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

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

All right. Thank you, Susan and thanks to everyone for joining us on the call today. Exelixis has continued to advance all components of our business in the third quarter, as we built the foundation to accelerate revenue growth for cabozantinib in 2021 with potential new commercial opportunities and a variety of mission critical developments and regulatory milestones. Please see our press release that was issued an hour ago for our third quarter 2020 financial results and an extensive list of key corporate accomplishments. The highlight of the quarter was the ESMO presentation of the positive results from the CheckMate -9ER, the Phase 3 pivotal trial evaluating the cabo/nivo combination in first-line RCC. We’re excited to highlight the compelling activity of the cabo/nivo doublet, notably the significant improvement in overall survival with a doubling of both progression-free survival and objective response rate to extended duration of response, the improved tolerability with low discontinuation rates and improvements in health-related quality of life compared to sunitinib. The FDA has accepted our application and granted a prior review with the PDUFA date of February 20, 2021. The Exelixis commercial organization is launch-ready and the United States, should approval come sooner. Our urgency and focus are driven by that consistent feedback from ESMO at -9ER represents best-in-class IO, TKI data and reinforced by recent market research, which indicates that a large number of previously untreated RCC patients could benefit from the combination of these two market-leading single agents. When the size of the first-line RCC patient population and long duration of PFS observed with the cabo/nivo doublet are viewed together, we project a potential doubling of cabo RCC revenues and expect to exit 2022 with a $1.5 billion annualized run rate in the U.S. if our assumptions and modeling are accurate. Our first-line RCC…

Thanks, Mike. For the third quarter of 2020, the company reported total revenues of $231.1 million. Total revenues for the quarter included cabozantinib franchise net product revenues of $168.6 million. Net product revenues in the third quarter of 2020 were negatively impacted by lower demand and by a decline in wholesale inventory. Total revenues also included $62.5 million in collaboration revenues from Ipsen, Takeda and Genentech. Our total operating expenses for the third quarter of 2020 were $273.7 million compared to $183.9 million in the second quarter of 2020. R&D expense was the primary driver of the increase in total operating expenses, which increased by approximately $61.8 million and was primarily related to increases in licensing and milestones fees associated with existing and new business development activities, stock-based compensation expense and clinical trial expenses from our continuing investments in cabozantinib and our emerging pipeline. Provision for our benefit from income taxes for the third quarter of 2020 was the benefit of $6 million compared to a provision for income taxes of $13.9 million for the second quarter of 2020. The company reported a GAAP net loss of $32 million or $0.10 per share basic for the third quarter of 2020. The company also reported non-GAAP net income of $11.2 million or $0.04 per share on a fully diluted basis. Non-GAAP net income excludes the impact of approximately $43 million to stock-based compensation expense net of the related income tax effect. Cash and investments for the quarter ended September 30, 2020 was over $1.5 billion. Now, turning to our fiscal year 2020 financial guidance. We have updated in the financial guidance we provided earlier this year to reflect the changes to our business in the second half of 2020. We are maintaining our total revenues guidance, which we expect to be in the range of $900 million and $950 million due to higher milestone and R&D reimbursement revenues. Net product revenues are expected to be in the range of $700 million and $725 million. Cost of goods sold is expected to be approximately 5% of net product revenues. Research and development expenses are increasing due primarily to higher forecasted licensing expenses and are expected to be in the range of $550 million and $575 million, which includes non-cash expenses related to stock-based compensation of approximately $40 million. Selling, general and administrative expenses are increasing due primarily to incremental personnel related costs and are expect to be in the range of $290 million and $300 million, which includes non-cash expenses, related to stock-based compensation approximately $70 million. Guidance for the effective tax rate in 2020 is decreasing; it is now expected to be in the range of 14% and 16%. And finally, we’re projecting cash and investments to be in the range of $1.5 billion and $1.6 billion. This guidance does not include the impact of potential new business development activities. And with that, I’ll turn the call over to Peter.

Thanks, Chris. I’m happy to provide an update on our preclinical development and pipeline expansion efforts. Work at our discovery laboratories and Alameda is continuing following stringent protocols to protect the health of our employees. It is exciting to see the ongoing flow of data and we’re continuing to make progress on an early stage discovery program and I’d like to take this opportunity to thank all of our discovery team members for making this happen. Work at our discovery partners, particularly Invenra, Aurigene and Iconic, has continued to advance as has preclinical development work at our network of CROs. As a result, we now have the opportunity to file up to four INDs in the next six months. This quarter, we could file INDs for the CDK7 inhibitor, AUR102 from our Aurigene collaboration, which going forward, we will refer to with the XL102; and the tissue factor-targeting ADC ICON-2 from our Iconic collaboration, which we will refer to as XB002, going forward. Early next year, we could also file INDs for XL265, a TAM kinase focused TKI from our internal laboratories and in second compound from our Aurigene collaboration with a novel mechanism of action. We recently presented data on XL092, our next-generation MET, VEGFR, AXL, MER inhibitor that is currently in Phase 1 trials at the recent EORTC-NCI-AACR meetings. In addition, Aurigene presented data on XL102, the CDK7 inhibitor at the same meeting, and Iconic presented data on XP002 the tissue factor-targeting ADC at the recent World ADC Conference. We plan to present data on XL265 and the second Aurigene compound at major scientific meetings next year. I will recap some of the key data from the XL092 presentation. XL092 is intended to build on the in-depth understanding that we’ve gained with respect to the clinical activity of…

Thank you, Peter. I’m pleased to provide an update on our cabozantinib regulatory and development program progress on XL092, and new compounds moving towards IND. I’ll start with CheckMate -9ER. We’ve made a lot of progress since the positive top-line results were announced for cabozantinib and nivolumab combination in first-line RCC, in late April by BMS and Exelixis. As you recall, the study demonstrated a significant benefit over the comparator, sunitinib for all three efficacy endpoints, including a significant improvement in overall survival with a 40% reduction in the risk of death and a doubling of PFS and objective response rate compared to sunitinib. Additionally, the combination of cabozantinib at 40 milligrams daily and nivolumab was generally well-tolerated, and associated with a low discontinuation rate, while maintaining improved quality of life compared to sunitinib. Detailed results of the study were presented by dr. Toni Choueiri at the recent virtual ESMO Conference in the Presidential symposium and favorably, discussed by Dr. Camilla Parker. On the basis of the results from the trial, we’ve made great regulatory progress together with EMS and our partners Ipsen and Takeda. We have completed the supplemental NDA filing concurrently with BMS’s supplemental BLA filing in the United States in August and FDA has recently accepted the submissions for priority review and signed a PDUFA date of the 20 of February of 2021. Concurrently with the United States submission, BMS and Ipsen have also completed at the submission in Europe to the EMA and the filing which validated on September 12, 2020. Further international filings have also been accomplished, including Switzerland, Australia, Canada, and Brazil, with many more to follow in short order. And also just a few days ago, our partner Takeda together with Ono Pharmaceuticals, have announced the submission of concurrent sNDAs for the combination…

Thank you, Gisela. I’m pleased to discuss the CABOMETYX business as we head into 2021, which will be a transformative year for the brand as we anticipate our first potential combination approval in first-line kidney cancer and subsequently, further combination data presentations for cabo. the strong -9ER data positioned CABOMETYX to return the franchise to significant revenue growth. The momentum built with the launch could further be driven by additional data readouts and other important indications as the robust cabo development program continues to generate data. I will discuss the opportunity that -9ER provides Exelixis. looking forward, as we continue to build upon the foundation in RCC, where we remain the number one prescribed single agent TKI. we are pleased that CABOMETYX market share remained stable in Q3 in our key segments, in both RCC and HCC. according to brand impact of IQVIA, CABOMETYX TRx share was stable at 31% in Q3 relative to 30% in Q2. while at the same time, TRx volume of the RCC oral TKI market basket of CABOMETYX, INLYTA, SUTENT and VOTRIENT declined by – in Q3 by 6% relative to Q2, CABOMETYX TRx volume declined by 3% in Q3 relative to Q2. As I mentioned, our focus is squarely on future growth of the cabozantinib franchise and we were excited by the recent outcome and presentation of the CheckMate -9ER study. We believe that these results pending regulatory approval may provide us with the opportunity to grow CABOMETYX market share and increase duration of therapy in the first line. the -9ER data in a presidential session was among the most high profile presentations at the 2020 ESMO conference and the data were extremely well-received by the KOLs and in market research we’ve conducted. The ICI combination opportunity is large with 15,000 RCC patients in…

All right. thanks, P.J. As we outlined at JPMorgan in January, 2020 is a transitional year for Exelixis as we navigate important readouts from ongoing pivotal trials, like -9ER, and advance our pipeline with cabo lifecycle management activities and new indications and combinations, while at the same time, building a diversified portfolio of assets. to date, 2020 has been a year of significant achievement and progress across all components of our business in the face of the COVID-19 pandemic. Unfortunately, we continue to acknowledge the potential risk to our business, should the pandemic continue to grow in severity as we’ve all sadly seen over the last several months. I’ll close by reiterating the three key themes from today’s call. First, we expect 2021 to be a transformational year for Exelixis and the cabo franchise as we project a -9ER approval to accelerate revenue growth for cabozantinib. based on the size of the first-line RCC market and long duration of PFS in -9ER, we expect to exit 2022 with a $1.5 billion annualized run rate for RCC in the U.S. if our modeling is accurate. Second, we’re encouraged by XL092 as a next-gen multitalented VEGFR, MET, AXL, MER inhibitor with the more user-friendly clinical half-life and the significant opportunity it represents to broadly expand into new and existing solid tumor indications with a variety of IO backbones and combination strategies. Third, we are aggressively advancing and investigating the diverse portfolio of next generation Exelixis cancer medicines, including both small molecule and biological modalities to increase our potential success in helping even more cancer patients with difficult to treat tumors. I’ll close by thanking everyone at Exelixis for their efforts in the third quarter under conditions that appear to get more and more challenging each quarter. The majority of our team has been working from home for more than seven months now, and continues to meet the demands of our business with great teamwork, expertise, and energy. I’m incredibly proud to say that the entire Exelixis team continues to work as one and making every day count as we discover, develop and commercialize, the next generation of our medicines for cancer patients in need of better and more effective therapies. We look forward to updating you on our progress in the future. Thank you for your continued support and interest in Exelixis and we’re happy to now open the call for questions.

Thank you. [Operator Instructions] Our first question is going to come from the line of Asthika Goonewardene with Truist.

Hi, guys. Thanks for taking my questions, and then showed a nice quarter again. A few if I may, Peter, can you maybe tell us a little bit about what mechanisms of actions besides PD-1 and CTLA-4 makes sense to you? I’m just wondering if they think about new negatives, vaccines and those kinds of mechanisms as well. Gisela, totally understand that you have a lot of opportunity to accelerate development of 092, and we’re quite excited to see what you guys do there. But maybe, I was wondering, for those of us on the outside, when would we get maybe, a first glimpse of that single agent PD-1 combo data from the dose expansion? And then Mike, I have to ask, you mentioned $1.5 billion in cash. That’s a nice chunk that you have to. How you think about business development activity for 2021? And maybe, to color up further, it’s still going to be more licensing deal focused or would the acquisitions could be underplay would be helpful. Thanks a lot, guys.

All right. Asthika, there’s a lot there. Why don’t we start with Gisela and Peter on 092? Gisela, you want to start there?

Sure, absolutely. Thank you for the question. And the question was around when do we get a first look on the phase 1 data. Peter referred to a little bit of the pharmacokinetic data that was included in the recent presentation and showed already that the molecule is behaving as hoped for when it was designed. And that it has shown a shorter half-life of about 24 hours or so. And regarding further data, we’ll present data, certainly when we have mature data, and just know that we are hoping to start at late stage studies and 2021. And of course, we see the data before we even get to presenting or publishing it. And so we can make decisions certainly, a little bit earlier and as you – as we do, you’ll see us move forward in that direction.

Yes. I mean, just to take your question on the kinds of IO modalities might be good to combine XL092 with, I mean, I think I’ll be with – there’s a broad opportunity there beyond the oldest, PD-1, PDL-1, CTLA4 as you have commented, in which we already have clinical POC essentially from cabozantinib. Obviously, we’ll continue to look at the development of additional IO agents be they novel checkpoint inhibitors, be they cytokines, and all of which could, could end up being appropriate combination partners, even a double, or potentially even triplets with XL092 depending upon the indication on the savings.

Okay, great. Thank you, Peter. Thanks, Gisela. Asthika, on the BD side, as we said previously, we’re very focused on using business development activities, to expand our pipeline of either clinical and/or preclinical compounds that we’re pursuing. We certainly did number of deals to announce this quarter with NBE and Catalent’s on the ADC side, we have a whole roster, a line-up of potential deals kind of coming down the pipe, when those get done. if those get done, we’ll talk about those in more detail. Obviously, we have, I think, a pretty good feeling for the kind of activity we’re looking for. The obvious importance of if possible, combining with the – with 092 as we go forward as well. So, there’s lots of opportunity and it’s a full team effort here in terms of how we’re focused to make sure that we make the right investments for the right assets at the right time for the right value, right. So – but we’re very excited about the recent additions to our – to the network of collaborators that we have and looking forward to getting those collaborations going and really tracking at full speed.

Great. Thanks a lot, guys.

You bet.

Thank you. Our next question is going to come from the line of Jason Gerberry with bank of America.

Hi. Good afternoon. Good evening, everyone. This is Chi on for Jason. Thanks for taking our questions. I guess maybe, first one for me is that, you talk about ICI combo’ed in renal, talk about that there’s about 20% of the patients, who use the ICI combo? The curious, do you have a split between IO/IO versus IO/TKI 20% and were these patients, did they receive TKI monotherapy or were the IO retreatment, where say they may have received an IO/TKI in frontline and next is to an IO/IO in second line?

Yes. Hi, chi. Thanks for the question. This is P.J. I’ll take that. So, as I mentioned, we think of the -9ER opportunities is very large and broad. and per your question, looking at the current sort of market share of IO combinations, in RCC, the 20% is in second line. So, what we see and this is all according to brand impact, there’s IQVIA data in first-line IO combinations account for about 80% of the market, right. And that’s a larger place and that’s the – a large population, and that’s the setting, in which the -9ER study is done. So, we would anticipate really I’m taking that first-line setting. of the 80%, about 50% total of the market is IO/TKI. The 20%, I was referring to is second-line uptake of IO combinations, and that’s kind of a mix of IO/TKI and IO/IO. And this is again, according to brand impact. And you really see those coming after just a variety of first-line agents. There’s no real strong pattern there. but I think what excites us about certainly, the -9ER data and the market research we’ve done with quite a large number of physicians at this point, is that the feedback on the data is very positive. As I mentioned with regards to the safety and tolerability, the efficacy data, quality of life data, and we think we’ll have a significant opportunity particularly in that first-line setting there and think we can really drive a lot of market share. And as I mentioned also the duration of therapy aspect will be really significant for the business. When we look at 19 months of PFS by investigator, 20 months’ duration of response in the -9ER study. So, we believe that that duration of therapy will be long – certainly much longer than what we see in CABOMETYX monotherapy.

Awesome. I guess, going back to the front line, it seems to be like IO/TKI keep pushing up a bit by bit every other quarter or so, do you see there’s opportunity for IO/TKI to expand further would be potential approval of -9ER and we’re right now added at 40%, 50%. where do you see that potentially can reach, waiting to see the potential filling for IO/TKI assignment in the frontline setting?

Yes. Yes. Great question, Chi. And as I mentioned, we kind of see that potential broad. So, the 50% IO/TKI, we certainly view as our profile being best-in-class and that’s the feedback we’re getting and being very competitive there. So, we think we can take share in that segment. We certainly believe we can take share in the other segments, lot broadly in the IO/IO segment as well as the 20% that our TKI monotherapy, because certainly, this is compelling data. And as we have the opportunity to educate physicians on it, we think we could expand the market and really steal share from all of those segments to benefit patients.

Awesome. I guess maybe, a last one from me is that, if you guys can provide any color on your progress on your second-line and your prostate cohorts in COSMIC-021, and when can we potentially expect next data update for these two particular indications. Thank you.

Gisela, do you want to take that one?

Absolutely. Thank you. Thanks for the question and happy to address that for CRPC and for non-small cell lung and the checkpoint inhibitor pre-treated population, we have presented data early in the year, I’d ask, would you and also at ASCO for the non-small cell lung cancer indication in both encouraging activity for the cabozantinib and atezolizumab combination, showing response rates for CRPC are 32% with a long duration and a disease control rate of 80%. And likewise for the lung cohort, we saw a 27% response rate and disease control rate there as well. These cohorts, cohort 6 and cohort 7 have now fully involved in COSMIC-021 and that is following up patients to fully understand mature data in both of these populations. And then, additionally of course, we are planning towards a potential accelerated approval path, in particular toward the CRPC indication, where we had initial interactions with FDA, and that will be dependent upon cohort 6 data and when it’s mature, but also additional cohorts in CRPC in the 021 study. So, certainly, following up these cohorts and we look forward to providing updates as they become available for both indications and just to a complete on the non-small cell lung cancer cohort and the checkpoint inhibitor, pretreated patient population. We are also completing enrollment with 80 patients and the other single agent cohort in this study as well. So, this has advanced very nicely and we look forward to more mature data.

And maybe, just one quick follow-up from me. When you said, you had initial interaction with the FDA on the prostate cohort 6 data. When did that interaction happen?

We have discussed that on various conference calls, so that they happened a while back when we discussed the initial encouraging observations in the cohort 6 based upon the first 30 patients or so, where we’ve seen very encouraging results in terms of objective response rates. So that’s a while back and then we received that initial encouraging feedback.

Got it. Thank you.

Thanks, Chi.

And our next question is going to come from the line of Peter Lawson with Barclays.

Hey, thanks for taking my questions. just on revenues, just if you could break out anything around that low demand, whether it came from academia or the community setting, and what inventory was this quarter?

Yes, this is P.J. We’ll just do with regards to the quarter in demand, what we saw there, I kind of referred to in the script is the entire market basket of TKIs and RCC were down approximately 6%. And really, I think that’s a – it’s sort of a broad dynamic there in the market and we didn’t really see any differences with regards to academic or community there. Certainly, some impacts still from COVID with regards to what we’re seeing in the healthcare system, patient visits being down, various follow-ups, et cetera. So, I think that’s something we saw broadly with regards to the market, and certainly also saw it in the – in those products reporting earnings as well.

Yes, Peter, this is Chris. So, from a reporting perspective, we reported revenue down quarter-over-quarter about – sequential quarter about $10 million. About half of that was related to demand, which kind of correlates with what P.J. was talking about. And this is for cabozantinib franchise and then of the remaining $5 million probably about three or so is related to inventory and the rest is related to a slightly higher gross to net.

Great. Thank you. And then just as we think about Q4, what helps drive acceleration run those revenues and then any color around kind of what could be happening in October?

Yes. Peter, it’s Mike. And probably not appropriate to talk about the quarter this early. Obviously, the biggest driver for revenue growth is that 90-hour approval and launch, as we talked about in the script. So, we’re ready to roll once we get the letter and/or certainly excited about the data and the potential, and the team is certainly very skilled and prepared to get out there and educate physicians, and prescribers on the data stuff. But that’s the big driver and that’s the big message for the call today.

Great. And then I just find anything around HCC, any since around growth, if that was declining as well.

Yes.

Hi, Peter. It’s P.J. again. One thing we’ll say is that basically the HCC businesses were stable in Q3, more broadly as we look forward, in HCC, we’re obviously looking forward to the 312 study reading out in combination in the first-line setting with atezo in HCC. And what we’ve seen is bev/atezo approval in Q2 has really driven significant, quick uptake for that regimen and personally, in HCC. And that bodes well potentially for another combination such as cabo/atezo, should the data be positive, and also it’s moving IO therapy into the first line in HCC. So, as we kind of look longer-term, we would anticipate a similar dynamic to what we’ve seen in RCC, whereas IO moves forward and then that sort of that 50% or so of the market that they occupied in second line kind of opens up for more TKI utilization. And we think the CABOMETYX data in our current label from the celestial study in HCC in second line is well positioned to then take more of that share in second line as patients progress beyond IO therapy in HCC.

Great. Thanks so much for the detail.

You bet, Peter. Thank you.

And our next question will come from the line of Andy Hsieh with William Blair.

Okay. Thanks for taking my question and I hope everybody is doing well at Exelixis. So, I have a question regarding basically data presented at the triple meeting. So, I think the [indiscernible] there is that there are more similarities and differences with the exception about like tenfold higher potency against actual. So, the first question I guess, for Peter or Gisela, is kind of the clinical relevance, why specifically you chose to optimize that specific target and also kind of thinking about bigger picture in things Gisela for kind of laying out the development path for 092, but just given the similarities, how much can you kind of peek into what you have in-house for COSMIC-021 and accelerated the development of 092. And that question really derived from the fact that you’re thinking about advancing that asset into late stage development next year.

Yes.

We feel so, Andy. Thanks for the questions and endeavor. So, I think if you’ve got the message from the presentation of the triple meeting was the aim with 092 was to retain the target profile of cabo, so potent against MET, AXL and MER and potent against VEGFR2. There was one slight wrinkle there where, with cabo and the VEGFR2 potencies is more potent against that the max and that feature, we pretty much retained in XL092. I think that plays out quite nicely in the in vivo setting as well. I think, we didn’t specifically optimize on AXL potency. We wanted to be sure it was potent enough. And as you correctly say, it turned out being a bit more potent. I mean, it’s definitely an emerging target of interest in many solid tumors and a lot of indications we may go into, but that was not a primary driver of the optimization. It was really retaining that target profile whilst giving them something that have a significantly shorter pharmacokinetic offline.

Okay. And Gisela, do you want to take the second part of the question?

Thank you. Thanks for the question. So, the question was around the development path and what can we learn or have we learned from COSMIC-021 and what can be applied for 092, and how can we drive things forward? I think this is a key question, of course, XL092, as Peter as described, is a differentiated product and the profile suggests that it has a shorter half-life and while retaining the target inhibition profile that we’ve learned to love with cabozantinib and we’ve seen very encouraging activity within. So, with that, certainly, we have lots of experience with cabozantinib as a single agent and combination. And so everything that we’ve learned and anything really in 021 – COSMIC-021, but also in other clinical experience with cabozantinib is coming to bear in some way that we can build on when we think about the development costs for XL092 while we’re not looking to replace cabozantinib, we are rather viewing this as the development cost with the opportunity to build upon that experience in broadly expand the opportunity in two indications outside the current and near-term specific indications that comprised the existing cabozantinib footprint, also including combination partners line of therapy in tumor indication. And so I think, we certainly see a lot of opportunities for XL092’s project development plan with various combination partners and in different lines of therapy, but also across an array of different indications. And that may include some of the cabozantinib indications, but again, we’re not looking to replace cabozantinib and are looking to do head-to-head study.

Great. Thank you. And maybe, one more for P.J. going back to the kind of the dynamic COVID-19 impact with the TKI market, I’m just wondering if you’re seeing any inflection points and maybe, your thoughts on when that is going to stabilize, would it be with like a vaccine be necessary to kind of see that, or are you anticipating some sort of stabilization going in the near-term?

Yes. Thanks for the question, Andy. I wouldn’t want to speculate too much specifically on the RCC, TKI market vis-à-vis COVID. I think anecdotally customer feedback, you do hear that things are starting to get back to normal depending on the geography, the location, tele-health et cetera, but I think, when you do look at data, that’s been put out there, published from folks like the community, for the Community Oncology Association, you see that these things have impacts of screening of – just follow-up things that may influence the patients’ journey. So those, I think just take a little bit of time, and this is broadly for oncology to kind of work through the system. Obviously, you can’t really, there’s no crystal ball for anyone with regards to the pandemic. And I think the system just working through that, but I wouldn’t want to speculate too much looking forward, but I think, what’s important for us, as kind of Mike mentioned, we mentioned in the call is that we’re very excited about -9ER with regards to getting that approval and then being ready to go with the launch and really driving growth in the business forward for CABOMETYX with that approval.

Right. Yes, absolutely, yes. Looking forward to that approval. Thanks for all the insights and answering all my questions.

You bet, Andy.

And our next question will come from the line of Yaron Werber with Cowen.

Hi, everyone. This is Leo on for Yaron Werber.

Hi.

Thanks for taking my questions. I have a couple of questions; first is regarding the cabo. You guys mentioned about the market trend to for TKI. I’m just wondering if you see any specific trends or different in terms of different market segments, such as maybe, the second-line RCC versus the first-line RCC. and within first-line RCC, are you just seeing any like different trends in the different risk categories in terms of favorable risk versus cool risk? I’m just wondering how the potential approval of -9ER in first quarter next year or the potential data from COSMIC-313 would kind of reverse that trend and I have a follow-up question for 092. Thanks.

Yes. Hi, Leo, it’s P.J. I’ll take that first question. So, as I mentioned broadly, we’ve kind of presented the TKI trends, and what they were. but what I would say is, when you look at the market for RCC, you see significant utilization of combinations in the frontline setting. Approximately, 80% of the frontline setting is combination therapy, in terms of IO and something else and 50% of that is IO/TKI. So, I think significant opportunities for -9ER looking forward, pending an approval. And as I kind of mentioned, we see -9ER competing across clinical risk groups, which is what we see the current IO/TKI to get therapy doing now, it’s getting share in favorable, intermediate and poor risk and we see -9ER potentially competing across all of those well – as well as across all competitors. With regards to the second line, we see CABOMETYX retaining our market share kind of across segments, certainly in the second line currently are key segment there, and have the potential for growth, and we really get the vast majority of patients, who are progressing from an IO-based therapy in the second line. So again, could see potential growth there as we look forward. So, I think we’re looking at just the potential to grow broadly pending the approval of -9ER, which we’re extremely excited about.

Okay, thanks. So, in terms of the first-line RCC dynamics, are you seeing more of like a decreasing trend of the use of IO/IO versus IO/TKI, or it’s still maintained as same?

Yes. I mean we’ve got, if you look at one of the slides, we’ve got that broken out in a bar chart for you. So, we see about 50% of the first-line as IO/TKI currently. And I would say, that’s either maintaining or slightly been increasing is what we’ve seen over the last couple quarters. So, I think that shows that IO/TKI is really kind of resonating broadly in the marketplace. So, I think there’s the opportunity to really build on that momentum with CABOMETYX in a potential -9ER approval.

I see. Thanks. So, regarding the 092, I’m just wondering, if you identify any potential indication that will allow you to go through the accelerated directory path?

Yes. This is Gisela. Thanks for the question. I think this will be entirely data dependent. And at this point, it’s a little bit early to speculate at this point. So, in the Phase 1 study, we have incorporated expansion cohorts in specific indications, and as we learn more about the compounds, we’ll certainly examine the data and then make a data-driven decisions.

Got it. Okay. Thank you so much. It’s very helpful.

Thanks, Leo.

And our next question will come from the line of Michael Schmidt with Guggenheim.

Hey, guys. Good afternoon, and thanks for taking my questions. Maybe, just a couple of follow-up to prior questions. It’s been a little while now since asthma where the type in -9ER data was presented. Just wondering what feedback has been now from KOLs since it’s been a while and one rate what your level of engagement, what physicians has to let you the feedback in that regard, and also wondering, how we should think about potential inclusion in [indiscernible] guidelines prior to the approval of the combination in February.

Hey, Michael. this is P.J. So, I’ll just – with regards to the second part, I mean, in NCC, and, I won’t speculate on what they or when they might do it, they just have to kind of wait and see how that goes. With regards to feedback, we’ve talked to a lot of KOLs, conducted many ad boards, and we’ve also done market research with a significant amount of community and academic positions. So, we’re talking well over 100 physicians at this point. So, I think we’ve gotten a really nice sampling and flavor of feedback and it’s all been extremely positive and we believe this will be a best-in-class combination in terms of IO/TKI; really looking at the totality of the data, it’s impressive. When you look at the efficacy in terms of, it’s the only combination that doubles progression-free survival, and objective response rate, while increasing, improving overall survival and doing that while it maintains quality of life relative to sunitinib, which is really novel in this setting. And I think you kind of wrap all that up in the fact that this is a new optimized dose of 40 milligrams daily in terms of with combination and nivo here, and physicians are viewing this very favorable and looking at it in a sense that they’re getting efficacy that they really want to use for their patients with tolerability sort of safety profile and quality of life that they really like, and can kind of build on their experience really both these agents separately. So, it’s been very favorable, I think we’re excited, we’re ready to go and launch it sort of across the board, both virtually and in person, and I think that the entire team is just looking forward to having the opportunity to get out there and educate on the data.

Okay. And then on COSMIC-312, the frontline liver cancer study, I guess, how do you think about potential differentiation from the approved Tecentriq-Avastin combination, and is it purely an efficacy question? Are there other factors that play that might sway physicians to prescribe one versus the other combination potentially are pending success, obviously?

Yes, Mike, P.J. addressed that as well. I think obviously, we’ll have to get a positive study and the answer to that will be data-dependent. I think, a couple of things as I think about that setting those, we’re seeing in multiple data sources, the atezo/bev combination do well in terms of rapid uptake in the first-line, seeing first-line share of already 30% to 50%. So that said, I think we’ll – it’ll be a great opportunity to differentiate depending on the data with instead of an IO/bev option and IO/TKI option, so novel mechanism of action. and this is a tumor type very much like renal, where TKIs have been backbone of therapy for over a decade. So, I think that’s – that we’ll be – we’ll be – we’ll do well from an experience standpoint there. And then I think there’s certain nuances with regards to bevacizumab in terms of the inclusion criteria, potential places, where physicians will want to think about what are appropriate patients given that safety profile, where perhaps we’ll have a slight advantage there, but obviously, we have to really wait and see the data. But certainly, represents a large potential of growth opportunity in the first-line setting and in the interim potentially, some opportunity for those patients progressing on an IO-based therapy into the second-line HCC.

Okay. And then one, maybe for Peter or Gisela. Just on XL092, so given the similar binding characteristics of that molecule to CABOMETYX and I guess the shorter half-life, how would one expect that to translate into a differentiated clinical profile? Is it mainly a safety advantage or might that and able to potentially a higher dosing or pushing efficacy maybe further, and as a result of that are there certain potential indications where XL092 might be more advantageously positioned relative to CABOMETYX for example.

Yes, this is Gisela. Thank you for the question. I think the key question is, how does the shorter half-life translate into differentiated profiles? And the key here is that it’s worth event management and management of tolerability could be improved and adverse events could subside more quickly as Peter explained earlier, cabozantinib depends a long half-life in the [indiscernible] on time is it’s longer. So that would be expected to be shorter and adverse events could sit side more quickly. And so it would be potentially resulting in if you build more user-friendly TKI in that fashion and that could translate into an improved safety profile in terms of other advantages that could be notable the shorter half-life of course, it’s also important to when thinking about peri-surgery indications or administration, where wound healing as well as pleased and things like that will always have to be kept in mind when dosing a longer half-life TKI to targets VEGFR. And so that could be a setting, where a shorter half-life, it’s also of benefit. But this would be a very specific indication here. General, we XL092 as one that’s a compound that can potentially have a broad and diversified development, including such indications as just mentioned.

Okay. Thank you so much.

Thank you, Michael.

Our next question will come from the line of Kennen MacKay with RBC Capital Markets.

Thanks for taking the question. I was hoping that the team could comment a little bit about specifically how cabo/nivo in the CheckMate -9ER profile would be differentiated in the eyes of physicians versus some of the other checkpoint TKI combos that are already approved, essentially, what’s going to be the edge that drives physicians to choose about cabo/nivo over any of the other combinations. Thank you.

Yes, hi Ken, and this is P.J. I’ll take that. As I was kind of referring to earlier, I think the data are really compelling and we’ve heard this from broadly in market research and for KOLs. I think, first of all, it’s the only – not only the only IO/TKI, but the only combination that’s doubling PFS and objective response rate while improving survival. So, I think when you look at the totality of the efficacy data, that’s very compelling. Furthermore, the safety and tolerability profile, I think look really good to physicians low discontinuation rate, the EU rate really good with the 40 milligram dose. And then if you look at the quality of life data, right, it’s maintaining quality of life despite adding a second drug and providing all that clinical benefit that we’ve talked to, which is unique relative to other IO/TKI. So, I think that’s really compelling for physicians and we’ve heard really good feedback on it. So, I think that gives us a lot of opportunity to position it broadly successfully across risk groups, favorable, intermediate and poor, and with regards to any potential competitors.

Yes, hi, Ken, it’s Mike. That’s a really good question, and we’ve done a lot of market research in terms of ad boards and blinded market research, and it’s been a very consistent instead of feedback, I’d also refer you back to the analyst discussion that we had post the ESMO presentation back in September with four are very kind of top tier KOLs that presentation is still on our website still online. And that would definitely recommend people take a listen to that. There was a lot of great discussion there, a lot of great perspective there on why they think this is not only great, a very competitive combination, but really veteran towards best-in-class as well.

Thanks, Mike. Thanks, P.J.

Thank you, Ken.

And our next question is going to come from the line of Chad Messer with Needham & Company.

Hello, everyone. Thanks for squeezing me in. And this is Duane for Chad. Just one question from us. Are here indications that are going to be revisited with XL092 or cabo face certain challenges in development?

This is Gisela. Just to go back to the development plan for XL092 there are certainly areas where cabozantinib has been developed its commercialized and where we can be looking now at different lines of therapy, different combinations within a tumor type. And that it certainly in the broader development plan. But we also see opportunity and various different combinations that haven’t been explored with cabozantinib. We see opportunity in different lines of therapy earlier lines of therapy across indications including adjuvant and new adjuvant indications, given the target the profile of the compound. And so we really are viewing this as an opportunity to build on the cabozantinib development plan, and from the cabozantinib development plan more broadly with a wide array of opportunities.

All right. Thank you for taking the question and congratulations on all the progress.

Thank you, Gill.

And our next question will come from the line of Stephen Willey with Stifel.

Yes, thanks for squeezing me in. So just a quick question. I know on the kind of year end 2022 run rate and guidance that you’re providing, I think Mike, you had mentioned, or P.J. had mentioned that you expect there to be, I think, five ICI/TKI combos to be approved at that point. I know you spoke a little bit to the inputs regarding just treatment duration that you guys were maybe assuming in that number, but can you maybe just say, I guess yes or no, whether or not you guys are assuming that you guys have a majority market share relative to those other those combo competitors and maybe to what extent?

Yes. Steve, it’s Mike. We don’t want to give that level of data from a competitive point of view. I would say if it’s a, it’s a very conservative market share estimate that’s arguably comparable. But certainly we’re not, we’re not going offline on a market share ledge, if you will, in terms of assuming we get a very large majority market share either. So, we’re taking, I think a very conservative view here, obviously, a doubling of duration of treatment, approximately based upon the PFS data is a strong driver of those of that run rate. But we’re conservative in terms of the expectation for market share, leaving some upside for growth as well, even beyond 313 and other cabo activities in that indication.

Okay. And, then just real quickly on COSMIC-311. I know that there’s a – I guess in interim read coming this quarter is, should we expect to see any kind of data, I guess, within a press release? Or was that something where you guys are just going to be – are just going to stay yes, we hit the threshold we’re filing. No, we didn’t. We’re going forward.

Yes. It’s our study. So, we have more flexibility with what we say and when we say it. So, I mean, we normally put some level of kind of uber top-line data in press release to give people some sense of the results. And I’m assuming we’ll do that here, but that remains to be seen. So, stay tuned.

All right. That’s helpful. Thank you.

Thanks, Steve.

And our next question will come from the line of Paul Choi with Goldman Sachs.

Hi everyone. This is Charlie Ferranti on for Paul. Thanks so much for taking our questions. I just had a quick question on the XL092 Phase 1 study. I noticed that previously there was a cohort designated for non-small cell lung cancer, and that cohort appears to have been edited to drop that indication at this point. And so I’m just wondering, has your thinking evolved somehow on this indication in terms of how you want to maybe approach it using XL092, because I see that on Slide, I think 30 of the presentation NSCLC is still listed as a potential target. So, just wondering how you’re thinking about lung at this point? Thank you very much.

Absolutely. Lung cancer is certainly still a interest and as a potential indication and various different fittings and as we go forward and as we develop a variety of combination approaches containing XL092 is a backbone, we are certainly including lung cancer in our thought process and in our plans. Hey, Charlie anything…

Thank you so much. That’s it for tonight. Thank you.

Thank you. I’ll now turn the conference over to Susan Hubbard for closing comments.

Great. Thank you, Holly. And thank you all for joining us today. We certainly welcome your follow-up calls with any additional questions you may have that we were not able to address on today’s call.

Thank you. And thank you all for joining us today. We walked on your follow-up calls and we appreciate your participation. You may now disconnect.