Thank you everyone for joining us today. I know this is the last session of the day, hope you are enjoying the conference. My name is Tarun Soni, I work in the Healthcare Investment Banking group at JP Morgan. It is my pleasure to introduce you the President and CEO of Exelixis, Michael Morrissey, who will walk us through the presentation. Great to meet with you, Michael, over to you.
Thank you. All right. Fantastic. Thanks for the intro and the invite. Great day of one-on-ones. This is the last session today, so I think I'm standing between all of you and a glass of wine. I will make this brief, and we'll have Q&A, and then we can all go out for a cocktail afterwards. It's great to be here. Happy 2023. Just some business before we start. I'll be making forward-looking statements, so please see our SEC filings for a description of the risks that we face in our business, number one. Secondly, we have preliminary financial results for Q4 and full year 2022. These results are unaudited, and we will have final numbers on our Q4 call in February.
All right, I could probably spend the rest of the time on this slide alone. I think it's a good summary of, you know, where we're at, where we've been, where we're going as an organization. 2022 for Exelixis was a very, very strong year focused on execution and on really moving forward all of our key initiatives around the cabozantinib commercial performance across various approved indications, as well as moving the pipeline forward with CABO, then in our really focused efforts on building a diversified pipeline of molecules that can raise the bar for standard of care with a variety of different patients with cancer.
Types of cancers, going across modalities, small molecules, biologics, single agent combinations, using internal sources of discovery, very broad network of collaborations, in the oncology space, as well as some, I think some interesting new deals, towards the end of the year that we talked about on the Q3 call, where we're looking at later stage assets, either in the clinic or near the clinic, where we can really frame option-type deals, to be able to move some of these assets forward. We'll talk all about this today. I think it certainly sets us up well for a very strong, 2023. You know, we're across the bay in Alameda and really looking forward to making this a very impactful year.
As we talked a bout last year, we're building a strong presence on the East Coast as well, outside of King of Prussia in the Philadelphia area. This whole issue of being bi-coastal, in the U.S., I think, really, sets us up well, to be able to move on a global scale, commercially, when we have that opportunity, with some of these new compounds that are currently in the clinic. Exciting times for us. Everything is really focused. It really comes from our ability to put gas in the tank, and that is obviously driven by the CABO commercial story. We had a strong year last year. Our preliminary numbers for 2022 net product revenues, we netted out at about $1.4 billion.
A strong year, globally, with almost hit this in Q3 and certainly are hitting this in Q4. We're at about a $2 billion a year run rate, through the both our efforts and the efforts of our partners, Ipsen and Takeda. Really pleased to have this homegrown molecule, you know, that we've been working on for a decade or more, driving so much benefit, for patients on a global level. I think, and we're all working as a team to be able to do this again and again and again, okay?
The lens of CABO frames everything that we do in terms of how we do discovery, how we do development, how we do BD, and how we'll do commercial on a broader scale with new agents as we go forward. It's really a very exciting time for us, and I'm really pleased to be able to kick off the year with a brief update on kinda where we're at and where we're going. Just some numbers. I won't go through these line by line, cell by cell, but give you a sense again for total revenues. Again, top-line numbers for the year did about $1.6 billion in total revenues for 2022. Again, net product revenues were $1.4 billion.
You can see for Q4, the numbers in terms of revenues was $415 million, net product revenues of $375 million. R&D expenses were up relative to Q3. I'll mention here that of the $340 million that we spent in R&D, approximately $150 million was either on upfronts or milestones for our various BD collaborations and transactions that we've either done in Q3 or previously. Again, really showing the investment that we're making, investing in innovation, investing in the pipeline, investing in platforms that's driving new molecules into preclinical and clinical development from the team. Certainly very exciting times for us in that regard as well.
In terms of our guidance for the year, again, these are shown here. Again, we're expecting to see a strong increase in total revenues and net product revenues, the commensurate increase in R&D spending. Again, we're investing revenues that we're generating from CABO into R&D very effectively. We expect to have a wide range of pivotal trials going with CABO, going with zanzalintinib, XL092, as well as moving, hopefully moving, XB002, our tissue factor ADC, into full development later this year. Lots of investment. The discovery and development teams, along with our manufacturing group, are working very hard to coalesce all the different activities to make sure we can continue to drive growth.
You know, to be quite frank, there's very few companies sitting here today that have been able to build one franchise molecule like CABO, and have that have the impact globally that CABO's having today. Our goal is to do that again and again and again, that's gonna take a lot of hard work and the appropriate level of investment going forward to make sure we can maximize our chance of success there. Very pleased with that and certainly, you know, just excited to be able to be, you know, running a profitable business while we are, at the same time, investing so much into the R&D framework of our business. All right, let's talk a little bit about CABO.
I really like this slide for a number of reasons because it really highlights again what we've done in the past and where we're going in 2023. These slides will all be online after the presentation, so Please, you know, see our website and download them when they're available. Very strong performance and momentum last year going into this year. Right now we are the number one prescribed TKI in a combination in the first-line setting for advanced RCC, and that's based upon the balance of efficacy, safety, tolerability, and quality-of-life data that was seen from the 9ER study that we did in collaboration with Bristol Myers Squibb.
Important to note is that we expect to have three-year follow-up data from that study at ASCO GU in about a month here again in San Francisco. We're excited about having that data at hand in hand to be able to further highlight the long-term follow-up from that study. Clearly, CABO is well-positioned as the first-line TKI leader in first-line RCC, and that's based upon the totality of that data. We've seen consistent increased levels of both new patient starts as well as stacking of patients due to the long duration of therapy that we saw in 9ER in terms of the PFS, and that's certainly translating its effect into the clinical setting. Into the commercial setting.
CABO, the total scripts grew about 30% year-over-year, 2022 versus 2021, which in the second year of launch, I think is pretty impressive relative to what's normally seen with traditional launches nowadays in the oncology setting. Showing really that the totality of that data really resonates with both investigators and prescribers, and really importantly, gives our team, our commercial organization, which is really best in class and kudos to them for, you know, all their efforts this year in 2022, to be able to educate physicians and prescribers and nurses about the data from 9ER and to really help them help their patients with advanced kidney cancer.
Overall, again, number one prescribed TKI for RCC and certainly part of the combination that's the number one prescribed in RCC as well. Very, very exciting. I think this slide really summarizes kind of, again, where we've come from and where we're going. 9ER was approved in January of 2021. You can see the growth over the last couple years. In terms of market share points, we've gained about 12 points in that timeframe. And clearly, seeing about a doubling of revenue as well.
You know, to see that performance really relies on two things, great data and a great team, I think that combination has really come together well, we're working very hard to, you know, help physicians help their patients with this regimen. We think we have a lot more growth going forward. As you saw in the guidance for 2023, we expect additional growth from the brand relying predominantly on the frontline RCC setting as we go forward this year. Certainly, lot, you know, tons of work to do, we're I think in that zone right now, we have a lot of momentum to be able to make 2023 very successful as well.
In terms of how we continue to move the CABO development plan forward, we have three ongoing pivotal trials, COSMIC-313, the triplet, CABO nivo/ipi versus nivo/ipi read out last year for PFS. We're still accruing events for survival, so we hope to be able to see that result later this year, as well as top-line data for CONTACT-02 and for second-line metastatic prostate cancer, as well as CONTACT-03. Both CONTACT-02 and 03 are combinations of CABO with atezolizumab. CONTACT-03 looking at second-line RCC, that combination versus CABO.
Important readouts that if successful, along with 313, would allow us to push the envelope in terms of where we take this brand forward, over the next several years. All right, I want to focus the rest of my time on the pipeline, and I'll do a high-level summary, and I'm sure we'll get into more details on the Q&A, if necessary. This has been our main focus over the last several years. Again, we have a strong history in drug discovery and drug development. Certainly, CABO has informed us about how we do that and what we've done in the past, but we've expanded our repertoire of modalities and targets and pathways to be able to be effective in that regard. Give you a top-line summary here.
XL092 is the next-gen cabozantinib that we think we have improved in a number of different ways. The new name is zanzalintinib. Even I can't say it. Zanza for short. Great nickname. It's a next-gen multi-targeted TKI based on the overall CABO inhibition profile with a shorter clinical half-life. We had data at ESMO last year that was certainly very encouraging, showing. I'll show a slide while I'm doing that right now. Showing good activity in advanced, very heavily pre-treated RCC patients, including more than two-thirds having seen cabozantinib, showing good overall clinical activity in terms of response rates as well as duration of therapy. The vast majority of these patients had clinical benefit for more than 6 months.
For those who had seen CABO on top of other IO therapies as well. Very encouraging there from the standpoint of that overall profile. We expect we have two pivotal trials going to date. STELLAR-303 in microsatellite stable, colorectal cancer, as well as STELLAR-304, looking at non-clear cell renal carcinoma. We expect to start additional pivotal trials for this molecule for Zanza this year. XB002 is our first biologic that we're pursuing. This is a molecule that we're able to access through a collaboration with Iconic Therapeutics.
This is a very interesting molecule that targets, it's an ADC, antibody-drug conjugate, that targets Tissue factor as its as its biological target in tumor cells with a next-gen linker payload from Zymeworks. The binder, the antibody, we think is very interesting because it's it has a novel mechanism of binding, so it doesn't compete. It's not competitive with the Factor VII, which it can then you know, basically catalyze the coagulation cascade. The expectation based upon both preclinical and clinical data was that we would see less bleeding, and that's the case in the clinic. Certainly, we have very important signs of early differentiation in the clinical setting that I'll talk about in a few minutes.
XB, I'm sorry, XL102 is a potent, selective, irreversible, orally bioavailable inhibitor of CDK7. Really important probe to start asking some key questions around the biology of this target and that pathway. We had early clinical data, which really kind of confirmed its overall profile and certainly looking forward to moving that forward this year as well. Variety of early-stage programs. We have three molecules as development candidates marching towards IND from our internal pipeline.
I mentioned that we have a number of collaborations, the most notable, one with Cybrexa and one with Sairopa that we'll talk about more in a few minutes, in terms of late-stage or late preclinical, early clinical assets that we're pursuing, and we expect more of those in 2023. I'll note that XL114, a molecule that is in the MALT1 pathway, we have discontinued. All right, let's move forward here. Here's a snapshot of some of the XB002 data.
I think one of the key points of differentiation that we've seen early in the process, early in the phase I study, is a very clear signal of differentiation around the stability of the ADC as well as the exposure difference, if you will, between the ADC and the free payload compared to TIVDAK, that also targets a molecule that targets Tissue factor. You can see here from this from this slide that we see about a two-fold enhancement of exposure of the intact ADC at the MTD dose for TIVDAK, where we're seeing more than 10-fold less of the free payload. We think that's very important from the overall stability and potentially impact on safety, but of this molecule compared to what's out there right now. Very important so far.
We had phase I data at the ENA meeting late last year, seeing I think really interesting, this interesting PK data for sure, as well as some early signs of very good safety. Early days, a lot more work to do here. We're enrolling the dose expansion trial of XB001 as a single agent, as well as having combination work going with different cohorts, with a nivolumab combination and a bevacizumab combination. The important point is because of the non-competitive nature of the Tissue factor binding, we're seeing no bleeding to date in what we published so far.
That's encouraging and, again, really reinforces the fact that we're able to design a molecule and access molecules that are different than what's out there and potentially they give us an opportunity then to improve upon the activity that we've seen so far. That's, I think, very encouraging. Here's just kind of a snapshot of what's gonna happen this year in terms of enrolling these different cohorts. Once we get to the recommended phase II dose, we have a wide expansion, very similar to what we did with COSMIC-021 with Cabo-Atezo. Really looking for signals, again, at potentially higher, certainly higher exposures, but with hopefully good safety that will allow us to articulate and find sensitive tumor types that we can move relatively quickly into full development. All right.
Importantly, the deals with Cybrexa and Sairopa, very important next steps in our business development process from the standpoint of being able to find, again, later-stage assets that are either in the clinic showing clinical activity, like Cybrexa's molecule or, near IND, as in the case with Sairopa. We like these option-type deals a lot, and you'll certainly see more of those going forward from the standpoint that we can put a little bit of money up front. We have our new partners doing the work in terms of the actual clinical evaluation, which is a great way to offload some of those efforts.
If we like the data, with another 100 or 200 patients, we can opt into that molecule, take over development, pay the appropriate milestone, and then move forward. It's a good way to, again, spread the risk, look for diversity in our, in our targets, in our modalities, in our assets, and really increase the probability of success in finding the next important molecule that we can move into full development. Just some data here with CBX-12. Again, this is a topotecan-based peptide approach similar to ADCs. It doesn't target any one specific binder.
It really focuses on the pH differential with tumors and the ability for that molecule to form an alpha helix, embed into a membrane, deliver the payload, and then do that in a more selective manner. You can see here, you're seeing they're seeing very interesting activity so far, very early in the first 18 patients in terms of both tumor shrinkage as well as duration of treatment. A couple of responses, including a CR in a patient with ovarian and a nice PR in a late-line patient with breast cancer. Certainly showing signs of activity. I need to optimize the dose.
Looks like the weekly schedule will probably be the best way to go. That has to be proven, and once we get that done, then we'll move into the expansion cohorts that will then drive the data that we need for the opt-in. Similar thing with Sairopa. Again, this is a SIRP alpha antibody, again, involved in the, you know, don't eat me pathway around CD47. Similar, this is really what we believe is a best-in-class molecule that has the potential to really help elucidate how you deal with macrophages in the tumor microenvironment from an anti-cancer point of view. We're excited about that. Same general scheme option deal.
They'll be filing the IND shortly and once that's active, then do the phase I work with the idea that they'll expand into single agent and combination cohorts to be able to get us to an option decision relatively quickly. We like these approaches a lot. Certainly looking at later stage assets as well from a broader strategic point of view, but I think this kind of optionality allows us to put our balance sheet at work, the fact that we're profitable and generating free cash every quarter. We can use that money very, I think, very judiciously and very carefully in a real disciplined sort of way, but make really good bets based upon compounds and companies that we have a lot of conviction in, because that's gonna help us drive innovation going forward.
In terms of our internal work, these three antibodies or three biologics are shown here. I won't go into great detail just to save some time. XB010 is a next-gen ADC targeting 5T4, a target of interest in terms of oncology using the Catalent SMARTag technology. XB014 and XB628 new molecules are bispecifics, both targeting PD-L1 with 1 arm, if you will, of the bispecific, and then going after either CD47 or NKG2A, which is involved in natural killer cell or NK cell triggering.
Again, important biology, blazing new territory to a certain degree, especially with XB628 and trying to make better molecules, like XB010, better ADCs for a target that, say, in the past has been targeted with first gen technology. I think our view here is quite simply, you know, construct good molecules, get them into the clinic quickly, ask the appropriate questions. If they look good, then push them forward rapidly. If they don't, you know, put them to rest and move on, because we have a diversity of assets and opportunities that we're gonna pursue, right? Here's the kind of the pipeline in terms of what's happening and what's moving towards the clinic led by Cabo, but covers all the molecules that we talked about just now.
Secondly, a very good summary and kudos to Susan and Veron for putting this slide together because it really captures all of our different, really the depth and the diversity of the network of collaborators that we have around around biologics and around the whole discovery framework to be able to move so quickly from a standing start a couple of years ago to having this rich, deep pipeline of biologics that we're hoping to move forward into the clinic as quickly as possible. Here's a sense of what's happening in discovery with both biologics and small molecules.
Beyond these molecules, there's another large number of programs targeting novel targets, small molecules and biologics in discovery that are moving towards, you know, the development candidate status. We're certainly very excited about where this is going and the momentum that we have across the continuum of R&D and manufacturing with the idea that we can push this forward as quickly as possible, use the momentum we have with CABO, the later stage assets with Zanza and XB002 to build this diversified pipeline of late-stage opportunities that, if successful, could then drive growth in the future. I'll stop here. Key highlight of our corporate objectives for the year.
The commercial success of the CABO franchise is absolutely critical to continuing to invest in innovation across the R&D continuum. That will certainly continue. I think our 2023 growth is going to be driven predominantly in the first line setting for RCC based upon the 9ER data, which is continuing to evolve nicely. We have other pivotal trials here that, if successful, could drive that further as we go forward. In terms of full development for Zanza, as well as the plan for the tissue factor ADC XB002 is very important and that those are key priorities for us to be able to have a suite of late-stage assets that we can then leverage going forward.
All the, all the great work that's going on inside the company, across this network of collaborations, small molecules as well as biologics, I think puts us in a very, very strong position, to be able to maximize our chance for success across the pipeline, as we try to grow the business and help more patients. I will be happy to stop there and take questions. Okay. Thank you.
If you have any questions, please raise your hand. People listening on the webcast, please feel free to drop your questions through the online portal.
Why don't you start? We just have a dialogue here and,
Sure. Absolutely. Thank you, Michael, first of all, for your wonderful presentation. My first question is, can you please talk a little more about the next generation TKI, which you alluded in your presentation, XL092, and also about your other product, which is the Tissue Factor ADC? How is it differentiated compared to TIVDAK, and what kind of opportunity lies ahead for you?
Sure. Again, at a high level, XL092, zanzalintinib, Zanza for short. You know, the whole idea behind that was really keep the overall target inhibition profile for Zanza similar to CABO. CABO is a great drug. Again, franchise molecule, helps a lot of people globally. The one area that we thought we could improve upon was the half-life. It has a 100-hour half-life, which makes dose adjustments, which is a necessary part of any TKI dosing, somewhat challenging. You have to wait for the drug to wash out. That can take a week, 10 days, two weeks sometimes.
That's a long time for a patient to be, A, off drug, and then, you know, once they're off drug, it's not all that uncommon for them to move to a different drug. The whole idea was to make the experience with Zanza more user-friendly with a shorter half-life, but while retaining the muscle behind CABO from the standpoint of its any tumor activity. I think we've shown that pretty effectively with the data from ESMO last year in terms of being able to. Again, two-thirds of the patients that had seen a variety of different anticancer, you know, kind of targeted and, and ICI-based therapies in RCC, including CABO, to be able to bring clinical benefit to them. I think that's I think that's really encouraging, right?
There was never a point to try to optimize the inhibition profile. The point was to make it more user-friendly from a clinical point of view. With XB002, it was I think as a whole different mindset, where, you know, you look at the opportunity to make a binder that has a non-competitive binding mode, where the whole idea around, you know, could you get around some of the bleeding issues that's seen with the first-generation molecule, was a very important part of that. And that's just clever protein engineering to be able to find a different epitope on tissue factor that really worked out well. And we're actually using that now. Certainly, you know, the first-gen molecule with XB002 uses the Zymeworks technology.
We have with the deal that we did at the end of 2021 and announced in January of 2022, we have the ability to make other ADCs with other linker warheads with that same antibody. We're doing that now, and we have a topotecan-based ADC on that same antibody from XB002 now moving through preclinical development. Again, we have the optionality with the suite of collaborators and network of partners to be able to mix and match different attributes to be able to really refine our activity for specific tumor types. That's encouraging as well, but we certainly like the clinical data that we saw from ENA.
The fact that we see this window, between the free, stable ADC with free payload of about 20 compared to the first gen molecule, we think is very meaningful. We have to be able to follow up on that now with the idea of pushing the dose further.
Got it.
Okay?
Thank you, Michael.
You bet.
One quick question, which is a good segue that you mentioned about the ADC. You have been building your ADC collaboration network as well as, you know, internally investing in your own, you know, pipeline as well on ADC. Which, what areas within oncology are you looking at specifically or you are most interested in?
Yeah. Good. You know, I'm gonna call Peter Lamb up to answer that question 'cause he's much more qualified than I am to answer it, and he's got a much better accent too, so.
Thank you. Welcome, Peter.
You have a lot of accent pressure right now. I'm Peter Lamb, I'm EVP of Scientific Strategy. The question was around obviously ADCs and what areas of oncology. I mean, I would say we view it rather through the lens of, you know, the starting point for developing any ADC is to identify a, you know, a protein, a tumor antigen, essentially, that's overexpressed on tumors and has relatively low or no expression on normal tissue. You know, there's been a lot of focus on that, certainly initially in a lot of heme malignancies. Let's say we've looked more at targets which are broadly expressed on solid tumors. That's where we're headed. We're not focused on one particular kind of tumor histology or the other.
As Mike alluded to, I think in addition, our aim is not only to have multiple antibodies that bind to these kinds of tumor antigens, but also to have a collection of payloads that we can conjugate and then make various versions so that we can match up, you know, the appropriate binding specificity with the appropriate payload for the most appropriate tumor type and patient population. I think that's how we're viewing it. We wanna give ourselves lots of options so that we can appropriately optimize any ADC that we wanna take forward.
Cool. Thank you, Peter. Any other question? If not, I will just have one last question, which I think is a very important question, which is if you can please elaborate, you've mentioned in your press release regarding the October 2023 decision on the CABO ANDA litigation. What does it mean and what to expect on that?
I'm not sure about the timing per se. But as I think you know or we've talked about a lot in the past, we're currently litigating the CABO ANDA with a litigant. We had a trial back in May covering the composition of matter patent as well as the polymorph patent. There's a second case coming up this fall around additional patents that are issued in the Orange Book. You know, we would expect to hear a ruling from the first case sometime relatively soon.
That's out of our control, obviously, so can't really opine upon that, and we're working very hard to be able to again, put our best case forward in that second case later this year in the fall. You know, these are issues that come up when you have a successful molecule, and cabo certainly fills that bill. I don't wanna go through all the details here. Certainly with, you know, I think the trial was very. It was a very public event. People and the sell side wrote about it extensively, so I won't rehash all the details. We're very confident in our IP.
We're very confident in the team, both internal and the external counsel that we have, and we have the resources to be able to continue to very aggressively protect and pursue our right to those patents, and we'll be doing that going forward. We have a lot of confidence in that. It's gonna take time, and that's the way it goes, full speed ahead for sure.
Cool.
All right.
Thank you, Michael, and thank you, Peter. Final call. I think everyone is ready for a glass of wine. Thank you very much and hope you had a great, wonderful first day of the conference. Thank you.