Good day, ladies and gentlemen, and welcome to the Exelixis Second Quarter 2020 Financial Results Conference Call. My name is Gigi, and I will be your operator for today. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to your host for today, Ms. Susan Hubbard, Executive Vice President of Public Affairs and Investor Relations. Please proceed.

Thank you, Gigi, and thank you all for joining us for the Exelixis second quarter 2020 financial results conference call. Joining me on today's call are Mike Morrissey, our President and CEO; Chris Senner, our Chief Financial Officer; Gisela Schwab, our Chief Medical Officer; Peter Lamb, our Chief Scientific Officer; and P.J. Haley, our Executive Vice President of Commercial, who will together review our corporate, financial, commercial and development progress for the second quarter 2020 ended June 30, 2020. During the call today, we will refer to financial measures not calculated according to generally accepted accounting principles. Please refer to today's press release, which is posted on our website for an explanation of our reasons for using such non-GAAP measures as well as tables deriving these measures from our GAAP results. During the course of this presentation, we will be making forward-looking statements regarding future events and the future performance of the company. This includes statements about possible developments regarding discovery, product development, regulatory, commercial, financial and strategic matters as well as the impact of the COVID-19 pandemic on Exelixis' business operations. Actual events or results could, of course, differ materially. We refer you to the documents we file from time to time with the SEC, which, under the heading Risk Factors, identify important factors that could cause actual results to differ materially from those expressed by the company verbally and in writing today, including, without limitation, risks and uncertainties related to product commercial success, market competition, regulatory review and approval processes, conducting clinical trials, compliance with applicable regulatory requirements, our dependence on collaboration partners and the level of costs associated with the discovery, product development, business development and commercialization activity. And with that, I will turn it over to Mike.

All right, thank you, Susan, and thanks to everyone for joining us on the call today. Exelixis had a strong second quarter across all components of our business. We continued to execute on key priorities and achieved important milestones throughout the quarter. We'll use today’s call to highlight our progress and provide additional perspective for the rest of 2020 as we build off the momentum from the first half of the year. As in recent calls, we'll keep our prepared remarks short and address your questions as the main part of today's update. Please see our press release that was issued 90 minutes ago for our second quarter 2020 financial results and an extensive list of key corporate accomplishments. The highlight of the quarter was the positive top-line results from CheckMate 9ER, the Phase III pivotal trial evaluating the cabo/nivo combination in first-line RCC. We're excited to present the detailed results for 9ER at the virtual ESMO meeting in late September. Along with our collaborators, we're on track to complete our high priority global regulatory filings in the near future. The Exelixis’ commercial organization will be ready to launch in the United States by the end of August. Our first line RCC remains our top priority as the next commercial growth opportunity for cabozantinib. We've also made important progress and advancing key discovery and development priorities, while we work to expand cabo’s utility and additional oncology indications. Importantly, three new global Phase III pivotal trials of cabozantinib in combination with atezolizumab have recently been initiated as part of the CONTACT clinical trial program. The success of CheckMate 9ER, coupled with the data presented this year at various ASCO meetings for cabo IO combinations in liver, prostate, lung and bladder cancers highlight the important role that cabozantinib can play as a unique and differentiated TKI backbone. These early signals of compelling efficacy and tolerability may provide potential encouraging read-through for current pivotal trials in new indications. Finally, we're on track to file up to three new INDs by the end of this year as a result of our internal efforts and the work of our partners. I'm incredibly proud of the commitment and focus displayed by the entire Exelixis’ team as we continue to drive our business forward during these challenging times. So with that, I'll turn the call over to Chris, who will provide an update on our second quarter financial results.

Thanks, Mike. For the second quarter 2020, the company reported total revenues of $259.5 million. Total revenues for the quarter included cabozantinib franchise net product revenues of $178.7 million. Net product revenues in the second quarter of 2020 were negatively impacted by the COVID-19 pandemic and by general reversal of the inventory built by wholesalers and end customers in the first quarter of 2020. Total revenues also included $80.7 million in collaboration revenues from Ipsen, Takeda and Genentech. Our total operating expenses for the second quarter of 2020 were $183.9 million compared to $174.1 million in the first quarter of 2020. R&D expense was the primary driver of the increase in total operating expenses, which increased by approximately $13 million and was primarily related to increases in clinical trial expenses as we continue to invest and maximize the full clinical and commercial potential of cabozantinib. The increase in R&D expense was partially offset by a decrease in SG&A expenses. Provision for income taxes for the second quarter of 2020 was $13.9 million and our effective tax rate for the quarter was approximately 17.2% compared to $11.4 million and 19% for the first quarter of 2020. The company reported GAAP net income of $66.8 million, or $0.21 per share on a fully diluted basis for the second quarter of 2020. The company also reported non-GAAP net income of $79.4 million or $0.25 per share on a fully diluted basis. Non-GAAP net income excludes the impact of approximately $12.5 million of stock-based compensation expense net of the related income tax effect. Cash and investments increased by approximately $100 million during the quarter ended June 30, 2020 to over $1.5 billion. Now turning to our fiscal year 2020 financial guidance. While we recognize the impact of the COVID-19 pandemic is both fluid and difficult to predict, we have been able to continue to execute on our corporate goals and therefore we are updating the financial guidance we provided earlier this year. We're increasing our total revenue guidance, which we expect to be in the range of $900 million and $950 million due to higher milestones in R&D reimbursement revenues. Net product revenues are expected to be in the range of $725 million and $775 million. Cost of goods sold is expected to be between 4% and 5% of net product revenues. Research and development expenses are increasing due primarily to higher forecasted licensing expenses and are expected to be in the range of $500 million to $550 million, which includes non-cash expenses related to stock-based compensation of approximately $25 million. Selling, general and administrative expenses are increasing due primarily to incremental marketing costs, supporting the potential 9ER launch and are expected to be in the range of $250 million and $270 million, which includes non-cash expenses related to stock-based compensation of approximately $40 million. Guidance for the effective tax rate in 2020 is decreasing and is now expected to be between 17% and 19%. And finally, we're projecting cash and investments to be in the range of $1.5 billion and $1.6 billion. This cash and investments guidance does not include the impact of any potential new business development activities. With that, I'll turn the call over to Gisela.

Thank you, Chris. I'm pleased to provide an update on our cabozantinib regulatory and development program and progress of new compounds towards IND before handing over to Peter. I'll start with CheckMate 9ER. We've made a lot of progress since the positive top-line results were announced in late April for BMS and Exelixis. As you recall, this study demonstrated a significant benefit over the comparative sunitinib for all three efficacy endpoints, including overall survival, progression free survival and objective response rate. Additionally, the combination of cabozantinib at 40-milligram QD with nivolumab was generally well tolerated and associated with a low discontinuation rate. On the basis of these results, we have been working very productively with the BMS team and our partners at Ipsen and Takeda over the last few months on advancing the regulatory filing. And I'm happy to say we are very close to completing our activities towards the supplemental NDA filing for the combination of cabozantinib and nivolumab in the first line treatment of RCC. The filing is intended to occur concurrently with BMS’s filing of the sBLA. We are also looking forward to the presentation of the detailed results from this study and the presidential symposium at the upcoming virtual ESMO conference in late September 2020. Besides the progress on CheckMate 9ER, the ongoing Phase III program for cabozantinib has also made rapid progress. Despite the modest impact on our study from the COVID pandemic with temporary slowing of screening and enrollment of patients in March and April, we have continued our efficient execution of the COSMIC study and have also been able to start up the contract Phase III program with Genentech Roche. Regarding our COSMIC trials, COSMIC-311, the Phase III study in RAI-refractory differentiated thyroid cancer, reached its enrollment milestone of 100 patients in February of 2020. We are looking forward to the planned analysis of the co-primary endpoint of objective response rate in the second half of 2020. Additionally, enrollment continues to the planned completion of 300 patients to support the other primary endpoint of progression-free survival. Further, we have completed the global enrollment of COSMIC-312, our first line HCC study comparing cabozantinib with atezolizumab with sorafenib in previously untreated HCC patients. The only sites remaining open for patient screening and enrollment at this time are in China, where we aim to enroll the necessary patient number to enable local registration data providing. With enrollment in the Maine's Global Study completed, the study will now advance to its event-driven analysis. While enrollment in China is being executed separately. Based on current event rates, we anticipate achieving the required events in late 2020, early 2021, and expect top-line analysis to occur in the first half of 2021. We are tracking events for both PFS for the final PFS analysis and OEs for the planned first interim analysis closely in a blinded fashion and will provide more refined guidance once we get closer to the event number triggering analyses. Lastly, enrollment in the COSMIC-315 Phase III study in previously untreated patients with intermediate or poor risk RCC continues globally. We expect to complete enrollment in late 2020 or early 2021, and are looking forward to results of the event-driven analysis from the study when available in the 2022 time frame. Likewise, COSMIC-021, our large Phase Ib trial of cabozantinib and atezolizumab, continues to make progress. Importantly, the metastatic CRPC cohort 6, and non-small cell lung cancer cohort 7 and checkpoint inhibitor pretreated non-small cell lung cancer patients, have yielded encouraging results that were presented earlier in the year at ASCO GU and ASCO. These results have supported the initiation of our contact Phase III program with Genentech Roche, evaluating cabozantinib and atezolizumab in three indications. All three of the Phase III studies have now been initiated, including CONTACT-01 and checkpoint inhibitor pretreated non-small cell lung cancer. CONTACT-02 in Nobel hormonotherapy pretreated metastatic CRPC and CONTACT-03 in checkpoint inhibitor pretreated renal cell cancer. Also, COSMIC-0221 itself has made good enrollment progress, particularly in metastatic CRPC and non-small cell lung cancer. As a reminder, the metastatic CRPC cohort 6, which is close to completing enrollment, can support an accelerated approval path as discussed with the FDA. This will depend upon further results from cohort 6 and other MCRPC cohorts evaluating single-agent activity of cabozantinib and atezolizumab to address contribution of the components of the combination therapy. For non-small cell lung cancer cohort 7, evaluating the combination in checkpoint inhibitor pretreated patients and the corresponding single agent cabozantinib cohort, are also close to completing enrollment in the rating evaluation regarding potential further expansion. Looking back on this quarter, we are thrilled with the progress of the cabozantinib regulatory and development program and the level of execution by both our own teams and our clinical partners, who together have been able to make significant progress despite the challenging times and conditions around the world due to the global pandemic. Likewise, we are making good progress on various IND-enabling efforts as well as the XL092 program. For XL092, we expect to start evaluation of the combination with checkpoint inhibitors in the coming months. And for our IND candidates, we are working towards IND filing before the end of the year. And Peter will roll into more detail on these programs in a few moments. Finally, we are looking forward to the copresent NIB presentations at the fall conferences, especially ESMO that will include data sets in clear cell RCC and non clear cell RCC from COSMIC-021 as well as, of course, importantly, CheckMate 9ER. To close, I'd like to provide a quick regulatory update on cobimetinib. At the end of July 2020, the FDA approved the supplemental Biologics License Application submitted by Genentech for atezolizumab plus cobimetinib and vemurafenib for the treatment of BRAF basic mutation-positive advanced melanoma in previously untreated patients. The approval is based on positive results from IMspire150, a Phase III pivotal trial that demonstrated that adding atezolizumab to cobimetinib and vemurafenib helped to reduce the risk of disease worsening or death compared to placebo plus cobimetinib and vemurafenib. This is the second FDA approval for a regimen containing cobimetinib, which we discovered and that is being developed by Genentech as part of a worldwide collaboration agreement between the two companies. With that, I will hand the call over to Peter.

Thank you, Gisela. So I'm happy to provide a brief update on our preclinical development and pipeline expansion assets. First, after a three-month hiatus due to COVID-19, we have partially resumed work at our discovery laboratories now immediately following stringent protocols to protect our employees. It's exciting to see the flow of data resume, and we are once again making progress on our early stage discovery programs, and I'd like to take this opportunity to thank all of the discovery team members for making this happen. Work at our partners, particularly Invenra, Aurigene and Iconic, has continued to advance as has preclinical development work at our network of CROS. As a result, we now have the opportunity to file up to four INDs in the next nine months. As previously discussed, we may file up to three of these INDs this year, a CDK7 inhibitor from our origin collaboration, a TAM kinase focused TKI XL265 from our internal laboratories and a tissue factor targeting antibody drug conjugate from an Iconic collaboration. We have now advanced an additional compound from Aurigene with a novel mechanism of action into preclinical development, which could provide an additional IND in the first half of next year. With respect to potential upcoming presentations, we plan to present data on XL092, our next-generation met VEGFR inhibitor that is currently in Phase I trials later this year. We also plan to present data on three of our preclinical assets at scientific conferences this year, specifically the CDK7 inhibitor, the tissue factor ADC and our lead program with Invenra, which is a bispecific antibody targeting PDL1 and CD47. We'll be happy to provide more details as we get clarity on abstract acceptances. We've had a very busy quarter from a business development perspective and have a number of advancing discussions. We continue to assess opportunities in both the small molecule and biologics space, which we find scientifically compelling and where we see a clear path forward for us to effectively develop and commercialize with an emphasis on clinical or near clinical stage programs. In addition, we're exploring a variety of platforms that have the potential to provide a flow of novel therapeutics going forward and that complement our internal discovery capabilities. We look forward to providing additional updates on these BD discussions as they come to fruition. And with that, I'll turn the call over to P.J.

Thank you, Peter. I'm pleased to review the commercial performance of CABOMETYX for the second quarter 2020. CABOMETYX continues to be the number one prescribed single agent TKI in RCC, which is notable in the context of a competitive market, which now includes three first line immune checkpoint inhibitor or ICI combinations. The business remained largely stable in Q2 despite the COVID-19 pandemic. As has been the case with other biopharma companies in Q2, we did see a few trends that we believe reflect the impact of the pandemic. Demand decreased modestly in Q2 as a result of the pandemic. And as Chris mentioned, inventory was built in Q1, both by the wholesalers as well as the end customers, and this trend generally reversed in Q2. Also, in the weeks following initial shelter in place orders at the beginning of the quarter, there was a decrease in new patient starts on CABOMETYX therapy with a nater in May. This trend reversed in June and has since remained stable. The impact on new patient prescription dynamics was largely a market phenomenon as it was seen across the market basket. We believe this may reflect obstacles that the pandemic initially created to patients’ ability to access the health care system. Nevertheless, with regards to competition and market share, we are pleased with the performance of CABOMETYX in Q2. Market share remained consistent in our key segments in both RCC and HCC. Cabo Trx share was stable at 30% in Q2 relative to Q1, although there was a small decline in the overall TKI TRx market basket in Q2. Our team continues to be focused on compliantly supporting the health care providers who treat CABOMETYX patients since the pandemic has taken hold in the U.S. Throughout the quarter, we did this through virtual speaker programs, phone calls and digital tactics. This has maintained our share of voice for CABOMETYX relative to our competitors. At the end of the quarter, the field-facing teams were able to resume in-person interactions with necessary safety precautions on a limited basis, if appropriate, relative to local shelter in place guidance, conditions and customer protocols. In looking to the future of the cabozantinib franchise, we are excited by the recent outcome of the CheckMate 9ER study as we believe that these results, pending regulatory approval, may provide us with the opportunity to grow CABOMETYX market share and increase duration of therapy in the first line. The ICI combination opportunity in the first-line setting is large, with ICI combination therapy consisting of approximately 75% of the market share in that setting. As we have now been in this market for over four years, our team has deep knowledge and experience in RCC. Again, assuming regulatory approval of the cabo/nivo combination, we look forward to the opportunity to educate physicians on this data at the appropriate time so that more patients have the opportunity to benefit from CABOMETYX therapy in the first-line setting. The feedback that we have received from KOLs on the 9ER top-line results has been very positive with regards to efficacy, safety and tolerability of the cabo/nivo doublet, and we are confident in our ability to compete effectively in the first-line setting with this data in hand. Our team is highly motivated and focused on launch preparation, and we will be fully launch-ready by the end of August. At the same time as we launch CABOMETYX in combination in first line, there will continue to be patients progressing from ICI-based therapy in the second line that will be eligible for CABOMETYX monotherapy. We currently continue to capture a very high percentage of that patient population and pending regulatory approval for 9ER, we believe, CABOMETYX will have great potential to grow in the first line in terms of both market share and duration, while simultaneously growing monotherapy share in the second line. With regards to HCC, the U.S. CABOMETYX business remained stable. As anticipated, the combination of atezolizumab and bevacizumab received approval in the first-line HCC in Q2 and early market data show fast uptake of the regime. The HCC landscape will likely evolve in a similar fashion to what we saw in the RCC market, with ICI combination therapy moving to the front line, which could be an important new standard of care for treatment-naive liver cancer patients and serve to expand the first-line market. We anticipate this will, in turn, increase TKI monotherapy utilization in the second-line setting, as second-line ICI monotherapy use decreases over time. Turning to a different ICI combination partner, we look forward to further ICI combination data with cabo in HCC to build on the CheckMate 040 data presented earlier this year. COSMIC-312 will provide the next Phase III readout of CABOMETYX in combination with atezolizumab and represents another potential growth opportunity for the franchise. Additionally, based on the encouraging cabozantinib-atezolizumab combination data that has been highlighted in recent presentations in CRPC and NSCLC and previously, in RCC, longer-term growth for cabo could be driven by the next wave of pivotal trials including the contact studies that were recently announced. Additionally, in first line RCC, the COSMIC-313 study, investigating the first triplet in RCC, cabo/nivo/ipi, has the potential to provide further growth. This broad development program expands the potential of cabo to benefit many more patients across different solid tumor malignancies and in multiple ICI combinations. We strongly believe that many more eligible patients could benefit from CABOMETYX. CABOMETYX remains the number one prescribed, single-agent TKI in RCC, and we look forward to building on this momentum in RCC, HCC and other potential future indications, such as prostate and lung, as our development program evaluating cabozantinib in combination with immune checkpoint inhibitors expands and progresses. The exciting data from 9ER is the first of many Phase 3 combination trials to readout, and we look forward to the opportunity to bring this combination to market as we continue to build the cabo franchise. Our team remains highly focused and motivated to compete every day to bring the benefit of CABOMETYX to all eligible patients, as we continue to build the franchise and maximize its clinical and commercial potential. And with that, I’ll turn the call back over to Mike.

All right. Thanks, P.J. As I said in today’s intro, we had a strong second quarter and are working to build on the momentum from the first half of 2020 over a range of commercial, clinical and discovery opportunities. At the same time, as we acknowledged on the Q1 call, we recognize the risk to our business should the pandemic continue to grow in severity, as we’ve sadly seen over the last several months. We will continue to push forward in these challenging times with employee and patient health and safety always our highest priority. We expect a data-rich second half of 2020, and are thrilled to have the complete 9ER dataset presented at ESMO. Most importantly, we are focused on building on CheckMate 9ER success, as we advance additional indications for cabo and investigate a diverse portfolio of next-generation Exelixis cancer medicines. I’ll close by thanking everyone at Exelixis for their efforts over the quarter under, obviously, challenging conditions. The majority of our team has been working from home for almost five months now and continues to excel across all components of our business with great teamwork, skill and energy. The entire Exelixis team is working as one in making every day count as we discover, develop and commercialize the next-generation of our medicines for cancer patients in need of better and more effective therapies. We look forward to updating you on our progress in the future. Thank you for your continued support and interest in Exelixis, and we’re happy to now open the call for questions.

Our first question comes from Yaron Werber from Cowen. Your line is now open.

Hi, this is Leo, on behalf of Yaron Werber. Congrats on the great quarter. And thanks for taking our questions. I just have one question regarding the first-line RCC competitive dynamics. Can you comment on – you mentioned that 75% of the market share is grabbed by the IO combos. Can you specify the split between IO/IO and IO/TKI? I’m just wondering because, I guess, you guys are trying to share data in all risk categories in first-line RCC. Maybe you can – can you comment on the favorable risk categories, how the 9ER were differentiated in that segment?

Yes. Hi Leo, this is P.J. Thank you for the question. A few comments there. As you did mention, yes, the first-line ICI combination market share is approximately 75%, and it’s roughly half split between ICI/TKI and ICI or IO/IO. That said, I think, as I mentioned, we’re really pleased with and confident in the 9ER data. As we’ve talked about the study design previously, it’s really a broadly applicable dataset across clinical risk categories, both – all favorable, intermediate and poor risk. And really, what we see is utilization of both of those IO combinations in all of those. And we’re going to clearly position this data broadly and think it really can have impact for all first-line RCC patients. We’re really excited to be able to – upon approval share that data in great detail with our customers and with oncologists.

Thank you. Our next question comes from the line of Asthika Goonewardene from Truist Securities. Your line is now open.

Hi guys, thank you for taking my questions. Chris, I’d like to start with you, please. Just checking, what was the gross to net for cabo in the second quarter? I’m just wondering if there’s a little less bounce back from what we customarily know is a weaker 1Q? And then I got a couple of others.

Yes. So – okay. Thanks, Asthika. This is Chris. So it’s in the 22% range for the quarter, slightly higher in the first quarter because of the Medicare Part D. As I said during the fourth quarter call in February, we were – our expectation for gross to net for the year is between 23% and 24% as we look to the future here.

Got it, thank you. And then we have atezo/bev in HCC first line. I’m wondering, in general, what are you guys looking for in that launch to, I guess, evaluate if the HCC market is evolving like RCC did? And then I’ve got one final question after that.

Yes. Hi Asthika, this is P.J. Thanks for the question. With regards to HCC, I think what we’ve talked about is primarily with the data and now the subsequent approval in May of atezo/bev, we anticipate and are frankly beginning to see that combination move quickly into the first-line setting in HCC. So what we think will happen is ICI combination therapy will become the standard of care in the first-line setting, and that will do a few things that will potentially expand the patient pool of patients in the first-line, who are able to receive a systemic therapy relative to other local regional therapies in HCC. So we would look forward with appropriate results from the COSMIC-312 study to really being able to compete in that large and growing market. Also, we see then the second-line setting in HCC as I/O, which has about 50% share the last few quarters in second line that will move to the first line and create more opportunity for TKI monotherapy in the second line, which we think CABOMETYX is really well positioned to compete for with regards to our broad data and overall survival in that setting. So that’s kind of how we view HCC evolving over the next couple of years.

Great, thank you. And then just want to take a minute. Guys, would you mind walking us through some of the ad board feedback you got at ASCO for cohort 7.

You’re talking about the lung cohort from the 021 data that was presented at ASCO, KOL feedback on that?

Yes, sure. Gisela, you want to take that one.

Sure, absolutely. Thank you for the question. The lung cohort, just to remind everybody, was in checkpoint inhibitor and chemotherapy pretreated non-small cell lung cancer patients. This was a cohort from the COSMIC-021 study, where we are evaluating the combination of cabozantinib and atezolizumab. Importantly, in this quite pretreated patient population with the combination therapy, a 27% objective response rate. These are confirmed objective responses that were quite durable in this setting. I think the feedback was certainly that these are encouraging data and the various KOLs that we’ve received feedback from were very intrigued and interested in seeing more from this cohort. We have since expanded the cohort by another 50 patients and are close to completing enrollment in that expansion cohort. We’re also evaluating single-agent cabozantinib to address the question of contribution of components in the framework of the COSMIC-021 study. So I look forward to providing more information when we have it.

Great. Thanks for taking my questions, guys.

Thank you, Asthika.

Thank you. Our next question comes from the line of Peter Lawson from Barclays. Your line is now open.

Hi, thanks for taking my questions. Just on the cabo 9ER data at ESMO, are there any specific aspects of that data that you’d point us to help kind of highlight that differentiation? And are there particular risk groups that you go after initially?

Hey Peter, it’s Mike. Yes, thanks for the question. Look, all the data is important, and I would think we believe that it will be a very fulsome presentation, and you’ll get a very good sense across literally every data point for how it stacks up as a novel combination in the first-line setting and you’ll obviously want them do your normal comparisons that you guys normally do. So – but it’s – I would look at all the data. It’s important to take the totality of that data in the context of its ability to have an impact in that population. So we’re very excited about it. And certainly, the data we had in the 8-K back in April, I think, is a good segue for what you can expect. So stay tuned.

Got you. And are there particular subgroups that you go after initially where you feel they could be easier to penetrate?

Yes. I think based – as P.J. said previously, it’s based on the data we’re going to target all patients in the first-line setting. We think the data is that strong, and we think it’s a very competitive offering.

Great, thank you. And then just picking up on some of that P.J. mentioned. The decline in the TK market overall in Q2, I think, you mentioned, do you think it’s a temporary issue? Is it COVID related? Or is that structural? And then is there any COVID impact in 2Q you can talk through and expectations for 3Q?

Yes. Hi Peter, this is P.J. So a couple of those things. I won’t – first of all, I won’t foreshadow Q3 since we are talking about Q2 here today. What I would say is with regards to Q2 and the historical prescription – total prescription TRx data, there’s always some variation there. It was down 2% for the market basket quarter-over-quarter, but what we really see is Q1 was relatively high. So even though it was down, it really sort of returns to what were the standard levels in the last couple of quarters, the prior year. So I’d say generally, it’s stable and don’t really anticipate any absence of a crystal ball, obviously, any long-term structural impact due to COVID, because these are very sick patients with metastatic disease.

Got you. And then for cabo in 2Q, what was the impact, do you think, from COVID?

Yes. So what we saw in TRx, it was the same as the market, down slightly, 2% there. And we did see sort of in the initial shelter in place, just a decline in new prescriptions, I think, as folks were not going to their health care providers, which is really something we’ve heard across earnings discussions in the industry, and we saw that recover into June. So really, some small impacts, but as I mentioned and generally perceived, the business to be stable, and all the metrics kind of point to that.

Got you. Okay. Thank you so much.

Thanks, Peter.

Thank you. Our next question comes from the line of Jason Gerberry from Bank of America. Your line is now open.

Hey, guys. Thanks for taking the questions. Just a few for me. First, I was curious, you guys heard Roche’s comments on 2Q call about frontline HCC being about a $300 million to $400 million market opportunity in the United States. And it struck me as a little bit low, but perhaps there are a lot of factors that can go into a number like that, like proportion of patients moving over to systemic therapy versus TACE, the IMbrave150 trial inclusion criteria, the narrowness of that. So just curious if you had any thoughts regarding that number if you fundamentally think it could be a much bigger market opportunity than that? And then my second question, in terms of the cabo patent dispute, I’m curious, a number of larger generic companies have sought out patent protection around alternative cabo salt forms. And so those companies have not been able to file generic applications for whatever reason. And I’m curious if you guys have any views regarding those salt forms if they ultimately inherently lack the necessary stability to not degrade like cabo and its N1 form – or N2 form, I should say, and/or bioavailability characteristics? That would be really helpful to understand. Thanks.

Yes, Jason, thanks. This is Mike. We’ll have P.J. answer the first question, and I’ll provide some commentary on the second.

Yes. Thanks, Jason, for the question. So I’ll comment on the HCC opportunity. I wouldn’t want to opine on Roche’s guidance in one way or another with regards to that opportunity, but what I would say is in the U.S., right, it’s a pretty large market, ballpark of 22,000, 23,000 patients, looking a couple of years forward, in the United States that will have metastatic disease there. As I mentioned, we do see that amount of patients if better therapies move into that setting. We see that increasing gradually over time. With regards to obviously, revenue opportunities, a lot of things go into that, the number of patients, the duration of therapy, the price, et cetera. But as we view it, we’ll certainly have a compelling story presuming positive data in the 312 study as potentially the first IO/TKI in that marketplace. So we’re certainly – would be excited about that and think we have the opportunity to help a large amount of patients that have significant growth for the cabo franchise there.

Okay. Good. Thank you. In terms of your question about other salt forms relative to ANDA filers, certainly, in a statement of the obvious, there’s many factors that go into play in selecting a salt form for large-scale utilization scale up and then clinical and commercial efforts. So there are a lot of tests that go into that in picking the right salt form, I certainly don’t want to opine on other salt forms out there right now for all the obvious reasons as well. But needless to say, we chose the malate for a reason. We chose the polymorph that we did for a reason, and we’ve been obviously, very successful at both scaling that up and then commercializing that form. So full steam ahead there.

Great. Thanks guys.

You bet. Jason, thank you.

Thank you. Our next question comes from the line of Michael Schmidt from Guggenheim. Your line is now open.

Hey, guys. Thanks for taking my questions. I had a few. Maybe starting out with one for Gisela about the COSMIC-312 study. I think you talked about enrollment and some of the mechanics around reaching the required number of PFS and OS events. I think in the past, you’ve talked about a potential interim analysis based on response rate? I was wondering if that’s still planned? And if you could provide any additional information on that front.

Great. Thank you, Michael. So COSMIC-312 has always been designed with the co-primary endpoints of PFS and OS. There are no interim analysis planned for PFS or for that matter, to your question, objective response rate. However, for overall survival, there are interim analysis planned in the statistical analysis plan. And so we’re tracking those events, of course, and now that the study is fully enrolled and looking at both PFS and OS events, tracking these events towards final analysis for the former PFS and for the first interim analysis for OS. And that is ongoing.

Okay, great. Understood. And then on DTC, COSMIC-311. So that’s another near-term thing that’s coming up. Could you just help us maybe understand some of the assumptions that you’ve made in kind of bracketing the market potential in that particular indication?

Yes – I’m so sorry.

No, Gisela, go ahead. Why don’t you start and then P.J. can pick up from there.

Yes, I’m happy to start just with the basic trial design. It’s a randomized placebo-controlled study in patients who have differentiated thyroid cancer, who have received radioiodine therapy and failed that and then also have received prior VEGFR-targeting therapy. So it’s a rather pretreated patient population. The study is designed with co-primary endpoints of objective response rate and progression-free survival. As we’ve said, the objective response rate analysis will be based upon the first 100 patients enrolled and that has been achieved earlier in the year in February. We’re looking to conduct the analysis for this co-primary endpoint of objective response rate in the second half, and the second endpoint is progression-free survival amongst all randomized patients. So that’s the basic trial design, and I’ll hand over to P.J.

Yes. Hi, Michael. I’ll just – what I’d add to that is there’s quite a number of differentiated thyroid cancer patients, I think, about over 50,000 per year in the U.S. This trial obviously looks at metastatic RAI-refractory patients, as Gisela said, who had previously received a systemic therapy or a TKI. So taking into account that part of the population, what I’d say, importantly, though, is there’s really no randomized data or approved agent for that setting. So certainly an opportunity to help patients in that area who’ve progressed on prior therapy. And also an opportunity to really sort of utilize and draw on the historical experience Exelixis has in thyroid cancer as a company to help those patients. It tends to be a malignancy that patients are on therapy for a little bit longer as well. So I would frame it that way.

Okay, great. And then on XL092, I guess, what should expectations be here with respect to this upcoming data presentation? And maybe talk about the choice of the expansion cohorts, the selection of the tumor types to be included in those, is that based on clinical data coming out of the Phase I study or maybe more related to just a mechanistic hypothesis behind the mechanism of XL092.

Yes. Why don’t we answer that question with Peter first and then Gisela after.

Yes, this is Peter. Yes, with respect to upcoming publication, as I said, we have submitted an abstract to a major medical meeting. So we’re looking forward to providing an update and substantial data on XL092 later in the year. I don’t really want to foreshadow what exactly that’s going to be. We haven’t finalized the presentation at this point. But as we get abstract acceptances, we’ll be happy to provide details of when and where the presentation will happen.

Okay.

I am sorry.

No, I am sorry, go ahead, Gisela.

Okay. And just a couple of words on the clinical development approach. Of course, we are making progress in the dose escalation phase, single-agent evaluation, looking forward to combination approaches with checkpoint inhibitors in the first instance for XL092. As we are looking, of course, at development opportunities, we’ve learned a lot and have certainly a large body of experience based upon cabozantinib and XL092 being a next-generation VEGFR MET and TAM family kinase inhibitor, we intend to apply these learnings and begin, of course, with the expansion cohorts in the various different indications. But also looking at the data emerging from the broad cabozantinib program, such as in the 021 study with its 20 cohorts and – but also our IST and CTEP program, which has yielded a lot of interesting information. So certainly looking forward to providing more updates here and looking forward to moving XL092 forward rapidly into late-stage development.

Okay, thanks. And then one last, if I may. I think I heard P.J. make some comments around business development mentioning interest in new technology platforms. And I was just wondering if you could maybe help clarify if you’re actually thinking about acquiring a new platform technology? Or if we should think about this more along the lines of partnership or R&D collaboration or something along those lines?

Yes. Michael, that was Peter with his very distinguished accent. So I’ll let him further opine upon that question. Peter, go ahead.

Yes, this is Peter. Yes, it was in my section. Look, we’ve been looking for technologies that will complement what we do internally. I think we do what we do internally very well. We’ve got a big compound library. We’re running high-throughput screening again. We’ve got obviously a deep background in medicinal chemistry. So we’re able to interrogate a reasonably broad range of targets. But there were technologies and approaches out there that really broaden the target landscape and provide differentiated therapeutic modalities. I think that’s why from a partnership, partnering BD point of view, we’re looking very extensively at both biologics of various kinds, the Iconic T2 factor targeting ADC, hopefully, will be our first biologics IND later in the year. So we’re continuing to look broadly and that can be either individual assets or it can be technologies that might be best done in collaboration or partnership rather than being brought in-house. So obviously, the way in which those things will transpire is very much a case-by-case basis.

Okay, great. Thanks for clarifying.

Thank you. Our next question comes from the line of Andy Hsieh from William Blair. Your line is now open.

Great, thanks. Thanks for taking my questions and hope everybody is doing well and staying healthy at Exelixis. Interested in your interpretation in terms of pembro/lenvatinib activity in checkpoint experienced patients in RCC. I think it showed over 50% response rate at ASCO. So maybe help us put that in context, especially, I think you and Roche just started the Phase III CONTACT-03 study in a very similar patient population.

Yes, Andy, it’s Mike. Thanks for the question. I’ll try and give you some perspective. Any single arm, non-randomized combination study is always a bit challenging to interpret in isolation. There’s lots of – even with cabo single-agent data from numerous ISTs that has cabo showing a response rate by itself in the 40% to 50% range based upon different second-line populations post IO. So it’s a challenging – certainly interesting data. There’s lots of interesting data across the board out there right now in the second-line setting. I think the commitment that we and Roche have made relative to CONTACT-03, looking at a randomized study of cabo/atezo versus cabo, in that setting, is the right experiment to do. You have a randomized control arm with a single agent that allows you to understand the contribution of components and get a very clear picture on what the combination does. What retreatment with IO does on top of a really good TKI versus the TKI by itself? So we think that’s the right study to do. We’re there to be working with Roche on that, and obviously, that’s up and running now, and hopefully, we’ll enroll fast.

And just to follow-up, I think, one of the unique factors of that study is the non-clear cell histology that you’re enrolling. So if you look at a lot of guidelines, as sunitinib is probably the only recommended option. So just kind of help us think about by enrolling that patient, the strategy going forward to potentially expand into the non clear cell histology.

That’s a great question I’m going to put that one over to Gisela to opine upon. Gisela?

Absolutely, thank you for the question. So yes, including both clear cell and non-clear cell patients in this CONTACT-03 study. We've, of course, collected data and information and looking forward to the presentations at ESMO of the combination of cabo and atezo in this patient population was a dedicated cohort of non clear cell carcinoma patients in this study. So that information certainly also influenced the willingness to exclude a little bit broader patient population and this randomized study. So certainly looking forward to data from the trial.

Okay. Thanks for that insight. And may be one for Peter, so the company is advancing two TKIs right 092 and 265. So beyond just the differences in target profile, one being probably more MET focus and TAM focus. Just help us understand the strategic positioning in terms of advancing two TKIs in parallel?

So this will probably goes back, Andy, to, obviously, our wealth of experience with cabozantinib, both clinically and preclinically and the I think, expanding and very encouraging data sets for that compound, both as a single agent and increasingly in combination with IO. So we felt it made a lot of sense to go back to that well and investigate ex generation variance of cabo, and we had a number of thoughts and ideas about how we might tweak or change the profile. 092 is the first of those. It is met VEGF, as we've discussed, more data on that compound will be published later in the year. XL265 is much more met 10-K focused, so less significantly less VEGF. So we'll see how the preclinical data for that emerge, and that will drive, in a large extent where those things go clinically. But it's such a – it's such been – I would say, productive and interesting area of that. We want to make sure we have the ground covered there. So there may be more variance to come. We're still working in the area, so we'll see.

Okay, nice. It’s an interesting thing. Thanks for sharing that perspective. Cool. Thanks for answering all the questions and congratulations on the progress. Look forward to the 9ER presentation absolutely.

Great, Andy. Thank you.

Thank you. Our next question comes from the line of Kennen MacKay from RBC Capital Markets. Your line is now open.

Thank you for taking my questions. I have a quick one regarding bladder cancer. The treatment landscape has changed significantly and continues to evolve. I would like to hear your thoughts on possibly evaluating a cabo cohort that combines cabo with a checkpoint in some form, whether it’s part of COSMIC or another setup.

Yes Gisela go ahead please.

Sure. Well, as you stated, bladder cancer is certainly an evolving landscape with new opportunities and new compounds being introduced and treatment strategies really shifting overtime. We’re certainly monitoring that field very, very closely. We have seen a single-agent activity with cabo. We're seeing good activity with checkpoint inhibitors and such experience has been presented at the recent ASCO GU conference in previously treated patients with bladder cancer. We continue to evaluate the opportunities here and are certainly thinking about the combinations with different compounds that play important roles in the field. That could be with cabo, but it could importantly also be with XL092. So that is certainly on the list of things to evaluate and potentially drive forward in development.

Thank you. Our next question comes from the line of Stephen Willey from Stifel. Your line is now open.

Yes good afternoon. Thanks for taking the questions. Just in terms of the comments regarding being launch-ready, I guess, to commercialize 9ER by the end of August. Is that in anticipation of maybe getting some kind of NCCN compendia listing prior to a formal approval?

Yes, hi Stephen this is P.J. I think we've been doing a heck of a lot of work since we've seen the results of 9ER to get ready for the launch. I wouldn't comment or speculate on what compendia or NCCN do with that. But obviously, it's really important for us to be ready to go to just be ready to educate physicians and be launch-ready to bring that benefit of CABOMETYX to patients as soon as possible, pending approval because we really view that as an important opportunity to drive incremental market share broadly in the first-line setting as well as potentially duration beyond that. So we just want to be ready to go.

Okay. And I guess when we saw the most recent update of the KEYNOTE-426 data, there was some deterioration in the event-driven hazard ratios. And so I guess, given that, how do you think the presentation of the initial data plays out with prescribers, given, I guess, the historical context around 426? And does that almost make subsequent presentations of 9ER that much more important or potentially that much more meaningful?

Yes, Steve. This is Mike. All data is important all the times. Certainly, that's been magnified in the renal area with follow-up looks at data for a variety of different trials, combinations, et cetera, over the last few years. I wouldn't want to speculate on how 9ER data might evolve over time, but certainly, there's, I think, very solid data. I think, as I mentioned earlier in the Q&A, the totality of that data needs to be looked at very carefully in the context of the potential benefit cabo can bring in combination with nivo across a broad patient population. So – but look, it's data is data, and we continue to get data. We'll continue to look at new data and evolve the story as the data evolves.

All right. And then maybe just lastly follow-up on the BD side, I think, you guys have kind of characterized your approach kind of being a bit agnostic and may be a little bit value-focused. And you now have a stable of preclinical assets, a number of them that are going to be ready to enter the clinic care over the next, I guess, nine months or so. And I guess, from a portfolio management perspective, do you kind of feel like you need to go out and maybe purposely shop a little bit more within kind of that mid-tier development space just to kind of fill the gap between some of the earlier preclinicals and the commercial drugs that you have? Or do you kind of feel that that will all kind of take care of themselves?

So we're certainly very interested in doing a lot of work, looking at, I would say, clinical-stage assets right now. That's been a focus of ours for a while. And the question always comes down to data, existing data, the potential to generate clinically differentiating data that can drive upsized commercial opportunities as we've seen with cabo in the past. So we have a very clear lens for how we want to look at clinical data and look at opportunities that are both within indications that we're currently pursuing and outside of those indications. So there's certainly a large portfolio of both clinical and preclinical assets that we're currently investigating, to say appropriately. And I think, as Peter said very eloquently, once we complete those transactions, we'll be talking more about why we've done? What we've done? In the themes and the kind of the way we're looking at binning these approaches together in terms of our internal platform, the molecules that we've got, indications that we've got and maybe most importantly the vertical integration that we worked so hard to build over the last few years. So, stay tuned. Obviously, I don't want to say a lot of specifics right now, except to say that we've got a big, big effort here, and I'm hoping that it will come to fruition in the short-term.

Okay. Thanks, Steve.

Thank you. Our next question comes from the line of George Farmer from BMO Capital Market. Your line is now open.

Hi, and thanks for taking the question. Could you comment a little bit on infector ADC with iconic that we'll be going into the clinic shortly? Seattle Genetics has reported some positive data with its ADC tissue factor targeting agent. Are you thinking about cervical cancer, ovarian cancer or do you go with an Alzheimer's population prior to picking your indication?

Yes. Thanks George. Peter, want to take that one?

Yes. So, I mean you're correct, right? This is – there is clinical proof-of-concept for tissue factor targeting ADCs. The iconic version of this was compelling to us because of some differentiation that it provided. It could be premature for me to speculate or to discuss what our clinical strategy might be at this point. But again, later in the year, we anticipate presenting data, preclinical data, obviously, on this agent at a meeting when we have that information. We'll certainly let you know. We're currently on track, still file the IND this year. So hopefully, that will come to fruition.

Yes. George, this is Chris. So the current revenue guidance of $725 million to $775 million does not include 9ER, an assumption of 9ER in our net product revenue for the year.

Thank you. Our next question comes from the line of Paul Choi from Goldman Sachs. Your line is now open.

Thank you. Good afternoon, everyone, and thanks for taking our questions. Two quick ones for me. First, on the CONTACT-01 trial, the inclusion/exclusion criteria doesn't between non-squamous and squamous patients. So can you maybe help us understand the decision to include squamous? And then does the statistical analysis assume an analysis of the entire population? Or are you going to treat that separately between the squamous and non-squamous populations? And then second, on the XL092 plus checkpoint inhibitor combinations that Peter mentioned in slides. Can you maybe just elaborate on what sort of patients you'll initially be targeting there? Will that be a basket? Or are you primarily describing testing it in healthy volunteers? Thank you.

Yes. Happy too, thank you. So your first question regarding CONTACT-01 and checkpoint inhibitor pretreated non-small cell lung cancer. Of course, there's an unmet medical need for both squamous and non-squamous cell histologies. And so we decided to go forward with both - include both strategies. The assumptions around both are integrated, of course, in the protocol that outcomes were similar in various checkpoint inhibitor trials. So regarding the analysis, of course, these histologies are going to be integrated in the trial as one thinks about subset analyses and stratification and so on. So that's the plan and as it is going forward with the study. And your second question, I'm sorry, I forgot now. I haven't taken a note of it. Go ahead.

Sure. It's just – with regard to the testing of the XL092 plus checkpoint inhibitor combinations, were you referencing testing in healthy volunteers? Or if not, what sort of patients are you considering initially for the combination? Thank you.

Sure. So we are not looking to test the combination in healthy volunteers. The plan is really to evaluate the appropriate dose in patients with advanced malignancies. And then expand into expansion cohorts that are more histology specific and so this will be including patients with RCC or CRPC and other cancer types. So certainly building on the experience that we have gathered in our cabozantinib development program.

Thank you. Our next question comes from the line of Jeff Hung from Morgan Stanley. Your line is now open.

Hey, thanks for taking my question. Two quick ones actually. Just to clarify on stable new patient starts. Can you provide more color on where those are relative to earlier in the year? Have you returned to pre-COVID levels? And then I have a follow-up.

Oh, yes. Thanks Jeff for the question. It’s P.J. Yes, what we'd say is with regard to that, we did see, and I think similar to the market basket, as well as other disease areas, a bit of a drop-off in new patient starts that nater in May. And then recover to sort of a standard level that we've been seeing for sort of quarters on the whole in June. So we've seen that kind of stabilize and, as I mentioned, thought it was really driven by more patient access to the health care system generally being really stressed during that sort of six to eight-week period in late March into early May.

Okay. Thanks. And then I believe previously, the 312 data were expected by year-end and now it's first half 2021. Is this change more from enrollment impact from COVID? Or is it too early to think that events are taking longer than expected? Thank you.

Yes, Gisela, go ahead, please? Sure. Well, thanks you for the question. And as we've stated earlier on in the call, the study has now completed global enrollment, and we're very pleased with the progress. The COVID impact was really very modest and was more early in the year in March and April, where we saw some impact on patient screening and enrollment that has quickly reversed. Enabling us to complete enrollment in the global study, with that now, we are tracking events very closely, as I said earlier, for both PFS and OS events now. We’re expecting now for the current projections that we would achieve the event towards the end of 2020 or early 2021. That would lead us to a top-line data in the first half of 2021. And so that is really a very similar situation as we have just a little while back, step through the CheckMate 9ER analyses that followed a similar part. Certainly looking forward to providing more granularity as we accumulate more events and have more precise estimates.

Thanks for clarifying.

Thank you for your participation today. There are no further questions. This concludes today's conference call. Thank you for participating. You may now disconnect.