Good day, ladies and gentlemen, and welcome to Exelixis Third Quarter 2024 Financial Results Conference Call. My name is Towanda, 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, Mr. Varant Shirvanian, Director of Investor Relations. Please proceed.

Thank you, Towanda, and thank you all for joining us for the Exelixis third quarter 2024 financial results conference call. Joining me on today's call are Mike Morrissey, our President and CEO; Chris Senner, our Chief Financial Officer; and P.J. Haley, our Executive Vice President of Commercial, who together will review our progress for the third quarter 2024 ended September 30, 2024. Amy Peterson, our Chief Medical Officer; and Dana Aftab, our Chief Scientific Officer are also on the call today and will participate in our question-and-answer session. 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 was posted on our website for an explanation of our reasons for using such non-GAAP measures as well as tables deriving these measures from our GAAP results. During the course of this presentation, we will be making forward-looking statements regarding future events and the future performance of the company. This includes statements about possible developments regarding discovery, product development, regulatory, commercial, financial and strategic matters and estimates and projections from our annual U.S. net product revenues and potential marketing growth opportunities. These estimates and projections involve a number of assumptions and limitations, and we caution investors not to place undue reliance on this information. Actual events or results could, of course, differ materially. We refer you to the documents we file from time-to-time with the Securities and Exchange Commission, which are under the heading Risk Factors, identify important factors that could cause actual results to differ materially from those expressed by the company verbally and in writing today, including, without limitation, risks and uncertainties related to product commercial success, market competition, regulatory review and approval processes, conducting clinical trials, compliance with applicable regulatory requirements, our dependence on collaboration partners and the level of cost associated with discovery, product development, business development and commercialization activities. With that, I'll turn it over to Mike.

All right. Thanks, Varant, and thanks to everyone for joining us on the call today. We'll use our prepared remarks today to provide a strategic perspective on the business with a forward-looking view of the opportunities for cabozantinib, zanzalintinib and the early-stage pipeline to maximize success in building a multi-franchise oncology business. The last few weeks have been extremely busy with the positive Cabo ANDA ruling and the Zanza collaboration announcement with Merck. As you saw in our press release issued an hour ago, Exelixis had a very successful third quarter across all components of our business. I'll start today with a strategic overview to frame our near-term and aspirational vision for the company, followed by financial and commercial updates from Chris and P.J. Amy and Dana are here as well and will address any technical R&D related questions that come up in Q&A. Exelixis is obviously at an inflection point with the clarity on the Cabo ANDA and significant momentum for Zanza. Cabo is having a strong 2024 and across literally all commercial metrics that we track routinely as performance indicators for the business, and we remain very bullish on Cabo's revenue outlook into 2030. The Zanza opportunity represents an important component of mid and long-term revenue growth starting in the back half of this decade and potentially building into a dominant position in the 2030s. We're pleased to be working with Merck in kidney and head and neck cancers and that cost sharing, compound sharing agreements, provides significant validation and momentum for Zanza, while we maintain full global commercial rights. As collaborate with the competition model has been a pillar of our Cabo development success, and we're pleased to get the first one moving with Zanza. We're obviously not done in this regard and aim to expand into…

Thanks, Mike. For the third quarter of 2024, the company reported total revenues of approximately $539.5 million, which included cabozantinib franchise net product revenues of $478.1 million. CABOMETYX net product revenues were $475.7 million and included approximately $6.6 million in clinical trial sales, which is similar to Q2 2024. Gross to net for the cabozantinib franchise in the third quarter 2024 was 26%, which is lower than the gross to net we experienced in the second quarter 2024. This decrease in gross to net deductions in the third quarter 2024 is primarily related to lower Medicare Part D and DoD and TRICARE expenses. We are now projecting that our gross to net deductions for fiscal year 2024 will be between 28% and 29%. Our CABOMETYX trade inventory was flat at 2.1 weeks on hand when compared to the second quarter 2024. As a continued reminder, clinical trial sales have historically been choppy between quarters, and we expect this to continue into the future. Total revenues included -- total revenues included $60.2 million of license revenues for the third quarter of 2024. The largest contributor to our license revenues was $42 million from the royalties we earned from Ipsen and Takeda on their sales of cabozantinib in their territories. Additionally, we recognized approximately $11 million in license revenues for a regulatory milestone resulting from Ipsen's filing of their application for a potential net indication with the European Medicines Agency. Our total operating expenses, including restructuring and impairment charges for the third quarter of 2024 were approximately $352 million compared to $361 million in the second quarter of 2024. The sequential decrease in these operating expenses was primarily driven by lower general and administrative expenses, offset by higher clinical trial and licensing costs in the third quarter of 2024. After evaluating our…

Thank you, Chris. The third quarter of 2024 was a very strong quarter as the team continued to execute at a high level (ph), which has resulted in CABOMETYX continuing to be the number one prescribed TKI and RCC. Additionally, CABOMETYX remains the number one TKI plus IO combination in first-line renal cell carcinoma. CABOMETYX TRx volume grew 9% year-over-year in Q3 2024 compared to Q3 2023. In the same period, the TKI market basket volume declined by 1%. Importantly, the business continues to grow in terms of demand in new patient starts, both of which were at an all-time high for CABOMETYX in the third quarter. CABOMETYX continued to perform well from a marketplace and competitive perspective. CABOMETYX again led the TKI market basket with TRx share increasing to 42%. As we have discussed previously, the first-line RCC market is extremely competitive and Q3 was the eighth full quarter in which CABOMETYX plus nivolumab remain the number one prescribed TKI plus IO combination in first-line RCC. In particular, we're continuing to see strong growth in the community oncology setting. Looking forward, the commercial team is excited about the positive results from the CABINET study in neuroendocrine tumors, as Exelixis aims to become a leader in the net space. We believe the RCC market provides a blueprint for how the net market could develop and grow in the coming years. The global RCC market grew from approximately $3.7 billion in 2016 to approximately $10 billion in 2023, driven by new therapeutic launches, improved outcomes for patients, leading to longer treatment durations and longer survival with patients receiving more lines of therapy. Similarly, early projections for the global net market show it could almost double going from approximately $2.5 billion in 2023 to approximately $4.6 billion in 2030. Based on the…

All right. Thanks, T.J. I'd like to close our call today by thanking all of our very talented and dedicated employees, who are unwavering and fulfilling our mission to help cancer patients recover stronger and live longer, successfully litigating the ANDA with the results of extremely hard work and perseveres over literally years led by our excellent legal team in partnership with outside counsel a little more hailed. I'm grateful to the numerous internal employees who were interviewed deposed and otherwise engaged in supporting this litigation, including scientists and discovery and manufacturing leaders and members of the commercial and medical affairs teams as well as finance and public affairs. It was a true team effort across the entire company, and I appreciate the commitment of everyone who is involved in seeing you through to fruition. I'd also like to recognize the team involved in successfully negotiating the Merck clinical development collaboration, which was another cross-functional effort led by our business development colleagues. With this collaboration, we're on our way to helping many more cancer patients with Zanza. I'd also like to thank our commercial organization, which has driven Cabo's outperformance and contributed to our strong financial results over the first nine months of this year. And finally, I'd like to recognize our entire R&D organization, who have propelled our pipeline efforts forward at a rapid pace. The collective Exelixis team has accomplished a great deal thus far in 2024 and with much more to come on the horizon as we strive to deliver results for cancer patients and our shareholders. We look forward to updating you on our progress. 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 comes from the line of Asthika Goonewardene with Truist. Your line is open.

Hi, guys. Thanks for taking my questions and congrats on the beating the race here. It's very encouraging to see that, since I'm restricted to just one question, I'll just focus on the Merck collaboration that was recently announced. Can you maybe give us some color on the diligence process that way into that deal? How extensive was it? I know it's hard to comment on that, but that will be useful. And the reason I'm asking is because Merck already has lenvatinib, a drug that where tolerability and half-life has been debilitating to its development. I’m just trying to get a sense of how the -- what they did – when they did analysis with Zanza? Thanks.

Yeah, Asthika. It's Mike. Thanks for the question. Yeah. It's a hard question to answer. We don't want to speak for Merck. We certainly want (ph) to respect the process that took place over many, many, many months. We're thrilled to be working with arguably our main competitor in the RCC space with Cabo moving forward together with them with Zana. So we're excited about moving forward. Obviously, there's nobody better in the industry to actually executing trials than Merck. So the fact that they're running two large pivotal trials is just awesome from our point of view, and we're certainly excited to work with them going forward with these percent of trials with Zanza.

Thank you. Please stand by for our next question. Our next comes from the line of Jason Gerberry with Bank of America Securities. Your line is open.

Hi. This is Chi on for Jason. Thanks for taking our questions. Congrats On securing a favorable ruling on Cabo IP. One on business development. I understand you look to do the right view of the right valuation for the right asset within the GU/GI space. I'm curious if you have a preference for modality, whether it's small molecule, monoclonal bispecific or ADC and whether you have a feeling on the size of the deal, you will consider for BD? Thanks so much.

Yeah. Thanks for the question on BD. Look, we're agnostic to, I think, almost all those factors, we are focused on active molecules, as I mentioned in our prepared remarks, that we have conviction on in terms of having the ability or the opportunity to generate differentiating clinical data that we can then convert into commercial success. I mean, again, that's the learning from Cabo. That's the Cabo lens that we base everything on. So we obviously want to be able to work in the GU/GI space because we’re really set up to execute very well there, both clinically and commercially. But in terms of modalities, we’re open. We’re looking for active molecules that we think we can build into a franchise number one, and then get over the goal line numerous times from a regulatory point of view with the obvious upside in helping more patients and then having that translate into commercial success.

Thank you. Please stand by for our next question Our next question comes from the line of Silvan Tuerkcan with Citizens JMP. Your line is open.

Yeah. Thanks, team. Thanks for taking my question and congrats on the beat. I would like to know about maybe that there's a gap between -- obviously, between your near-term growth with Cabo and Zanza. And then you want to do with BD and then your earlier pipeline, but maybe talking about the earlier pipeline, your [indiscernible] assets. When can we expect some data there? And how have you -- what's your view on the space with all the competitive data that has come out recently here? Thank you so much.

Dana, I want to take that one first from a competitive point of view. And then I think both Amy and I can provide some color commentary as well, so.

Sure. So thanks for the question. Just regarding -- so let's just be clear, we've got two compounds in the clinic now that are in the synthetic lethality space XL309, which targets you as design (ph). And as we announced in the press release, XL495 has now been filed in the Phase I trial is running. As I highlighted at our R&D Day presentation December, both of those molecules are substantially differentiated from the other molecules that are in the clinic. Regarding XL309, we now believe we are the front runner in the clinic with Roche pulling back on their molecule to rework and work through some PK issues. They really hit a ceiling in terms of exposure. So we're quite happy with our position now in the clinic with that compound. And then with 495, the PK-1 inhibitor, the main competition there is from repair with lunresertib. And as we presented at R&D Day in December, our compound, we believe, has a PK advantage as well as selectivity advantage. We -- with our PK modeling, we believe we can hit well into the efficacious range of exposure with once daily dosing. And we also have -- we also hit about 33% or 35% fewer kinases in a broad selectivity panel compared to that competitor compound. So we think there might be a safety advantage as well.

Amy?

Yeah. So I know we spent a lot of time talking about Cabo and Zanza because those are sort of the nearer-term things. But trust me, Dana is keeping the development team very busy with some of these assets in the pipeline as they advance. And they are – here we really are focusing on best-in-class. And with the modality that we have around USP1 and single-stranded break repair, there's really an opportunity to not only extend the reach of PARP inhibition and BRCA mutations, but potentially also take it beyond BRCA mutated patients into HRD and potentially other indications. And we have XB010 ADC with MMA payload that targets 5T4 advancing. And now as Dana just pointed out, FPI to 495. So we are busy with the pipeline. There's a lot coming. There's more to come. And we are really focusing on that just as much as intensely as we are focusing on Zanza and maturing it.

Thank you. Please stand by for our next question Our next question comes from the line of Michael Schmidt with Guggenheim Securities. Your line is open.

Hey. Thanks for taking my question. Great to see reacceleration of Cabo sales growth to double-digits here in the second half of this year. Could you just comment on what's been the primary driver for that? And then on Zanza, congrats on the Merck collaboration. I'm just curious, if you could comment on the two planned Phase III studies of Zanza and [indiscernible] in RCC and how you think about positioning that versus Cabo and the ARCUS HIF-2⍺ inhibitor longer term? Thanks so much.

Okay. P.J. take the first one, and I'll comment on the second one. Okay.

Yeah. Thanks for the question, Michael. We're certainly very pleased. As I mentioned, with the quarter and the significant momentum we have with Cabo now and the franchise, as I've mentioned previously, we were sort of continuing to see new highs in both demand and new patient starts and really primarily driven by first-line RCC. We've maintained our market leadership position there. And as we see increasing new patient starts there, we continue to see patient stacking and sort of demand moving forward. So very pleased with that. And really, it comes down to we've got great data across the board there and then a great team really focused on executing at a high level and just continue to see that moving forward.

In terms of Zanza with Merck, again, we've agreed with Merck to keep the details to ourselves for now. As I'm sure time goes on and trials are moving forward. Merck again, who's running those trials will communicate the design and those kinds of issues. So stay tuned on that. I don't have much to say in terms of other competitive programs. We're very, very happy to be partnered with Merck, which has the only FDA-approved HIF inhibitor on the market right now. And with the momentum we've got with Zanza and certainly with their firepower, we're very excited to be moving forward here with them going forward.

Thank you. Please stand by for our next question Our next question comes from the line of Greg Renza with RBC Capital Markets. Your line is open.

Great. Good evening. Good afternoon, Mike and team. Congrats on the quarter and also on the string of recent great update. Mike, maybe sticking with Zanzalintinib and we appreciate the layout of some of the peak opportunity longer term, that's great to see. Just wanted to ask if you could maybe elaborate a little bit further on some of the assumptions there, you certainly mentioned of the patient stacks, which is helpful that the differentiating data that you would expect to get to those numbers and even the unadjusted nature. But as we think about sort of those breakdowns with respect to GU and GI and head and neck, would be great. And certainly, related, Mike, what is the optimal pipeline constructed -- portfolio construct for you having gone back, having lived through the Cabo days establishing and defending the competitive positioning is Zanza at sort of that single asset to get that full white space and diversity of opportunity, the right way of thinking for Exelixis moving forward. Thanks so much and congrats again, guys.

Yeah. Thanks, Greg. I appreciate the comments and the question. Look, as we talked about previously, Cabo provides the foundation for which we're building future opportunities with Zanza going forward that we've learned a lot with Cabo. We've spent 15 plus years developing that molecule. We've had a string of successes. We've done, I think, a lot of really great science at the lab bench in the clinic, been able to learn a lot as an organization to be able to maneuver. So think we're applying all those learnings from all those different lanes into how we view the Zanza opportunity. In terms of details on assumptions, we have a very sophisticated commercial organization that does modeling professionally, I mean this is what they do. So we'll share that -- those assumptions and that data in time. I think it's important for the sell-side now to be quite frank to roll up their sleeves, start with their pencils and look at these opportunities, start doing your own modeling, and we can talk about that together when some of that data, some of your modeling is more mature in the future. But we’re thrilled about having Zanza where’s it’s at to have a molecule at this stage in six ongoing their planned pivotal trials. We think there’s more opportunity on the way collaboration with Merck top line data in 303 in 2025, potentially first launch in ’26. The momentum is palpable right now, coming off the strength of |Cabo. So we’re excited to be – to again, to be past the ANDA, so everybody can focus on the business moving forward, positive direction forward without having the – some of the overhang that we’ve had with the ANDA and other stuff in the past. So happy to engage with you going forward and looking forward to making this happen.

Thank you. Please stand by for our next question Our next question comes from the line of Yaron Werber with TD Cowen. Your line is open.

Great. Thanks for taking my question. Congrats on the quarter and on the litigation. So Mike, just the one thing that really caught my mind is your comment about potentially looking at late-stage deals. I think you've kind of commented that, but I think this is kind of something you're highlighting a bit more now, at least in our view. Am I thinking about this correctly and are you open for acquisitions or is this like really in-licensing only? Thank you.

Yeah, Yaron. So thanks for the question and the commentary. Look, we've been talking about late-stage opportunities for a while now. As you heard from Dana and Amy, we have a very full early-stage pipeline. We like these molecules. We think they're best-in-class. We have a lot of work to do to interrogate and then prioritize what moves into full development. So to be quite frank, we don't need more development candidates, more INDs, more Phase I molecules because we've got our plate full, right, in terms of what we're doing internally, right? We're interested in building Exelixis into a multiproduct multi-franchise oncology business, that's the goal. And to do that, and obviously, we have Cabo going full steam. Zanza have got great traction. But if we can find again, the right asset that has the right level of -- gives us the right level of conviction on being able to generate differentiating clinical data that can then drive commercial performance we're very interested in finding a way to bring that molecule or those molecules into the organization. As I said in my prepared remarks, we have any number of different potential business development opportunities going forward. We can do virtually anything we think makes sense, but it’s got to be the right deal, the right valuation with the right asset.

Thank you. Please stand by for our next question Our next question comes from the line of Jay Olson with Oppenheimer. Your line is open.

Wow, congrats on all the progress across so many fronts, really appreciate the optimism around Zanza, an impressive $5 billion peak U.S. sales potential. Can you comment on what gives you the conviction at this point in time to share your thoughts on the commercial potential? Is it related to the Merck collaboration or something else? And since you have global rights to Zanza, why did you focus your outlook on U.S. revenues and how are you thinking about the ex U.S. opportunity? Thank you.

Yeah, Jay. Thanks for the question. It's really the right time, as I said in my kind of my early comments this afternoon, right, we're at this inflection point organizationally, where we're past -- we're past the ANDA, we have that overhang finally removed. We want everybody, all of our various stakeholders to look at us today, as we're going forward with a successful product in Cabo, an asset in Zanza that has multiple, I would say, high PTRS shots on goal in terms of new indications that we think could really build on Cabo's success and expand it from the scale and scope that we're seeing currently with Cabo. So it's really the right time to get everybody focused on the future. Again, as I mentioned with Greg, there's -- we've been -- we've had a challenging time getting people to pay attention to us from the standpoint of where we're at and where we're going. So to get you guys, everybody off the sidelines and looking at us in maybe a new light with the momentum we've got right now, I think, is super important. We are focused on building a multiproduct multi-franchise business because that's where the value is for patients and for shareholders. And with the momentum we have with Cabo and with Zanza and the pipeline, lots of optionality, BD-wise we’re super excited about our path going forward.

Thank you. Please stand by for our next question Our next question comes from the line of Andy Hsieh with William Blair. Your line is open.

Thanks for taking our questions. Really encouraged to see the durability of Cabo's leadership there. Two questions, if I may. One for P.J., so there's a pet imaging agent for CA-9 (ph) for RCC that could get approval potentially next year. I'm just wondering how you view that potentially pulling some patients who otherwise would have gone undiagnosed and would that be a potential upside to your $10 billion TAM that you laid out for RCC? Second question has to do with the -- also the $1 billion TAM that you mentioned for the small molecule NET. Just kind of back of the level of calculation I think you're probably projecting anywhere from a five to six month duration. I'm curious, if you look at the landscape, especially with like Afinitor label some of the durations for earlier lines are basically nine, 10 months. So is it unreasonable to assume that if Zanza entrenches earlier in the treatment landscape for NET, that duration will be significantly higher, given that it's a more indolent cancer. Thank you.

Yeah, Andy. Thanks for the questions. Briefly, with regards to RCC, I think a lot of patients are in the funnel, and we're certainly -- as I mentioned, pleased with our performance there and our leading TRx market share, which continues to grow, now up to 42% in that market basket. And I think that market -- most of the patients are being treated. And I think the bar for success, particularly, in the first line and really even with Cabo in the second line is quite high. So I view that market as relatively stable in the near term vis-a-vis other mechanisms of action. And thinking about NET, as you mentioned, yeah, as I mentioned, about a quarter of the patients in first-line NET are getting oral therapies approximately 50% in the second, third-line settings getting orals. And we basically use, I won't go into the details of all of our assumptions, but we've done a lot of market research there. I understand it very well. And using durations that we see from that. I certainly think you're correct. Obviously, the earlier -- you do go the longer the duration of therapy, particularly in neuroendocrine tumors, which is a bit more indolent than some other solid tumors. And I think there is the potential for Zanza in the long term, pending trial results, regulatory approval, etc., of having earlier utilization and therefore, a longer duration. I think that's certainly right. But what I'd say in the near term, we're really excited about Cabo and the potential approval that we’re looking at with a PDUFA date of April 3. And as we think about that market and that $1 billion market in 2025 that I mentioned, we think we’re incredibly well positioned to not only penetrate it and achieve a lot of that market, but do it rapidly. Really, the more we think about it is we’re the only branded oral therapy in the space, it really gives us a big advantage in terms of the promotional share of voice and really just the ability to help patients comprehensive patient support services, we think it will be really important. So we’re really excited about that opportunity in the near term.

Thank you. Please stand by for our next question Our next question comes from the line of David Lebowitz with Citi. Your line is open.

Hi, guys. Jon for David. Thanks for taking our question. For Cabo and neuroendocrine tumors, I know you just -- you're touching on some of the commercial considerations for this market, but what sort of work still needs to be done before a potential launch? And assuming approval, how should we be thinking about initial launch cadence? Are there any existing indications that might serve as sort of a proxy for how we should be thinking about early uptake? Thanks.

Yeah. Thanks for the question, Jonathan. Our team, as I mentioned, are incredibly excited and motivated across the board getting ready for this launch. We will be ready to go on day one as we always are for launching a new indication. And frankly, the more we do it, I think the better we get at it. So -- what I would anticipate here, as I mentioned, not having really the amount of competition that you have in RCC, which is, for example, very competitive we would anticipate a very strong uptake right from the beginning. And we believe our data is very strong. I went into some detail on the prescriber universe. The sales force has been expanded and we're frankly really ready to go. And we believe we can really move into the market rapidly and efficiently. And really, we're very excited about the opportunity to help potentially a lot of patients with neuroendocrine tumors.

Thank you. Please stand by for our next question The next question comes from the line of Akash Tewari with Jefferies. Your line is open.

Hi. This is [indiscernible] for Akash. Congrats on the quarter and on the recent IP decision. Just a couple on my end. The first is about the potential to expand Merck partnership beyond RCC and head and neck. Do you think that's possible as we get more data from the PD-L1 [indiscernible] bispecifics? And then the second question is, do you think that your head and neck data would compare well versus mirrors in the PD-L1 refractory population or do you see this kind better or worse on our front?

Thanks for the questions, Amy. Why don't I start with the head and neck question, and then I'll address the Merck

Yeah. So when it comes to Zanza we're obviously interested in developing it broadly as its best-in-class, and we have multiple collaborations to that and with other IOs, including Arezo, including nivolumab and now recently with pembrolizumab in head and neck. So whether or not there's expansion beyond head and neck, I would say, we're always looking. And of course, we're interested in getting Zanza into as many indications as possible. What we combine with remains to be seen. And I guess, when it comes to the data with the bispecifics in the PD-1 refractory space, I'm not quite sure we're competing with them. We have about a year lead time with Bicara against Bicara in the frontline space and Merus. And we are leveraging that lead time very aggressively to ensure sites that we can enroll and read that study out. How it plays out in the P1 refractory, so maybe I didn’t understand the question, but I’m not sure I’m able to answer that for Bicara.

Okay. Thank you.

Thank you. Please stand by for our next question The next question comes from the line of Stephen Willey with Stifel. Your line is open.

Yeah. Good afternoon. Thanks for taking the questions and congrats on the quarter. So I know you previously characterized STELLAR-305 as a Phase II/III (ph). I think you're now kind of explicitly referring it to, to it as a Phase III. So just wondering if you've completed that formal assessment of Phase II data to officially transition into Phase III. And I guess if so, can you speak to those metrics that you're evaluating to make that decision and just whether you might be disclosing that data at some point? Thanks.

Amy, please go ahead.

Yeah, quickly. Thanks for the question. It is a Phase II, III. We are still in ruling, and we’ll disclose data when it is mature.

Thank you. Please stand by for our next question Our next question comes from the line of Ash Verma with UBS. Your line is open.

Hi. Thanks for taking our questions. So I just wanted to understand the capital allocation priorities from here. You have a pretty sizable buyback program outstanding. Do you think this was the right focus when you were dealing with the IP uncertainty, but now that the IP decision is behind you, why not focus most of your capital deployment on the pipeline build out? Thanks.

Yeah. Thanks for the question. It's Mike. Yeah. I think with our cash flows, we can do all of the above. So as I mentioned in my prepared remarks, we’re committed to being very disciplined as we go forward in terms of expense levels, kind of keeping expense levels kind of where they are currently for the foreseeable future with the cash flows that we have and project, we think we can continue investing in the pipeline doing BD and then returning cash to shareholders.

Thank you. Please stand by for our next question Our next question comes from the line of Peter Lawson with Barclays. Your line is open.

Great. Thanks for taking the question. Just I have a question around Slide 9 that the guidance around Zanza. So should we read that as kind of Zanza $5 billion in 2033 and then what Cabo kind of essentially declined to zero?

Peter, it's Mike. I think the Cabo LOE is in the 2030 time frame. So as outlined on Slide 9, that is a 2024 number, and we see Zanza growing dramatically over the next several years as these pivotal trials read out, and if successful, could drive a lot of upside growth for Zanza.

Thank you. Please stand by for our next question Our next question comes from the line of Etzer Darout, BMO Capital Markets. Your line is open.

Hey. It's Luke Shumway on for Eser. Thanks for taking my question. For the Zanza colorectal cancer update next year, the primary endpoint is OS in patients without liver events. How readily identify or patients without liver events in the real world and would that require a companion diagnostic?

Hi. This is Amy. Thanks for the question. So this is an imaging assessment. All patients, when they're diagnosed with advanced disease tend to get scanned from head to toe. And that absolutely includes a liver scan, especially for patients with colorectal because of its predilection to metastasizes to the liver. So all patients with colorectal will have a scan of their liver. And it’s pretty straightforward to identify whether or not there is a disease present in the liver or not. So it’s an imaging. It’s a clinical assessment. It’s actually not a companion diagnostic, and it’s readily utilized by physicians every day.

Thank you. Please stand by for our next question Our next question comes from the line of Sudan Loganathan with Stephens. Your line is open.

Hi. Thank you for taking the time to share your quarterly results. Good evening. Congratulations on all the great quarter and the recent progress on many fronts. With the breadth of clinical program opportunities for Cabo and Zanza, the GU and GI space, what indications or therapeutic technologies are left out there of interest when you're looking for assets during the BD endeavors? Are you specifically looking for assets primarily for novel combinations with Cabo and Zanza or monotherapy options out there to cover the GU/GI indications?

Yeah, Sudan. Thank you for the question. It's Mike. Yeah. I would say simplest answer is all of the above. Our conviction is around clinical differentiation that can drive commercial success if those are -- those assets combined with Zaza other XL molecules in the pipeline, great. If their standalone agents or combined with checkpoints that's fine, too. So again, we're agnostic when it comes to modality MOA type of transaction. We're focused on really high level of conviction on clinical differentiation that then drives commercial success.

Thank you. Please stand by for our next question Our next question comes from the line of Chris Shibutani with Goldman Sachs. Your line is open.

Thank you, Mike. As you think about how you're staffing your teams and obviously monitoring how you're spending, noting that SG&A, the R&D has come down. What are the areas that you feel are going to be important to expand further?

Thanks, Chris. Yeah. I think we’re in a pretty good spot right now. Obviously, if we have in the out years continued clinical success and we need to augment what we’ve got commercially. That’s a relatively easy and incremental growth as we’ve seen so far in our planning for the net space. But in terms of the company, we have 100-plus employees. We are – I think we’re leading mean in terms of what we are aspiring to do organizationally in terms of building this multi-franchise oncology business. But we’ve got a lot of momentum in the organization from an R&D point of view, from a commercial point of view with the right size G&A to make it all work. So we’re excited about where we are, and we think we’ve got the right team and certainly the right horsepower both talent-wise as well as energy wise to make that happen as we go forward.

Thank you. Please stand by for our next question Our final question comes from the line of Joe Catanzaro with Piper Sandler. Your line is open.

Hey, great. Thanks for taking my question. Congrats on the quarter. I had one on the PK MIT program since it's now in Phase I. So you mentioned on restorative and that program seems to have honed in a biomarker-selected population in endometrial and ovarian cancer. So maybe can you speak to your strategy around tumor type selection and biomarkers that you may be using. And then you also mentioned potential cytotoxic combinations for that program. Wondering if maybe you could elaborate a bit more on that. Thanks.

Yeah. Thanks for the question, Joe. This is Dana. I'll take that one. So yes, so XL495 as you're quite aware as a PK-1 inhibitor, which has shown synthetic lethality in tumors that have increased cyclin E levels that can be driven by a number of different actual genetic biomarkers, including CCNE amplification and a few others. So we've certainly identified those biomarkers in our preclinical models, but we've also identified some other interesting biomarkers that we have not yet disclosed, which we're also quite excited about. So we are looking at all of these biomarkers in the Phase I study. We have also conducted quite a few combination studies preclinically looking at, as you mentioned, cytotoxics, but also a very expanded range of drugs that have direct or indirect impacts on generating sort of a replication stress type phenotype in the cells and we have a lot of opportunities there. So we haven’t been – we haven’t really disclosed details of our Phase I program yet. We will do that at some point in the future. But until then, we’re looking at quite a few different hypotheses in the clinic for both biomarkers and combinations?

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to your host, Varant, for closing remarks.

Thank you, Towanda, and thank you all for joining us today. We welcome your follow-up calls with any additional questions you may have that we were unable to address during today’s call.

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