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Exelixis, Inc. (NASDAQ:EXEL)

Q4 2012 Earnings Call

February 21, 2013 5:00 PM ET

Executives

Charles Butler – VP, IR

Mike Morrissey – President and CEO

Frank Karbe – EVP and CFO

Gisela Schwab – EVP and Chief Medical Officer

Scott Garland – EVP and Chief Commercial Officer

Analysts

Eric Schmidt – Cowen & Company

Lee Kalowski – Credit Suisse

Ted Tenthoff – Piper Jaffray

Joel Sendek – Stifel Nicolaus

David Miller – Biotech Stock Research

John Sonnier – William Blair

Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter, 2012 Exelixis’ Earnings Conference Call. My name is Regina and I’ll be your conference operator for today. At this time, all participants are in a listen-only mode. Later we will be conducting a question-and-answer session. (Operator Instructions) As a reminder, today’s event is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Charles Butler, Vice President of Investor Relations. Please go ahead, Charles.

Charles Butler

Thank you for joining us for the Exelixis’ fourth quarter and full year 2012 financial results call. Joining me on today’s call as usual are Mike Morrissey, our President and CEO; Frank Karbe, our CFO; Scott Garland, our Chief Commercial Officer; and Gisela Schwab, our Chief Medical Officer, who will together review our corporate, financial and development progress for the quarter and year ended December 31, 2012.

They will also discuss priority activities for the remainder of the year and provide an update on the COMETRIQ launch and ongoing clinical development activities for cabozantinib.

As a reminder, we’re reporting our financial results on a GAAP basis only. And, as usual, the complete press release with our results can be accessed through our website, at exelixis.com.

During the course of this presentation, we’ll be making forward-looking statements regarding future events or the future performance of the company, including statements about possible future developments regarding clinical, regulatory, commercial, financial and strategic matters. Actual events or results, of course, could differ materially.

We refer you to the documents that Exelixis files from time to time with the Securities and Exchange Commission, and in particular the company’s annual report on Form 10-K filed today, February 21, 2013. These documents contain and identify, under 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 adversely impact the launch, commercialization, distribution, and availability of COMETRIQ, degree of market acceptance of and reimbursement for COMETRIQ, risks and uncertainties related to compliant with applicable regulatory requirements, market competition, and risks and uncertainties related to the initiation, conduct, and results of clinical trials.

With that, I’ll turn the call over to Mike.

Mike Morrissey

All right, thank you, Charles, and thank you all for joining us on the call today. We have a lot to cover this afternoon, so I’ll start with a few introductory comments first.

We made important progress across all aspects of our business in the fourth quarter of 2012, and since the approval of COMETRIQ for progressive, metastatic medullary thyroid cancer, or MTC.

We’ll use today’s call to provide a detailed review of our Q4 and full year 2012 financial results and initial update on the COMETRIQ MTC commercial launch and the broad progress of our cabozantinib clinical efforts. We’ll discuss the agreement that we announced this afternoon with Swedish Orphan Biovitrum or Sobi for short, for EU distribution of COMETRIQ for metastatic MTC. Overall, today’s call is aimed to help you gauge our progress and potential as we navigate the important events ahead in 2013 and beyond.

To start, we’re pleased with the progress that we’ve made so far in the initial phase of commercializing COMETRIQ for MTC. We successfully launched the product in the U.S. in late January, and have a complete supply and distribution chain in place, including experienced sales reps in the field. Scott will provide additional color commentary later in the call.

I’ll remind you that we’re less than a month into our launch, so we won’t be providing any detailed sales results on today’s call.

We announced today that Exelixis and Sobi have entered into a three year agreement which concludes at the end of 2015 to support the distribution and commercialization of COMETRIQ for MTC in the EU and potentially other countries.

As background, Sobi is a Stockholm-based international specialty healthcare company that is focused on rare diseases and markets more than 40 specialty and rare disease products for partner companies.

Now, I want to be extremely clear here from the outset. No other indication is covered by this agreement and Exelixis maintains full commercial rights for COMETRIQ in MTC outside the covered territory and for all other indications on a global basis.

Under the terms of this agreement, Exelixis will continue to be responsible for regulatory approvals in the covered territory. Sobi will serve as the exclusive distributor of COMETRIQ in the covered territory for a named patient use, or NPU program and will, if approved by the EMA promote, market, and sell COMETRIQ for MTC in the covered territory on behalf of Exelixis.

Our payments to Sobi are limited to certain predetermined fixed fees as well as potential performance-based milestones related to the commercialization of the product in the covered territory. Exelixis will book revenues based on product sold to Sobi. We have the ability to terminate this agreement at will, at any time, upon payment of certain predetermined fees.

Our goal here is to realize the full value of the MTC opportunity in Europe and potentially other regions without the need for a large scale investment in sales and marketing infrastructure. I’ll note that this strategy is consistent with our vision to match our commercialization investments with the potential value of each opportunity.

So I will close here by saying that with the approval of COMETRIQ, the fourth quarter of 2012 was an important time for Exelixis. We remain a development statement company committed to innovation and execution, albeit one of a select group of such companies with an approved product.

Our focus remains on further clinical development and expansion of the cabozantinib opportunity. We are undertaking additional Phase II and Phase III programs including planned pivotal trials in renal carcinoma and liver cancer which are designed to build a diverse and robust cabozantinib franchise across multiple cancer indications. Through diligent management of our expenses and financial assets, we believe we have a solid financial position that will support our efforts to realize the full clinical and commercial potential of this compound.

So with that, I will turn the call over to Frank next who will provide an overview of our fourth quarter and full year financial results for 2012 as well as guidance on our financial expectations for 2013. Gisela will review our clinical development strategy for cabozantinib and several indications, followed by Scott, who will then provide an update on the COMETRIQ launch.

At the end of the call, we will be happy to take your questions. So with that, I will turn the call over to Frank.

Frank Karbe

Thanks Mike. Let me begin with the fourth quarter and full year 2012 financial results. As usual, I will focus my comments on the highlights of our financial performance and refer you to our press release and today’s 10-K filing for additional details.

Revenue for the quarter was $7.8 million, and $47.5 million for the full year. In line with our guidance, revenues for both the quarter and the year were substantially lower than in 2011, as a result of the previously disclosed wind-down of several collaborations and the one-time accelerated recognition of the associated deferred revenue in 2011.

While COMETRIQ was approved at the end of November 2012, our fourth quarter financial results do not include any revenue from the sale of COMETRIQ since we only started to ship product in late January 2013. R&D expenses for the quarter were $32.5 million and $128.9 million for the full year. Year-over-year for the quarter, R&D expenses were up approximately 6%, mainly as a result of increased clinical trial expenses predominantly driven by the ramp up of the COMET studies.

However, for the full year, R&D expenses were down by about 18% which reflects several factors including the wind down of EXAM and several clin pharm studies in support of our NDA filing.

The wind down of RDT, lower allocations of G&A expenses and reductions in head count resulting from focusing R&D spent solely on COMETRIQ. G&A expenses were $9.8 million for the quarter and $31.8 million for the full year. The increase of $2.8 million year-over-year for the quarter was predominantly due to additional expenses in connection with our preparations for the launch of COMETRIQ. However, on a full year basis, G&A expenses for 2012 were down by $1.3 million or approximately 4%, mainly as a result of lower rent and utility expenses.

Restructuring charges amounted to $7.5 million for the quarter, mainly driven by $7.2 million charge in connection with having further vacated one of our buildings. Restructuring charges for the full year were $9.2 million, down by approximately $1 million as compared to 2011.

Operating expenses for the quarter were $49.8 million and $169.9 million for the full year. The increase of $8.1 million or approximately 19% year-over-year for the quarter was primarily a result of the Q4 restructuring charge mentioned a moment ago, as well as the increase in expenses associated with the launch preparations for COMETRIQ. For the full year, however, operating expenses decreased by $30.2 million or 15% mainly driven by the reductions in R&D expenses mentioned before.

For other income expense, we incurred a net expense of $10.1 million for the quarter, and $25.1 million for the full year. The increase in expenses for both the quarter and the full year was primarily due to interest expense in connection with our convertible notes issued in August as well as the accretion of interest related to the Deerfield debt. It is important to note that $15.6 million of the full year interest expense related to both of these instruments reflected non-cash charges.

We ended the quarter and year with approximately $634 million in cash. This includes $36.5 million of restricted cash held in ASCO to satisfy the first three years of coupon payments on our 4.25% convertible senior subordinated notes due 2019 issued in August of last year.

Let me now turn to the financial outlook for 2013. Let me start off by saying that at this time, and for the foreseeable future, we will not provide any revenue guidance associated with sales for COMETRIQ.

Our financial guidance for 2013 will, however, as in past years, include estimates for revenue from collaboration and license agreements. Our expense guidance assumes ongoing broad investments in the cabozantinib development program.

Most notably, it includes costs associated with the startup of the phase 3 studies in RCC and HCC that Mike alluded to, and in addition of course to costs related to our ongoing studies such as the COMET, EXAM, RDT, and others.

For the full year 2013, we expect contract and license revenue of $16.3 million related to several of our BMS collaborations. This revenue represents the remaining deferred revenue in our balance sheet as of December 31, 2012. We expect total costs and expenses in the range of $200 million to $230 million, including non-cash expenses of approximately $16 million to $18 million, which is primarily attributable to stock-based compensation expense.

We further expect interest expenses of approximately $45 million, which includes non-cash charges of $26 million related to the amortization of the debt discount on the 4.25% convertible notes as well as the interest accretion on the Deerfield debt. And finally, we expect to end the year with approximately $400 million in cash.

Lastly, I would like to point out that our P&L going forward will show two new line items, namely product sales and cost of goods sold. Please note that for the time being, our cost of goods sold are not a good representation of our true manufacturing costs since the majority of the costs associated with our current inventory on hand has been expensed in prior periods.

With that, I will turn the call over Gisela, who will provide an update on the COMETRIQ clinical development program.

Gisela Schwab

Thank you, Frank. The approval of COMETRIQ in the U.S. for progressive metastatic MTC and the initial success of its launch that Scott will speak to shortly have been important validating events of our clinical development and regulatory capabilities.

Importantly, COMETRIQ has received a Category One NCCN rating for MTC in January 2013. We have deployed a small six person medical science liaison team as part of our efforts in medical affairs, and the MSLs are supporting the product in the approved indication and are also supporting involvement in ongoing studies for cabozantinib.

The review process of our EU marketing authorization application is proceeding. The filing was accepted for review in November 2012. While we are awaiting a final opinion from CHMP, we are setting up the infrastructure to make cabozantinib available under a named patient use, or NPU program, in countries of the EU and in other regions. This activity will be part of our agreement with Sobi that Mike spoke to earlier.

An NPU program provides access to unapproved drugs for a single patient or a group of patients in a particular country. Products offered through NPU programs can be investigational, that is still in clinical studies or approved in one country, but not yet approved in the patient’s home country.

Regulations governing NPU programs vary by country, but companies offering products through NPU can sometimes charge for the product being administered. With those activities underway, the clinical and regulatory effort is intensely focused on expanding the cabozantinib opportunity.

As we have discussed previously, we have a robust strategy for evaluating the compound in a variety of indications using internal resources to support phase 3 trials, and working in partnership with a wide array of individual physicians, as well as cooperative groups through our collaboration with the National Cancer Institute’s Cancer Therapy Evaluation Program, or CTEP, as well as through an investigator sponsored trial program.

Now, let me turn to the ongoing COMET trials which are our two phase 3 pivotal trials in metastatic castration-resistant prostate cancer. As you know, COMET-1 is focused on improving overall survival and COMET-2 is focused on pain reduction. We are continuing to activate additional clinical trial sites and our patient recruitment and enrollment trajectory are in line with our expectations, and we continue to expect the top line data from both COMET trials will be available in 2014.

If both trials are successful, the combined data package demonstrating a survival benefit and improvement of pain associated with bone metastases would differentiate cabozantinib from other agents used in the treatment of mCRPC, and would support the product’s unique activity profile in this indication.

We are also advancing our planning to evaluate cabozantinib in the earlier line of therapy of CRPC patients prior to chemotherapy. We are working on the details of the design of two Phase I/II studies; one evaluating the combination of cabozantinib with enzalutamide and one evaluating the combination of cabozantinib with abiraterone. We are hoping to start these trials in the second half of 2013.

Now, beyond enrolling the COMET trials, two of our key development priorities for 2013 are the initiation of our planned Phase III trials in renal cell carcinoma and hepatocellular carcinoma, or RCC and HCC, respectively. We have completed pre-Phase III meetings with regulatory authorities including the FDA and multiple member state authorities in the EU, and have incorporated their feedback into the design of the Phase III trials. We have also consulted with key opinion leaders from around the world and are applying their insight to the trial design as well. Based on our current timeline, we expect that both trials will begin in the third quarter of 2013.

Now, let me take a moment to review the rationale for pursuing these indications and to describe each trial in detail. With respect to the renal cell carcinoma Phase III trial, data presented for a cohort of 25 RCC patients that was shown at ASCO last June showed that cabozantinib had encouraging anti-tumor activity in a heavily pretreated group of patients.

Based upon the encouraging signal of clinical activity, our Phase III trial in RCC will be a randomized, open label study that will compare cabozantinib against everolimus in patients who have received and progressed on at least one prior VEGFR Tyrosine kinase inhibitor.

The primary end point will be progression free survival or PFS, and the secondary end point, overall survival. PFS is the established acceptable endpoint for RCC. As you probably know, the PFS endpoint was used to support approval of sorafenib, sunitinib, everolimus, exitinib, and pazopanib in RCC and regulatory authorities in the U.S. and Europe are supporting it as the endpoint for our Phase III trial.

In our study, we will assess overall survival as a secondary endpoint, and no crossover between treatment arms will be allowed. Patient reported outcomes, biomarkers, safety and pharmacokinetics will be evaluated as exploratory endpoints. Pharmacokinetics will be evaluated as statutory endpoints. The current plans project that the trial will be conducted at up to 200 global sites and is expected to enroll approximately 664 patients with clear cell renal cell cancer, who have received at least one prior VEGFR-TKI therapy.

Patients will be randomized one to one to receive 60 milligram of cabozantinib daily or the approved dose of everolimus. Patients will be stratified based on the number of prior VEGFR-TKI therapies received and based on risk criteria commonly applied in RCC and established by (inaudible).

For the primary endpoint of PFS, we are assuming a five months’ median PFS for everolimus and a 7.5 months’ median PFS for the cabozantinib arm. This provides for an HR of 0.67 and 90% power and requires 259 PFS events among the first 375 patients randomized.

For the secondary endpoint of OS, we are assuming 15 months’ median OS for the everolimus arm and 20 months for the cabozantinib arm. With an HR of 0.75 and 80% power, this requires 413 events.

Now, with respect to HCC, as reported at ASCO last June, the HCC cohort of our large randomized discontinuation trial showed encouraging antitumor activity. There is no standard of care available for this patient population at the current time, and we believe that cabozantinib could be an important new treatment option in this indication.

The HCC trial will compare overall survival between patients treated with cabozantinib and those receiving placebo. Overall survival is the accepted endpoint in this indication and was the endpoint used to support approval of sorafenib as first-line therapy for HCC. The current plan is to conduct the trial at up to 200 global sites and it is expected to enroll approximately 760 patients with advanced HCC. Patients must have received prior sorafenib therapy and may have received up to two prior systemic therapies.

Patients will be stratified by geographic region, etiology of HCC, and the presence or absence of extra hepatic spread and/or microscopic vascular invasion. The trial will be blinded and placebo controlled and patients will be randomized two to one to receive 60-milligram of cabozantinib daily or placebo.

Secondary and exploratory endpoints include overall response rate, progression-free survival, patient reported outcomes, biomarkers, and safety. For the primary endpoint of overall survival, we are assuming a medium duration on the placebo arm of 8.2 months and a 10.8 months median overall survival for the cabozantinib arm. With an HR of 0.76 and 90% power, this will require 623 events.

Interim analyses will be planned at the 50% and 75% fraction of the total events. There is tremendous amount of enthusiasm for these trials in the community, based on the early stage data and the planned Phase III trial designs. The Exelixis team is in place and working hard to ensure that we initiate these trials later this year. And we hope that these studies will support the next wave of indications for cabozantinib after mCRPC.

Now, turning to our IST and CTEP programs; the IST program and our collaboration with CTEP are also making good progress. The focus of both programs is to evaluate cabozantinib in different tumor types and to generate data that allows us to prioritize the next potential indications to enter into late stable development.

We now have 20 ongoing or planned investigator sponsored studies and 13 studies under the IND held by CTEP. The first randomized Phase II studies under the CTEP IND are expected to initiate in the next couple of months and several trials are already recruiting patients.

Regarding those randomized Phase II studies now, a trial comparing cabozantinib versus weekly Paclitaxel and the treatment of platinum-resistant ovarian cancer has already started. Two Phase II randomized studies conducted by the Cooperative Group Alliance are expected to start in early spring.

These are the first line RCC studies comparing cabozantinib versus sunitinib and a study in ocular melanoma comparing cabozantinib versus temozolomide. Also a randomized trial in EGFR wild type, non-small lung cell cancers patients with failed prior chemotherapy that compares cabozantinib versus alotonib versus the combination of cabozantinib versus alotonib conducted by ECOG is expected to begin shortly.

So to summarize, we’ve made very good progress on multiple fronts. The COMET trials are actively enrolling. The new Phase III studies in HTC and RCC are expected to initiate in the third quarter 2013 and the IST and CTEP programs are advancing well.

Now, with that, I will turn the call over to Scott who will provide an update on the commercial launch of COMETRIQ.

Scott Garland

Thank you, Gisela. As you know the FDA approved COMETRIQ for the treatment of progressive, metastatic MTC on November 29 of last year and we shipped product to our specialty pharmacy on January 24 of this year. Over the last several months, we have been busy executing a commercial plan that we believe is flexible, scalable and resourced appropriately relative to the size and the market opportunity.

As previously communicated, we are fielding a small contract sales organization of five individuals to sell COMETRIQ in MTC. All five reps have been hired and we are pleased with the talent and the experience of the team that we have been able to attract. The average amount of sales experience is close to 20 years, and includes prior physicians at some of the biggest oncology companies. The sales team has been trained and is now out in the field actively calling on customers.

We made additional progress in the marketing front as well. Our non-personal promotional activities launched immediately after approval and included among other things direct mail, digital media and journal advertisements. Coupled with the efforts of the sales force we expect to continue to drive awareness and usage of COMETRIQ in the labeled indications.

Moving to access and reimbursement, as I mentioned earlier, COMETRIQ became available on January 24 of this year, and Diplomat, our contracted exclusive specialty pharmacy, is now actively filling COMETRIQ prescriptions. Our paired field team has been out in the field meeting with commercial and government payers to secure appropriate coverage for COMETRIQ. These conversations have gone as expected and we continue to believe that COMETRIQ will be covered for the labeled indication.

As Gisela mentioned, we received a category one NCCN rating for COMETRIQ and MTC which obviously assists payers in making their coverage determination. Mike began the call with an overview of our new agreement with Sobi and I’d like to provide some additional color on the agreement and why I think it’s a good one for Exelixis.

As Mike said, Sobi is focused on rare diseases and the company has over 25 years of experience promoting niche specialty markets through agreements like ours. As a result, the team at Sobi has a high level of familiarity and expertise supporting lean, flexible, commercial models of the type we’re using for COMETRIQ. Moreover, Sobi’s integrated and focused team-based approach to sales, marketing, and patient access, including named patient use resonates well with our own stateside efforts.

So in terms of both philosophy and structure, the Sobi agreement is a logical extension of what we’ve already put in place in the United States. And all of us on the Exelixis team are looking forward to working with Sobi to commercialize COMETRIQ in the EU.

In summary, we continue to make solid progress on our commercial execution to-date and I look forward to sharing additional updates in the months ahead.

I’ll now turn the call back over to Mike for his closing remarks.

Mike Morrissey

Okay. Thanks, Scott. We’ve had a long call today, so I’ll keep my closing comments brief. I’d like to take a moment to thank the entire Exelixis team and all of our employees for their continued efforts and commitment as well as the patients and physicians who are helping us advance the development of cabozantinib across a wide range of trials.

We also want to thank our shareholders for their ongoing support. So at this time, we’re happy to take your questions. Thank you.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question today is from the line of Eric Schmidt with Cowen and Company.

Eric Schmidt – Cowen & Company

Good afternoon. Thanks for taking my questions. I was hoping you could provide a little bit more detail on the COMET-1 enrollment, whether you can give actual figures or an update on how things have turned around following some of the seasonalities in, I guess, Q3? And also, whether we might see the interim analysis in late 2013 or 2014 or what timing we might get from that?

Gisela Schwab

Sure. So in terms of the enrollment, I think things are going very well. For COMET-1 we have the majority, roughly more than 50% of the sites activated, and the enrollment trajectory is in line with our expectation to have top line data in 2014. Now, beyond that, we haven’t really communicated any expectations around the interim analysis, but obviously, if there is one, it would be before 2014 or late 2014.

Eric Schmidt – Cowen & Company

Okay. And Gisela, we appreciate all the commentary or color you gave on both the RCC and HCC trials. I think at one point you were considering more of a head to head versus Sutent in renal cell carcinoma. Could you talk about your decision to go versus a different comparator?

Gisela Schwab

Yeah. We have elected to go forward in the second or later line setting versus everolimus and that’s based upon the data that we have shown at ASCO in 2012. And recall, that data was generated in heavily pretreated patients with renal cell cancer. In that population, we observed a medium PFS of 14.7 months, which vastly exceeds what has been observed with other agents in the later line of therapy. So that’s how we’re going forward with the Phase III study.

Now, the comparison, though, that you mentioned, in the first line setting is being evaluated in a randomized Phase II study that’s being run by the Cooperative Group Alliance and that is to start shortly. And so that study will be evaluating cabozantinib versus sunitinib in the first-line setting.

Eric Schmidt – Cowen & Company

Okay. Great. Just a last quick question for Frank on the cost of goods. You mentioned some previously expensed inventory. Can you talk about how long that might last or what your cost of goods might be either while you have previously expensed inventory or after you run through the inventory?

Frank Karbe

That’s a fair question, Eric but it’s really too early to comment on how long the current inventory on hand might last. And as for what our expectations are for cost of goods sold, I would defer that discussion to the Q1 earnings call, which will be the period when we actually have commercial revenue for the first time, and we would envision to discuss those matters then.

Eric Schmidt – Cowen & Company

Okay. Sounds good. Thank you.

Operator

Your next question is from the line of Lee Kalowski with Credit Suisse.

Lee Kalowski – Credit Suisse

Great. Appreciate the opportunity and good evening, everyone. So on the prostate cancer combination trials that you had mentioned, I guess my first question is how early are those trials going to be? Are they specifically post-metastatic trials? And I ask in part because, you know, one of the things we’re seeing is these – the agents that are to be combined with are potentially moving earlier. So to what extent if you are moving forward with combination trials might these be a little bit of a moving target?

Gisela Schwab

Yeah, that is a great question, and thank you for that. We are still working on the details of these trials, and I think as you say, some of the agents are moving earlier on, but I think a very good population of patients is the patient population with asymptomatic or mildly symptomatic disease who are candidates for abiraterone or/and flutamide prior to chemotherapy. So these patients would have metastatic disease but are earlier on, haven’t received chemotherapy as yet.

Lee Kalowski – Credit Suisse

Okay. And on the agreement with Sobi, just a question on why it’s a three-year agreement. You know, you guys have talked about the COMET data coming out in 2014. Just wondering, I mean, so that data will probably is going to be out before ‘16. I’m just trying to understand why you signed a three-year agreement there.

Mike Morrissey

Yeah, Lee, it’s Mike. I think the goal here was to, again, really maximize our optionality in the out years, number one. And to be able to, in the short term, capture the – you know, whatever population we can for MTC in Europe in the most cost efficient manner.

Lee Kalowski – Credit Suisse

Okay. Appreciate that. Thanks.

Operator

Your next question is from the line of Ted Tenthoff with Piper Jaffray.

Ted Tenthoff – Piper Jaffray

Great. Thank you very much and thanks for the thorough update. Lots of things going on and appreciate the details. My question had to do around the kidney cancer study, and I guess I want to dig in a little bit more with respect to some of the changing environment there, and maybe some of the details that we have seen from some of the competitors recently in terms of how Naxavar is – oh, I’m sorry, how, you know, some of the overall survival data is shaping out and how that has changed your view to potentially look at competitive agents there, and maybe just a little bit more detail on why you went for a different comparator in the later stage stuff, if you can go into a little bit more detail, and how that could position cabo in that indication?

Gisela Schwab

Sure. Thanks for the question. So, in renal cell cancer, as I pointed out, we have very encouraging data from the earlier phase study in heavily pretreated patients, and so that’s a very strong signal.

Also, cabozantinib, compared to other competitors that are already in the marketplace, which are largely VEGFR-TKIs has, obviously, a different mechanism of action, and while it hits VEGFR very hard, it also hits MET very hard, and the combination of inhibiting both these targets, which are very important in clear cell renal cell cancer, I think, is certainly a different approach from yet another VEGFR-TKI.

We chose to move forward in a comparative study versus everolimus, because everolimus is in the second-line setting the most frequently used drug. It certainly has activity, it’s PFS is in the order of four to five months in that setting, and that has been well established. And it’s a clear benchmark that we believe we can exceed, given the early data, and if the early data bears out. And so that’s how we designed the study, and going forward, obviously, progression-free survival is the primary endpoint.

Ted Tenthoff – Piper Jaffray

Right.

Gisela Schwab

And we are encouraged by what we’ve seen in the earlier study that I referred to earlier.

Ted Tenthoff – Piper Jaffray

Yeah, and I guess maybe my question more has to do with how important that overall survival signal is for ultimate approval.

Gisela Schwab

That’s a very good question also. So progression-free survival has supported a number of compounds. The approval, the number of compounds in renal cell cancer, and it is an accepted end point in this indication, and there’s good data published data that relates progression-free survival to overall survival as well.

And as I mentioned earlier on on the call, we have discussed the design end points and statistical assumptions with the FDA and also ex-U.S. authorities and have received very good feedback. And clearly progression-free survival is an acceptable end point that will support an approval provided it’s positive.

There’s obviously interest in collecting data on overall survival and I think it will be important to collect that in a clean fashion, which is why we will not allow crossover in this study.

So much like EXAM, when you reflect back on to the MTC experience, we want to basically recapitulate that experience and have an opportunity with longer follow-up, evaluate overall survival for this study which is why the study is sized as it is for 664 patients. And I think if positive, of course, overall survival will give us a competitive advantage over other competing compounds.

Ted Tenthoff – Piper Jaffray

Okay. Fantastic. That’s really helpful, Gisela. Thanks so much.

Gisela Schwab

Sure.

Operator

Your next question is from the line of Joel Sendek with Stifel Nicolaus.

Joel Sendek – Stifel Nicolaus

Hi, thanks a lot. I just wanted to run through a bunch of quick timeline questions. So I’m looking back in my notes on when you said on previous calls about COMET. I think you previously said the data would probably be in the second half of 2014.

So should we continue to view it that way? And can you give any kind of feeling for when we might see the European approval? And finally, the OS data from EXAM, when might we see that? Thanks.

Gisela Schwab

Sure. So regarding the COMET timeline, I think what we’ve said in the past is that we would expect data in 2014. And we have left that window a little bit larger because it’s a little bit early to be so specific. So it hasn’t changed at all from what we’ve said in a previous call.

Regarding the EU timeline to approval, that is a little bit less predictable than it is, as you know in the United States because there are these clock stops that are foreseen in the review timeline while the agency raises questions. And then the applicant has to address and obviously that will have to be factored in. So we are hoping to see, to get to a decision late in ‘13. Excuse me, or early ‘14. And then the last question, could you repeat the last question?

Joel Sendek – Stifel Nicolaus

Sure. Yes. Just overall survival for EXAM?

Gisela Schwab

Overall survival for EXAM, we’re following up and right this minute, it’s a little bit early to predict. The total number of events that we need to observe as per the statistical plan is 217 and we are currently projecting that later in this year or in 2014.

Joel Sendek – Stifel Nicolaus

Okay. And my next question – thank you very much for that – is on ASCO. I know you submitted a bunch of abstracts. Can you give us any clue as to what we might see if they are accepted?

Mike Morrissey

Yeah, I will jump in here and give Gisela a break. You are correct. We submitted a number of ASCO abstracts. We’re going to not speak to the details of that until we have been notified of what’s been accepted and that normally comes in the – I think the April timeframe. So stay tuned there. Once we know, we will make that available.

Joel Sendek – Stifel Nicolaus

Okay. Thanks Mike.

Operator

(Operator Instructions.) Your next question comes from the line of David Miller with Biotech Stock Research.

David Miller – Biotech Stock Research

Hi, great. Thanks for the informative call. I just have a couple of questions. In terms of the RCC trial, and in the PFS point of view, are you stratifying between the number of prior VEGF TKIs that they have taken?

Gisela Schwab

Yes, we’re intending to do so.

David Miller – Biotech Stock Research

Okay. Are you going to be securing special protocol assessments for the RCC and HCC trials?

Gisela Schwab

So we are not intending to do that. And the reason is that we have, you know, received very clear feedback from the regulatory agencies and now our recent interactions and also the endpoints are clear for both RCC and HCC.

David Miller – Biotech Stock Research

Okay. In terms of the RCC trial, PFS is your primary end point, are you looking to submit an application based only on PFS or will you wait for OS before you – before you put an application in?

Gisela Schwab

So our intent would be to submit on PFS and that is something we have discussed also in these recent interactions.

David Miller – Biotech Stock Research

Okay and then the last question...

Gisela Schwab

Obviously there is another opportunity then to update the label if positive with OS.

David Miller – Biotech Stock Research

So how – in that situation, if you apply on the basis of PFS, how are you going to prevent people from getting the drug and not – in the interim and to be – I mean, would you expect the OS data to mature between the time you get the PFS read back and approval or will you have some kind of on-the-market crossover that might mess up your OS data?

Gisela Schwab

Well, there are obviously multiple active agents out available for patients, and patients when they progress will go on to other treatments and that will occur for both treatment arms. What we are avoiding, though, is a systematic crossover from one arm to the other, which is really what you feel when you think about outcome for OS data that, our patients ultimately receive the drug anyways and that could potentially confound the OS data.

David Miller – Biotech Stock Research

Okay. Let me try the question this way. About how long after you get your PFS readout would you expect the OS readout?

Gisela Schwab

I think about a year and a half hater.

David Miller – Biotech Stock Research

Okay.

Gisela Schwab

Yes. And this – and this study would be obviously fully enrolled per our projections at the time that we conduct the PFS analysis.

David Miller – Biotech Stock Research

Okay. And so then the last question is, is that in the press release about Sobi, you had mentioned a price that you are charging Sobi in their territories. Can you talk a little bit about how that price compares with the final retail selling price in those covered territories?

Scott Garland

Yeah, Hi, it’s Scott Garland here. So for competitive reasons we are not going to be discussing the price of COMETRIQ in either the named patient use or the commercial phase.

David Miller – Biotech Stock Research

All right.

Scott Garland

We are obviously discussing that with Sobi now and we will provide more specifics at the appropriate time.

David Miller – Biotech Stock Research

I guess it’s more of a spreadsheet question. I mean, are you selling it to them at a particular price so then part of their profit is – it’s being marked up or what?

Scott Garland

I’m sorry, can you repeat the question?

David Miller – Biotech Stock Research

So is the price that you are charging Sobi equivalent to the retail price there, or are you selling it to them as some sort of a discount?

Scott Garland

Again, I think probably we want to hold off on commenting on that specifically. And we will give you some details at the appropriate time.

David Miller – Biotech Stock Research

Okey-dokey. Thank you very much.

Operator

Your next question comes from the line of John Sonnier with William Blair.

John Sonnier – William Blair

Hey, thanks for taking the question. I guess just a couple of questions on the RCC trial. The first is on dose. I think the very impressive data we saw at ASCO was from a much higher dose if I understood correctly, the plan phase 3 of the 60. Can you talk about your confidence in that dose in this setting?

Gisela Schwab

Sure. Thank you for the question. So most patients on the RCC study that was presented at ASCO dose reduced, and in fact, many patients achieved their response or disease stabilization on a lower dose, and that is at 60-milligrams, and were able on the 60-milligram dosing to maintain their response or disease stabilization. So there’s clearly activity with the 60 milligram dose in RCC. And the data obviously has been obtained largely with a reduced dose. We also, as you know, have a growing body of data in CRPC and other indications that shows that there is activity at even 40 milligrams, but also 60 milligram dose levels.

John Sonnier – William Blair

Yeah. I appreciate it outside of RCC. That was helpful to know that in this trial you actually titrated these patients down. As I recall, it was a PFS of just under 15 months. And had you reached the upper bounds of the confidence interval? Like how high could that number be?

Gisela Schwab

Yeah. I believe we have reached for PFS the upper bound. So that is 14.7 months is a stable outcome for the median. And in terms of the OS, however, we had not even reached the median as yet. So that was a follow-up – a median follow-up of about 15 months was not reached at the time.

John Sonnier – William Blair

And I know it’s a bit dangerous to do this. But just remind us what the Afinitor PFS approval looked like and how many prior treatments those patients have had, just for comparative purposes?

Gisela Schwab

Sure. So the Afinitor data that was supporting the approval was a PFS of four months that was later updated in a later publication to be five months. So that’s the median PFS observed for Afinitor. And I think subsequent studies have repeatedly reported very similar data. In terms of prior treatments, these patients could have received – had to have received sorafenib and/or sunitinib.

John Sonnier – William Blair

Okay. Thank you.

Operator

And, ladies and gentlemen, this does conclude the question-and-answer portion of today’s broadcast. I’d like to turn the call back over to management for any closing remarks they’d like to make.

Mike Morrissey

Okay. Thanks, again, for your time and attention today. We appreciate your support, and we’ll look forward to updating you next on our first quarter call. Thank you.

Operator

Ladies and gentlemen, thank you so much for your participation today. This does conclude the presentation, and you may now disconnect. Have a great day.

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