EXELIXIS, INC. Q3 FY2024 earnings call

• Exelixis is at an inflection point with the Cabo ANDA ruling and Zanza collaboration. Cabo had strong 2024 performance across commercial metrics, and the company is bullish on its revenue outlook into 2030. - Zanza represents an important mid and long-term revenue growth opportunity, with collaboration with Merck for kidney and head and neck cancers, and plans for multiple pivotal trials leading to potential approvals starting as early as 2026. - The early-stage pipeline has three novel compounds (XL309, XB010, XL495) with ongoing early clinical evaluation. - Financial performance in Q3 2024 was outstanding with top and bottom line growth, and full-year 2024 revenue and net product revenue guidance was increased. - Commercial updates on CABOMETYX showing strong performance in RCC, including market share and new patient starts, and potential for expansion in neuroendocrine tumors with the CABINET study results.

In the third quarter of 2024, Exelixis delivered strong financial performance. The cabozantinib franchise was a key driver. CABOMETYX maintained its leading position as the TKI for RCC in the U.S. Third quarter 2024 Cabo franchise net product revenues were $478 million, up 9% quarter-over-quarter and 12% year-over-year compared to Q3 2023. Global cabozantinib franchise net product revenues generated by Exelixis and its partners grew to $653 million. License revenues for the third quarter were $60.2 million, with the largest contributor being $42 million from royalties on cabozantinib sales by Ipsen and Takeda, and approximately $11 million from a regulatory milestone related to Ipsen's filing with the European Medicines Agency. Revenue contribution: Cabozantinib franchise was the main contributor, with its net product revenues making up a significant portion of the total, and license revenues also contributing.

• Total revenue guidance for 2024 is increased to $2.15 billion to $2.2 billion. - Net product revenue guidance is increased to $1.775 billion to $1.825 billion. - Zanza has projected greater than $5 billion of top line sales in the U.S. to 2033, with potential for further growth from additional trials and ex-U.S. commercialization. - Cabo is projected to reach peak sales in the U.S. of nearly $3 billion annually by 2030 based on midterm projections.

• Risks related to product commercial success, market competition, regulatory review and approval processes, conducting clinical trials, compliance with regulatory requirements, dependence on collaboration partners, and costs associated with discovery, product development, business development, and commercialization activities.

Q: Could you give color on the diligence process for the Merck collaboration?

A: It's hard to speak for Merck, but we're thrilled to work with them on two large pivotal trials for Zanza in kidney and head and neck cancers.

Q: Any preference for modality in business development within GU/GI space?

A: We're agnostic to modalities, focused on active molecules with conviction to generate differentiating clinical data for commercial success.

Q: When can we expect data from earlier pipeline assets?

A: XL309 and XL495 are in early clinical evaluation, with XL495 in Phase I, and we're focused on best-in-class with unique modalities.

Q: What's the primary driver for Cabo sales growth reacceleration?

A: Primarily driven by strong performance in first-line RCC with increasing new patient starts and maintaining market leadership.

Q: Comment on Zanza's commercial potential assumptions and ex-U.S. opportunity?

A: Zanza's potential is based on multiple pivotal trials and collaborations, with ex-U.S. commercialization by Exelixis or partners having potential upside. Assumptions are based on thorough market research and modeling.

Q: Capital allocation priorities now that IP uncertainty is behind?

A: We can do all of the above, with disciplined expense levels, continuing to invest in pipeline, do BD, and return cash to shareholders through buybacks.