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Executives

Charles Butler - Investor Relations

Michael Morrissey - Chief Executive Officer

Analysts

Karen Jay - J.P. Morgan

Exelixis, Inc. (EXEL) J.P. Morgan 31st Annual Healthcare Conference Transcript January 9, 2013 5:00 PM ET

Karen Jay - J.P. Morgan

Good afternoon and thank you for coming. I’m Karen Jay from the Biotech team at J.P. Morgan. We’re going to hear next from Exelixis, just as a reminder, please turn your cellphone windows off and the breakout is out the door into left in the Olympic Room. So you first going to hear quickly from Charles Butler from Investor Relations and then he will turn it over to CEO, Michael Morrissey.

Charles Butler

Thanks Karen. Before we get started with the presentation just let me read the forward-looking statement. During the course of this presentation, we will be making forward-looking statements regarding future events or the future performance of the company. Including statements about possible future development regarding clinical, regulatory, commercial, financial and strategic matters, actual events or results could -- of course could differ materially.

We refer you to the documents that Exelixis files from time-to-time with the Securities and Exchange Commission. Specifically, the company’s most recent Form 10-Q filed November 7, 2012.

These documents contain and identify under the heading Risk Factors, important factors that could cause actual results to differ materially from those contained in any forward-looking statements, including the risk that unanticipated development could delay or prevent the launch, commercialization, distribution, and availability of COMETRIQ, the degree of market acceptance and reimbursement for COMETRIQ, risks and uncertainties related to compliance with applicable regulatory requirements, market competition and risk and uncertainties related to the initiation conduct and results of the clinical trials.

And with that introduction I will call up Mike Morrissey to give the full presentation.

Michael Morrissey

All right. Thanks, Charles. Thanks for doing that. All right. So we’ve been coming to J.P. Morgan now for about 14, 15 years. We’ve been a company for almost more than 80 years now so. I'm very pleased to be able to speak to you today as part of the company with newly approved product COMETRIQ, cabozantinib was approved at the end of November last year for metastatic medullary thyroid cancer. This is the culmination of almost 10 years worth of work.

We’re very excited to be able to have navigated the clinical regulatory process. This is a compound that we devised, synthesized and characterized preclinically, scaled up the whole process to move this in the pivotal trials and to get the regulatory approval then.

So we are very excited about that. We had a very extensive call in November talking about the data the approval at that call. We were I think pretty clear and transparent that this is not a transformational event for the company. We have lots of ambitions and a big vision for the company and for the compound going forward, but it’s certainly a good step and the right place to start going forward now with the product so.

Some of the details that we talked about in November, again this is a -- it’s a kinase inhibitor targets MET and VEGF amongst other receptors and kinase is and it's been indicated for the treatment of progressive metastatic medullary thyroid cancer or MTC starting dose of 140 milligrams daily. All the important safety information is shown here and can be elaborated fully with the other prescribing information at our website www.COMETRIQ.com.

So the vision for us as we go forward as a company is really based upon our belief that that cabozantinib COMETRIQ now has the ability to be a franchise in the oncology setting. And that’s based upon a wide variety of Phase 2 data that we’ve generated and published over the last several years.

We think cabozantinib is a unique compound especially in today's age of researchers making single molecules, targeting driver mutations in oncology for single subset of a single indication with high efficacy, but also very narrow I would say focus commercially, cabozantinib has the opportunity, has the potential of being a broadly active compound based upon our existing Phase 2 data set.

In the say tradition of Taxotere/Avastin in terms of its broad antitumor activity the ability for the compound to impact tumor shrinkage in all the key compartments that are involve in the development or the metastasis of tumors, very provocative activity in prostate cancer, other tumor types that we’re excited about.

So the real focus here for the company going forward is certainly to launch the compound in MTC. We’ve talked about that. We talked about our plans. I’ll review that in the few slides.

But the main focus we is to remain and to excel as a development stage biotech company with the small micro niche, nano niche product that will allow us to have the opportunity as we move forward in a variety of pivotal trials now and in the future to really establish its efficacy and safety in a variety of different indications and build upon this broad Phase 2 data set.

So, again, MTC is a start for us. We have an opportunity to build small commercial presence. We’ll talk about that in more detail. We plan to launch this month. I was just finishing up the last bits and pieces there of the packaging and labeling and validation of that and then we are ready to go shortly.

The real effort and the real focus for the company is around other indications. Obviously over the last two years we had a really strong effort in prostate cancer and one that has resulted in us evaluated in almost 400 patients to date with prostate cancer again seen very unique signal in this space and one that we are now trying to recapitulate in a -- in two distinct pivotal trials call the COMET’s. I’ll talk more about those later. But certainly that’s our next focus and certainly our main priority right now is to get those trails enrolled and read out.

At ASCO last year we had nine abstracts presented, four were oral presentations, two of those I thought got a lot of traction with a variety of oncologist and KOL’s in renal cell carcinomas, as well as in liver cancer.

We have taken those further now to the point where we are planning to launch additional randomized pivotal trials in that -- in those two indications this year, afterward we’ll talk more about that as well.

But it really reinforces this idea that we’re looking to broaden the opportunity and the commercial potential of the compound with a variety of either simultaneous or stage pivotal trials that will allow us potentially really expand the scope of its commercial opportunity.

Broad Phase 2 program, we own the compound right and we are again maximizing -- trying to maximize the value and really define the boundary conditions for the compound in terms of where we see activity late line, early line, combination, single agent of different parameters across a variety of different tumor indications.

It’s a very exciting data and I think we’re very committed to why we're doing the pivotal trial program to really again define additional opportunities more regulatory and commercial point of view continuing to expand the depth and breadth of the opportunity with the compound across a variety of different and important other tumor types.

Obviously, we’re doing a lot here, we -- again we own the compound. We are doing all the work ourselves. This certainly requires a strong financial component of the company to move forward. We did a large fund raising last year that provides us with I think a very strong position, so as we look at company going forward, we really taken that very lot of the equation so we can focus on executing and really making sure we’re doing all that we can as fast as we can to be able to build value with the compound and this vision of cabozantinib as a franchise.

So I’ll walk through some of these different components this afternoon as we go through each of these one by one. Our goals for the year are pretty straight forward as in the context of being development stage biotech company with small niche product. Obviously, want to get the launch and calling that somewhat carefully and seems possible in terms of having that be able to market the drug.

And then to advance our clinical trial program in prostate cancer initiate in advance pivotal trials in liver cancer and renal cancer and then obviously continue to expand the depth and breadth of our Phase 2 program either we sponsor ourselves through our collaboration with the NCI in their CTEP programs.

We have a very wide array of investigator-sponsored programs or ISTs that are ongoing with leading KOLs on a global scale that we think is certainly a very important addition to the overall process. Again, single agent, combinations, early lines, late line so, very, very broad focus and we’ll talk about in the few slides.

But let’s first move to how we’re looking at COMETRIQ as a commercial launch. Again we’ve always, I think proud of ourselves on doing things differently looking at the situation carefully, doing what is right and proper as suppose to what’s kind of standard, standard of -- standard operating procedure and we are certainly doing that here in terms of how we are viewing our commercialization of this initial small indication with medullary thyroid cancer.

And going back even while we’re running the trial -- the pivotal trial like (inaudible) catalyst that we needed a new approach here that made sense relative to a small market size in the oncology space.

And one that we could use capital efficiency, we could use human resources efficiently, as well as really not be a distraction from what we're meant to do, what we have to do to build long-term sustainable value for both patients and our shareholders.

So we have devised I think a very efficient, a very scale right sized approach for commercializing COMETRIQ and MTC. We’re using as much outsourcing as we can to effectively market and sell the drug. This is, I think in today’s day and age of pharma downsizing this, lots of great talent available right now that is interesting in working with a company like us and there is opportunity, we have the ability to be flexible, we have ability to track data very carefully with we have been doing our overall logistical process, we are actual selling the drug, so we can scale this as needed up or down based upon the overall success of that and how the data comes out.

So, overall, I think this is a very unique process, is one that we are, I think paying close attention to but not over investing and it’s a right size investments that we think make sense for us as a company for the opportunity of MTC for those patients but also as we go forward with this vision of a franchise in other indication as well.

Here is the product, I’m not sure you can see that too well, but that we are, we have a capsule configuration, was selling three different doses that are flat priced at $9900 per 28-day supply. We have capsules in 80 milligrams strengths and 20 milligram strengths and we also have then those three different dosages at 140 milligrams, 100 milligrams and 60 milligrams daily.

So the commercial team led by Scott Garland and back his devise, I think a very good overall comprehensive access to reimbursement plan to make sure that we can get the drug to patients that need it. And we’re excited to be able to launch in the very near future.

In terms of our overall strategy with our sales force, again we’re going to have five reps in place to start the -- we've done a very careful analysis of the metastatic MTC market. By our view, our analysis, there is approximately 500 to 700 patients annually that are drug eligible. MTC is treated historically at leading academic centers. This graphic here shows the 60 or so academic centers that were involved in the exam pivotal trial and vandetanib pivotal trial in U.S.

So we have a very good sense of who they are. We know the investigators for the most part. They are located on both coasts in the Midwest. So I think from the standpoint of being able to deploy a small targeted sales force with a laser-like focus to be able to again talk to the -- investigators talk to physicians and be able to help them understand how the drug help their patients is a very important approach.

So again a very streamlined approach here but we’re using inventive contract sales organization with I think a strong history and supporting oncology washes and one that certainly works there to work with as we go forward. And we have the ability to bring them in at the appropriate time as we need to as opportunities arise in terms of additional indications.

Again the real focus here is around building the franchise. I think this slide reinforces that graphically from the standpoint that while we’re starting with the approved indication of MTC which is again a small niche indication.

We’ve seen very encouraging somewhat provocative activity and other indications with a very large potential commercial market opportunities, prostate cancer, lung cancer, liver cancer and we’re now going through those one by one and somewhat of a staged fashion to be able to again generate the data we need to move forward in a regulatory fashion.

Certainly the COMET trials, COMET-1 and COMET-2 are the most advanced. Those are up and enrolling in for geographic regions each. We’re very excited about the opportunity we have in prostate cancer and had a lot of success there over the last several years. But the truth of the matter is we haven’t cured anybody with metastatic disease yet.

30,000 or so men with prostate cancer will die this year. So the unmet medical need is high and we think the profile we've seen to date in Phase 2 is, I think, pretty encouraging one that deserves a very careful analysis in the pivotal trial with the drugs.

So we’ll talk more about the COMET, the COMET trials in a minute. We’re very interested in doing a combination work with some of the newer drugs with abiraterone and enzalutamide in the pre-chemo setting as well. We have some early data from an IST at Dana-Farber which I think highlights the potential there. And so we’re devising a plan to do company-sponsored randomized trials as well in that space.

Beyond that, again based upon the data from ASCO 2011, ASCO 2012, we’ve seen very encouraging Phase 2 data with cabozantinib in a variety of other larger tumor indications liver cancer, renal cancer. And so the highest parody for us but also with lung cancer, breast cancer and others and being able to move forward now with the cash position that we have, I think is very, very important from the standpoint of being able to strategically plan for success and have these stage pivotal trials moving forward in a, I think, a very clear and appropriate fashion.

So our development plan overall is shown on this slide. Again in Phase 3 48, again development stage biotech company to have five pivotal trials either ongoing or about to start in the 2013 timeframe, I think is indicative of our vision and certainly our commitment to really expanding and documenting the potential benefits of the compound in a variety of indications in the oncology setting.

And so COMETs are going again RCC, HCC. We have small datasets in Phase 2. Very good analogous to what we’ve seen before in the medullary thyroid cancer or MTC space several years ago. And I think with that experiment under our belts where we took a phase 1 data set of 35, 37 or so patients in Phase 1, skipped Phase 2 and directly into Phase 3. And we’re able to recapitulate the overall response rate, the durability of response and then see it has a ratio in the standpoint of progression-free survival of 0.28 really I think is indicative of taking that approach with some of the low hanging fruit from the patient’ point of view where we think we've got striking data.

And I think that's the case with RCC and HCC with those two indications in those datasets that we had at ASCO last year. So we are -- again going to the process to finalize the protocol, have regulatory discussions and if all goes, this plan will start those trials this year.

In terms of randomized Phase 2 studies, again this is a snapshot in the middle of what's going on in that space. We’re about to start with in terms of CTEP collaboration with the NCI group. First line, renal, couple of lung trials looking at either EGFR mutated patients or viral-type patients, melanoma, ovarian cancer. Again tumor types that we’ve seen signaling to date and are very intrigued but we need randomized Phase 2 data then to prioritize what we go forward and what order in terms of pivotal trials in the future.

And I mentioned the prostate cancer combination trials before I won’t believe it again. In terms of single arm Phase 2s again either through ISTs or through CTEP wide variety, I think the ones that I’m most excited about what’s happening right now in the breast cancer area as well as in the red translocation area, non-small cell lung cancer until it looks encouraging early but nonetheless, it’s – we were certainly seeing a signal that we can get moving on in terms of other ideas and those as well as across the board. And these are the tumor indications that we’re moving forward.

So overall we have more than 30 trials in the Phase 1, Phase 2 area either ongoing or planned, covering both ISTs and CTEP and some of that we’re planning to do ourselves. So again very broad development program, which is indicative of I think the vision and the commitment to really maximizing the value of this emerging franchise with the drug as we go forward.

The COMET trials we’ve talked about the lot in the past, I won’t believe with the point here. Again, we have two trials with the idea that we like to document the Phase 2activity with pivotal trials showing that we can potentially improve overall survival. We can document a randomized trial, the pain palliation benefits we’ve seen in Phase 2, decrease in narcotics, potentially using a bone scan response to predict activity in patients.

So it's -- they are well-designed, well-established trials from the standpoint of the powering and the assumptions that we’ve got. We’re looking at patients in both trials who are post chemotherapy and post either abiraterone or enzulatimide. So I think we’ve taken into account what’s happening already in terms of abiraterone moving up into the pre-chemo setting and being able to list these trials. If successful, establish a very strong basis in the second line setting, which is a large population. How you going to get unmet medical need et cetera.

So again, these are up and running. We expect top line data in 2014 and certainly our main priority this year is to do the heavy lifting, the blocking and tapping that we need to do in a very efficient fashion to make sure we get these trials moving forward and continuing to advance as rapidly and broadly as possible.

Other trials, again mainly focused on liver and renal. I think, speak to the point around really being able to plan for success. I mentioned this before, I think doing pivotal trials in sequential fashion waiting for one to finish and then start a new one, having that finished and waiting to start a new one is a safe approach but you potentially leave a lot of money on the table if things work and you waited for one to drive the other.

So we’re doing things if not in parallel certainly in a very staged fashion based upon the data we have and our healthy cash position certainly spreads the risk around more that really speaks to what we believe is the ultimate price here and that’s increasing the value of this -- of this emerging franchise around the drug.

So that's the goal, that’s the logic. I think it makes sense and again we’re focused on getting this done with the great deal of urgency and energy. So again we’re all about cabozantinib, we’re all about COMETRIQ that’s how we’re spending our time and our money. Beyond that we have a rich pipeline of partnered compounds that were the result of our previous efforts in a large-scale level of drug discovery, early development. These are all compounds that we've discovered ourselves.

We partnered after having done at least initial if not all the way through to Phase 2. Proof-of-concept, we’re going to clinic, the most advanced here is XL518, GDC-0973 which is a selective MEK inhibitor which is not being profiled in a pivotal trial by Roche and Genentech in combination with Zelboraf in first line development.

Behind that we have two inhibitors of PI3-kinase. We have cabozantinib’s cousin Foretinib with GSK other compounds as well in Phase 2. But again these are compounds that we’re not investing from our point of view. We’re tracking closely but have the potential to add additional value for patients and shareholders as the result of our early efforts.

So with that I will stop here. Thank you for your time again. Key goals are to build on the momentum of the approval from the fall, from November and then advance the co-metric franchise as it emerges across different tumor types. So the breakout in Olympic Room. Thanks for your time and attention. I appreciate it.

Question-and-Answer Session

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Source: Exelixis' CEO Presents at J.P. Morgan 31st Annual Healthcare Conference (Transcript)
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