Exelixis, Inc. Q3 FY2021 Earnings Call

Good day, ladies and gentlemen, and welcome to Exelixis Third Quarter 2021 Financial Results Conference Call. My name is Jeff 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, Jeff, and thank you all for joining us for the Exelixis third quarter 2021 financial results conference call. Joining me on today's call are Mike Morrissey, our President and CEO; Chris Senner, our Chief Financial Officer; P.J. Haley, our Executive Vice President of Commercial; and Peter Lamb, our Chief Scientific Officer who will together review our progress for the third quarter 2021 ended September 30, 2021. 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. 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 cost associated with discovery, product development, business development and commercialization activities. And with that, I will turn the call over to Mike.

All right. Thank you, Susan, and thanks to everyone for joining us on the call today. Exelixis had a strong third quarter across all components of our business as CABOMETYX demand and market share grew in the face of increased competition. At the same time, we advanced our pipeline of promising early-stage programs with a new IND and additional collaboration for an exciting target in the RNA sensing pathway. On the commercial front, CABOMETYX maintained its status as the leading TKI for RCC in Q3. We saw a strong demand for the CABOMETYX nivolumab combination across all segments of the first-line RCC market, including continued NRX and TRX growth. Despite some quarter-to-quarter fluctuations, we are pleased to see CABOMETYX's net product revenue in the third quarter of 2021 maintain significant momentum with 63% year-over-year growth compared to the same period in 2020. To expand this further, three factors converged to impact the second quarter 2021 CABOMETYX revenues. First is significant growth in demand, following the success of the 9ER launch; second an increase in inventory, reflecting the growing demand seen throughout the first half of 2021; and third, clinical trial competitor sales. While third quarter CABOMETYX demand continued to grow in the face of increased competition, the latter two factors did not occur to a significant extent in Q3. Looking ahead, we expect Cabo to achieve well in excess of $1 billion in U.S. revenue for the full year 2021. And our goal remains to exit 2022 with a $1.5 billion annualized run rate for RCC in the U.S. Our progress in 2021 is putting us in a good position to achieve this goal. Exelixis has also advanced key 2021 regulatory development and discovery activities in Q3. We were thrilled with the early approval of CABOMETYX in second-line DTC and excited to bring this new treatment option to prescribing physicians and patients to treat this indication for which no standard-of-care previously existed. The abstract for the Cabo, which has a doublet in first HCC from COSMIC-312 was accepted for presentation at the ESMO Asia Virtual Oncology Week Congress during the virtual plenary session on Saturday, November 20th. Based on recent feedback from the FDA, we plan to file the COSMIC-312 sNDA in early 2022 once the final OS data are available. In regard to late-stage development, the full portfolio of COSMIC and CONTACT trials with cabozantinib ICI combinations continues to advance. In particular, the CONTACT-01 and CONTACT-03 studies in forms of non-small cell lung cancer and renal cell carcinoma, respectively, are nearing full enrollment. Top-line results for COSMIC-313, which is evaluating the cabo/nivo IPI triplet in previously untreated intermediate or poor risk RCC are now expected in the first half of 2022, based on current event rates. Our early clinical pipeline is advancing as well, with significant progress for XL092, XL102 and XB002, and we expect to share initial clinical updates for each program over the course of 2022. Since reinitiating our early-stage pipeline build-up in 2017, the Exelixis discovery, business development and non-clinical teams have seamlessly integrated their work streams to pursue compelling opportunities across small molecules and biologics with the aim of growing our clinical pipeline, most recently exemplified by our new IND filing for XL114, and the collaboration with STORM Therapeutics. So, with that, please see our press release issued an hour ago for a full Q3 financial results and an extensive list of our corporate milestones achieved in the quarter. I'll now turn the call over to Chris, who will review our third quarter 2021 financial results. Chris?

Thanks Mike. For the third quarter of 2021, the company reported total revenues of $328.4 million. Total revenues for the quarter included cabozantinib franchise net product revenues of $263.1 million. Total revenues also included $65.3 million in collaboration revenues from Ipsen, Takeda, and Genentech. Our total operating expenses for the third quarter of 2021 were $276.8 million compared to $262.2 million in the second quarter of 2021. R&D expense was the primary driver of the increase in total operating expenses, which was primarily related to higher licensing and clinical trial expenses. Provision for income taxes for the third quarter of 2021 was $15.1 million compared to $28.8 million for the second quarter of 2021. The company reported GAAP net income of $38.2 million or $0.12 per share on a fully diluted basis for the third quarter of 2021. The company also reported non-GAAP net income of $64.5 million or $0.20 per share on a fully diluted basis. Non-GAAP net income excludes the impact of approximately $26.3 million of stock-based compensation expense net of the related income tax effect. Cash and investments for the quarter ended September 30th, 2021 was approximately $1.8 billion. And finally, turning to our financial guidance for the full year of 2021. Given where we are in the year, we are tightening the financial guidance for total revenues, net product revenues, R&D, and SG&A expenses provided earlier this year. Total revenues are expected to be in the range of $1.3 billion and $1.35 billion. Net product revenues are expected to be in the range of $1.05 billion and $1.1 billion. Research and development expenses are expected to be in the range of $650 million and $675 million, which includes non-cash expenses related to stock-based compensation of approximately $50 million. Selling, general and administrative expenses are expected to be in the range of $400 million and $425 million, which includes non-cash expenses related to stock-based compensation of approximately $70 million. And finally, we're projecting cash investments to be approximately $1.8 billion at year-end. This guidance does not include the impact of any potential new business development activities, which remains a key priority for the company. With that, I'll turn the call over to P.J.

Thank you, Chris. Today, I will discuss the CABOMETYX business with regards to Q3 2021, particularly in the context of the continued prescription growth driven by the approval of CABOMETYX in combination with immune checkpoint inhibitors. As you know, on January 22nd, CABOMETYX received FDA approval for use in first-line RCC in combination with nivolumab. We are pleased that we continue to see broad adoption as CABOMETYX builds on its position as the number one TKI in RCC. Q3 saw continued growth of CABOMETYX prescriptions, both in terms of new prescriptions (NRx) and total prescriptions (TRx). NRx grew 8% in Q3 relative to Q2 and TRx grew 7% in Q3 relative to Q2. This growth is being driven by CABOMETYX in combination with nivolumab in first-line RCC. As the launch progresses, the success of CABOMETYX in combination with nivolumab is changing the mix of patients on CABOMETYX and RCC. First-line combination usage has increased the proportion of the new Cabo prescriptions in this patient population. Given the clinical data from the CheckMate 9ER study, we anticipate these first-line combination patients to receive therapy for approximately 1.5 years or more, driving a longer treatment duration for CABOMETYX. We are encouraged by the fact that in our data, we see more than a doubling of the amount of new patient starts at the 40 milligram dose year-to-date relative to the same period last year. This indicates that the combination uptake in the first-line setting is robust. The launch of the combination has led to an inflection in the prescription growth of CABOMETYX in 2021. TRx growth in 2021 year-to-date relative to 2020 year-to-date is 35%. For the same year-to-date comparison of NRx growth in 2021 relative to 2020, the growth rate is 37%. Now looking at the same IQVIA prescription data, but for the broader market, including competitors, a couple of salient points stand out. The 7% Q3 over Q2 TRx growth affirms CABOMETYX is the only TKI in this market to have positive TRx sequential volume growth in Q3 relative to Q2. Furthermore, CABOMETYX is the only agent in this market basket to have positive market share growth as CABOMETYX TRx share went from 38% in Q2 to 41% in Q3. As I mentioned previously, the growth is being driven by first-line combination utilization, while the second-line RCC business for CABOMETYX remains stable. Turning to the next slide. We looked at the same market basket and prescription data with the addition of cabozantinib to the graph, given the recent first-line combination approval in RCC. The key takeaways from the previous analysis and discussion remain the same. CABOMETYX was the only product in the market basket to grow TRx volume in this competitive marketplace and the only agent to increase market share, going from 32% to 34%, driven by the first-line combination indication. In addition to the strong momentum in the RCC business, we are pleased that CABOMETYX was approved for previously treated differentiated thyroid cancer in September, several months ahead of the PDUFA date. There were previously known therapies approved for this patient population with significant unmet medical needs. We are proud that this fifth indication for CABOMETYX adds to the body of data in the label and enables Exelixis to help more patients with severe cancer. The strong Q3 performance and CABOMETYX's trajectory position the cabozantinib franchise for continued significant revenue growth in 2021 and beyond. We're thrilled with the opportunity that 9ER provides Exelixis looking forward, as we continue to build upon the foundation in RCC where CABOMETYX is the number one prescribed TKI. Our team remains highly focused and motivated to compete every day to bring the benefits of CABOMETYX to all eligible patients, as we continue to build a franchise and maximize potential. And with that, I'll turn the call over to Peter.

Thanks, P.J. I'm pleased to provide an update on our preclinical development and pipeline expansion efforts. For the last six months, we've enhanced our capacity and ability to pursue a wide variety of targets and programs, both from a small molecule and biologics perspective, while continuing to advance our preclinical pipeline. We significantly expanded our internal discovery footprint with the opening of new laboratories on our Alameda campus that will allow us to add capacity and new capabilities to our small molecule discovery efforts. Work with our partners has also advanced. In particular, we are pleased to exercise our option for a second compound XL114 from our collaboration with Aurigene. XL114 has a novel mechanism of action that results in inhibition of MALT1 activation. MALT1 is a paracaspase and a key part of the signaling pathway downstream of B-cell receptors, and it's constitutively activated in a variety of B-cell lymphomas. XL114 is a potent inhibitor of B-cell lymphoma cell growth and is active in a variety of lymphoma models in vivo. Notably, since XL114 acts downstream of BTK, it has activity in BTK-resistant lymphoma models and in certain subsets of B-cell lymphoma where BTK inhibitors are not active. The IND for XL114 is now active, and we anticipate initiating the Phase 1 trial in patients with non-Hodgkin's lymphoma in the next few months. Work on additional programs that Aurigene is also advancing, and we might have the opportunity to move additional compounds from the collaboration into preclinical development in the first half of next year. With respect to all biologics programs, we have greatly expanded our collaboration with Invenra to encompass an additional 20 targets over the next three years. We've been impressed by Invenra's ability to produce high-quality antibodies against a range of targets, including some very challenging ones. Antibodies generated by Invenra will be used to create biospecifics using Invenra's B-Body platform and will also flow into our ADC collaborations. We've already provided Invenra-generated antibodies to our partners, Catalent and NBE, who have successfully moved them into their site-specific conjugation platforms and coupled some of them with their proprietary payloads. This has resulted in the identification of multiple ADCs with excellent activity in vitro and in vivo, which are being further characterized to understand their therapeutic index before potentially advancing into preclinical development. Invenra-generated antibodies have also advanced since our collaboration with Adagene, aimed at using their SAFEbody technology to generate masked antibodies that will preferentially bind in the tumor microenvironment, thereby improving the therapeutic index compared to a conventional antibody. Several masked versions of these antibodies have been identified and are being further characterized. We're excited about a recently announced new partnership with STORM Therapeutics based on their RNA modifying enzyme platform. Modifications to bases in RNA, termed RNA epigenetics, have emerged as a novel way to control gene expression and influence the activity of RNA sensing pathways, processes that are often deregulated in tumors. The collaboration includes two targets, ADAR1 (adenosine deaminase) and a second target to be named later. ADAR1 is an enzyme that converts adenosine to inosine in double-stranded RNA, thereby destabilizing the double-stranded structure. Cytoplasmic double-stranded RNA is recognized by two sensors, MDA5 and RIG-I, which then activate a gene expression program that includes the upregulation of interferon production. Tumor cells expressing interferon activate an interferon-stimulated gene expression program, which includes the upregulation of inflammatory cytokines and often results in cell death. Tumor cells can have elevated levels of double-stranded RNA, probably as a result of deregulated transcription, and this leads to chronic stimulation of MDA5 and RIG-I, resulting in the activation of an interferon gene signature seen in about 30% of tumors. These cells are reliant on ADAR1 activity to maintain high levels of double-stranded RNA; therefore, a reduction in ADAR1 levels can result in tumor cell death. Consistent with this, ADAR1 has emerged as an interesting target in large unbiased CRISPR or shRNA screens irrespective of the tumor cell lines used. Moreover, induction of ADAR1 sensitizes tumors to checkpoint inhibition, even in genetic backgrounds that are refractory to single-agent checkpoint inhibitors, such as those with beta-2 microglobulin loss. STORM has established a leading platform for the discovery of ADAR1 inhibitors and has a suite of biochemical and cellular assays to guide lead optimization. We look forward to working with them to develop inhibitors against this novel class of targets. We continue to assess a broad range of opportunities for additional business development, including partnerships that may further complement our ongoing small molecule, biospecific, and ADC programs, as well as individual assets, particularly those in late preclinical or early clinical development. We look forward to providing further updates as these discussions evolve. And with that, I'll turn the call back to Mike.

All right. Thanks Peter. As you heard on the call today, our team continues to execute across all facets of our business in Q3, with significant progress across our pipeline, clinical development and commercial activities. As we close out the remainder of this year and look to 2022, we're excited about the potential of the multiple growth drivers ahead of us to move the business forward. Most importantly, Exelixis is now at a 99% vaccination rate against COVID-19, and we are back in the office, working together again side-by-side. I want to thank everyone on the team for their individual and collective efforts to navigate the many significant challenges introduced by the pandemic, which ultimately saw us through to a very productive third quarter. Before I close, I want to touch on the recent passing of two of our colleagues, Dr. Gisela Schwab, the company's President of Product Development and Medical Affairs, and Chief Medical Officer; and John Berndt, our Senior Vice President of Sales. Losing Gisela and John in the same week, both of whom were life science industry veterans, incredible colleagues and dear friends, is a reminder of our fragility and that cancer knows no bounds. This also serves as a driving reminder of why we do what we do every single day at Exelixis. It has only served to deepen our commitment to our mission to help cancer patients recover stronger and live longer. So, with that, we look forward to updating you on our progress in the future. Thank you for your continued support and interest in Exelixis. We're happy to now open the call for questions.

Your first question comes from Asthika Goonewardene from Truist Securities. Please proceed.

Hi, everyone. Thank you for answering my questions. I want to reiterate what you mentioned about the sudden deaths; we certainly miss Gisela's input on this call. Perhaps a question for P.J. is whether the excess inventory has been addressed and if we are back to more normal levels. As we look toward Q4, should we anticipate that reported sales figures will better align with the volume growth reflected in the Symphony or IQVIA data? I also have a follow-up question.

Hey, Asthika. It's Chris. So, the inventory that was built during the second quarter was all demand-related, so it wasn't excess inventory as you said. I would say that our weeks on hand inventory between Q2 and Q3 was relatively stable. And even if you go back to Q1, it's been relatively stable throughout the year. So, it's not excess inventory. It was just inventory built in, in association with the demand increase during Q2.

Got it. So, Chris, would you expect then going into Q4 that maybe the prescription data from Symphony and IQVIA might better reflect what you report in your next sales?

Thanks for the question. It's hard to say. Both Symphony and IMS are based on forecasted numbers, so it's difficult to determine how their data and projections correlate, but they seem to align historically with reported numbers.

Got it. Okay. And then, it was very encouraging that the FDA gave you guys feedback to file the sNDA for frontline HCC. Just want to make sure I haven't missed anything. This actually indicates that the FDA is open to the possibility of granting approval for cabozantinib for first-line HCC, just based on PFS as the co-primary endpoint? And then maybe some specific scenarios where this is more relevant, for example, where patients on the control arm crossing over and causing complications. Thanks, guys.

Yeah. Asthika, it's Mike again. I don't want to get into the details of the discussions with the FDA. I think the information we shared today was pretty clear. We plan to file the sNDA in early 2022, once we have the final OS data available. As we talked about previously, as other sell-side research analysts have noted, there's a sizable population of patients with either gastric or esophageal varices that can have complications in terms of bleeding with long-lasting agents, like antibodies to VEGF, for example. We want to help that population if that's feasible, but I don't want to get ahead of ourselves. We will file as we plan to, based upon the guidance we just provided in early 2022, once we have the final survival data. So, all the rest, stay tuned.

Great. Thanks for taking my questions.

You bet. Thank you.

Your next question comes from the line of Mike King from H.C. Wainwright. Please proceed.

Hi, guys. Can you hear me?

Yeah. Loud and clear.

Okay. Great. So, thanks for taking the question. I had to jump on late, and if you guys don't want to go through the numbers again, that's fine. I can always take it offline. But just on a sequential quarter basis, do you have a handle on what the underlying demand increase was quarter-on-quarter?

Yeah. So, again, I don't want to repeat the whole call. Sorry you missed the early part. P.J., you want to just give the high-level demand numbers and then we can cover the rest offline.

Yeah. Thanks for the question. We're really pleased with the quarter where we continued demand growth. Q-over-Q, we had 7% TRx volume growth, and 8% NRx volume growth. So continuing to see a strong uptick across all segments, driven by first-line combinations. So we're very pleased with that.

Okay. Great. That's super helpful. And then related to that, can you talk about whether you saw any inroads or any competitive pressure from LENVIMA combinations with KEYTRUDA at all in RCC and would that have had any impact on the numbers in the quarter?

Yeah. Mike, it's Mike again. As we said numerous times in the prepared remarks, the demand growth that we saw was in the context of increased competition.

Your next question comes from the line of Jason Gerberry from Bank of America. Please proceed.

Hey guys. Thanks for taking my questions. I guess two for me. Just on the patent litigation front, curious, are there any important milestone events between now and the scheduled May 2022 trial date? Be it either any more patents that you guys might be adding to the orange book? I know you guys have been active on that front, any important pretrial proceedings that are worth mentioning. And then secondly, just on XL092, is the plan to still move that into some pivotal trials before year-end 2021? Just wondering if we might start to hear about some pivotal trials getting underway before the end of the year. Thank you.

Yeah. Jason, it's Mike. In terms of the patent litigation topic, nothing that I'd like to point out here between now and the beginning of a trial date. Obviously, I wouldn't want to front-run any news in that regard before it happens, so just stay tuned as things evolve. We will keep you up to date on that. In terms of XL092, the first pivotal trial for that compound in combination with an ICI will shift to 2022, and we will alert you when we have the first site activated, so stay tuned there as well.

Okay. Thank you.

Your next question comes from the line of Michael Schmidt from Guggenheim. Please proceed.

Hey, guys. Thanks for taking my questions. I just had another one for Chris or P.J. Just trying to understand the sequential decline in product sales a little bit better given the 7% growth in volume. And I know you mentioned a few factors, but could you perhaps quantify how much each of those contributed to the decline?

Yeah. Michael, it's Chris. So, we did see, as Mike mentioned, the inventory demand related inventory build in Q2, which didn't take place in Q3. We also saw some competitor sales in Q2 that, to a large degree, didn't take place in Q3. So, those are the two drivers of the difference in between the demand numbers that P.J. referenced and the reported numbers that we're talking about today.

Got it. And the gross-to-net was stable in the third?

Gross-to-net was slightly down. It's slightly up between Q3 and Q2, but down from where it was in Q1. As I said earlier in the year, we were thinking 25% to 26% gross-to-net. We're still thinking in that 26% range.

Got it. Okay. Interesting. And then, Peter mentioned some more details on the new product that’s going into Phase 1 XL114, just if you had some additional color on how this drug could potentially fit into the treatment landscape within non-Hodgkin's lymphoma.

Yeah. Thanks for the question. We have a very interesting and differentiated profile in that setting, particularly as I commented, because its point of intervention is downstream from BTK. It is active in BTK-resistant lymphoma models. So that's certainly one place where it could go, but also subtypes of B-cell lymphoma, which activate the MALT1 pathway without activating BTK. So, that’s another point of differentiation. So that's another area that this compound could target as well. So, those are the two things I'd highlight nationally.

Very interesting. And then, I know you mentioned initial data disclosures on the earliest stage pipeline drugs in 2022. I'm just wondering if we were thinking more first half, ACR or ASCO perhaps, or are we thinking more in the second half of the year at one of the conferences?

Yeah. Michael, it's Mike. Yeah. Probably too early to opine upon that now, but stay tuned as those plans evolve, and we'll be sure to keep you up to speed on what's happening.

Great. Thanks again.

Your next question comes from the line of Andy Hsieh from William Blair. Please proceed.

Thanks for taking my questions. So, first and foremost, like express my deepest condolences to the Exelixis team on losing Gisela and John; their energy and enthusiasm are missed. So, in terms of questions, P.J., I have another question maybe on the broader RCC TKI market. Could you provide your perspective on where it stands versus prior to the COVID-19 pandemic? It seems like there are some fluctuations between growth and declining towards the middle part of last year and also some fluctuations in the first half of this year. Just curious about your take on that.

Yeah. Andy, thanks for the question. You're right; over the course of the pandemic, I think the broader RCC marketing beyond TKIs saw certainly some fluctuations as we've discussed, given the difficulties with treating patients and hospitals during that time. However, over time, we have seen the market expand. Part of this recovery from COVID is likely attributable to the use of IO TKI combinations becoming more standard-of-care in first-line treatment. As we've discussed, the CABO/NIVO combo is driving more of that utilization in the frontline setting. We're seeing the TKI market expand and potentially expect that trend to continue as we see more duration from the utilization of drugs, like CABOMETYX over time for these first-line patients who would stay on therapy longer. That could continue to drive the expansion of the TKI market within RCC.

Got it. Okay. And in terms of the upcoming 303 study, I have a question about the protocol. For CheckMate 214, they have a very strict discontinuation protocol. I'm just curious if that is also included in the 313 study, or maybe there's been an improvement because people know how to use IO/IO combinations better over time.

Yeah. Andy, it's Mike. We've done a really good job of working with various KOLs to optimize the protocol regarding managing AEs associated with one or all three of those molecules combined. That's why you're on trials; to analyze the data in a blinded fashion and let the data speak for itself. We're excited about this opportunity. We're pleased to be on the leading edge of the potential advancement of standard-of-care with the first triplet in RCC. We look forward to the data coming out sometime, hopefully in the first half of 2022. Stay tuned.

Great. And maybe last question for Peter, just curious about your take on the MALT1 pathway, especially within the B-cell space, particularly with POLIVY potentially replacing the standard-of-care. Would that drive higher dependency on the MALT1 pathway as patients go through frontline therapy?

Yeah. There's a lot of activity in the B-cell lymphoma space generally. As I commented earlier, there's still a lot of activity around new BTK inhibitors. People are starting to advance the grade now as well against BTK. In all those cases, should resistance arise—which we anticipate will—the compound like XL114 will also have a strong opportunity to be active. As you mentioned, CD79 activation can drive B-cell lymphomas too, but that does not go through BTK. However, lymphomas look to be sensitive to XL114 as well. So, it would be interesting to see whether downstream agents directed at CD79 would allow us to engage those resistant patients occasionally.

Great. Well, thank you so much for taking all my questions.

Glad, Andy. Thank you.

Your next question comes from the line of Jay Olson from Oppenheimer. Please proceed.

Hi. This is Joan, sitting in for Jason. Thanks for taking the question. Can you tell me about the launch of Cabo in DTC given that it's almost three months ahead of the PDUFA date? Also, are you counting patients in DTC into your full-year revenue guidance? Thank you.

Yeah. This is P.J. Happy to talk about the approval. We're certainly very pleased to have DTC approved, about 79 days ahead of the PDUFA date. That's great news for patients, who really needed a therapy in the setting of high unmet medical need, so we're very happy about that. The data are very strong, and I think what we continue to hear from physicians is that the progression-free survival data is very compelling. As we promote and raise awareness, we expect good utilization. We're also pleased that our team was ready to go immediately on launch day, even with the rapidly accelerated timelines of approval. So, very good news there. Thyroid cancer is a space we've been in since 2013, so we know it extremely well. We know where those physicians are and who they are, and we are really excited to be working with them.

Yeah. This is Chris. On the revenue guidance question, yes, it's included in the revenue guidance generally.

Your next question comes from the line of Peter Lawson from Barclays. Please proceed.

Hey, thanks for taking my questions. Just on the HCC filing, are you waiting for further data for that filing, and could XL092 also have a place in HCC?

Peter, it's Mike. I missed the first part of that question. Could you say it again?

Just on the HCC filing, are you waiting for further data for that filing?

I see. Yeah. As we discussed in our prepared remarks, we've agreed with the agency to submit the sNDA once we have the final overall survival data in hand. So that's what's driving it from a Q4 2021 event to a 2022 event.

And do you see a need to see more than a trend in the OS?

I don't want to speculate on that topic. We've agreed to file once we have the final survival data in hand, so stay tuned.

Gotcha. And then XL092, could that find a place in HCC, or is that kind of white space not available?

No. It's certainly a potential indication. We're discussing various indications and combinations for XL092 right now. Some of the learnings from 312 indicate that if you look at the broader context of HCC, emerging data from other IO combinations suggests XL092 could play an interesting role in potential doublets and triplets for HCC. We just need to prioritize among various indications and combinations. But generally, we see development broadly—as we do with RCC—not just as one shot but with multiple shots at goal and multiple trials covering various lines of therapies. That's the goal for all our compounds and trials, to advance the standard-of-care for patients. Thus, 092 could play an important role across multiple indications, including liver.

Gotcha. Okay. Thanks so much.

Your next question comes from the line of Kennen MacKay from RBC Capital Markets. Please proceed.

Hi. Thanks for taking the question. Maybe for Mike or P.J., can you help us understand the magnitude of the commercial frontline RCC market that could be addressed by the triplet of cabo? It'd be nivo based on your conversations with both KOLs and community physicians in your service. Thank you.

P.J., do you want to give that a shot? I'll provide color commentary as we go.

Of course. It's important to see the data. Thanks for the question, Kennen. The trials being run in the intermediate and poor risk setting, where the control arm in 214 is approved. What I'd like to share is that the intermediate and poor-risk patient population represents about 75% to 80% of that first-line patient population, which is about 14,000 patients in the U.S. We are excited to see the data when available.

Your next question comes from the line of Jeff Hung from Morgan Stanley. Please proceed.

Hi. This is Melina Santoro on for Jeff. Thanks for taking our question. Regarding CABO/NIVO in first-line RCC, with the continued growth in new patient share in the community setting, what do you see as the remaining opportunity for growth in that segment? Are there specific patient populations that would be easier to reach?

Yeah. Hi, Melina. Thanks for the question. We're very excited about the data and the feedback we receive from physicians on the overall survival, as well as the improved tolerability and safety profile from the 40 milligrams dose of CABO. We receive great feedback on that, and on the quality of life as well. I think broadly we see inroads and opportunities. And since it's still early days in our launch, we can maintain our execution against that. Patients will benefit from it regardless of the setting. We continue to have more data in terms of patent net and non-clear cell which round out the clinical profile of CABOMETYX in RCC. We're pleased with that. If you look at the NCCN guidelines, you'll see we are well-positioned as a preferred agent across risk groups, as well as lines of therapy, and community physicians reference that. We are pleased with our positioning. We have many patients who could benefit from CABOMETYX.

That's helpful. Thank you. And then I have one more question. You continue to establish these collaborations with other technologies recently with STORM Therapeutics. Can you talk about your strategy going forward? Is it to be more opportunistic with the new platforms and technologies, or are there certain capabilities that you want to remain more focused on?

Yeah. Thanks for the question. I think we'll stay consistent with what we've been doing. We have our own internal small molecule discovery capability, which is undergoing significant expansion. We aim to complement what we can do internally with the expertise that other folks have, perhaps through a different approach, and specific areas where they have deep experience that we would like to expand our bandwidth and throughput. The STORM Therapeutics collaboration represents that. It's a new target for us in oncology. They have a compelling platform regarding how to target that as well as a larger base of RNA modifying enzymes. Therefore, it made sense to partner with them instead of trying to reinvent everything in-house. We will continuously evaluate opportunities like that—whether related to platform advancements or novel assets that can take us into the clinic sooner.

Great. Thanks for taking all my questions.

Your next question comes from the line of Chris Shibutani from Goldman Sachs. Please proceed.

Thank you. Could I ask about the CONTACT programs? These are Phase 3 trials for several large indications. I believe you mentioned that we will be reaching a point where we’ll begin to see some progress updates. Can you be more specific and let us know whether we’ll see any data in 2022? I know you’re enrolling globally, but when you get that data, how do you view the decision points those opportunities that these trials are designed to investigate?

Yeah. Chris, it’s Mike. CONTACT trials are vital in non-small cell lung cancer, prostate cancer, and second-line RCC, all in collaboration with Roche. They're exciting opportunities for CABO, and we’re focused on executing them. Do we expect results in 2022? These are event-based trials; we have to see how those go in terms of event rates. They're certainly priority trials, and we hope for success, but we need the data to move forward as appropriate. So, they’re very high on our priority list right now.

From a pipeline standpoint, XL092 remains the most advanced program. Any updated thinking on targeted clinical development for XL092?

We’ll discuss that as we launch the first pivotal trial and activate the first sites. We’re very pleased and encouraged by what we see clinically regarding CABO across various components of activity and profile. We're looking to get pivotal trials underway quickly for XL092, as well as XB002, the tissue factor-targeting ADC, and XL102 along with XL114 discussed today. Overall, we are pleased with progress, and our focus remains on advancing impactful small molecules and biologics into the clinic as quickly as we can.

Your next question comes from the line of Mike King from H.C. Wainwright. Please proceed.

Thanks, guys. My follow-up was answered. Thank you.

Okay. Thanks Mike. Operator, do we have any more questions?

At this time, there are no further questions. And so, I will turn the call over to today's host, Susan Hubbard. Ms. Hubbard?

Thank you, Jeff. Thank you all for joining us today. We welcome any follow-up calls with additional questions you might have that we didn't cover during today's call. Thanks so much.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.