GUGGENHEIM 3RD ANNUAL HEALTHCARE INNOVATION CONFERENCE - EXELIXIS INC

with XLXs. With me today, I have Andrew Peters, Chief Strategy Officer. My name is Michael Schmidt, Biotech Analyst with Guggenheim, and I'm looking really forward to this. Welcome, Andrew. Thank you for having me. Andrew, so XLx has just reported a solid third quarter earnings. The stock is near an all-time high. Zanza is under FDA review. How would you describe XL X's focus today as you bridge from CABBA to the Zanza franchise? Yeah, it's a great place to start, actually. And thanks for the invite for the conference. Always great to be in Boston this time of year and great meetings today. Before I begin, as a reminder, we're going to be making some forward-looking statements today, so please see relevant disclosures around the risks to our business in our filings with the SEC. So, you know, kind of the bridge to Zanza is a great place to start with Exalexis right now. We're really at a fun time for the company, meaningful time for the company as we kind of transition from this, you know, period of Cabo being the TKI of choice in the 2020s towards kind of our vision of Zanza being the TKI choice in the 2030s. So behind that, obviously, we have seven pivotal studies ongoing or that have read out with Zanza in kind of that first wave and then we've talked about wave two coming and so from our perspective we couldn't be more excited about everything that we have ongoing kind of this emerging second franchise with Zansa while the Cabo business continues to kind of do extremely well kind of we're keeping our head down and just executing And so that's really the theme of the company right now is just executing across all of those pillars. First with Cabo, then with Zanza, and then it's that third and that fourth and that fifth asset. Whether it's internal from our earlier stage portfolio or looking external from a business development perspective, that's kind of how we see the future as we transition from this blockbuster franchise Cabo company to what's next. Okay. So before we talk about Zanz, I did want to spend a couple of minutes on Cabo, which is still growing, actually, 13% volume, I believe, in the third quarter. So what has been the main growth driver at this stage in the lifecycle of the product? Yeah. I mean, I think it's something that we're especially proud of. You know, you highlighted the growth that we're continuing to see. And it's incredibly rare in this business to see kind of that continued market share gain this long after, you know, a launch. And so, you Know, as PJ talked about in the last earnings call, it's continuing to kind of go out and work hard to fight for every market share point in RCC. And then in NETs, we're still kind of in that, you know, first year, a little bit past our first year in the launch phase. And that's just something that we're going to continue to fight and execute on as well. You know, we've talked about new patient share and going out increasingly to the community and, you know, talking about the data, how it can be meaningful for patients, and just some of those dynamics that we've highlighted in the past around how NET patients are treated right now, but it's really that commercial execution and hyper-focus that we have, the commercial ops and analytics that we can go out and target prescribers, pockets of prescrivers who maybe don't use Cabo as much. Those are the sorts of things that wecan do on the margin that are really paying dividends. Okay. Is it fair to assume that Nets is now the main growth driver or is RCC still a country? Yeah, as PJ talked about, we're seeing kind of growth across the board. You know, obviously, Cabo is the number one TKI in RCC and, you know, we are seeing, you know, very strong share in Nets as well and that's something that, again, you know, our goal is to go out every day in the commercial organization and fight for every market share point and we want to continue to do that. Okay. And as we think about sort of modeling Cabo out through the end of its life cycle, you've obviously settled with most of the ANDA filers at this point. So I think there's less ambiguity around, you know, generic entry. But there are a couple of 545B2 applications underway as well that are being pursued, an alternative strategy. One of them was approved recently. How do you think that might impact the Cabo franchise? Yeah, I think they're really kind of, you know, I don't even want to say apples and oranges. It's apples and something, you Know, pretty, pretty different there between kind of the normal and generics and the 505 B2 products. You know, as a generalizable statement, 505b2 products in oncology haven't really been successful commercially absent meaningful clinical data. So you point to, you know, I think Abraxane is probably the most famous example of a 505B2 product. Their use and utilization is really driven by robust data that they were able to generate. Absent of that, given the non-AB rating, the non substitutable lack of guideline inclusion generally, those are all things that historically have really prevented these products from being adopted broadly. Our focus again is always on two things, maximizing and doing what's best for the patient and to ensuring our kind of intellectual property rights. And so thematically, those are things that we're gonna continue to do, and we're going to, as I said before, continue to fight for share in RCC. Great. So then maybe a few questions on Zans. STELA 303, the first phase three study, obviously met overall survival outcomes in colorectal cancer study in a full population. The FDA did extend the review a bit to March 3rd, to do for day now next year. Just remind us what drove the push in timing and how confident are you in approval at this point? Yeah, so we're really excited about 303 and kind of the potential for the first approval of Zanza there in kind of that CRC population. It's an indication where there continues to be a high unmet need. A lot of the market research that we're seeing right now is really favorable towards Zanza there, kind of that chemo-free option, the checkpoint-containing option, you know, the activity across all of those different patient subgroups, you know, prior BEV and, you know, liver met, non-liver met, that kind of consistency of effect. So, you know, we're seeing that excitement kind of building in the clinical community. As it relates to kind of the FDA, you know, for obvious reasons. We don't really talk about ongoing interactions, but kind of at a very high level. They had asked for some data. We gave them data, and they said it's going to take a little more time to review the data, you know, beyond that. Don't really want to get into it. Okay. And obviously, the study did succeed in the ITT patient population, but the original hypothesis sort of missed in this non-liver med subset. Do you think that might affect how the drug might be used if approved on market at the end of the day? No, so, you know, again, kind of that subgroup dynamic, generally what's happened in the past is a concern, was there a particular group of patients that drives the treatment effect across the overall population, something, say, like, you now, with the BRCA patients or something. That's kind of more typical of why this subgroup is an issue we kind of have the inverse where the ITT data you know show a consistent consistency of benefit across that overall population and then when we specifically looked at the non liver met subgroup that original hypothesis that we had around you know non liver med patients potentially having differentiated biology etc that ended up not bearing out you know as a reminder you know, that original hypothesis was really driven by kind of backward-looking empiric observations from some of the prior data sets that we saw in CRC. It really turns out that that's probably not as much of a biological driver as we thought. And, you know really, kind of the key takeaway from our perspective is that ZANZA-TEZO does work, you know, regardless of liver met status. And so that's something that we're especially excited about. Okay, great. Maybe sticking with colorectal, you did announce the 316 study, which moves potentially Zansar into a much earlier stage of colorectoral cancer. How large is that adjuvant opportunity, and how de-risked is Zansars' profile in that setting? Yeah, so I'd say there, it's kind of following the Cabo playbook, so to speak, where the first approval for Cabo was in Meteor, kind of in that later line RCC population, and then we continued to evaluate it in earlier lines, knowing, kindof using that first readout as an anchor point to understand sensitivity of the tumor type to the drug. So kind of same thing with Zanza here. We know that ZANZA's active, you know, improvement in overall survival, kind of the gold standard in oncology in a later line population. So the question is, as we wanted to move earlier, what are the opportunity sets from an unmet need perspective? And how can a drug with a profile like ZANSA, shorter half-life, kindof user-friendly combinability, how could that really help patients? So in the backdrop to all of this, Natera had generated this substantial data set showing kind of the pretty stark differences between DFS for patients who are MRD positive and MRD negative. And that to us was really kind of where the light went off, so to speak, where there's this huge unmet need in these patients who were MRD-positive, who are a very high likelihood of seeing relapse, but unfortunately don't have any treatment option, you know, therapeutic intervention doesn't exist. So they're essentially in kind of a watch and wait period. So we're asking a question with our partners Merck around, can the intervention of Zanza or Zanza and Pembro have the effect of kind of delaying that DFS period over time so that patients cancer doesn't doesn't recur and so that's something that as we're able to look at who are the patients who are likely to recur we're looking at a very targeted population who's at very high risk in a sensitive tumor type like CRC where we've shown this survival benefit in a much later more heavily treated pre-treated population you know it's a it's a study where we're really excited about from a sizing perspective you know we We also think it's significant. We've talked about 12, 13,000 patients, how that evolves over time as kind of the Signatera and MRD testing rate increases over time, as well. These are all dynamics that we're looking forward to, but it's really a sense of kind of this new diagnostic modality driving a new treatment landscape, where it's a really green space for us. And I think I'm especially proud that Exalexis is kind of at the cutting edge of offering something to potentially help patients there. And I believe this is a phase two, three study design. Is there sort of a gating stage that would offer opportunity for disclosure of data before moving into the phase three? Yeah, so we haven't really talked about a lot of those sub-dynamics yet, but in general, I think the challenges with any phase two, three study is kind of can that earlier data inform the later data and can you use it for the overall stuff. So kind of stay tuned there, we haven't really gotten into a lot of the specifics. Then maybe shifting to stellar three or four, lots of discussion recently, just given it's the second phase three study that could read out very soon. In fact, you just delayed the guidance to 1Q again. And so I guess, why has it been taking so long? It seems like the readout is far behind initial expectations for the study. Yeah, so again, it's hard to speculate on what the cause for the delay is. But it's really as simple as kind of counting event rates as they're coming in. As a reminder, it says PFS is the co-primary endpoint of the study, And so, the primary analysis is triggered when we hit a certain number of events and we kind of see those events come in and we can narrow our timing based on kind of how many events we need and how many events are coming in on a monthly, weekly, quarterly basis. And then, so it's really as simple as that and kind of counting events. So what Dana talked about in the last call, you know, based on everything that we're seeing right now, we're approaching clinical cutoff, and that's what's driving that 1Q timing. And is the data readout driven by PFS events or perhaps OS? PFS. Okay. Because when I look at the design paper, there's a response rate outcome as well as… Yeah, response rate's a co-primary as well, but PFS is what's going to be the primary. analysis. And how much should investors read into the Stella 304 study result once available in terms of validation for other ZANSA opportunities? How important is it in terms OF validating the hypothesis around ZANZA? I mean, I think the challenge with kind of that obviously all data is informative and helps kind of shape the overall profile of the drug, but candidly it's really hard to understand how RCC and CRC and NETS and some of the other tumor types that we're looking at, they're all different combinations, different settings, different drugs. So I kind of look at everything individually. But, you know, to me, the excitement that I have around ZANZA is really that breadth of opportunity. You know, CRC, and then non-clear cell RCC and then the two clear cell Rcc studies and then net and meningioma and you know earlier line CRC and then wave two and so it's kind of that building on those layers and layers of opportunity and that breadth of opportunity that drive the excitement where we can really get a sense of you know Zanza being not only building on Cabo but growing to be much larger as well that's kind of what what we're really excited about okay so then a question on clear cell RCC obviously Cabo's most important market perhaps one of the bigger opportunities for Zanza as well and so Merck is running light spark 0 3 3 in the first line setting and then you have the 0 3 4 study in second line patients with How would you describe Zanza's role in clear cell kidney cancer evolving, especially as the Cabo franchise matures? Yeah. So one of the things I talked about kind of in the beginning was this idea of Cabo being the TKI of choice for the 2020s, Zanza being the TK of choice of the 2030s. And so there's a bunch of kind of nuance to that. One, you know, as we look to, say, like the LightSpark 033 study, that's that first-line post-adjuvant setting. So one of the observations that we see in the RCC landscape is as patients are increasingly getting adjuvant PEMBRO over time, that question of what should they get after they've exhausted their checkpoint is increasingly coming up. And so LightSpark 033 is, you know, specifically designed to answer that with pivotal data. Similarly, kind of 034, common with Belzodifan in kind of a later line setting. And so that's the sort of thing where we're asking not necessarily how are patients being treated today, but what does that patient journey look like in the 2030s, and, you Know, how can we ensure that SANS is a key part of that? The other dynamic that I'd highlight is, you know, say following the recent ESMO conference, you know we saw the failure of the LightSpark 12 study. That was the triplet of PEM, LEND, and Belzudafam. And that really kind of to me opened the door to the question of what are we going to do, what is XLXS going to with ZANZA in that frontline space. And so we think we have a real opportunity there with kind of the wave two studies in that frontline setting to really kind of, again, define in that front line metastatic space Zanza as the TKI of choice for the 2030s. So kind of stay tuned there. But that's really kind OF the lens that we see it is in the future. How do we establish Zanza AS the dominant player in RCC? I try to ask this sort of on the earnings card. So my understanding is that Zulifan is now also approved in adjuvant, clear cell with PEMBRO. Does that impact how this may be used in the metastatic setting? Yeah, so one of the dynamics that we've talked about in the past and kind of is somewhat self-evident in how patients are treated is if you look at the adjuvant space, especially having a survival advantage has historically been kind of the most important driver of adoption because, functionally speaking, a lot of these patients are essentially cancer-free. So the treatment choice, the treatment decision essentially becomes, do you want to add on a therapeutic intervention with additional tox for these patients? What's the benefit that you're seeing? Kind of that combination versus sequence question that comes up a lot kind of in any cancer setting. And so when you're adding on Belzutifan on top of Pembro, what's the, the benefit that the patient is seeing? Is it just on DFS? Is it on survival? historically that survival data for Pembro especially has been one of the real drivers. And so the question that I think is going to exist in the market is, what is that added benefit of adding Belzodifan in the adjuvant space relative to, say, just using Pemro or not treating and then waiting for the metastatic disease to come on and then you get IOTKI or IOIO or now IOHIF or TKI then HIF and all of these kind of sequenced questions, there's just a lot to kind of play out there. Okay. So I just want to check two more real quick. So Stella311 looks at Zanza in NETS as well, sort of a wave one opportunity. How will Zanza be positional to Capo in the NET space? Yeah. Again, you know, I'd say kind of similar dynamic to what we talked about in RCC around kind of how patients are treated in the 2020s versus how patients were treated in the 2030s. Obviously, there are, you know, some pretty significant differences between the cabinet study, which was the label enabling trial for CABO in NETS, and 311, you know, controlled study against everolimus, you know, slightly different patient population. And so they're kind of asking two different questions. But again, you know, our hope is to establish Zanza as kind of that TKI of choice for net patients in the 2030s. Okay. And then you've talked about meningioma, which is a unique opportunity as well, perhaps with an accelerated approval opportunity. How would you describe that market and potential registrational path? Yeah, so that's one that, again, we're especially excited about just because of that unmet need and real opportunity there. Meningioma, it's a common CNS-related cancer, but similar to, say, the dynamics and nets where the patients tend to be a little bit more indolent, slower-growing tumors, et cetera, but also without really many treatment options. And so this is one where, based on our experience with CABO, we can point to clear, robust efficacy signals that inform why we're developing there, going into a setting where we think if we're able to establish robust activity, hopefully with good duration, it can really translate into a pretty sizable market for us. And so it's that idea where unmet need, more indolent sort of patient population can hopefully translate to longer treatment duration for patients, translating to a significant revenue opportunity. Okay, and then you recently highlighted these wave two opportunities, going back into lung cancer, for example, among other things. So how do you prioritize opportunities to pursue in that second wave? Yeah, I mean, I think prioritization is probably one of the things that Exalexis does best, it's we're hyper focused on being an efficient company. Our internal tagline that we joke about a lot is we run Exalexis like a business and not a biotech. And one of through lines of that is that discipline on the expense side, discipline on the decision to invest in new trials especially. So we want to ensure that we're running studies in opportunities that make sense for patients and opportunities that makes sense from a commercial perspective that we think have a high degree of probability of success of establishing XANS as a new standard of care. So an example of that is we have a lot of prior CABO data in bladder cancer. We never really pursued CABO there in part because there was a lot going on from a development perspective around Cgen, Pfizer's, PADSEV, and so we wanted to really understand how that treatment landscape would shape up before investing in bladder. As now PADSAV is established as kind of the first line MIBC or first-line metastatic with PEMBRO, there's now this opportunity and this question of what should patients get post-PADSF. We have a phase two study ongoing right now of ZANSA in that population, and so that's an example of the sort of wave two studies that we could potentially initiate if data continue to look good, that we're seeing responses there that looks like an opportunity for patients. That's the sort thing that we'd really want to invest in because significant opportunity from a market perspective. Huge unmet need for patients, because once they come off of PADSEV, there's really no idea of what they should be getting. Clearly an active indication for ZANSA, and so it's just a matter of understanding the profile that we're seeing, and then what that study could look like from a pivotal perspective. So I just wanted to squeeze one more in before we wrap up. So obviously with ZANZA, additional phase three studies ramping up, next year and in coming years, you guys have been very active in terms of the share repurchase program. How do you see that evolving as you invest more in the pipeline next year? Yeah, so capital allocation we kind of think of in three buckets, you know, obviously internal investment. We've highlighted that we expect to spend about a billion dollars in R&D and, you Know, that to stay flat going forward. So that's kind of bucket one. Bucket two is external innovation, kind of on the BD side, looking outside the company for new assets that we can bring in, new franchises we can Bring in. And then the third one being kind of that shareholder-friendly buyback perspective. Given the success that we have financially, the tailwinds with Cabo, we don't view them as mutually exclusive. We think that we Can do all three with our balance sheet, as well as we don' t have any debt. So should we see something externally, the ability to lever up etc so we think we can kind of continue across all three of those great well Andrew thank you so much for that we'll wrap up appreciate it thanks