Afternoon, everybody, and thank you once again for joining us for the 46th Annual TD Cowen Healthcare Conference. I'm Yaron Werber from the biotech team, and it's a great pleasure to moderate the next fireside chat with Mike Morrissey, CEO and President of Exelixis. Mike, good to see you.
Good to see you. Great to be back.
I know.
Another one. It's March. Must be common, right?
March. Thank God it's not snowing. Thank God.
Well, I, yeah.
We'll take it.
Talk about the weather later. Yeah.
Exactly. Maybe a lot going on. Do you wanna maybe say a few opening remarks first?
I would love to
then we can go into.
Before I begin, I'll just say that we'll be making forward-looking statements, so please see our SEC filings for a description of the risks that we face in our business. Look, we're Exelixis commercial stage, oncology-focused, again, commercially oriented, franchise-oriented biotech company. We've been around for a while. We have, I think, hit our stride, in the area of building franchises and certainly with cabozantinib. We have the first one under our belt and looking to do more with the pipeline.
We had an R&D day in December where we spent, you know, a couple hours talking about what we're looking to do to build a pipeline of franchises and how we think about franchises in multiple dimensions to be able to, you know, whatever we do, always improve standard of care for patients with cancer first and foremost, then move the needle for all of our stakeholders in terms of building global franchises that can really, you know, take cancer care to the next level. We're doing that with cabo, hoping to do that with zanza, have a pipeline of early-stage assets that are really exciting. I'm sure we'll cover all that today.
Yep. If anybody has any questions at any point, just feel free to raise your hand. You know, let's start. We're all fresh out of ASCO GU.
We are.
Lots going on with, you know, this is RCC is an important market, and obviously some other people have taken notice. Merck just released their LITESPARK-011 data in second line testing Weli with Lenvima head to head against cabo.
Mm-hmm.
We're all waiting for LITESPARK-021, potentially data by year-end, testing, you know, there's another drug, but the important one is pembro, Weli, Lenvima against pembro, Leni in the front-line.
Mm.
That's a PFS study with, I believe, survival as a co. so what was your impression of LITESPARK-011 and kind of?
Yeah, sure. Let's, well, let's talk about it.
Is it gonna find a role?
Yeah. Let's, let's talk about all that. First kinda foundational statement of the obvious, right? Oncology is hypercompetitive. You know, we not only acknowledge that, but we've reveled in that over the years. If you go back to look at how cabo has maneuvered, multiple indications since the first launch and, you know, second line, RCC based on METEOR, you know, we've got eight indications in our label, monotherapy combination, GU, GI, blah, blah. We're, we acknowledge, we understand that this is a highly, highly competitive space. It always has been. Our job is to navigate that by, you know, making sure we bring the best drugs forward, the best combinations forward to, again, singular focus on improving standard of care for patients with cancer.
you know, cabo is the leading TKI in RCC.
Mm-hmm
... in general, but certainly in the second line, in the first line TKI IO category as well. You know, we're super proud of that and looking to, you know, extend that as we go forward with cabo and then be able to then transfer that over to zanza. You know, cabo, as we've been talking about today and over the last couple of months, you know, the dominant TKI in the twenties, our goal is to make zanza the dominant TKI in the thirties, right? The data this weekend from eleven, to be frank, it kinda met our expectations. You know, we thought it would win on PFS. You know, not surprised by the data at all.
You know, if you look at the data for cabo, the contemporary data for cabo from CONTACT-03, from the control arm of 11, you add that to, you know, belzutifan from 05, you know, you would expect, you know, 15, 16 months of PFS, and I think they saw 14.5 or whatever that was. Not all that surprising. Survival isn't significant. We'll see if it crosses that threshold or not. Tolerability, safety, you know, you know, I think that was hit a little bit at the meeting. I think probably underappreciated some of the complications there. I think you can probably...
I don't wanna speak for Merck, you can probably infer from that data why we and they think a Zanza/Bel's combination looks potentially pretty exciting. Yeah. Look, you know, does that combination gain market share? We'll see. We're not really concerned about that because, again, all of our modeling kind of assumed this outcome. We're confident based on all the market research that if we lose anything second line, we'll gain that back first line, you know, because of Cabo's just superior activity as a single agent. A lot of docs actually reserve it for second line. They choose not to use their first line in combination with Nivo. There's a reason to change that dynamic that actually works for us. We'll see.
In some ways, it's another day at the office and, you know, we're excited to be able to, you know, keep our eye on the ball with cabo in all the indications, but certainly RCC and NET. You know, this is the transitional year for Zanza-
Yep.
where Zanza filing is in. Review's going well. We expect that will continue to be the case, and we're hoping to launch end of the year. We have a full suite of pivotal trials either ongoing or planned to start this year and the next wave coming. Like, the Exelixis story is really evolving from, you know, a singular focus on cabo to this broader focus on zanzalintinib and then the pipeline.
Yeah. When, their P value in the second for survival with hazard ratio of 0.85 was 0.0608, something like that. The alpha was 0.0245. This is the interim. From IA one, the hazard ratio was 0.9.
You got all this stuff down.
I got it 'cause I-.
I'm impressed, man. That's good. Yeah.
Can they really even get there on the front line?
You know, I don't wanna speculate.
Yeah.
I mean, you know, who knows?
I think it's a little too high.
How many events do they have left remaining? You know, whatever. Again, I don't wanna get into that level of speculation. You know, the feedback, the feedback that we've gotten before the meeting, during the meeting, literally after the meeting, you know, it's a classic question of, is it better to combine early, kinda take all your shots up front or sequence, right?
Mm-hmm.
That, and that's a question throughout oncology, and the data really has to drive that, right? One of the things that we've heard a lot about belzutifan, which kinda makes sense, is that docs like to use that a little bit later because it gives the patients a break from some of this, you know, long-term.
TKI.
cumulative TKI tox. You think about it from the standpoint of somebody, you know, a renal patient has been whether it's IO-IO or IO-TKI and then a TKI afterwards. I mean, they've probably been on drug for 2 years probably. There is this long, you know, long-term chronic exposure tox that kinda creeps in. I've heard numerous docs say, "I like using bels a little bit later because it gives them a break from that." They can go back to a TKI afterwards if they need to, right? Again, everybody's different. You've got the academics who are, you know, a little bit more aggressive. You've got the, you know, the community docs who have a different mindset sometimes. You know, we're here to help patients with cancer.
Certainly, kidney cancer is where our main focus is. You know, we have very strong growth over the years. You think about what we've done since, you know, we've launched CABOMETYX. You know, we've essentially tripled revenues on the back of that data.
Yep.
We're excited about NET. There's this whole landscape ahead of us, this whiteboard of open space for zanzalintinib. You know, colon, meningioma, you know, potentially other tumor types that we're gonna certainly wanna explore as we go forward if the data continues to look good. That gives us a lot of opportunities there to build that too.
Yeah. Okay, let's move to LITESPARK-033, the zanza/weli combo against-
Mm-hmm.
I'm sorry, zanzalintinib/Weli against cabo in the post-adjuvant IO.
I've never heard Weli before either. That's. You should trademark that.
I'll try. Wait, 'cause you saybels.
Bels, yeah.
Bels.
Yeah.
Okay, I'll call belzutifan.
Either way, it's good.
That's essentially Well, I'm sorry, post-adjuvant IO. This is a frontline regimen, essentially. But it's cabo mono. Is that relevant? I imagine it's one study as part of a, I imagine it's a one-two punch, right? There's gonna be probably another study that is being planned with Merck in frontline. I imagine it's gonna be a triple. Is the gating factor waiting to figure out the dose to then start the second study? Maybe to zoom out, what's the strategy for this combo in frontline for it to be competitive?
Yeah. I would say, couple things. Merck will talk about the details of the second study, when that starts. We've agreed that they're gonna kinda control the narrative there and, you know, I don't want to, disrespect that.
Totally.
That agreement. I'll leave that there. You know, there's been a narrative that, you know, it might not start based upon whatever 'cause of the LITESPARK, blah, blah. That's just complete hogwash, okay? That study, to all of knowledge I have which is as recent as last week, you know, Friday is basically... It's planned to start. Details.
Starting early in the year.
Whenever. I'm not gonna comment on timing, but it's just, again.
That was the guidance, right?
Yes. Okay. Yeah. Just stay tuned on that, okay? The other thing I would say is, this is really important, is you gotta think about the next wave of studies not in the context of 2025 and 2026, but in the context of the 2030s, right?
Mm-hmm.
The question that we talk about a lot and we think about a lot is, how will standard of care evolve over the next, you know, five, 10 years? If you're aiming for what the target is today.
Mm-hmm.
Things change over, even a reasonably short timeframe, then you're gonna miss the mark.
Yeah.
You're not gonna be relevant. We think the adjuvant setting in all tumor types, but certainly renal, is ground for a lot of important improvements and a lot of important advances. To have a molecule and a combination like zanzalintinib/belzutifan that has the ability then to play in early. Makes a lot of sense.
Mm.
So that, that is one-
Mm
... approach, right? You think about what we're doing in renal, we've got basically three or four, the non-clear cell that should read out, you know, mid-year plus or minus, then two Merck studies. That's just the first stake in the ground, if you will, right?
Yeah.
We're really excited about being able to pair zanzalintinib with orthogonal MOA, right? That allow us the opportunity to really see synergy across the continuum of RCC patients, right? If you look at, you know, if you look at the VEGF HIF, that's all one pathway. The biochemistry is intimately related. One regulates the other.
Mm-hmm.
That's been known for years, right? You know, again, doubling down there makes sense, but there's a trade-off in terms of additional efficacy versus safety. We're much more interested in asking the question, are there other pathways and specifically, and importantly, other bispecifics that we can combine zanza with that give us more breadth of coverage biochemically and from a target pathway point of view that could lead to better efficacy? 'Cause for us-
Mm.
The name of the game is.
Mm-hmm
... improving standard of care, and you can only do that if you're taking kind of bigger shots on goal. We're excited about that. It's early. Look at what you've got here. Just like with colon and NET, it's just the beginning. It's not the end all.
Mm.
It's just the start.
Yeah. Is it possible that the Merck second study is in the adjuvant setting?
Yeah.
did they?
I know, I'm not gonna talk about the second study.
Right.
They'll talk about that at the, you know, at the appropriate time.
If I remember correctly, I thought that was collaboration was for metastatic, but maybe it was just broadly in RCC.
It's RCC.
RCC.
Yeah.
Okay.
Yeah. Just stay tuned.
Mm-hmm.
Okay?
Okay. KEYNOTE-B40 is testing several different things. Can you talk about the KEYNOTE-B40, you know, U03 and where zanza fits in there?
Not much to say there. I think that's their basket. Again, you should ask them. Not more than me. I think that's their basket study where they've looked at different combinations, and we're certainly using that to do dose range finding as part of the zanz a/Bel's run up into pivotal.
Yeah. that's only has zanzalintinib/belzutifan, right? No other MOA.
Right now it's just zanzalintinib/belzutifan. Yeah.
Yeah.
Yeah.
Because I'm just kind of reading between the lines. I mean, to your point, I don't see a triple coming down, but we'll see with pembro.
Yeah. I don't wanna get into the details that we haven't talked about previously. Question is, again, broadly speaking, how do you define a triple? Is it three agents or is it three targets?
Either or.
Yeah. Right. Stay tuned.
Okay. Got it. Any questions from the audience? Can we talk about maybe just a little bit of the dynamics right now. I'm gonna now go back a little bit commercially and talk about Q4 and the guidance for the year.
Mm-hmm.
In the guidance for the year for cabo.
Mm-hmm
in Q4, you saw nice growth in net. There's always some lumpiness in gross to net ordering patterns.
Mm-hmm
... you know, quarter-over-quarter RCC growth.
Mm-hmm.
It looks like the tailwind in that quarter was, and net continues to grow really, really nicely. As you think about fiscal year 2026 and the guidance for CABO, revenue guidance was about up 9%-13% year-over-year.
Mm-hmm.
What's driving that? What do you expect in RCC?
Growth both in the base business and in net. We haven't broken that out for obvious competitive reasons. We expect both to grow in 2026. We had a strong year in 2025, right? Revenues were up, I wanna say, I'm looking at Chris, 17% year-over-year. Demand was up 15%, so very small impact of growth on from price. You know, and that is. Part of that was net. We did about $100 million, a little bit more than $100 million in net in 2025. The rest was solid growth in the base business. Now quarter-to-quarter, it's choppy. We had a really strong Q3, a little bit lighter Q4, you know, all the growth to net issues.
You know, nobody should be, you know, looking at with that much precision quarter to quarter since it's just lumpy and choppy. We had a great year last year and, you know, the transition from 2025 to 2026, we talked about, you know, muscling up more on the GI side at the end of last year. That's now done. We've got a full complement of our kind of field-based reps for the GI sales team in place today that complements the full field force we have in GU.
I mean, the mission there is to, you know, obviously, you know, get to terminal velocity with net for cabo as soon as possible so that, you know, end of the year, whenever that, you know, whenever the approval comes for zanzalintinib and CRC, we can put our attention there. We wanna be able to, again, sequence and focus and deliver. The CRC opportunity is huge for us. It's a big population. Medical need is high. Lots of interest in the zanzalintinib atezolizumab combination. Again, as we talked about previously, this is the first time a checkpoint-containing regimen has actually worked...
Mm-hmm
... third line plus, you know, non-MSI-high CRC after four failures with other checkpoint-containing regimens. Again, zanza seems to be the special sauce there. You know, we've went in the ITT population. Non-liver mets should read out, you know, again, mid-year plus or minus. You know, ideally, you know, things work out to have that whole, you know, kind of data set, you know, in the mix for launch, it'd be great, right? It would be a great way to get out of the gate strong and, you know, it's a big opportunity and, you know, with the post-adjuvant trial that we're now planning to do with Natera that I'm sure we'll talk about later. I mean, the buzz around-zanza CRC is really high.
303 and 316 play off each other. We talked to KOLs about one, and they bring up the other and vice versa. It's a great setup for what we think could be a really strong new franchise in CRC for Zanzalintinib.
Yeah. net did about $100 million in year 1. The market opportunity we thought can even be sort of $500 million-$1 billion, right?
Mm-hmm.
The path ahead to getting there, it sounds like you're mentioning that it's gotten good traction in the academic settings. Is it about moving to the community, or what's kind of the gaining traction?
The main focus now is to get the community uptake, to be, to match what we're seeing with the academics. That's, you know, it's a, it's again, it's more dispersed, if you will, as it always is in the community opportunity. You know, these patients, this is an indolent disease. Patients progress slowly,
you know, so therefore the number of patients coming into any community site compared to some of the bigger tumor types is less. You just need more, more face time, more non-personal promotion, more, you know, more alerts, if you will, about what the data is and why they want to use it, right? That's all. We've had this issue, we had this issue with cabo in RCC back in 2016, 2017.
There were docs we had survival of second line RCC, and there were docs in the community still writing Afinitor, right? It wasn't as familiar with them. You know, we know how to do this. We're pros at being able to kind of shift the mindset based upon high-quality data, and we're gonna do that compliantly, and off we go so.
Okay. Maybe Zanza for nccRCC. We're expecting that data. This is STELLAR-304, right? Randomized 2 to 1, Zanza and nivo against sunitinib. Primary endpoint is PFS.
Mm-hmm.
Data is expected midyear, I believe, right?
Mm-hmm. Yep.
In PFS. cabo, atezolizumab, or cabo and nivolumab, they showed 31%-48% response rate, about 9.5-12.5 PFS. In PAPMET, it's PAPMET, cabo alone showed about 23% ORR and about 9 months of PFS.
That was single agent.
Single agent.
Yeah. Yeah.
Yep.
Yeah.
Sunitinib did four, just to give everybody a sense.
Yeah. Yeah.
4% ORR and 5.6 months PFS. you know, pretty low. Sunitinib is the comp. If cabo/atezo or nivo/atezo are comps, we're looking for a nice beat here. you know, 30%-40% ORR, you know, 10-12, 10-13 months PFS, almost doubling PFS.
Mm-hmm.
Is that sort of what, the way you're looking at the world for that study?
Yeah, I guess I would frame it more of the comps in clear cell, right? Trying to recapitulate what we see in clear cell in this first. Again, there's no existing pivotal trial in non-clear cell RCC to put a stake in the ground, have level one evidence, would be fantastic, right? A win's a win. We'd love to be able to get the trifecta here like we saw with CheckMate 9ER and METEOR, everything else, where you've got PFS, survival, and response rate all going in the right direction. That's the way to capture people's attention and to, you know, bring that standard of care up to, up to par. Yeah. I mean, it's again, it's the first stake in the ground.
Mm-hmm
for RCC. It's 15%-20% of the overall market. There's a lot more coming. Again, I'm not sure we're gonna invest more in non-clear cell, but from the standpoint of being able to, again, to look at orthogonal MOA combined with Zanza in a way that we can move the needle, early in the treatment paradigm is the way to go. With an eye for the thirties, not so much the twenties. Okay.
Right. Okay. You're thinking clear cell-like data. The clear cell-like data would be even higher than the data I quoted.
I think we have to aim high. I mean, we're gonna get what we get, it's just a matter of, you know, the more data we have that is compelling around the efficacy and safety endpoints, the better. Statement of the obvious.
Yeah. Okay. Now going back to CRC with Zanza, so back to STELLAR-303, and we're waiting for the non-liver Mets.
Mm-hmm
...midyear. NLM originally outperforms the ITT. Is the hope here for stat significant survival benefit in that subset? Is it possible?
Well, that's the whole goal, right? Yeah, for sure. That's, you know, ideally what we would, you know, like to have. To have, we have a win in the ITT population, to be able to... We have a clear win statistically in the liver mets population, right? Can we round that out with a the statistically significant improvements in OS for the non-liver metastases too? That's the question, right?
Yeah.
To be able to have all three. I mean, you think about what that. Again, if we were able to achieve that and we get approved on that, and all the caveats, but that's a pretty strong way to market the drug to physicians, prescribers, and ultimately their patients who are asking upfront, you know, "Why can't I get a checkpoint-containing regimen for my disease?
Mm.
Right? Again, we always do the right thing. We always play by the rules, all that stuff. I mean, that's the goal is to be able to have, if it's there, to have that offering to provide that. I think that's a pretty compelling data set, right? There are obviously all the chatter last fall. I mean, that, in some ways, I think the, you know, the background noise has dissipated. The unmet medical need is there. The interest in this kind of regimen is growing with time. The idea that we're gonna reinvest in CRC and three sixteen in this post adjuvant study, it just raises, I think the level of enthusiasm.
Mm
...for Zanza here as well. I think it's going together really, really well, the team is executing at a very, very high level, I'm really excited and proud of them for what they're doing right now. It's great.
The PDUFA is December third. I, you know, I was sort of hoping to get more of a priority review. I mean, there is.
Sorry. Didn't deliver on that one.
Uh-
It's kind of on my hands too, so.
No, why, what's going on with FDA? I mean, you have a survival benefit with third line.
I, you know, I, again, I wouldn't wanna speculate on that. We've had great collaboration with them, great discussions with them. They have to make the call. I'm not privy to how they decide this kind of stuff. I'm happy to engage in however they wanna engage, and we'll get that done. Yeah.
Okay. Is it that they felt that there's other regimens in that area? That's-
I wouldn't wanna speak for them. Yeah.
Okay. Any questions from anyone? Maybe just, before we go into the rest of the pipeline, stock buybacks. As we look at your cash flow, it's gonna accelerate in the future. I think you've been doing, let's say right now, about $750 a year or so.
Mm-hmm.
We think that could accelerate.
If you look at our guidance, right? Probably should, right.
We should expect the same sort of cadence consistently? 'Cause I mean, the stock's been kind of... It's not like the stock is diving down.
Yeah
where it can go all over the place.
Look, our whole not just philosophy, but how we've executed on capital allocation is pretty simple, right? We wanna invest the right amount of money in the internal pipeline development, and that's having the right level of stringency and prioritization around where we invest and where we don't. We've done that historically, I mean, going back to 2010, how we've done that. We've, you know, we basically killed everything in 2010 to focus on Cabo, then focused some more on Cabo, and then just kind of turned the corner in terms of once we had a signal.
I think we do that pretty well, and I think the whole management team is very aligned with making the right hard decisions about go, no gos and about where we invest and where we double down based upon, you know, the data that we have versus where we pull back. That will continue. We're spending, you know, $900 million-$1 billion a year on R&D. That feels about right. Then we have to make the best of that, right, in terms of where we prioritize and how we spend. BD is absolutely critical, and I've talked about this publicly in terms of how we're looking for kind of later stage assets. Early stage pipeline is full.
We don't need to add more there. Later stage assets that are either in pivotal trials or ready for pivotal trials is our sweet spot, and we're focused on that. M&A is unlikely. You know, the right BD backend loaded, you know, pay for success kinda deals, we think makes a lot of sense, and that will continue to go. Look, we our buybacks aren't just there to spend money. We're investing in a company that we really believe in, that we understand I think better than anybody else, and we think is significantly undervalued.
Mm.
Why wouldn't we buy back our shares if we think the future value is much greater than is perceived with the present share price? I think, you know, as I think Chris has said numerous times today, you know, over the last couple of years, we bought back $2.2 billion of shares. What, 78-
Seventy-seven.
77 million shares. At some point in time, if we're successful, we're gonna be an EPS company, so the more we can pull that float down, the more that's gonna help us on the EPS side in the future. If Zanza hits like we think we will, we get another molecule that can become a franchise, get the third Exelixis franchise, then we're gonna be in that rarefied air where, you know, our success is looked at purely through the lens of EPS. The more shares we pull off the table now when it's cheap, the better. That's the plan. Yeah.
The third orthogonal mechanism, is that something from the outside, or is that something internal?
Either one. You know, we're looking for this next... The next franchise needs to stand up like cabo did, like zanza did, and say, "Hey, super active, you know, invest in me," right? We like 628, the PDL1, NKG2A bispecific. 371 is a tissue factor targeting ADC with a topo ligand. That's designed literally specifically for CRC. Again, you can imagine things going in different directions. Zanza, I mean, the next wave of opportunities for pivotal trials, we think, and we've gotten a lot of feedback from KOLs that, you know, the tolerability profile is such with zanza that it might be the TKI to combine with actual chemotherapy.
We're looking at, you know, at Zanza, say, docetaxel combinations starting in prostate cancer to ask the question, since no one seems to be able to beat docetaxel in prostate or in lung, could you combine and conquer in that direction? We need early data and everything else, but, you know, I think it's a very intriguing way. You can see if there's success there, what that could do to revenues if you can play in second-line prostate, second-line lung, and really move the needle.
Sizable. Yeah.
Yeah, it's huge, right? Lots of options. The focus is pipeline franchise molecules. That's how we look at. That lens of, you know, single compound, single indication, you know, just doesn't really appeal to us because it just doesn't make sense relative to how we can maneuver-
Yeah
...and really build this outsized success.
Yeah. Well, terrific. I think.