Good day ladies and gentlemen and welcome to the Exelixis’ Second Quarter 2014 Financial Results Conference Call. My name is Whitey and I’ll be your operator for today. As a reminder this call is being recorded for replay purposes. I would now like to turn the conference to your host for today Ms. Susan Hubbard, Investor Relations. Please proceed.

Thank you Whitey, and thank you all for joining us for the Exelixis second quarter 2014 financial results conference call. Joining me today’s call are Mike Morrissey, our President and Chief Executive Officer; Scott Garland, our Chief Commercial Officer; Debbie Burke, our Interim Chief Financial Officer; and Gisela Schwab, our Chief Medical Officer who together will review our corporate, commercial, financial and development progress for the quarter ended June 30, 2014 as well as providing specifics around the priority activities for 2014. Peter Lamb, our Chief Scientific Officer is also with us and will participate in the question-and-answer session of the call. As a reminder we are reporting our financial results on a GAAP basis only and as usual the complete press release with our results can be accessed through our Web site at exelixis.com. During the course of this presentation, we will be making forward-looking statements regarding future events or the future performance of the Company, including statements about possible future developments regarding clinical, regulatory, commercial, financial and strategic matters. Actual events or results of course can differ materially. We refer you to the documents Exelixis files from time to time with the Securities and Exchange Commission and in particular the Company’s quarterly report on Form 10-Q filed today. These documents contain and identify under the heading Risk Factors important factors that could cause actual results to differ materially from those contained in any forward-looking statements including without limitation, the availability of data at reference times, risk and uncertainties related to the initiation, conduct and results of clinical trials, risks relating to the commercialization of COMETRIQ, risk and uncertainties related to regulatory approval processes and the compliance with applicable regulatory requirements, the sufficiency of Exelixis Capital and other resources and market competition. With that I’ll turn the call over to Mike.

Thank you Susan and thanks to everyone for joining us on the call today. We had busy second quarter and I’ll take a few minutes to review several key topics before turning the call over to Scott, Debbie and Gisela for a review of our commercial, financial and development highlights. First, our cabozantinib development activities continue to advance and we expect several important milestones in the second half of 2014, including top line results for the COMET studies, overall survival data from EXAM for MTC and completion of enrollment in the METEOR study and second line RCC in anticipation of top line results in 2015. Gisela will provide additional color on these and other studies in her development update. I’ll emphasize here that our main goal with the COMET studies is to generate data, which if positive will clearly differentiate cabozantinib from other agents in prostate cancer. Second we saw a solid increase in COMETRIQ revenue for Q2 2014 over that seen in Q1 2014. While the absolute numbers are still small, reflecting the limited number of MTC patients in need of therapy, we’re encouraged with the good quarter-over-quarter growth. Scott will update you next on the evolving treatment patterns we’ve observed this quarter and share our thoughts about next steps in the MTC marketplace. Finally we’re pleased with the announcement of positive top line data from the coBRIM pivotal trial with cobimetinib, a selective MEK inhibitor discovered at Exelixis and being developed by our partner Roche-Genentech. As you saw two weeks ago, the coBRIM trial met its primary end point of demonstrating an improvement in progression free survival for the combination of cobimetinib plus vemurafenib as compared to vemurafenib alone. Based on information provided during their recent earnings call, Roche expects the results from this trial to be presented at ESMO in September. We’re pleased with the progress being made in the development of this promising new agent and look forward to sharing additional information with you as it becomes available from our partner. So with that I will turn the call over to the team for more detailed updates on our progress over the quarter. I will return at the end to sum up and close the session by reviewing our top priorities for 2014. So with that I’ll turn the call over to Scott.

Thanks Mike. Total net COMETRIQ revenues were $6.6 million for the quarter, an increase of 34% compared to Q1 of this year. Net sales in the U.S. were $6.1 million representing a 27% increase over the prior quarter. Sales growth in the U.S. was driven by increases in treated patients and treatment duration. Focusing first on treatment duration, this quarter average treatment duration for active MTC patients was approximately eight months. About a third of these patients have now been on drug for a year or longer. We believe that the continued increases in treatment duration we have seen quarter-over-quarter reflected growing level of comfort amongst prescribing physicians in managing the side effect profile associated with COMETRIQ. Our market research supports this point. Close to 90% of surveyed oncologists that have prescribed COMETRIQ report favorable impressions of the drug and 80% rated their experience with COMETRIQ as more favorable than that with other TKIs. Furthermore, our latest duration numbers continue to indicate that some MTC patients can stay on drug for relatively long periods of time. In fact we have several patients that have remained on COMETRIQ since launch. In addition to seeing a lengthening of treatment duration, we have also seen a solid increase in the number of new MTC patients treated this quarter as measured by new MTC cartons shipped. We believe this growth was driven by increasing traction made by our sales and marketing team in the second quarter. To recall we expanded the sales force from 5 to 15 reps at the end of last year and they have now collectively been in the field for more than six months. These reps made close to 2000 calls on customers this quarter. Moving to Europe, our distribution partner Sobi continues to make progress on the commercialization of COMETRIQ in the EU. Sobi has obtained reimbursement coverage for COMETRIQ via the Cancer Drugs Fund in the UK and began commercialization activities there. In addition, they are in the process of negotiating pricing and securing reimbursement in other European countries. As I said on our other calls, securing pricing and reimbursement across Europe can be a lengthy process and consequently we expect ramp up of sales in Europe to be slower than that of the United States. Finally, our preparation for the potential co-promotion of cobimetinib with Genentech continues to progress nicely. As you know, the melanoma market place is becoming increasingly dynamic and we’re excited about the possibility of having products to co-promote in that space. We will of course provide more specifics on the commercialization of cobimetinib when appropriate and as more details become available from Roche Genentech. Now let me turn the call over to Debbie.

Thank Scott. I'm pleased to provide you with the highlights of financial performance for the second quarter of 2014. I’ll refer you to our press release and today’s 10-Q filing for additional details. Net revenues for the quarter were $6.6 million, consisting entirely of product revenue from the sale of COMETRIQ. This is an increase of $2.5 million in product revenue over the same period last year. Net revenue in Q2 '13 included $7.8 million of contract and license revenue from collaborations which were fully recognized in 2013. R&D expenses for the quarter were $51 million, reflecting a slight increase of $1.9 million over Q2 last year. This increase is primarily due to personnel related expenses to support our five phase III pivotal trials. SG&A expenses were $16.5 million for the quarter. The increase of $3.3 million as compared to Q2 last year was mainly driven by higher personnel expenses, mostly related to the expansion of our U.S. sales force. The remaining increases relate to stock based compensation and marketing expenses, including an increase in expense for cobimetinib under our collaboration with Roche Genentech. Total operating expenses for the quarter were $68.3 million. The increase of $5.1 million as compared to Q2 last year reflect the increases in R&D and SG&A expenses I mentioned a moment ago. For other income and expenses, we incurred a net expense of $11.7 million compared to $10.9 million in Q2 last year. Included in the 2014 amount is $7.3 million of non-cash interest expense, related to the accretion of discounts on both our convertible senior subordinated notes and financing arrangement with Deerfield. We ended the quarter with $352 million in cash, compared to $415.9 million at the end of 2013. I will comment briefly on our financial outlook by saying that our financial guidance for the full year 2014 remains unchanged. We continue to expect total cost and expenses in the range of $250 million to $280 million and we anticipate to end the year with greater than $200 million in cash. Our outlook for the length of our financial runway also has not changed and we continue to be confident that our runway extends through the readout of METEOR trial for RCC. With that I will pass the call onto Gisela.

Thank you, Debbie. In the next few minutes I will provide an update on the progress of the development program for cabozantinib and the recent news on cobimetinib. I will start with cabozantinib program update. As you know, we are intensely focused on exploring and ultimately expanding the cabozantinib opportunity across multiple indications. We have a broad strategy in place for evaluating the compound in a variety of indications, using internal resources to support phase III trials and working in partnership with a wide array of individual physicians and corporative groups through our collaboration with the National Cancer Institute’s Cancer Therapy Evaluation Program with CTEP and an investigator-sponsored trial program to enable a broad program of earlier stage exploratory trials. Our highest priority for 2014 is to secure top-line data for both phase III pivotal studies COMET-1 and COMET-2 in advanced metastatic castration-resistant prostate cancer. As you know, COMET-1 a randomized study of cabozantinib versus Prednisone is focused on the assessment of overall survival as the primary end point and COMET-2 is a randomized study of cabozantinib versus mitoxantrone/prednisone focused on pain response. Both studies are ongoing and we continue to expect top-line data this year. In the meantime, we are preparing for U.S. and EU regulatory filings to be made if and when we obtain suitable results from final analysis of the COMET studies. Considered together, the basic objective of the COMET studies is to evaluate whether cabozantinib demonstrates both a survival benefit and relief from pain associated with bone metastasis. We believe such a profile would significantly differentiate cabozantinib from other agents used in the treatment of CRPC. Now turning to other important ongoing trials for cabozantinib. In addition to the COMET studies, we are also studying cabozantinib earlier in the treatment of CRPC patients prior to chemotherapy…

Okay. Gisela. Thank you. I’ll keep my closing remarks brief so we can get to your questions. As you heard from the team today, progress continues on all fronts and we're on the critical path towards a very important set of milestones in the second half of 2014. I’ll conclude by reiterating our top priorities for the year. First, top-line data readouts for both the COMET-1 and COMET-2 studies, second, working towards submitting regulatory filings, assuming positive COMET data; third, completing enrollment for METEOR and second line RCC in anticipation for top-line results in 2015; and fourth, planning our commercial build out supporting the prostate cancer indication in the U.S. and EU pending positive COMET data. I’ll wrap up here by thanking all of our great employees for their dedication, their focus and their tremendous work ethic in helping us meet our key goals and priorities. Collectively and individually we remain completely focused on our key objectives, to bring new therapies to patients with cancer and build value for our shareholders. So we’ll stop here and be happy to take your questions. Operator?

(Operator Instructions) Your first question comes from the line of Ted Tenthoff with Piper Jaffray. Please proceed.

Firstly, congrats on the positive top-line coBRIM read. That’s a really exciting addition or expansion of the late stage pipeline and going to be an exciting opportunity for you guys next year. I guess my question has to do with market potential there and maybe some of the competitive dynamics that you guys see in the MEK/BRAF space in general. It might be a little bit early to be asking that, since the data hasn’t even been reported yet, but maybe you can at least tell us what your thoughts are and anything that maybe Roche has shared along those lines?

Yes, Ted, it’s Mike. Thanks for the question and your support. I think it’s an important question that you’re asking around the melanoma space. It certainly is very dynamic now with all the different combinations around the MAP kinase pathway, certainly with all the immuno-oncology agents that are emerging there. Its early right and we’re probably not in a great position to say a lot of there. Scott, do you want to provide some color commentary?

Yes. I mean we know from the American Cancer Society about 76,000 patients that are newly diagnosed each year with melanoma about 9600 of them will die each year. So it’s a good sized market. I think it relates to the competitive environment. Obviously we're just going to have to wait and see the data. And you guys would get a chance to take a look at the cobi data at ESMO. What I can say is we have great partner. Obviously Genentech has been around oncology for a while and it’s a company that I know very well. I was there for 10 years and we have a great relationship with them and we’re working very closely and we look forward to the potential of being able to compete in that space.

Your next question comes from the line of Brian Klein with Stifel. Please proceed.

First off on cobimetinib, I know that you guys don’t have access to the data or you can't disclose the data. But I was wondering if you could give us a sense of what is a meaningful PFS improvement in this patient population so we can have at least some sense of where we should be thinking about the benefit of this combo therapy?

Yes, Brian its Mike. Thanks for the question. Again, I think it's really important issue. Without have the data come out right now, it’s really hard for us to I think even opine upon some of the boundary conditions that you’re talking about there. We’re, as Scott said really pleased to be in this space if you will by having a positive pivotal trial readout with the combination we’re certainly looking forward to having the data come out at ESMO in September. So stay tuned.

Okay. That’s fair. In terms of expenses going forward, as you guys think about the second half of the year and into next year, how much of your expenses are now going to shift over to cobimetinib as you progress or as Genentech progresses towards regulatory filing and commercialization?

Hi, Brian. This is Debbie. I’ll answer that for you. Our agreement with Genentech includes an equal share of the U.S. profits and losses and the expense that I referred to this quarter represents our share of those expenses for the U.S. commercial costs associated with their launch planning activities, so the expenses that they've shared with us have been included in our expense guidance for this year.

And then lastly just on cabo, in terms of the data read out. Can you give us a sense of -- obviously the survival data I think is going to be the paramount piece of information that we’re going to have? But how much additive benefit is there with a positive COMET-2 trial? How do you sort of see the market and physicians interpreting a positive COMET-2 trial in the setting of positive COMET-1?

I think it’s a really, again, it’s Mike. It’s a really good question. It certainly I think gets to the heart of what we’ve done with the broad COMET program to be able to capitalize and utilize the broad Phase II data set where we saw I think unique, in some ways provocative activity and try and translate that into data from pivotal trials that we can use to move forward. So clearly we’re interested in being able to differentiate the compound with potential survival benefit, pain reduction, narcotic reduction really. I think those different parameters speak well to the advancing disease state of prostate cancer as I think we’ve all heard from all the various experts. So that’s the overall goal. And I think if we can do that in COMET-1 and COMET-2, we’ll be I think very fortunate to then move forward with the compound. Gisela, Scott do you want to provide some other color commentary?

Maybe just to add to this, we designed the studies in way in a complementary fashion; COMET-1 addressing the overall survival benefit or overall survival as the primary endpoint and COMET-2, the pain endpoint. And that is a dedicated study to that PRO, Patient Reported Outcome of pain, which is obviously complicated to collect. So these two studies together could support a product profile that could be importantly differentiated from other compounds.

Scott.

Yes, maybe just to add a bit, we’ve done a lot of market research, looking at the importance of differentiated profile on prostate cancer. And what’s clear is physicians tell us they have a number of treatment goals but their top two are improving overall survival and improving quality of life. And pain is a major influencer of overall quality of life. So our research is very clear; that physicians deem that potential improvement and pain is very important for us as well. And obviously we know prostate cancer is a crowded space and the opportunity to be able to have those from a commercial perspective jointly I think is going to give us some additional value. We know the drugs that are currently approved are good drugs but they're not curing patients. We know there are 30,000 men who die each year from prostate cancer. We think there's a real potential for us to go out there with these two studies and make a meaningful difference if we have positive data.

Your next question comes from the line of Eric Schmitt with Cowen and Co. Please proceed.

Are you able to talk at all about when we might see data from the cobimetinib combination trials, the Phase I/IIs that Roche that is running?

Eric its Mike. We don’t have that information right now. Those are trials that were initiated I would say I think late last year. So it’s still relatively early. There are dose range finding studies. But we have no feedback from our partner and they to our knowledge haven’t communicated any timelines for when they would communicate data from those trials.

Maybe realizing again Mike this is Roche’s design, but can you talk about the mechanistic rationale for combining MEK with say an ERBB pathway inhibitor or a PD-1 inhibitor?

Certainly I can’t but I think Peter could do it better, so I’ll pass it over to him.

Just to speak to the two that I think you mentioned; first very interesting combination I think with the PD-L1, antibody. There was actually very nice preclinical rationale for doing that. There is data that suggest that in innovation of MEK in the setting of tumor immune cell interactions may actually help ameliorate some of the tumor-mediated immune suppression that normally exist under the circumstances and then therefore complement the activity of a PD-L1 antibody quite nicely. And I believe Genentech actually had some data at AACR last year, very nice preclinical poster demonstrating exactly that, that incorporated some cobimetinib data and showed some nice additional efficacy in our preclinical model when you combine those modalities. So it’s very important that the: So the thinking again is, I believe this is also supported by preclinical data, is that you then combine a MEK inhibitor, which acts downstream of the RAF mutation with an inhibitor of the HER family pathway. It will then kind of overcome this kind of, inhibitory activity if you like of the KRAS mutation. So all of the trials are really well founded on I think a very strong preclinical rationale.

Great. Thanks for that. May be just one quick question. It looks like the COMET-2 study is still enrolling. What’s your confidence in wrapping that up by year-end?

Again, our guidance as you heard, I am guessing several times today and in the past is that we’ll have top-line data in 2014.

Okay. And how long after data from COMET-1 and COMET-2 might you be able to turnaround a filing in the event that data sets were positive?

Gisela.

Yes. Signing obviously in the case of positive data would be the highest priority and we’re preparing for it as we speak, at risk obviously but that would be the highest priority for the company and we will execute that as quickly as we can. We haven’t guided to a specific timing from final data but certainly we would input that in 2015.

Your next question comes from the line of Biren Amin with Jefferies. Please proceed.

I guess on COMET-1 and COMET-2 would you disclose data from both trials separately or would you wait for both trials to complete before disclosing data?

Hey, Biren its Mike. Yes. As we’ve said previously, we will disclose data as trials read out. So there is no need in our view to wait. So that’s the plan right now. We haven’t guided to the sequence and obviously more precise timing but our view is that as trials read out, we will get the data soon thereafter.

Okay. And I guess at ESMO, are there any plans to maybe disclose baseline data on the COMET trials?

Not sure I understand that. Could you repeat that again for me?

So I mean, the baseline patient characteristics that you’ve enrolled into COMET-1 and COMET-2 would you have any plans to maybe share with us that data set?

Yes. No, that’s something that we would not. These are active ongoing trials. So we would not make any forays into talking about the data until the trials are done.

Got it. And then I guess on the ISP data that you’re expecting later this year, early next year, can you talk a little bit about if the trials are powered in second-, third-line non-small-cell lung and in platinum relapse-refractory ovarian cancer, and what type of differences should we look for? Is it overall survival that's a primary endpoint? Any color that you can provide. Thanks.

Yes, sure. So these are cooperative group trials that are run out of GOG and ECOG respectively. These are sizable Phase II studies, randomized Phase 2 studies and they follow a sizing if you will that’s common in oncology with about a 100 plus patients for a randomized Phase II study. So these are pretty robust Phase II trials. Primary endpoint of both of them is progression free survival.

Your next question comes from the line of Lee Kalowski with Credit Suisse. Please proceed.

First question just on cabo and particularly on the U.S number, just curious if -- so if I look at the step up there, I'm wondering if that’s all demand related, particularly relating to the step up in the sales force or if there was any inventory build ahead of the July price increase or anything, we should be thinking about as we look at the step up in the U.S. number from Q1 to Q2?

Yes. Scott, that’s probably in your.

Yes. The step up was entirely demand driven. Just to remind you, we report revenue on a sell-through methodology which means we don’t count it until it actually gets shipped to patients. The other approach is known as the sell-in methodology, which is where you count it when it gets shipped to distributor, seller. So this was demand driven as I said in my nothing remarks. It was driven by increases both in new patient starts, as well as increases in treatment duration as well.

Got it, okay. And question on cobi; curious what your thoughts are, just as far as having OS data, how important having OS data is relative to the evolving landscape in melanoma? And is that something we might see at ESMO given that it’s a secondary endpoint?

The trial is designed to receive primary end point of progression free survival and that was the endpoint that was communicated, that read out to positive. The secondary endpoint over our survival but would take a little longer to follow to maturity.

And last question Mike and I think you had mentioned is your priorities for the year was building out a commercial infrastructure for the prostate cancer. Just curious if that’s something that is already underway or is that going to wait for final analysis of COMET-1.

Yes, Lee. Again I think what I said exactly was we are doing our planning around the commercial buildouts supporting the prostate cancer indication. So all those planning activities are well in hand and we’re dotting the Is and crossing the Ts but obviously we’re going to wait to see the data before we start investing.

Your next question comes from the line of Terence Flynn of Goldman Sachs. Please proceed.

This is Irene in for Terence. Thanks for taking the question. Can you talk about your combination strategy with cabo for prostate, given you’ve initiated the Phase II trial of cabo in combination with Zytiga for chemo-naïve prostate cancer patients?

Sure. You are correct, we have initiated a randomized Phase II study combining cabozantinib at various dose levels with abiraterone and that study is ongoing and it was built upon on the data that was published previously from a Phase I dose ranging study done at The Dana Farber Cancer Institute. The doses were evaluated and cabozantinib was well tolerated in combination with abiraterone at the 20 milligram and 40 milligram dose level. We are also evaluating, and that is study one we run in the CTEP program, the combination of cabozantinib with docetaxel. So that is an ongoing Phase I evaluation. So we are planning at this point and have a protocol in development for combination of cabozantinib with enzalutamide. So we’re evaluating the compound in various different combinations and in various different lines of therapy and the later line but also in the earlier line importantly before chemotherapy.

And maybe just, can you provide an update on the ongoing cabo trials at the NCI's running?

So the NCI has a broad program ongoing and that spans about 15 or so ongoing or approved studies. They have been very, very effective in getting studies up and going and enrolling. And in fact the two studies that I've spoken about little bit earlier, the lung cancer and the ovarian cancer study, these randomized Phase II studies are run under the umbrella of the CRADA that we have at the NCI. So I think it’s been very effective, the program is moving forward and is going to yield data late ’14 and ’15.

(Operator Instructions). Your next question comes from the line of Michael Schmidt with Leerink. Please proceed.

I was wondering in your agreement with Genentech, who will determine the pricing of cobimetinib? Will it be a joint decision or will Genentech drive that pricing decision?

Genentech will actually drive that pricing decision.

And when does the composition of matter patent expire for cobi?

Yes that’s a number that I'm not familiar with right now or date. We'll have to get back to you on that.

I can circle back with you on that, Mike.

At this time there are no further questions, and so I will turn the call back over today’s host Ms. Susan Hubbard.

Thank you Whitney and thank you all for joining us today. We look forward to taking any of your follow up calls and questions after we wrap up. So thanks again.