Conference Transcript - EXEL 2026-09-08

Seba Forte, Analyst — Wells Fargo

Great. So welcome to the next session. My name is Seba Fortea. I'm one of the biotech analysts here at Wells. We have with us today, Andrew Peters, SVP strategy and Chris Zener, CFO of Exelixis. Thanks so much for being with us today.

Andrew Peters, Head of Investor Relations

Yeah, thank you for the invite.

Seba Forte, Analyst — Wells Fargo

Great. So maybe we can just start our chat with, you know, kind of leg of the line, last 12 months, next 12 months for Exelixis.

Chris Senner, CFO

Yeah, I can start. Andrew can kick in. So, you know, we continue to, you know, currently in 2026, you know, we were in the process of, we launched the net indication last year. We're continuing that process of, you know, penetrating the market from a net indication perspective and also from a, from an RCC perspective. And then, you know, the development of Zanza continues to be at the forefront of what we do. So it's a big part of what the company is. As we look into 2027, it's a big part of what our expectations for the outlook for the company.

Andrew Peters, Head of Investor Relations

Yeah, so, you know, just kind of to add on that and just as a reminder, Chris and I are going to be making forward-looking statements today. So please see relevant risks or relevant disclosures around risks to our business. But I think Chris kind of said it well in that 2026 is this interesting transition period for the company. As we're, you know, continuing to execute, grow Cabo and really use that kind of financial success that we have with our base Cabo business to then invest in Zanza, not only kind of ahead of our potential launch in colorectal cancer later this year, but also kind of expand the breadth of that development. So that as we kind of exit the decade, you know, in 2031, kind of the LOE of Cabo, that handoff to not only, you know, replace that Cabo revenue, but growing it is really kind of the focus of the company. And then either between our early stage pipeline or being opportunistic around business development, enable that third, that fourth, that fifth program so that we can really scale as a company. And that's really kind of what we're focused on is kind of maximizing the value of Cabo while really starting to invest in a really important time in the Zanza franchise and then kind of being opportunistic in investing appropriately within our own internal program, looking externally, and then again making sure that we're doing the right thing for our shareholders and looking towards things like share buybacks. as well. So really exciting time at Exlexis.

Seba Forte, Analyst — Wells Fargo

Great. So maybe let's start talking a little bit about the Cabo franchise. I mean, it's been incredibly successful. How should we be thinking about growth from here?

Chris Senner, CFO

Yeah, I mean, from an overall Cabo franchise perspective, you know, we set out a $3 billion what success could look like number, and we still feel like that's an achievable number based on everything we know today um and so you know we the rcc indication is part of that also that growth but also net is a big part of that growth as we look into you know 27 28 29 got it so maybe just touching upon the you know kind of like what drove the reduction in guidance and kind of like the second quarter um revenue for capital yeah so you know we talked about it on the call to a large degree but you know we when we looked at the overall the kind of the pace of the net indication we saw that we you know we as we drove into the community with our expanded field force we saw that the kinetics around how patients some patients move from therapy to therapy we saw that was a little bit slower than we originally had projected And so in a more indolent disease like NET versus other solid tumor malignancies, they don't get scanned as often, right? So kind of other solid tumor, for some of the patients in other solid tumor malignancies, they get scanned every three months. And from a net perspective, a neuroendocrine tumor perspective, it could be, for some of these patients, it could be a longer period between scans and also sometimes a longer period between therapies. And so that's what we noticed in the market. We don't see a change in our overall outlook for the total potential, but it's just going to be a slower ramp than we originally projected.

Andrew Peters, Head of Investor Relations

Yeah, I mean, I think the best way I think about it is really kind of more of a temporal dynamic than anything. You know, it's kind of that gap between new patient market share and total market share. So PJ, our head of commercial, kind of talked about this on the call, you know, with 47% or so new patient market share. As patients, you know, as Chris said, are coming in for scans, if they do need to come on to a new therapy, you know, increasingly they're going on to Cabo. But that time course on when that new treatment decision happens is just a little bit slower, especially in the community, because of either the scan interval or is there a treatment break between these. Because, again, you know, unlike a lung cancer or most other solid tumors, that slower-growing disease that's just inherent in neuroendocrine tumors makes that kind of decision point or, you know, part where the new bottle is dispensed, just temporally a little bit slower. But again, the focus from our perspective, that leading indicator is new patient market share. We're confident that those patients are there. We're increasingly successful in kind of converting those new patients. It's more kind of a temporal dynamic than anything around when that kind of switch occurs.

Seba Forte, Analyst — Wells Fargo

Got it. have you shared your assumptions on like peak you know opportunity in the net space for cabal and kind of like how has your launch ramp changed your assumptions on the launch ramp changed i think we've talked about net being about a billion dollar indication from an oral perspective at contemporary pricing and we still believe that's the case and you know as andrew was talking about But we're, you know, the new patient share that we're picking up is around that 45% range.

Chris Senner, CFO

And, you know, that's a good leading indicator of our penetration. And, you know, and also what we're starting to see, too, is the actual stacking of prescriptions for patients. And that's a big part of the longer-term success as those patients build on Cabo, then there'll be, you know, potential higher revenue.

Andrew Peters, Head of Investor Relations

Yeah, so it's kind of the dynamic, again, or the way that we think about it is, you know, that aspirationally billion dollar TAM our goal is to capture as much of it as possible that's kind of the endpoint you know that shape of the curve how we get there is a little bit dependent candidly on kind of this dynamic around new patient starts etc but at steady state as that total market share and new patient market share kind of converge I think that's a you know that's where that endpoint becomes more important.

Seba Forte, Analyst — Wells Fargo

Got it. Very helpful. Maybe just switching gears a little bit to hand us tentative approval under Kabul-like therapy and kind of like how does that change your view on the competitive landscape for Kabul?

Andrew Peters, Head of Investor Relations

Pretty minimally. I think, you know, as a generalizable statement, 505b2 products in the absence of clinical data haven't been successful commercially. I think kind of the best known 505 B2 product is Abraxane. And utilization of that product was really driven by large robust randomized data sets, showing that there's a meaningful clinical improvement of the product versus say that the reference. Absent of that, given the dynamics around non-AB rated non interchangeable non-substitutable the you know just the inherent challenges of the 505 products around you know labeled risk markets you know market penetration due to having to go out and build a commercial organization without data all historically have really made these products largely unsuccessful from a commercial perspective and so I think that the short answer candidly is we don't view the the 505 B2 products as a meaningful commercial risk to our cob-o-medics business in our focus is really on two things ensuring you know patient safety are these 505 B2 products ultimately good for patients and that was kind of at the heart of one of our concerns about that program. And then second is ensuring our intellectual property and asserting our IP rights when appropriate.

Seba Forte, Analyst — Wells Fargo

Got it. And how should we be thinking about, you know, the IP property until, you know, the end of the decade? Is there anything there that is concerning or, you know, when should we be thinking about loss of exclusivity and just, you know, erosion of sales for Cabo?

Andrew Peters, Head of Investor Relations

Yeah, I mean, I think one of the truisms in biopharma is the more successful you get, the more legal problems or legal challenges you'll face. And so, you know, we run our business with the assumption around Cabo generics emerging January 1st, 2031. That's when we've announced settlements with Teba, Sibla, others around kind of a true cabo generic um between now and then obviously there's always litigation there's always you know things like last week or a couple weeks end of the end of last month um we went on appeal uh with msn um but you know 1-1-31 um from our planning purposes is probably the best date to use got it very helpful okay so maybe switching gears a little bit to zanza we got the non-liver you know stellar 303 analysis how you know confident are you in securing and all comers label you know come December yeah I mean we we base the filing uh on the ITT population or the filing was the the data from the ITT population which is all comers um and so I think you know that's what what drives our confidence the data that we presented at ESMO of last year and subsequently published, you know, really shows that consistency of benefit of the doublet across all of those different subpopulations. You know, the non-liver met outcome really is probably the result of probably not enough power in that specific subpopulation. But just as a reminder, kind of that ITT group was inclusive of both patients with and without liver mets. And so um our filing reflects that got it what has been the feedback from doctors from you know all the data that you've shared so far and what percentage of patients have non uh don't have liver meds what you know how are you thinking about like penetration in the yeah so i i don't think the the our you know the market research and kind of all of our conversations around the combination certainly doesn't focus on the liver met non-liver met dynamic it's much more about you know having an opportunity for patients to gain access to this doublet so there's you know the chemo free component of it there's the checkpoint containing component of it there's the fact that you know data the the benefit is is there regardless of prior avastin use you know It's all of those different things that kind of sum out to a high degree of enthusiasm from the patient and clinical community to potentially have a new treatment option for these patients. Coming back to one of the things that I mentioned that kind of consistently comes up is that checkpoint-containing dynamic. So if you think about how CRC is treated, there's certainly the academic centers. But perhaps more than other tumor types, there's a pretty large contingency of the community prescribers as well. And given that they tend to treat lung cancer, RCC, liver cancer, you know, all these different types of solid tumors and beyond, there's kind of this inherent familiarity with checkpoints that up until now, you know, of patients watching the Super Bowl and sees a bunch of ads for checkpoints, they go to their oncologist and say, hey, is this something that I could be eligible for? Until the ZANSA data in Stellar 303, the answer's been no. But we think that this provides that opportunity to have kind of not only an active modality like a TKI, but also layer on that CPI component as well that I think kind of offers the best of both worlds. And if you look at our data that we've generated, it's certainly there's a contribution from both of those.

Seba Forte, Analyst — Wells Fargo

Got it.

Andrew Peters, Head of Investor Relations

Are there any specific types of patients that would particularly, you know, benefit from this approach or that would make up for this like early launch? um yeah i mean again given the consistency of benefit especially as kind of described in the forest plot um you know our goal our plan is to kind of try and capture as much of that market as we possibly can i think in the past we've described kind of that third line plus crc segment is about a 1.5 billion dollar opportunity and candidly our job is to target as much of that as we possibly can because we think that this is a

Chris Senner, CFO

you know great opportunity for patients to have a new effective potential standard of care got it and you mentioned recently also the expansion of your gi cells team not only to address the net launch but also in preparation for your crc launch for zanza maybe you can share with us kind of like the the metrics there and how should we be thinking about launch readiness yeah so we as you said we and i mentioned earlier too we expanded the sales team earlier this year we started the process late last year and you know pretty much everybody was on board by the end of the first quarter and you know started started to have an impact really and the net indication during q2 and continue to progress in q3 and look forward to q4 but you know from a crc perspective 303 perspective you know we're launch ready um you know we'll we'll be launch ready when we when we get approval um you know we within our guidance we've included our launch expenses and things like that so you know we've accounted for all that and uh you know the commercial team is getting themselves ready and understanding the market through um you know ad boards and things like that and you know as andrew said there's been a lot of excitement around the fact that But there is a checkpoint option now, and that's a key and important part of that, especially since a lot of this, as Andrew talked about, is treated in the community.

Seba Forte, Analyst — Wells Fargo

Got it. Should we be thinking about the launch as a, you know, PDUFA comes in, potential approval, and then you can launch right away? Or will you be waiting a little bit for XANSA's launch?

Chris Senner, CFO

Waiting for XANSA launch? No, we'll be launching right away.

Seba Forte, Analyst — Wells Fargo

Right away.

Chris Senner, CFO

And do you expect any ad comms? yeah yeah hard it's hard to say yeah i mean i i guess what what we've said is um you know if we had been uh asked by fda or informed by fda for an outcome we would have let you guys know so got it beyond that can't speculate very helpful okay and i mean it's still a little bit early but what factors should drive pricing and kind of like coverage yeah we haven't talked about pricing specifically but it's been a question we've gotten a lot in a lot of the meetings today i mean it's it you know the way we look at it is it's going to be you know pricing contemporary to what's happened what's been happening more recently in the market and so you know that's that's kind

Seba Forte, Analyst — Wells Fargo

of the approach we're looking at and we'll we'll look at all different metrics in order to determine the correct price but you know no no specific comment on pricing today got it okay so maybe just shifting gears towards stellar 304 the non-clear cell renal cell carcinoma phase three study um you know just in terms of control what's the bar a lot of utilization off-label of the cavo combo there how should we be thinking about what's success in that study is you know statistical significance enough or should we be looking at you know off-level usage as the bar

Andrew Peters, Head of Investor Relations

Well, complicated question. I mean, just as a reminder, all drugs approved in RCC are approved in ClearCell and non-ClearCell. It's kind of an interesting dynamic within the oncology world where the labels are granted based on randomized data in the ClearCell space but have broader indication statements for essentially all rcc so cabo like all other drugs in rcc is approved in non-clear cell so it's not off-label use got it um but i think the challenge from a patient and physician perspective and actually kind of why we sought out to do 304 in the first place is um utilization for the large part is really driven by answering the question, which small unrandomized study do I trust the most? The challenge with non-clear cell is just the data. There's never been a large randomized study done there. All of the inherent complications with over interpreting unrandomized small studies kind of get amplified in a disease like non-clear cell where patients can be a a little bit heterogeneous based on the subtype and all of those sorts of things. And so what 304 really sought out to do is define a standard of care in that population. And so realistically comparing the data when 304 reads out to some of these phase twos is really a true apples and bananas kind of thing. just because of those complications we all have looking at interpreting and understanding limited small and phase two data where maybe they over indexed to a certain intermediate or favorable risk, all of those different things that we all know. So three or four is an opportunity to kind of plant a flag in the ground level one evidence and say this is, you know, potentially the standard of care in non-clear cell and kind of no longer be in that realm of, you know, how to, which small study do I believe or trust and interpret that into my patient that's in front of me. So that's, that's really the technique.

Seba Forte, Analyst — Wells Fargo

Got it.

Andrew Peters, Head of Investor Relations

So, so you mentioned non-clear cell has always been a little bit more challenging and kind of like there's no controlled studies why do you think this is and what you know what's the risk to the phase three then um it's a great question i i think again kind of as we started looking into it we were figuring that out as well um i think one of the answers is as i mentioned before all of the drugs have labels that are inclusive of non-clear cell and so um cavo gets gets used there, Su-Cheng gets used there, everything kind of gets used there. So it's just been a kind of a unique dynamic within the oncology world. And so, again, the goal of 304 is to kind of definitively answer that question as opposed to really just try and gain as much share without, in the absence of large data sets.

Seba Forte, Analyst — Wells Fargo

Got it. And you also mentioned some heterogeneity in the histology. Can you just remind us which histologies are included in 304 and how should we be thinking about the potential differences in PFS for one histology versus the other?

Andrew Peters, Head of Investor Relations

Yeah, I think kind of without speculating on the data ahead of time, it's probably more relevant to talk about how we're excluding in the chromophobe subpopulation. Again, that was kind of based on some relatively limited data sets that we'd seen before. And so, you know, three or four is a relatively inclusive study. Chromophobe is a pretty small sub-segment of that, but we just wanted to make sure that we were successful in the study.

Seba Forte, Analyst — Wells Fargo

So it's probably better to think about which ones we're excluding, then kind of list all of the inclusive types got it is is the study large enough to really understand like the differences between the histologies uh again don't want to speculate on the data but um you know we think it's a well-designed study got it okay um and maybe just before we move away from non-clear so how are you thinking about you know the overall opportunity there?

Andrew Peters, Head of Investor Relations

I think if you look at the epidemiology of RCC, it's about 20% or so. Kind of drilling into what that TAM looks like. It's a little complicated. Just as I mentioned before, everything kind of gets used there. So, you know, our goal is to capture as much of that 20% as we can with hopefully you know data but it's really gonna depend on what it looks like got it maybe switching to clear cell and here you've pursued the strategy of combining with HIF2 where do you think ZANSA can really establish itself within the clear cell space yeah I mean we're really excited working with our partners Merck on the 0-3-3 and 0-3-4 studies both areas where we think kind of there's this high-end med need, in particular kind of looking at LightSpark 033, where the survival data of PEMBRO on the adjuvant side is really driving a lot of utilization there for appropriate patients. When they do kind of, if they do ultimately progress, the question becomes, well, what should they get? The data across the industry has consistently shown that probably a re-treatment with a checkpoint has historically been much less effective. And so, Exalexis and our partners Merck are kind of at that forefront of answering the question of what should be the standard of care. Same is true with 034 where, again, as part of that patient journey in the second line plus segment, does the combination of Zanza and Bell's kind of improve the outcome for for patients there and so we think that the kind of potential differences and really best-in-class profile of Zanza pair well with a HIF like Belzutafan and then really the question that we get asked a lot is well what's next in RCC you know with the failure of the LightSpark 12 study that was the the frontline Len Bell's Pembro study really kind of opens the door for someone like Exelexis to kind of come in and really take that opportunity and so that's something that we're focusing on pretty carefully and making sure that you know the biology is driving that decision and you know how do we really establish that new standard to care there so something to uh pay attention to got it do you think that the you know combination agent of choice in terms of hif2 belzutafan plus statifan like do you think that makes a difference or is it more of you know selecting the proper tki um you know i i guess time will tell so to speak we certainly think that um you know belzutafan is very effective I mean, if you look at, you know, what the combination provides, is it really, you know, the firepower and the low primary PD dynamic, as well as, you know, just Zanz on its own is a good drug. But combining it with, you know, a drug like Bell's, we think covers a lot of bases.

Seba Forte, Analyst — Wells Fargo

And so the question is, you know, a best in class TKI with a very, very strong HIF can that benefit patients and we certainly think yes got it so maybe shifting gears to the net opportunity for ZANSA and the first line study here you know just the you know slower kinetics for the second line does that change your view on the opportunity for ZANSA in the first line and kind of like you know overall opportunity within net yeah I mean I I think we continue to be very excited about NET overall.

Andrew Peters, Head of Investor Relations

Again, coming back to kind of this kinetics versus market opportunity perspective. And we're certainly focused on the overall market opportunity. We view NET in totality as one of the core franchises for XLXs. Taking a step back, franchises is probably the best way to think about the company overall. We have kind of the individual product franchises like Cabo and Zanza, where there are multi-indication drugs. But say within that other degree is either RCC or NET where we have multiple products, multiple programs within each of those. And so NET is one of the core franchises at the company. It's one we're executing on with Cabo, investing with Zanza, and certainly investing with our earlier pipeline as well. So we think it's historically been greatly underserved, and we really have the chance to be kind of the dominant player there. So we're certainly very excited about 3.11 as well as kind of what's next from the kind of next things we're going to do.

Seba Forte, Analyst — Wells Fargo

Got it. Does the difference in kinetics impact the way you think about trial enrollment for 3.11?

Andrew Peters, Head of Investor Relations

No, I think someone asked us on the last call if actually 3.11 was having an impact on Cabo, probably a little bit on the margin. But I think that temporal dynamics is much more of a factor than how we're seeing patients. But it's certainly not lost on us that the enthusiasm for Zanza in the 3.11 study and kind of that pace of enrollment that we're seeing is certainly something to consider.

Seba Forte, Analyst — Wells Fargo

Got it. And maybe I just wanted to touch upon the meningioma opportunity. I feel like we don't really get to talk about it too much. Is the phase 2 study could potentially support an accelerated approval? And how should we be thinking about the response rate there and the unmet need?

Andrew Peters, Head of Investor Relations

Yeah. I mean, again, all this is data dependent. But, you know, if we're able to show a robust response rate, given the high unmet need for this patient population, it's certainly something that we could pursue. You know, it's all kind of data dependent, so to speak. But our goal, our hope is we can generate as high of a response rate as we possibly can just given that these patients really don't have many effective options and it's really based on kind of a foundation from some early data we've generated with Cabo that would suggest that there's real promise here. So don't want to get ahead of ourselves on kind of what that regulatory path looks like but we want to do whatever we can to kind of help patients here just given the absolutely high end.

Seba Forte, Analyst — Wells Fargo

Got it. Maybe given that there's not a ton of studies in this space that have been successful, just like what does robust efficacy look like in this space? And based on other types of accelerated approval, it's been mostly in response rate and duration of response. Is this what we should be thinking about when looking at this data potentially, you know, in the future when you share it?

Andrew Peters, Head of Investor Relations

Yeah, I mean, the primary endpoints response rate, secondaries, duration, PFS, OS, but given the relatively indolent nature of meningioma, maybe that's a little bit longer term of an endpoint. You know, beyond that, can't really speculate on what the bar is, other than our goal is to generate as robust of a data set as possible, just so that we can help patients.

Seba Forte, Analyst — Wells Fargo

Got it. What has been the challenge within these patients that's driving this lack of systemic therapies?

Andrew Peters, Head of Investor Relations

Biology, I guess, is probably the simplest. And finding that right combination of targeted biologic-based activity, tolerability, and focus as well, I think. historically it's probably an underinvested indication same as that I think you know we're kind of the strongest voice out there so to speak in the net community so at least on a branded side so a combination of a lot of those things.

Seba Forte, Analyst — Wells Fargo

Got it and how should we be thinking about the market opportunity in this space versus you know the net opportunity or the CRC opportunity?

Andrew Peters, Head of Investor Relations

So we haven't really, you know, define specifically what the TAM in meningioma is, but we think it's quite significant.

Seba Forte, Analyst — Wells Fargo

Got it. Okay. So maybe just, you know, in terms of what's next beyond Zanza, I mean, we haven't seen a lot from the early pipeline, but maybe can you share what are you the most excited about? And is there perhaps an R&D day planned or something where we're going to learn a little bit more about, you know, the activities there.

Andrew Peters, Head of Investor Relations

So cadence of R&D days, I think everyone would kill me if we did them more than once every two years. We just did one in December. So it's a lot of planning and logistics goes into each of those. I think our focus really is generating as as much data as quickly as we can to come to a go, no go decision. Because ultimately that's kind of our focus is do we want to invest in late stage studies for this program? Does the program have the potential to become a new standard of care in indication X or multiple indications X? Does it have the potential to be that next franchise molecule beyond Cabo and kind of that's, that's our focus. And so the, the dynamic there is instead of putting out a press release that here's 10 patients, here's four responses and declaring victory. Let's generate a data set that gives us a reasonable sense of what the profile is versus what it could be, and then that informs kind of that go, no go. So from a capital efficiency, capital allocation, capital investment perspective, we want to make sure that we're making informed decisions on that expensive part of the development curve, which is late stage. And so we want to make sure that we're moving the right assets into late stage developments. We can only do that if we ask the right questions and generate the right data.

Seba Forte, Analyst — Wells Fargo

Got it. So maybe just following up on this, we've seen how a no-go decision looks like. It's usually during earnings. But how does a go decision look like here? Would you share it during earnings? Would you share it with some kind of presentation or medical meeting, company?

Chris Senner, CFO

Yeah, I think that honestly it all depends on the situation that we're in at the time. So I wouldn't want to say we're going to do it one way or another. I mean, it's just, it'll all depend on the actual situation.

Seba Forte, Analyst — Wells Fargo

Got it. And maybe just last question from me in terms of you've been doing, you know, share buybacks. How do you plan to balance that with business development? You were talking about it a little bit at the beginning. Like, are there any particular, you know, therapeutic areas, I'm assuming, or, you know, types of mechanisms that you're looking at?

Chris Senner, CFO

So, you know, we look at capital allocation in three buckets, right? we talk about R&D, a billion dollars or less every year. We look at BD deals. Andrew and Stefan look at BD deals all the time. And, you know, it's primarily, you know, focused on GI and GU areas. And then, you know, from a share buyback perspective, you know, through last quarter, we had done about 2.9 billion of share buyback, you know, from 2023 to second quarter, 23 to second quarter of 26 you know retiring about 90 million shares and so you know that and we have about 600 million left on our current authorization as of the end of last quarter so that that is also a key part of capital allocation so all three of those buckets are key part of the capital allocation game that we're playing yeah just importantly I think they're not mutually exclusive either and so we think that kind of the our financial profile allows us to invest kind of in all three buckets concurrently and you know from a BDE perspective we

Andrew Peters, Head of Investor Relations

want to make sure we get it right.

Seba Forte, Analyst — Wells Fargo

Got it we're out of time so thanks so much for joining us today this was incredibly helpful. Thank you. Thank you so much.