Good day, ladies and gentlemen, and welcome to the Exelixis Third Quarter 2018 Financial Results Conference Call. My name is Justin, 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 call over to your host for today’s conference, Ms. Susan Hubbard, Executive Vice President of Public Affairs and Investor Relations. Ma’am, please proceed.

Thank you, Justin, and thank you all for joining us for the Exelixis third quarter 2018 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 Senior Vice President of Commercial; and Gisela Schwab, our Chief Medical Officer, who together will review our corporate, financial, commercial and development progress for the third quarter ended September 30, 2018, as well as recent key developments and corporate events. Peter Lamb, our Chief Scientific Officer, is also here with us and will join us for the Q&A session following our prepared remarks. 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 website at exelixis.com. 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 clinical, 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, and without limitation, risks and uncertainties related to product commercial success; market competition; regulatory review and approval processes; conducting clinical trials; compliance with applicable regulatory requirements; our dependence on collaboration partners; and the level of costs associated with commercialization, research and development, business development and other activities. Now 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 and maintains a high level of clinical, commercial and financial execution as we move into Q4. As you will hear from the team today, revenues, earnings, and cash continued to grow in Q3. We advanced our plans to expand indications for CABOMETYX, launched a next wave of potential label enabling studies with cabozantinib and rebuilt our pipeline. Importantly, we see tangible growth in Q3 for the CABOMETYX, RCC business. While increased competition has negatively impacted the market share and Q3 revenues of the other TKIs in this indication. Simply put, our company and our business have never been stronger. We’re optimistic that cabozantinib’s best-in-class TKI profile can continue to drive strong growth in the face of emerging competition from immune checkpoint inhibitor based therapies. We’re determined to stay focus and deliver on our goals every single day for both patients and shareholders. I’ll begin today by providing a brief summary of our key Q3 milestones and then turn the call over to Chris, P.J. and Gisela for additional details on our Q3 financials, the commercial performance for CABOMETYX and our cabozantinib development activities. Key highlights for Q3 2018 includes, first, the significant growth in revenue, earnings and cash based on the strong commercial performance for CABOMETYX in advanced renal cell carcinoma. Third quarter net cabozantinib franchise revenues were approximately $163 million. Achievement of key regulatory milestones for cabozantinib in the EU and Canada provided additional milestone revenue and led to total revenues for the quarter of $225 million. Q3 net income was approximately $127 million with diluted earnings of $0.41 per share. The continued strong performance of the RCC business, where CABOMETYX is now – secondly, the continued…

Thanks, Mike. I’m very pleased to share with you our strong financial results for the third quarter 2018. Total revenues for the third quarter 2018 were $225.4 million with $126.6 million of net income and diluted GAAP earnings per share of $0.41 compared to total revenues of $152.5 million, net income of $81.4 million and diluted GAAP earnings per share of $0.26 for the same period last year. Total revenues include net product revenues of $162.9 million for the quarter ended September 30, 2018 compared to $96.4 million for the comparable period in 2017, which is a 69% increase. The increase in net product revenues reflects the continued growth of CABOMETYX in the treatment of advanced renal cell carcinoma. On a quarter-over-quarter sequential basis our net product revenues increased by approximately $17.1 million or 12%. This was a result of an approximate $8 million increase in CABOMETYX patient demand, a change in inventory approximately $6 million and finally, approximately $3 million which reflects the positive impact of the price increase we took on CABOMETYX at the end of the second quarter. Our deductions from gross sales in the third quarter of 2018 increased slightly to 15.7% when compared to the second quarter of 2018, which was 15.5%. This increase in gross to net was primarily due to an increase in discounts related to government programs. Total revenues also include collaboration revenues of $62.5 million for the quarter ended September 30, 2018 compared to $56.1 million for the comparable period in 2017. Collaboration revenues in third quarter of 2018 was primarily related to the recognition of $36.9 million and $5 million of milestone revenue from our collaboration with Ipsen for the anticipated approval of the second-line treatment of HCC in EU following positive CHMP recommendation and the approval by Health Canada…

Thank you. Chris. We’re pleased with the strong performance of CABOMETYX in the third quarter. We made significant progress towards our goal of establishing CABOMETYX as the TKI of choice in RCC is demonstrated by the strength of the Q3 business fundamentals, updated NCCN guidelines positioning cabo more favorably, and continued gains in market share in the TKI market. CABOMETYX net product revenue grew by 12% over Q2 to approximately $158 million and demand grew by more than 5%. The prescriber base of CABOMETYX continued to expand and grow by approximately 11% in third quarter. Also, we saw broad utilization across academic and community settings, lines of therapy, and clinical risk groups. We are pleased that CABOMETYX continued to grow in Q3 despite the increased competition. In order to get a better sense for the evolving competitive dynamics, we analyze the IMS prescription data for the RCC oral tyrosine kinase inhibitor or the TKI market comprised of sunitinib, pazopanib, axitinib in CABOMETYX over the last two years. Notably, both the NRx and TRx volume for this basket of compounds have been relatively stable since the first quarter of 2017. These trends confirm that the approval of the nivo/ipi combination has had a limited impact on the TKI prescription volume since its U.S. approval in April of this year. On the other hand, based on the publicly available IMS prescription data, CABOMETYX has continued to grow in both market share and volume. CABOMETYX NRx volume increased by 3% in Q3 relative to Q2 and CABOMETYX market share increased to 32% in Q3 even in the face of increased competition. Furthermore, these trends were strongest in the month of September where we saw 4% NRx volume growth over August and CABOMETYX NRx market share increased to 34%. In terms of new prescriptions,…

Thank you, P.J. I am pleased to provide an update on the progress of the cabozantinib development program in the quarter. I will start with a brief regulatory update on second-line HCC and RCC, as the first quarter was marked by important milestones. First, in September, 2018, the CHMP granted a positive opinion of cabozantinib and its monotherapy for the treatment of HCC and adults who are previously been treated with Serafenib. If confirmed by the European Commission who has the ultimate authority for approval decisions, this will further expand the labeled indication of CABOMETYX in the European Union. FDA’s review of our submission for second-line HCC is ongoing and the PDUFA date has been set for mid January 2019. Also in September, Health Canada approved CABOMETYX for the treatment of adult patients with RCC who have received VEGFR-targeted therapy. The Health Canada approval brings the international approvals for CABOMETYX to 10th including recent approvals in Brazil and Taiwan for this indication besides the United States and Europe. With these important milestones achieved, we’re fully focused on the broader development and lifecycle management plan for cabozantinib. Including single agent evaluations and combinations with immune checkpoint inhibitors to our collaboration with BMS and Genentech Roche. As we have mentioned on prior calls, we are planning to start multiple pivotal trials with cabozantinib in various tumor types in 2018 and in 2019, and I’m making progress in our work for such trials as planned. One such study has advanced to initiation recently and then please to provide a little more color on this Phase 3 trial today. A couple of weeks ago, we announced the initiation of a placebo-controlled Phase 3 trial of cabozantinib with a treatment of advanced radioiodine-refractory differentiated thyroid cancer patients who have received prior VEGFR-targeted therapy. This trial…

All right. Thank you, Gisela. Exelixis had a strong third quarter and continues to see solid growth in all aspect of our business as we put out the year and move into 2019. Our notable commercial and financial performance in Q3 provides a strong platform for building our product portfolio with future cabozantinib trials and important new indications in adding new product opportunities through internal and external R&D efforts. I will close by saying that we fully recognized the recent market volatility and specifically, the decline across the small and mid-cap commercial oncology sector that has been ongoing since the beginning of the year. I will restate what I said in my introduction. Exelixis has never been stronger from a clinical, commercial and financial perspective. Our recent success differentiates us from others and the small mid-cap oncology space and provides substantial momentum as we move into 2019. I’d like to reiterate several key issues that are important to keep in mind as we move forward. First, Exelixis will continue to build on the strength of the CABOMETYX launch and is positioned as the TKI of choice for RCC. Based on the totality of the clinical data from METEOR and CABOSUN, our commercial efforts target of the entire RCC population, independent of line of therapy, IMDC risk category and PD-L1 status. While targeting the broad RCC opportunity, we are working towards a future where nearly every eligible RCC patient receives CABOMETYX at some points in their journey from first- to third-line treatments. We are not surprised by the success of ICI combination strategies in RCC and expect that the vast majority of these patients will need subsequent therapies as they stop responding to frontline ICI modalities. Based on market research and KLO feedback, CABOMETYX appears to be a TKI of choice…

Thanks for taking my question and congratulations on the progress. I got a couple of questions if I may. First is for Gisela. How do you think about the data flow as we head into 2019? It seems like you kind of talked about several opportunities for early look for the COSMIC-311 study in DTC. But specifically for COSMIC-021, I think some of the cohorts you’re targeting I-O, relapse or I-O experienced patients, do you think any of them could be eligible for the accelerated approval pathway?

Yes, thank you for the question. Certainly COSMIC-021 is a large basket study with the opportunity to generate a lot of interesting data for the combination of cabozantinib and atezolizumab. We certainly look forward to the results from the various different cohorts. Just to reiterate what I said a little bit earlier, we are going to wait for full enrollment of the individual cohorts and maturing of the data so that we have reliable data to present. And it’s right now a little bit early to say when that will be the case. But as we go forward, we will keep you updated. And regarding your last bit of the question, we have the opportunity to expand individual cohort depending on activity and overall profile of cohort and the initial expansion cohort, so we certainly look forward to updating you on that as well when it occurred.

Okay. Yes, thanks for that. So at ESMO I think, or near ESMO there’s been two Phase 3 studies with I-O TKI combinations, specifically pembro/axitinib, avelumab/axitinib. When you compare these two trials, so the pembro/axitinib study stopped early it’s been PFS and OS benefit across the whole population. On the other hand, the JAVELIN Renal 101, I think the OS is still mature despite the fact that they enrolled about 60-plus-percent of PD-L1 positive patients. I think the consensus view on the street is that I-O TKI various combinations might perform similarly. So this question is perhaps for Mike or Gisela. Do you think this is perhaps a data to suggest potential differentiation across various I-O TKI combinations out there?

Hey, Andy, it’s Mike. Yes, it’s a little early to speculate on, comparing trials, especially when one trial hasn’t been presented right. So, yes, we’ve seen the press release and certainly saw the JAVELIN data at ESMO. We’re not surprised by that data. All the Phase 1b data that’s been – I think being presented and talked about over the last 18 months has looked encouraging, high response rates, long PFS, high DCR. So our expectation is that those would readout positive in some shape, manner or form. How they compare side by side? At steady state, when all the data’s out we’ll see, again, it depends upon a number of different factors and certainly where they enroll, when they enroll and everything else. So, it’s early there. We’re excited about 9ER. Certainly both cabo and nivo have been leading the charge here as kind of next generation agents for RCC over the last few years. Both have a strong survival advantage based upon their various trials. So we’re excited about that combination and certainly that collaboration with the BMS. And as Gisela pointed out, there’s a lot more there that we’re thinking about doing and looking at that, whether it would be cabo/Nivo, cabo/nivo/ipi or cabo/axitinib combinations. So we’re going to push this hard and, again, use the data that we’ve got as momentum to really move the whole company forward potentially based upon data that will come out in the future.

Great. Just a follow-up on that if I may. Obviously, these two combinations are using sunitinib. So maybe for P.J. What is the kind of utility for sunitinib in the second-line setting? Obviously, if those become the standard of care, maybe a sunitinib might not be used as frequently as right now.

Yes, thanks for the question, Andy. I guess a couple things there. I think since our initial launch of CABOMETYX and METEOR, we’ve really seen axitinib utilization decline in the second and third lines. And really, as I kind of mentioned in my remarks, we’ve seen CABOMETYX really become the best-in-class TKI with regards to, now leading a new prescriptions, as well as certainly revenue growth and the demand we’ve seen in the last few quarters. That said, I think as we talked to KOLs and conduct our market research generally, we think there will always be a place for cabo across lines of therapy, certainly in the first-line setting for certain patients with potentially rapidly progressing disease, symptomatic disease. And certainly as ICI combinations go into first-line, that’s going to create more and more patients in the second-line who’ve been exposed to immunotherapy or as you point out, potentially another TKI already. And I think that really just increases the opportunity for cabo in the second-line. So we continue to be focused on differentiating cabo from the other TKIs, which with the NCCN guidelines, certainly the data from our clinical trials gives us a really strong platform to do that, and continue to really compete for every patient across lines of therapy.

Great. Well, thanks so much for answering all my questions.

You bet, Andy.

Thank you. Our next question comes from Michael Schmidt from Guggenheim. Your line is now active.

Hey guys, thanks for taking my questions. I had a couple of maybe a follow-up on the commercial performance of CABOMETYX in the third quarter. Can you teach you, help us understand a little bit more how much of the volume growth that was seen was driven by frontline use versus recurring RCC?

Yes, I think with regards to that, Michael, what we’re seeing is growth across lines of therapy. We’re certainly seeing a lot of the growth driven by refills as well as new patient starts in Q3 and that’s encouraging. I think we’re well positioned now that we’ve sort of taken the lead, so to speak in overall NRx prescriptions and all of the TKI of choice. And I think really the NCCN guideline continues to provide us with the opportunity to have continued momentum there. And I think that’s really in the first-line setting because we do see still opportunity remaining with Sutent and Votrient there that we can go after in the TKI market. And certainly as I just sort of mentioned in the second-line, plus setting, opportunity for growth there as the landscape changes and ICIs are used in the first-line in combination.

Great. And then I realized, Mike, you didn’t want to speculate around checkpoint TKI combination and potential differentiation. But just looking at the CheckMate 9ER design, it looks like it’s a relatively small trial compared to the Merck study, for example. I think it’s about two-thirds of the number of patients. I’m just wondering if you would be able to provide at some point updates on the enrollment pace and potentially narrow sort of a guidance or a potential data from CheckMate 9ER trial.

I’m not sure about the question, but at some point we will certainly tell you when the trial is fully enrolled as we normally do. And once we have a sense on data, I mean, again, its primary endpoints are all event driven. So that’s kind of on a timeframe that is defined by the actual numbers and how those trials work. But, again, we’ll be as transparent as we can in the context of how we do this stuff and how we’ve done it in the past. And obviously, we have a partner with BMS that we have to coordinate with too.

All right, great, I understand. And then last question, a bigger picture strategy type question. I know that you in the past have said that you’re – business development strategy has been focused sort on earlier stage licensing of R&D type assets in terms of business development. And I was just wondering at this point in context of the strong financial health of the company, to what degree do you feel that there’s an opportunity or maybe sort of an urgency to take advantage of, obviously, your capital in order to do a bigger transaction, maybe a much informative transaction to bring another product into the basket.

Yes. As for the question and as we talked about previously before, we certainly had a very focused effort looking at literally all oncology assets going from preclinical to marketed products for the last couple of years now. We had strong effort that’s been collaborative between BD and R&D and commercial and finance kind of a full team effort to understand. Take our knowledge of the landscape, our knowledge of the biology, understanding of potential combination approaches and move that forward. So I don’t see anything changing and this is all, if you will, then somewhat, pre thought-out from the standpoint of going back to as early as the middle of 2015 around the idea that we wanted to right size the company, fix the balance sheets, get on a much more strong financial foundation and then look to add assets in a way that could help us build growth. Again, the cabo only focused wasn’t a strategy, it was a tactic to do all the baseline work that we had to do and to then move the company forward in a sustainable fashion. And we’ve done that now and we’re certainly cranking in terms of clinical, commercial, financial and feel good about where that’s going. We have to do the right deal at the right time, at the right price, that mindset hasn’t changed. We don’t want to do a suboptimal deal just to do a deal, but it has to really fit our criteria. We have pretty high bar when it comes to the science and the numbers relative to commercial and the financial side. So we’re going to continue to be aggressive and looking at opportunities and we’ve got a pretty broad net out there across the continuum of assets. And when we find something that we like, that makes sense to us both scientifically, commercially and financially, then we will move forward.

Okay, great. Thanks for taking my question.

Thank you. Next question comes from Kennen MacKay from RBC Capital Markets. Your line is now open.

Hi, thanks so much for taking my question and congrats on the commercial progress there. Just looking at your 5% increase in demand, it seems like this has really being driven by the increase in the prescriber base, about 11% increase. And wanted to see, is that 11% quarter-over-quarter? And really was hoping to understand a little bit more sort of where that incremental new prescriber is coming from. Is that commercial or community docs that haven’t been treating some of the higher risk and later in line patients were cabo was previously approved. And beyond that I was wondering what’s happening on the commercial sales FTE front as it looks like SG&A has actually been coming down quite a bit. And then just had one quick follow-up on some seasonality questions.

Great. Kennen, we’ll take those one at a time.

Thanks for the questions. So with regards to your observation on the demand increase in the prescriber base, I think that’s right. So we did have, as you mentioned, over 5% demand growth in Q3 relative to Q2 and an approximately 11% increase on the prescriber base and that’s really over cumulative prescribers. So people who have prescribers who have not prescribed CABOMETYX. So that’s really important to us, strategically too, as we prepare for new indications in HCC, for example, our market research indicates on advisory boards and HCC that physician who have previously written cabo and there’s a lot of them in the community as I mentioned in the prepared remarks. And RCC are more likely to prescribe than HCC and do that more quickly, so it’s great to expand the prescriber base. And I think your comment about really that happening in the community is what we see happening. So we see – really in the last few quarters, going back to the cabo that launch in December, treating sort of earlier, healthier patients in the first-line has given us the opportunity to educate more broadly the prescribers and the community. And then those prescribers who may not see as many RCC patients a year are now having the opportunity to gain experience with cabo which is great, out just particularly before the HCC launch. I’ll touch on also your question about the sales force. We really – we always evaluate and take a look at the size of our organization. And really our team, we’ve gotten right sized and prepared for the business in terms of our CABOSUN launch in HCC going back over a year now. So the team is ready and focused when we have, as I said, a high degree of overlap between RCC and HCC prescribers. So we’re prepared and ready to go with regards to the infrastructure commercially. I think having these new opportunity or new indications provide us the opportunity to have operating leverage and synergy, which is fantastic as we kind of leveraged the experience and the capabilities we have in place.

Got you. And maybe one sort of final commercial question here. I was wondering that the new patients add the new demand that you saw in Q3. Last quarter you talked a little bit about some patients coming onto cabo post I-O. I was wondering if these new patients were largely post I-O TKI naive patients and so we’re starting to see some patients progressing beyond I-O combo frontline, or if these were sort of true front line RCC patients that hadn’t seen any prior therapies. And then the follow-up question I had was on just inventory. I was wondering if there’s sort of a seasonality effect there or what the quarter-over-quarter change in inventory was relating to/. Thank you.

Okay. Kennen, this is P.J. I’ll maybe start off with kind of what new patients we saw in the quarter and then I’ll pass it to Chris to discuss inventory. So what we’re seeing really in terms of new patient starts, we did say last quarter, we’re starting to see patients progress on ICI combination therapy and we’re certainly continuing to see that. I’d say we’re really in the sort of early days of that, we’re not seeing a significant amount yet progress. What’s certainly encouraging across all the market research that we conduct and see is that the majority of those patients who are progressing on immune checkpoint inhibitor combo therapy are going on to CABOMETYX. So that’s consistent with what we’ve heard, which is good. And we are also seeing new patients come in, in the first-line. So I’d say it’s a mix. The market is very dynamic right now. But as I mentioned, I think we have an opportunity for growth across lines of therapy and particularly as that second-line immune checkpoint inhibitor combination sort of previously treated population will increase in the coming quarters.

Kennen, this is Chris. I’ll talk about the inventory. So we did see an increased in inventory in the quarter. I wouldn’t call it seasonality, but we did see an increase in inventory related to the demand increase that we saw and we also saw a slight increase in our weeks on hand. We’re still at the lower end of our range around 2.5 weeks, but we’re very comfortable in that range. And so, again, there’s no real seasonality to it.

Got you. Thanks so much for the question and congrats.

Thank you. Our next question comes from Peter Lawson from SunTrust Robinson Humphrey. Your line is now open.

Thanks for taking my question. Just on the gross this quarter, is that mostly driven by kind of frontline patients or the post diode? Is there any way you can kind of break that out for mostly the biased one way or particular?

Yes. Peter, this is P.J. Thanks for the question. I think we’re seeing it kind of from across lines of therapy. It’s like I said, it’s sort of early days in terms of seeing the patients go on to cabo or any therapy for that matter from ICI combinations. We are seeing the majority of those patients who get treated with ICI combinations in the first-line are going on to cabo, but we think that population is going to continue to grow in the coming quarters. And we are still seeing a new patient starts, so to speak in first-line. We’re pleased that we’re competing effectively there across risk groups broadly and I think particularly with the favorable updates to the NCCN guidelines in September that really makes us now we’re the preferred TKI in intermediate and poor risk frontline patients, which is 80% of the population. So I think we have the opportunity to continue to grow in the first-line at the expense of the other TKIs.

P.J., where do you think you’ve taken share mostly in the TKI space?

Peter, we’re seeing it, taking it from really both Sutent and Votrient. Certainly years ago we saw the decline come from axitinib, but since our CABOSUN launch in December, we’ve seen both Sutent and Votrient decline. Frankly those TKIs, if you look at their revenue quarter-over-quarter, all had significant double-digit sequential declines in revenue while we had a increase of 12% quarter-over-quarter. So we think we’re impacting on all of them.

And then just finally on the liver opportunity. It sounds like you’re not going to be adding to the – feel like you got enough bandwidth kind of liver and kidney indication and should we kind of think SG&A kind of being flat into next year?

But I think – with regard to the commercial infrastructure, we’re really at the end of the 2017 put in place the team structure that will need to compete effectively in both these indications, and that included adding sales representatives as well as marketing personnel that we need to do that and the teams really in good shape and ready to launch in HCC. So we do expect to start to get some operating leverage with regards to commercial organization. And there is a large overlap in community oncology with regards to the treatment of RCC and HCC. As I mentioned in the prepared remarks, we currently cover 95% of the potential of the RCC and HCC market opportunity, and it will be very simple just a few accounts for representative to start calling on those HCC only treaters upon a potential approval.

Great. Thanks for taking the questions.

And next question comes from Stephen Willey with Stifel. Your line is now open.

Good afternoon. Thanks for taking the questions. I guess, you guys consider the plethora of I-O TKI trials that are starting to underline now. Just what your thought is around what is the need for these combos to be able to move the needle in terms of depth of response in order to gain traction as a frontline regimen? And I guess, as you think about cabo, relative to some of the other TKIs, is there anything about the mechanism or the kinase profile that you think would somehow move the needle on CRA, its more so than perhaps axitinib and lenvatinib?

Steve, it’s Mike. Let me start with that, and I’ll pass it off to P.J. and Gisela to provide some additional commentary. Again, it’s really early for us to speculate on what’s going to move the needle here. I’m much rather have data than just kind of top line press releases to be able to really answer that question in detail. Obviously, the duration and depth of response is very important. DCR rates that go for a long time and also very important obviously move the needle with both PFS and OS is going to be an important part of the equation. Certainly, cabo, cabo is different. It was designed to be different, it certainly – we tested that hypothesis clinically, and I think across the board at least study has been read out now in renal and liver looks to be different than kind of VEGFR-targeting TKI. Is that because of the MET AXL inhibition? Probably. Certainly, we impact other cell types as well, that appear to play an important role outside of the simple antitumor, anti-vascular activity, which I think is important. So – but you look at the totality of the data, single-agent cabo versus single-agent other VEGFR-targeting molecules with all the caveats that go with dealing those comparisons, those cross product comparisons, cabo has very real differences in terms of its activity in METEOR where we double PFS, we should survive for the first time with the TKI second-line. Certainly winning with the survival benefit in liver was again, relatively rare event to my knowledge, no other molecule has done that besides those based upon sorafenib backbone. So lots of failed attempts. So we have some ideas. Those ideas obviously were put into play, when we made the molecule long time ago and it took us a while to. If you will, prove it clinically, but we feel that we’ve gotten that now and the momentum that they’ve got with these ICI combinations is I think pretty strong. So now our challenge is to do that on a broad scale, is renal, it’s liver and beyond some of the histologies that were mentioned in Gisela’s remarks, is just really the first tip of the iceberg there. And certainly, looking at the 021 study, we’ve got lots of other options and opportunities to play there as well. So it’s early days for us. We certainly like what we’ve got and we are excited to push that forward as quickly and as deeply as we can.

Okay. And then, I guess, you think about the work that you’re doing both with Bristol and with the Roche. There is some redundancy obviously between tumor types your bladder cancer data with Bristol renal data with Bristol and liver data with Bristol looks like you’re kind of replicating that with the Roche as well. So just trying to how you guys are thinking about the redundancy there exists between tumor types and do you eventually choose one partner to kind of concentrated development efforts on all should we think about these as occurring in parallel tracks

I would think more of the lateral knowing that we will make investment decisions on a case-by-case basis based upon data, based upon where we stand in terms of the competition and other the factors. So stay tuned on that. I don’t want to get ahead of where we’re taking those, but I would say the idea that we have a second wave and the third wave of potential label-enabling trials with cabo combinations is a vision that we hope to make a reality, and the question is just now filling in all the details, the histology, the combination partner, the line of therapy, the from all that is certainly important and how we factor the priorities here relative to what is obviously a very fast- moving field with lots of other players and other combinations that certainly have some activity.

And then just lastly, on the COSMIC-311 trial in DTC. Is lenvatinib the frontline TKI of choice there? And I guess, if so, how much data do you have in the post-lenvatinib setting?

I think both have obviously sorafenib and lenvatinib as an indication in this setting and both are being used and may be regional differences that goes are certainly being used in the setting. We have our older data largely in sorafenib filling patients, but the little bit of data in lenvatinib feeling patient the mechanism of action is obviously VEGFR-targeting and DTC and/or for another indication that cabozantinib is active and the post VEGFR-targeted is getting.

Great. Thanks for taking my questions and congrats on quarter.

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

Thanks for taking my questions and congrats on quarter as well. I guess my first question is with regard to the commercial side as we prepare for the second-line launch in DTC. And as you think about the demand curve of the gate, what is your view that is there a buildup in terms of demand or there will be more of a steady build if you get characterized your expectations there that would be helpful.

Thanks for the question, Paul, this is P.J. We certainly don’t want to provide any guidance so to speak in terms of our revenues. We’re not doing that. I think what we can see is that, it’s been a very dynamic marketplace as I mentioned heavy unmet medical need there for those patients. So I think with the newer therapies recently available physicians are really trying to figure out how to put all that together right now. You see that the medical meeting. So it’s really an ideal time and opportunity for us to be able to launch into that dynamic marketplace and help educate physicians on the CABOMETYX data there. So I think we’ll build on and leverage the experience we have in RCC and the positive momentum there. As I mentioned, we have market research that indicates prescribers that are more likely to write for CABOMETYX in HCC if they’ve written in RCC – over 50% of the community target have it at this point. So really good momentum there and with that, the 11% increase in prescribers this quarter certainly is helpful there, a good sign. So we look forward to bringing that to patients if and when approved by the FDA.

Okay, thanks for that. And then, in the wake of the various I-O plus TKI datasets or headlines at least that we’ve seen so far and post ESMO. Can you give us your updated thoughts or any color you are hearing on how renal docs are thinking about sequencing and what you think in the post I-O TKI patient population? What duration could possibly look like relative to where it is right now?

Yeah, I think, as I mentioned, renal RCC has really been a sequencing market for over a decade now and I think certainly for everybody in the field, and the KOLs, exciting to have new options for their patients. I think the sequencing will continue to play out. And as I mentioned, we’re really well positioned to continue to compete in the first line as well as post any sort of ICI combination in the second line in RCC. And I think beyond that it’s probably a little bit early to speculate until we see more data and kind of see how things play out in the coming quarters and years frankly in that marketplace. But I think being the TKI choice currently and really having the great team and experience we have in the marketplace really gives us a lot of momentum to continue to be successful there.

Okay. Thanks for taking our questions.

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

Yeah, thanks for taking the questions. A follow up on that earlier BD question. So you said that you want to do the right deal at the right price. So has the recent market pullback changed your views on external assets that might now be more attractively priced? Or do you feel things are still priced a little bit too high?

Yeah, Jeff, I think the issue really is more around the science and the data and the fit. Price is certainly important. But again, we’re focused on doing the right deals, early stage – preclinical early stage, mid stage, late stage, or whatever that makes sense from the standpoint of existing data, either as those assets exist. The potential for those assets to be franchised molecules, right, in their own rights and their ability to combine with compounds that we have in our portfolio as well as those that could be useful in other – with other compounds stay on the ICI front as well. So we have a very – we’re certainly very agnostic in looking at how we view the assets, the classes, the modalities, the targets. But the overall framework has to make sense to us and has to really fit our expectations around the science. The pullback recently is certainly something that we’ve noticed as well kind of hard to miss that, but it certainly doesn’t – it’s not that driver for us from the standpoint of pulling the trigger or not based upon where we see the real priority is at finding the best assets possible that we’ll have the longest term potential to drive growth going forward.

Great, thanks. And then you’ve highlighted overlaps between RCC and HCC such as the prescribers. As you prepare for the potential launch, what differences do you see in HCC from RCC? And how are you preparing for those?

That will certainly – it’s a different indication, so there are differences clinically. There is just a lot of commonality though in community oncology generally. So, clearly, there’ll be some academics in KOLs and HCC that will engage vigorously upon launch. The marketplace is so as I mentioned very common customer base and community oncologists and similar in the fact that both are really TKI and immuno-oncology spaces too. So I think our experience over the last few years competing with those types of agents will really serve us – service well. So I think we’re certainly very excited to get out there and hopefully have the opportunity to sell it as soon as possible.

Great, thanks.

Thank you. Your next question comes from [indiscernible]. Your line is now open.

Hi, guys. Thanks for squeezing me in. Clearly KEYNOTE 426 has gotten everyone excited. So I’m going to try and ask one more question about Checkmate-9ER. Is there an interim coming up? And if so, when?

Yeah, we haven’t really spoken about details of the trial design. Remember, the study is being run by BMS and it’s really for them to address any questions on interim analysis and the like – what we can say at this point.

Okay, I had to ask. Interesting in discussions with our – with I-O KOLs. They have highlighted that AXL and MET and some of the other kinases that cabozantinib hit. It could be causing – could lead to some synergy with PD-1 and PDL-1. Looking at that slide that you put with the expansion cohorts with the T cell for example, I’m wondering does this AXL and MET synergy would be the one. Is that more particularly relevant in certain tumor types than others?

Yeah, this is P.J. I’ll take that one. The role of AXL and MET with respect to PD-1 is probably largely driven through AXL and MET on the immune cell subset. So it’s kind of host site thing rather than tumor type thing. So, if you look at the totality of the cabozantinib target profile, we’ve got VEGFR, MET and AXL. There is a role of TKI that play a role in modulating immune cell subsets. And in general when they’re activated, they help enhancing the immune suppressive environment. And what we’ve been seeing in preclinical models and also increasingly in some kind of clinical PD in patients treated with cabozantinib is that you get increase in the activated T cells, you get decreases in immune suppressive cells, just Tregs and MDSCs. And I see that’s a very interesting poster at ESMO recently. Looking at RCC patients on cabozantinib pre and post that – one confirm those findings and actually also showed an increase in the activated natural killer cells. So we’re impacting both of the adaptive and innate immune systems with cabozantinib. And I think it’s that we feel provides the kind of scientific underpinnings for the ongoing I-O combo trials with cabozantinib.

Okay, thanks. That’s exciting. On HCC, I understand we discussed on the call extensively today that you have HCC, RCC overlap in the community setting. But I’m just wondering is this going to be anything you could expect even in the larger prescribing centers? Just wondering what advantages unique to you – you’ll have when you square up against Merck in HCC?

Well, I think, as I mentioned, what’s I think exciting for us in the HCC centers, we have the synergy and the community for that great experience and we’re in all of these centers already though we’re not hauling on those specific positions toward HCC docs. But I think it’s really the same type of story that led to our success in early days of RCC. We’ve got a very experienced team. We’ve got a great data. We’ve got – we’re going to have tremendous focus on educating them and moving the business. And frankly, I think one advantage that we’ve had and will continue to have at Exelixis. This is where we’re hungry, we’re small and we’re nimble with a great drug to sell. And there is not that many incremental HCC customers that we’re going to have to call on. So I think that’s very doable. And frankly, we have the opportunity to focus on just a couple of things and really make that count.

Okay. And then last one, when you think about pipeline, could you tell us if any – if either small molecule or biologics are interesting to you either or just seeing that there’s quite a bit of data coming out from ADCs and by specifics these days. I’m just wondering if you have a particular preference?

Yes, Mike, yeah, we’re completely agnostic to the modalities that we’re interested in. Obviously, it’s all about the – it’s all about the tumor biology and the data that’s existing that helps guide us. The two deals that we’ve done this year, to date one is with small molecules, one is with biologics and we’re certainly looking and talking to people on both fronts as well. So, again, it’s all about data and potential to be able to build a franchise either by itself or in combination with other drugs that we have in our existing portfolio.

Great, thank you very much for taking my questions guys.

Of course.

Thank you. At this time, there are no further questions. So I will turn the call over to today’s host, Susan Hubbard. Ms. Hubbard, you may begin.

Great, thank you, Justin, and thank you all for joining us today. We certainly welcome your follow-up calls and any additional questions that we were unable to get to you in today’s call.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day.