% threshold that we qualify for.
80% of sales, right, related to that drug. You do not get that rebate from next year onwards, right?
Again, not getting into the specifics, it's a phase-in period over time that the small manufacturers qualify for. So, it's 1%, and it grows incrementally from there. But again, kind of there's a, you know, a little bit of, we'll wait and see as to how that actual change, actual implementation goes over time.
That's a 1%. That's literally 1% of sales to Medicare every year.
No, it's a little bit more kind of complicated than that. It's not a 1% of sales. The total sales is more the threshold around do you qualify for the exemption or not. The rebate period is the 1% rebate amount.
Got it. Okay. But that's a rebate back to the company, right, of what you don't need to pay to Medicare or what in terms of.
It's related to kind of the overall discounts that, I mean, the purpose of the overall legislation was to, you know, ultimately impact how the burden that the patients face. The percent of that burden that falls on various participants in the ecosystem, whether it's the manufacturer, whether it's the insurer, whether it's Medicare, et cetera, and the patient. It's that component that the small manufacturers.
In the catastrophic phase. Yeah.
Correct, that are treated differently than, say, large, you know, conglomerate pharma stores.
Right. It's under the 20% in the catastrophic that the industry is on the hook for.
Yeah. Again, I mean, a lot of that's just kind of, you know, very minutiae, you know, from really kind of the way that I've conceptualized and I think about it as it relates to our business is really, you know, that 1% is relatively de minimis to the overall hit of our business this year.
Yeah. Great. Let's talk about the NET launch coming up, though, or that's ongoing right now. You know, on the call, there was a question about, do you expect a bolus? And I mean, you know, historically, right, we both know when you're launching into an unmet need, refractory solid tumors with a new product with great data, there's always going to be patients who are going to want to come and get treated, and physicians are going to want to use a new drug pretty quickly, whether it's a bolus because of warehousing or just initial, you know, typical curve, right? Why shouldn't this launch go pretty quick, just given the data?
Yeah, I mean, so PJ talked a little bit about this on the one Q call. I mean, one of the dynamics that, you know, we consider as we think about, you know, bolus of patients or just launch curve trajectory and dynamics is the relative state of the patients who are likely to get treated. And what PJ has talked about is, given that these are later line more advanced patients, they don't necessarily have that ability to just remain untreated while they wait for Cabo approval. And so, given the advanced state of and stage of these patients, we don't really see kind of that bolus dynamic as necessarily happening, much different than other tumor types where you have kind of more of a watch and wait, you know, situation where, you know, maybe patients are coming in for regular scans, but they're not being treated currently.
The physicians have the ability to withhold therapy or kind of continue to watch and wait until a next available therapy's on market. With Cabo, given kind of the nature of these advanced patients, you know, we really do not see that dynamic playing out as much as, you know, it has in other, you know, analogous launches.
Yeah. You essentially got a fairly broad label. Which population do you see coming on therapy, you know, kind of the fastest?
Yeah. I mean, one of the things that's always jumped out to me kind of when I've listened in and sat in on a lot of the market research and kind of ad boards and KOL panels and patient panels that we've done is really kind of the breadth of the label, not only kind of from a regulatory perspective, but NCCN guidelines as well, is really that, you know, the CABINET data show that Cabozantinib has the potential to really have a positive impact for the pretty wide range of patients. What has never jumped out to me is individual pockets of PNET or EPNET or, you know, any of those dynamics who we see as especially likely to kind of, you know, move towards coming onto therapy. It's more that, you know, the response has generally been near universal.
You know, I always joke that, you know, it's really rewarding and heartening to see in this industry, you know, when data come out, you see, you know, 0.2 and 0.4 in front of the HRs on PFS. That really means you're having quite an impact on these patients' lives. The totality of that CABINET data really resonates across the, you know, spectrum of NETs. Because of that, you know, I don't really think there's going to be any sort of pocket of, you know, accelerated uptake relative to the others.
Okay. What about Lutathera, right? That's it's not the easiest drug to, you know, to be on. And that drug is actually moving up. How much of a void is it really creating? How fast is it really moving up?
Yeah. I mean, you know, Lutathera's relative to the oral options is a little bit of a, you know, somewhat unique dynamic. I think you correctly identified some of the challenges that, you know, patients and physicians have with Lutathera. Again, coming back to some of those ad board discussions, you know, I've heard anecdotally around patients who are trying to work through whether or not they're going to go on to something like Lutathera, given the fact that you're functionally radioactive for a certain amount of time, you can't be around children. If someone's, say, a kindergarten teacher or something like that, how does that influence their decision-making around whether to go on drug or not? It's kind of a unique dynamic that's starting to emerge in the marketplace.
Really, again, what I'd point to is when we've talked about that billion-dollar total addressable market across the oral options for these patients, you know, that tends to be kind of on the later side of things, as you point out, if Lutathera goes early. It's much less around taking share from Lutathera, but identifying kind of who are those patients right now that currently get some of those oral cytotoxics. Then how does Cabo in the cabinet data fit in? You know, with our team, our, you know, voice share, how do we kind of go out and compliantly market to that data to make sure that patients and physicians understand the potential benefits of that cabinet data set? That voice share dynamic is certainly something that, you know, is probably underappreciated.
You know, when you think about that segment, whether or not patients get everolimus, Sutent, or CAPTEM, those are all generic options right now. There is really not a voice in the market kind of advocating and, you know, really kind of driving utilization. We think we have the opportunity with our team to kind of go out there and appropriately frame, you know, the CABINET data and the breadth of the impact that it potentially has for patients. That is kind of why, you know, you will always hear this enthusiasm from us because we really think this is a, you know, a great opportunity.
The SSAs, MYCAPSSA, is that branded? MYCAPSSA, that's a part of Amryt Pharma. Are there any sort of branded SSAs at this point?
The SSAs are kind of a slightly different bucket. The somatostatin analogs, depending on if the patient's SSTR are positive or negative, they're kind of always used. If you look at the CABINET data set, for example, Cabo was used on top of background SSA for a pretty good chunk of patients. I, you know, I always think it's analogous to say like a prostate cancer market where patients, you know, remain on background kind of, you know, ADT and then additional therapies are layered on top of. Obviously, it's different based on SSTR status, but it's something that, you know, is probably more familiar to a bigger group of investors who may not, you know, live and breathe the NET world as much as we do.
Yep. Okay. Let's move to Zanza. Love to talk there. Let's maybe move first specifically to the CRC upcoming data in the second half of the year. You've at this point now elevated, this is the STELLAR-303 study, elevated the liver mets patient to be a coprimary on survival.
Dual primary. Yeah.
As a dual and not co. The before it was really the endpoint was in non-liver meds. What, and the data's obviously blinded. You're able to see a blinded data set. What led to that decision at this time point?
Yeah. So, you know, we talked about, you know, on the call and subsequent to that is really, you know, pretty simple. If you think about it, we see blinded event rates coming in. And patients with liver metastases and patients without metastases in the liver, you know, tend to have functionally pretty distinct diseases. You know, if you think about it, it makes sense that if you have a tumor that's in the liver, you tend to have much worse prognosis, much worse outcomes. Unfortunately, you're much likelier to expire in a shorter period of time. If you think about it from kind of a blinded event rate perspective, we were seeing differentiated rates coming in in those two populations.
The relative maturity of those two data sets allowed us to make this change so that we can, you know, really have the opportunity to have the widest or largest, you know, group possible. You know, we've talked about the liver met and non-liver met populations being roughly equal from a market size perspective, even though the non-liver met group's about 30%. The reason for that is that non-liver met patients tend to do better, tend to live longer, they tend to be on drug longer. Even though kind of the liver met group is much larger, the opportunity set's similar. Making this change based on a temporal analysis of the relative event rates between the two groups essentially allows us to have the opportunity to evaluate the biggest group possible to potentially have the beneficial outcome for more patients.
It really was about kind of the difference in the temporal event rate between the two groups that, you know, really makes a lot of sense based on the physiology of those patients.
That you would expect to have benefits in both.
That's the hope. Yeah. I mean, you know, if you look at the STELLAR-001 data that we presented at ASCO GI earlier this year, you know, that's what drives a lot of my enthusiasm, drives a lot of our enthusiasm because you can see, again, 303 is comparing the combination of Tezozanza versus Regorafenib. I mean, if you compare, you know, the ITT data there as well as the data in the non-liver met group, we think that, you know, if those data hold up in 303, they certainly would compare favorably with what you would expect based on kind of historic rego outcomes. I mean, combination of all of those things.
Yeah. Stellar 305 is the go/no go based on the phase II portion and head and neck. This is Zanzalintinib with KEYTRUDA against KEYTRUDA alone. The Lenvatinib, the LEAP-10 study failed. Lenvatinib, KEYTRUDA actually did worse than KEYTRUDA alone in the phase III, which was a surprise relative to the phase II.
Yeah.
I think that there's a thought that it was because of tolerability. So, why would Zanza be any better?
Yeah. I mean, I think it's a good illustration of, you know, our approach in general. Obviously, with 303, we've made amendments to that study to, in our mind, increase the probability of success, including learning from other contemporaneous trials, like in the case of CRC, looking at the LEEP-17 results to understand some of those important dynamics around trial design. Similarly, with LEEP-10, you mentioned that Len-PEM actually showed a detriment and was not a successful study, but importantly, it wasn't a successful study on overall survival. The doublet actually showed pretty robust improvements, not only on response rates, but PFS, but those, you know, the benefit that those patients saw was ultimately very, very short-lived. Because of what we think are tolerability toxicity issues, that drove kind of that inversion of the survival curve.
What we thought with 305 was really to say, okay, we've generated really compelling data, we think, in a prior kind of smallish phase II IST with Cabo and Pembro. Clearly, a patient population that we think is sensitive to a Cabo-like drug, but can Zanza, which we envision, which we designed to be a more user-friendly, more combinable, potentially, you know, more tolerable TKI, can those benefits that you see there on response rate and PFS actually translate to overall survival? Because if you look at the LEEP-010 data and you look at the discontinuation rate, what you really have are two groups of patients. Patients who discontinued, you know, the Len arm. On, you know, depending on the durability of the time on that doublet, what you're really doing is you're randomizing to survival PEM versus PEM.
The second group of patients discontinued both therapies due to tox. Again, you're having a group of patients, which is functionally placebo versus PEM on a longer-term kind of survival look. Unsurprising, if you're seeing a lot of this heightened tolerability concern with Lenvatinib, not necessarily translating to a survival benefit. That is something that unfortunately has been seen with a lot of the LEEP studies that Merck has run over time. Really kind of the question that we wanted to ask with Zanza is, can that more combinable, more potentially user-friendly, you know, potentially, you know, more tolerable TKI partner with Pembro to drive survival in these patients? That is really the goal of the 305 study.
The phase II component, is that looking at ORR and MDOR or what drives the go/no go?
We actually haven't broken out kind of what that go/no go decision is based on, for obvious competitive reasons. I think an important dynamic for you to consider and for investors to consider is that we're actually not going to see that data. Understandably, you know, as you imagine, in order for that phase II portion of the data to be used in the overall analysis, we don't see it. We remain blinded to it because otherwise, if we saw that data, we'd essentially have to restart the phase III study. From a temporal perspective, again, that's not super practical. We're just going to get a decision around, is this study going to continue or not?
Yeah. At that point, you'll communicate it to us. I mean, presumably, it's based on ORR and some kind of durability. I imagine it's going to be way too early to look at survival.
We just haven't said one way or the other.
Okay. So, that's just a go/no go announcement, basically.
Yeah.
Okay. And then maybe I know we're running over now. Maybe a non-CCRCC, I mean, that trial design makes a lot of sense because Cabo is not formally approved. It's on the NCCN guidelines. What's the risk to that study? I mean, that study really should work.
Yeah. I mean, you know, that's the point of running these studies, so to speak. But it's one we're particularly excited about. You know, one of the things that I've always found interesting is that there haven't been large randomized studies done in the non-clear cell population. It was one of the reasons why we're doing it, actually. Utilization is really driven by a lot of kind of guidelines based on, you know, single-arm unrandomized data. What 304 is, is really an opportunity to define a new standard of care in that non-clear cell segment of RCC. You know, we're excited to share that data later this year. Obviously, it's event-based. We're kind of monitoring that real-time, but certainly something we're looking forward to.
Yeah. And that second half. And then for going back to first-line RCC, I mean, given that you have a collaboration with Merck, I mean, they're not trying to salvage KEYTRUDA at this point. At some point, it will be biosimilar. They're interested in Wellireg. You're interested in Combo, and you're in the business of better outcomes for patients, right, as you say. The best outcome right now is NIVO-CABO. So, that's the control. So, you potentially can go KEYTRUDA, Zanza. That's pretty, that's risky, but maybe doing a Wellireg, PEM, Cabo would make sense. Anything I'm missing? Because that way.
Yeah. I mean, you know, again, we've agreed with our partners, Merck, not to share additional details on the Zanza studies until they're up and running later this year. Kind of stay tuned there. Certainly a lot to talk about, but we've just agreed with our partners to kind of keep that a little under wraps. Obviously, super competitive space. You know, want to make sure that the studies are up and running before we really kind of flush out a lot of those details.
Yeah. Okay. The, and then maybe finally for the early pipeline, I know we're at 3:00 P.M., so maybe you have a lot going on in the early pipeline. Maybe is there one drug you want to highlight to us really quickly in the phase I stages?
Yeah. I mean, you know, we're, as we were talking about before this got started, kind of we're on that pre-ASCO reading up on anything phase. It seems like bispecifics are the topic du jour. 628 is a program that recently went into the clinic. I think I and a lot of folks have been surprised at the interest and enthusiasm for that program. That's a PD-L1, NKG2A bispecific that in my mind really reflects a kind of novel approach of taking two well-understood mechanisms, combining them to really get that adaptive and innate immunity in kind of the same molecule. The biology behind it's super interesting.
You know, when we've talked with kind of these KOLs about it, that's when you see kind of the lights going off in their eyes and their head around, "Oh man, this really is kind of something that's different." You know, ultimately, we're in the business of P-values, as we like to say. This one's in the very earliest stages of getting that going. You know, when I hear that, "Oh, this is different. Oh, this is unique," I'm really excited about it. It's something that I always internalize and, you know, think, "Okay, this is one that I like to talk about." You know, we don't have favorite kids, so to speak. Ultimately, the data is going to have to show which of those programs are going to raise their hand for us to really invest and run with.
Where would that go? I mean, NKG2A, that's been historically AML lymphoma. It's been tested in autoimmunity. There's a little bit of a gut axis too, at least on the ionization.
It's really kind of a combination of what I briefly mentioned before of, you know, how do you co-localize, co-locate the NK cells into the tumor microenvironment and solid tumors. It's not only kind of the activity of the PD on one side, not only the activity of the NKG2A side, but kind of that co-localization dynamic of the bispecific and how do you form that trimer? Can you form that trimer of kind of the tumor cell and the NK cell? You know, that's something that I think is unique. We had some data earlier this year on that that I think you should check out. It's really about some of that novel biology. You know, as I mentioned before, as we head into ASCO, bispecific is certainly on top of a lot of people's minds.
Kind of making sure that, you know, people are aware of that program.
Yeah. Terrific, Andrew. Always great to see you. We're all very happy.
Yeah, good to see you.
Appreciate it. We'll see you soon.
Good luck flying out to Chicago, and I'm sure I'll see you around.
I'll see you there at the airport as usual.
Yeah. All right. Bye.
Thank you.