Great. Welcome to the next session. My name is Eva Fortea. I am one of the Biotech Analysts here at Wells. We have with us today Andrew Peters, SVP Strategy, and Chris Senner, CFO of Exelixis. Thanks so much for being with us today.
Yeah, thank you for the invite.
Great. Maybe we can just start our chat with lay of the land, last 12 months, next 12 months for Exelixis.
Yeah, I can start, and Andrew can kick in. We continue to, currently in 2026, we're in the process of. We launched the NET indication last year. We're continuing that process of penetrating the market from a NET indication perspective, and also from an RCC perspective. The development of zanza continues to be at the forefront of what we do. It's a big part of what the company is, as we look into 2027, it's a big part of what our expectations for the outlook for the company.
Yeah. Just to add on that, and just as a reminder, Chris and I are going to be making forward-looking statements today, so please see relevant disclosures around risks to our business. I think Chris said it well in that 2026 is this interesting transition period for the company as we're continuing to execute, grow CABO, and really use that financial success that we have with our base CABO business to then invest in zanza not only ahead of our potential launch in CRC later this year, but also expand the breadth of that development. So that as we exit the decade, in 2031, the LOE of CABO, that handoff to not only replace that CABO revenue, but growing it, is really the focus of the company.
Between our early-stage pipeline or being opportunistic around business development, enable that third, that fourth, that fifth program so that we can really scale as a company. That's really what we're focused on, is maximizing the value of CABO while really starting to invest at a really important time in the zanza franchise, and then being opportunistic in investing appropriately within our own internal program, looking externally, and then, again, making sure that we're doing the right thing for our shareholders and looking towards things like share buybacks as well. So, really exciting time at Exelixis.
Great. So maybe let's start talking a little bit about the CABO franchise. It's been incredibly successful. How should we be thinking about growth from here?
Yeah, from an overall CABO franchise perspective, we set out a $3 billion what success could look like number, and we still feel like that's an achievable number based on everything we know today. The RCC indication is part of that growth, but also NET is a big part of that growth as we look into 2027, 2028, and 2029.
Got it. Maybe just touching upon what drove the reduction in guidance and the second quarter revenue for CABO.
Yeah. We talked about it on the call to a large degree, but when we looked at the overall pace of the NET indication, we saw that as we drove into the community with our expanded field force, we saw that the kinetics around how some patients move from therapy to therapy, we saw that was a little bit slower than we originally had projected. In a more indolent disease like NET versus other solid tumor malignancies, they do not get scanned as often, right?
For some of the patients in other solid tumor malignancies, they get scanned every three months. From a NET perspective, a neuroendocrine tumor perspective, for some of these patients, it could be a longer period between scans and also sometimes a longer period between therapies. That is what we noticed in the market. We do not see a change in our overall outlook for the total potential, but it is just going to be a slower ramp than we originally projected.
Yeah, I think the best way I think about it is really more of a temporal dynamic than anything. It is that gap between new patient market share and total market share. P.J., our head of commercial, talked about this on the call, with 47% or so new patient market share. As patients, as Chris said, are coming in for scans, if they do need to come onto a new therapy, increasingly they are going onto CABO.
But that time course on when that new treatment decision happens is just a little bit slower, especially in the community, because of either the scan interval or is there a treatment break between these. Because again, unlike a lung cancer or most other solid tumors, that slower-growing disease that is just inherent in neuroendocrine tumors makes that decision point or part where the new bottle is dispensed just temporally a little bit slower. But again, the focus from our perspective, that leading indicator is new patient market share. We're confident that those patients are there. We're increasingly successful in converting those new patients. It's more a temporal dynamic than anything around when that switch occurs.
Got it. Have you shared your assumptions on peak opportunity in the NET space for CABO, and how has your assumptions on the launch ramp changed?
Yeah, I think we've talked about NET being about a billion-dollar indication from an oral perspective at contemporary pricing, and we still believe that's the case. And as Andrew was talking about, the new patient share that we're picking up is around that 45% range, and that's a good leading indicator of our penetration. Also, what we're starting to see too is the actual stacking of prescriptions for patients, and that's a big part of the longer-term success as those patients build on CABO, then there'll be potential higher revenue.
Yeah. The dynamic, again, the way that we think about it is that aspirationally billion-dollar TAM, our goal is to capture as much of it as possible. That's the endpoint. That shape of the curve, how we get there is a little bit dependent, candidly, on this dynamic around new patient starts, etc . But at steady state, as that total market share and new patient market share converge, I think that's where that endpoint number becomes more important.
Got it. Very helpful. Maybe just switching gears a little bit to Handa Pharmaceuticals' tentative approval and their CABO-like therapy, and how does that change your view on the competitive landscape for CABO?
Pretty minimally. I think, as a generalizable statement, 505(b)(2) products, in the absence of clinical data, haven't been successful commercially. I think the best-known 505(b)(2) product is Abraxane, and utilization of that product was really driven by large, robust, randomized data sets showing that there's a meaningful clinical improvement of the product versus, say, the reference.
Absent of that, given the dynamics around non-AB-rated, non-interchangeable, non-substitutable, just the inherent challenges of the 505(b)(2) products around labeled risk, market penetration due to having to go out and build a commercial organization without data, all historically have really made these products largely unsuccessful from a commercial perspective. I think the short answer, candidly, is we don't view the 505(b)(2) products as a meaningful commercial risk to our CABOMETYX business, and our focus is really on two things, ensuring patient safety. Are these 505(b)(2) products ultimately good for patients? That was at the heart of one of our concerns about that program. Second is ensuring our intellectual property and asserting our IP rights when appropriate.
Got it. How should we be thinking about the IP property until the end of the decade? Is there anything there that is concerning, or when should we thinking about loss of exclusivity and just erosion of sales for CABO?
Yeah, I think one of the truisms in biopharma is the more successful you get, the more legal problems or legal challenges you will face. We run our business with the assumption around CABO generics emerging January 1st, 2031. That is when we have announced settlements with Teva, Cipla, others around a true CABO generic.
Got it.
Between now and then, obviously, there is always litigation. There are always things like last week or a couple weeks, end of last month, we won on appeal with MSN. But 1/1/2031, from our planning purposes, is probably the best date to use.
Got it. Very helpful. Okay, maybe switching gears a little bit to zanza. We got the non-liver met STELLAR-303 analysis. How confident are you in securing an all-comers label come December?
Yeah, we based the filing on the ITT population, or the filing was the data from the ITT population, which is all comers. I think that's what drives our confidence, the data that we presented at ESMO of last year and subsequently published really shows that consistency of benefit of the doublet across all of those different subpopulations. The non-liver met outcome really is probably the result of probably not enough power in that specific subpopulation. But just as a reminder, that ITT group was inclusive of both patients with and without liver mets. Our filing reflects that.
Got it. What has been the feedback from doctors from all the data that you've shared so far, and what percentage of patients don't have liver mets? How are you thinking about penetration in the two patient subpopulations?
Yeah. I don't think the market research and all of our conversations around the combination certainly doesn't focus on the liver met, non-liver met dynamic.
Got it.
It is much more about having an opportunity for patients to gain access to this doublet. There is the chemo-free component of it. There is the checkpoint-containing component of it. There is the fact that the benefit is there regardless of prior Avastin use. It is all of those different things that kind of sum out to a high degree of enthusiasm from the patient and clinical community to potentially have a new treatment option for these patients. Coming back to one of the things that I mentioned that kind of consistently comes up is that checkpoint-containing dynamic. If you think about how CRC is treated, there is certainly the academic centers, but perhaps more than other tumor types, there is a pretty large contingent of the community prescribers as well.
Given that they tend to treat lung cancer, RCC, liver cancer, all of these different types of solid tumors and beyond, there is kind of this inherent familiarity with checkpoints that up until now, if a patient is watching the Super Bowl and sees a bunch of ads for checkpoints, they go to their oncologist and say, "Hey, is this something that I could be eligible for?" Until the zanza data in STELLAR-303, the answer has been no. We think that this provides that opportunity to have kind of not only an active modality like a TKI, but also layer on that CPI component as well, that I think kind of offers the best of both worlds. If you look at our data that we have generated, certainly there is a contribution from both of those parts.
Got it. Are there any specific types of patients that would particularly benefit from this approach or that would make up for this early launch?
Yeah. Given the consistency of benefit, especially as described in the forest plot, our plan is to try and capture as much of that market as we possibly can. I think in the past, we've described that third-line plus CRC segment as about a $1.5 billion opportunity. Candidly, our job is to target as much of that as we possibly can, because we think that this is a great opportunity for patients to have a new effective potential standard of care.
Got it. You mentioned recently also the expansion of your GI sales team, not only to address the NET launch, but also in preparation for your CRC launch for zanza. Maybe you can share with us the metrics there and how should we be thinking about launch readiness?
Yeah. As you said, and I mentioned earlier, too, we expanded the sales team earlier this year. We started the process late last year, and pretty much everybody was on board by the end of the first quarter, and started to have an impact, really, in the NET indication during Q2 and continue to progress in Q3 and look forward to Q4. From a CRC perspective, STELLAR-303 perspective, we're launch ready. We'll be launch ready when we get approval. Within our guidance, we've included our launch expenses and things like that. So, we've accounted for all that and the commercial team is getting themselves ready and understanding the market through ad boards and things like that.
As Andrew said, there's been a lot of excitement around the fact that there is a checkpoint option now, and that's a key and important part of that, especially since a lot of this, as Andrew talked about, is treated in the community.
Got it. Should we be thinking about the launch as PDUFA comes in, potential approval, and then you can launch right away, or will you be waiting a little bit for zanza's launch?
Waiting for zanza launch? No.
Yeah.
We will be launching right away.
Right away. Got it.
Yeah.
Do you expect any AdComms?
Yeah, it's hard to say.
Yeah, I guess what we've said is if we had been asked by FDA or informed by FDA for an AdComm, we would have let you guys know.
Got it.
But beyond that, can't speculate.
Very helpful. Okay. It's still a little bit early, but what factors should drive pricing and coverage?
Yeah, we haven't talked about pricing specifically, but it's been a question we've gotten in a lot of the meetings today. The way we look at it is it's going to be pricing contemporary to what's been happening more recently in the market. That's kind of the approach we're looking at. We'll look at all different metrics in order to determine the correct price. But no specific comment on pricing today.
Got it. Okay. So maybe just shifting gears towards STELLAR-304, the non-clear cell renal cell carcinoma phase III study. Just in terms of control, what's the bar? A lot of utilization off-label of the CABO combo there. How should we be thinking about what's success in that study? Is statistical significance enough, or should we be looking at off-label usage as the bar?
Well, it's a complicated question. Just as a reminder, all drugs approved in RCC are approved in clear cell and non-clear cell. It's kind of an interesting dynamic within the oncology world where the labels are granted based on randomized data in the clear cell space, but have broader indication statements for essentially all RCC. CABO, like all other drugs in RCC, is approved in non-clear cell, so it's not off-label use.
Got it. Okay.
But I think the challenge from a patient and physician perspective, and actually kind of why we sought out to do 304 in the first place is, utilization for the large part is really driven by answering the question: which small unrandomized study do I trust the most? The challenge with non-clear cell is just the data. There's never been a large randomized study done there.
All of the inherent complications with over-interpreting unrandomized small studies kind of get amplified in a disease like non-clear cell, where patients can be a little bit heterogeneous based on the subtype and all of those sorts of things. So what 304 really sought out to do is define a standard of care in that population. So, realistically comparing the data when 304 reads out to some of these phase IIs is really a true apples and bananas kind of thing.
Just because of those complications we all have looking at interpreting and understanding limited small N phase II data where maybe they over-index to a certain intermediate or favorable risk, all of those different things that we all know. So 304 is an opportunity to plant a flag in the ground with level one evidence and say, "This is potentially the standard of care in non-clear cell," and no longer be in that realm of, "Which small study do I believe or trust and interpret that into my patient that's in front of me?" So that's really the dynamic.
Got it. You mentioned non-clear cell has always been a little bit more challenging and there's no controlled studies. Why do you think this is and what's the risk to the phase III then?
It's a great question. I think, again, as we started looking into it, we were figuring that out as well. I think one of the answers is, as I mentioned before, all of the drugs have labels that are inclusive of non-clear cell. So CABO gets used there, SUTENT gets used there. Everything gets used there. So it's just been a unique dynamic within the oncology world. So again, the goal of 304 is to definitively answer that question as opposed to really just try and gain as much share in the absence of large data sets.
Got it. You also mentioned some heterogeneity in the histology. Can you just remind us which histologies are included in 304 and how should we be thinking about the potential differences in PFS for one histology versus the other?
Yeah, I think without speculating on the data ahead of time, it is probably more relevant to talk about how we are excluding the chromophobe subpopulation. Again, that was based on some relatively limited data sets that we had seen before. 304 is a relatively inclusive study. Chromophobe is a pretty small subsegment of that, but we just wanted to make sure that we were successful in the study. So it is probably better to think about which ones we are excluding than list all of the inclusive types.
Got it. Is the study large enough to really understand the differences between the histologist?
Again, don't want to speculate on the data, but we think it is a well-designed study.
Got it. Okay. Maybe just before we move away from non-clear cell, how are you thinking about the overall opportunity there?
I think if you look at the epidemiology of RCC, it is about 20% or so k ind of drilling into what that TAM looks like, it is a little complicated. Just as I mentioned before, everything kind of gets used there. Our goal is to capture as much of that 20% as we can, with hopefully data, but it is really going to depend on what it looks like.
Got it. Maybe switching to clear cell, and here you have pursued the strategy of combining with HIF-2. Where do you think zanza can really establish itself within the clear cell space?
Yeah, we are really excited working with our partners, Merck, on the 033 and 034 studies. Both areas where we think kind of there is this high unmet need. In particular, kind of looking at LITESPARK-033, where the survival data of pembrolizumab on the adjuvant side, is really driving a lot of utilization there for appropriate patients. When they do, if they do ultimately progress, the question becomes, well, what should they get?
The data across the industry has consistently shown that probably retreatment with a checkpoint has historically been much less effective. Exelixis and our partners, Merck, are kind of at that forefront of answering the question of what should be the standard of care. Same is true with 034, where, again, as part of that patient journey in the second line plus segment, does the combination of zanzalintinib and belzutifan improve the outcome for patients there.
We think that the potential differences and really best-in-class profile of zanza pair well with a HIF like belzutifan. Then really the question that we get asked a lot is: What is next in RCC? With the failure of the LITESPARK-012 study, that was the frontline lenvatinib/belzutifan/pembrolizumab study, really opens the door for someone like Exelixis to come in and really take that opportunity. That is something that we are focusing on pretty carefully and making sure that the biology is driving that decision and how do we really establish that new standard of care there. So something to pay attention to.
Got it. Do you think the combination agent of choice in terms of HIF-2 belzutifan plus axitinib, do you think that makes a difference, or is it more of selecting the proper TKI?
I guess time will tell, so to speak. We certainly think that belzutifan is a very effective HIF-2 agent. If you look at what the combination provides, is it really the firepower and the low primary PD dynamic as well as just zanza on its own is a good drug. But combining it with a drug like belzutifan, we think covers a lot of bases. So the question is, a best-in-class TKI with a very strong HIF, can that benefit patients? We certainly think yes.
Got it. So maybe shifting gears to the NET opportunity for zanza and the first-line study here. Does the slower kinetics for the second line, does that change your view on the opportunity for zanza in the first line and overall opportunity within NET?
Yeah, I think we continue to be very excited about NET overall. Again, coming back to this kinetics versus market opportunity perspective, and we're certainly focused on the overall market opportunity. We view NET in totality as one of the core franchises for Exelixis. Taking a step back, franchises is probably the best way to think about the company overall. We have the individual product franchises like CABO and zanza, where there are multi-indication drugs, but say within that other degree is either RCC or NET, where we have multiple products, multiple programs within each of those.
NET is one of the core franchises at the company. It's one we're executing on with CABO, investing with zanza, and certainly investing with our earlier pipeline as well. So, we think it's historically been greatly underserved, and we really have the chance to be the dominant player there. We're certainly very excited about STELLAR-311, as well as what's next from the next things we're going to do.
Got it. Does a difference in kinetics impact the way you think about trial enrollment for STELLAR-311?
No, I think someone asked us on the last call if actually STELLAR-311 was having an impact on CABO. Probably a little bit on the margin. But I think that temporal dynamics much more of a factor than how we're seeing patients. But it's certainly not lost on us that the enthusiasm for zanza in the STELLAR-311 study and that pace of enrollment that we're seeing is certainly something to consider.
Got it. I just wanted to touch upon the meningioma opportunity. I feel like we do not really get to talk about it too much. Is the phase II study could potentially support an accelerated approval, and how should we be thinking about the response rate there and the unmet need?
Yeah. Again, all this is data-dependent, but if we are able to show a robust response rate, given the high unmet need for this patient population, it is certainly something that we could pursue. It is all data-dependent, so to speak, but our goal, our hope is we can generate as high of a response rate as we possibly can, just given that these patients really do not have many effective options. It is really based on a foundation from some early data we have generated with CABO that would suggest that there is real promise here. So, do not want to get ahead of ourselves on what that regulatory path looks like, but we want to do whatever we can to help patients here, just given the absolutely high unmet need.
Got it. Maybe given that there is not a ton of studies in this space that have been successful, just like, what does robust efficacy look like in this space? Based on other types of accelerated approval, it has been mostly on response rate and duration of response. Is this what we should be thinking about when looking at this data potentially in the future when you share it?
Yeah. The primary endpoint is response rate, secondaries, duration, PFS, OS, but given the relatively indolent nature of meningioma, maybe that is a little bit longer term of an endpoint. Beyond that, can not really speculate on what the bar is other than our goal is to generate as robust of a data set as possible, just so that we can help patients.
Got it. What has been the challenge within these patients that is driving this lack of systemic therapies?
The biology, I guess, is probably the simplest, and finding that right combination of targeted biologic-based activity, tolerability, and focus as well. I think historically it is probably an under-invested indication, same as that. I think we are kind of the strongest voice out there, so to speak, in the NET community, at least on a branded side. So, combination of a lot of those things.
Got it. How should we be thinking about the market opportunity in this space versus the NET opportunity or the CRC opportunity?
We have not really defined specifically what the TAM in meningioma is, but we think it is quite significant.
Got it. Okay. Maybe just in terms of what is next beyond zanza, we have not seen a lot from the early pipeline, but maybe can you share what are you the most excited about, and is there perhaps an R&D date planned or something where we are going to learn a little bit more about the activities there?
Cadence of R&D days, I think everyone would kill me if we did them more than once every two years. We just did one in December, so it is a lot of planning and logistics goes into each of those. I think our focus really is generating as much data as quickly as we can to come to a go/no-go decision. Because ultimately that is kind of our focus is do we want to invest in late-stage studies for this program? Does the program have the potential to become a new standard of care in indication X or multiple indications X? Does it have the potential to be that next franchise molecule beyond CABO and zanza? Kind of that is our focus.
The dynamic there is instead of putting out a press release that here is 10 patients, here is four responses, and declaring victory, let us generate a data set that gives us a reasonable sense of what the profile is versus what it could be, and then that informs that go/no-go. From a capital efficiency, capital allocation, capital investment perspective, we want to make sure that we are making informed decisions on that expensive part of the development curve, which is late stage. We want to make sure that we are moving the right assets into late-stage development as we can. We can only do that if we ask the right questions and generate the right data.
Got it. Maybe just following up on this, we have seen how a no-go decision looks like. It is usually during earnings. But how does a go decision look like here? Would you share it during earnings? Would you share it with some kind of presentation or medical meeting, company?
Yeah, I think honestly, it all depends on the situation that we're in at the time. I wouldn't want to say we were going to do it one way or another. It'll all depend on the actual situation.
Got it. Maybe just last question from me in terms of you've been doing share buybacks. How do you plan to balance that with business development? You were talking about it a little bit at the beginning.
Right.
Are there any particular therapeutic areas, I'm assuming, or types of mechanisms that you're looking at?
Right. We look at capital allocation in three buckets, right? We talk about R&D at $1 billion or less every year. We look at BD deals. Andrew and Stefan look at BD deals all the time, and it's primarily focused on GI and GU areas. Then, from a share buyback perspective, through last quarter, we had done about $2.9 billion of share buyback from second quarter of 2023 to second quarter of 2026, retiring about 90 million shares. We have about $600 million left on our current authorization as of the end of last quarter. That is also a key part of capital allocation. All three of those buckets are a key part of the capital allocation game that we're playing. I don't know if you want to talk about therapeutic areas.
Yeah, importantly, I think they're not mutually exclusive either. We think that our financial profile allows us to invest in all three buckets concurrently. From a BD perspective, we want to make sure we get it right.
Got it. We're out of time, so thanks so much for joining us today. This was incredibly helpful.
Thank you.
Thank you.
Thank you so much.
Thank you.