Exelixis' (EXEL) CEO Mike Morrissey Hosts COMET-1 Results Conference (Transcript)

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 |  About: Exelixis, Inc. (EXEL)
by: SA Transcripts

Operator

Good day ladies and gentlemen and welcome to the Exelixis’ COMET-1 PT Results Conference Call. My name is Alex and I’ll be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this call is being recorded for replay purposes.

I would now like to hand the call over to Susan Hubbard, Investor Relations. Go ahead please.

Susan Hubbard

Thank you, Alex, and thank you all for joining us for today’s Exelixis conference call to discuss the topline results from the COMET-1 Pivotal Trial. Joining me on today’s call are Mike Morrissey, our President and CEO; and Gisela Schwab, our Chief Medical Officer who will together review the results and the Company’s near-term activities, including the reduction in workforce. Peter Lamb, our Chief Scientific Officer; Scott Garland, our Chief Commercial Officer; and Deborah Burke, our Interim Chief Financial Officer are also here with us and will participate in the question-and-answer session of the call.

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 plans and 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 Exelixis files from time-to-time with the SEC and in particular the Company’s quarterly report on Form 10-Q.

These documents contain and identify under the heading Risk Factors, important factors that could cause actual results to differ materially from those contained at any forward-looking statements including without limitation, the results and implication of completed, partial and ongoing clinical data analyses, the availability of data at the reference times, risk and uncertainties related to the initiation, conduct, cessations and results of clinical trials, risks relating to the commercialization of COMETRIQ, risk and uncertainties related to the regulatory review and approval processes and a compliance with applicable legal and regulatory requirements, the general sufficiency of Exelixis’ capital and other resources and the specific risk of unforeseen expenses that could diminish Exelixis’ financial ability to support its operations through the release of topline METEOR results and market competition.

With that I will turn the call over to Mike.

Michael M. Morrissey

All right, thank you Susan and thanks to everyone for joining us on the call this morning. We are very disappointed to announce today that the final analysis of the COMET-1 Phase III pivotal trial reveal that the study did not meet its primary endpoint of demonstrating a statically significant increase in overall survival for patients treated with cabozantinib as compared to prednisone. Before going any further I would like to thank the patients, physicians, nurses, caregivers and other study members who took part in the study.

Based on the outcome of COMET-1, Exelixis has deprioritized the clinical development of cabozantinib in metastatic CRPC. Enrollment in COMET-2, which is our second pivotal trial in metastatic CRPC evaluating pain palliation, has been halted. We continue to expect topline results before the end of this year. Based on the outcome of COMET-2, we will discuss with the regulatory authorities the potential regulatory path if any for cabozantinib with metastatic CRPC.

We remain focused on the late stage development of cabozantinib in other indications, which include the ongoing pivotal studies METEOR for RCC, and CELESTIAL for HCC and from which we expect topline data in 2015 and 2017 respectively. With this disappointing news in hand we are initiating a reduction of our workforce. We have thoughtfully prepared for this potential scenario and the resulting very difficult decisions.

This workforce reduction will enable us to focus our financial resources on our METEOR and CELESTIAL clinical trials and ensure that we have sufficient cash to take us through the topline results of METEOR next year. The Company will reduce its workforce by 70% or approximately 160 employees, resulting in approximately 70 remaining employees.

Exelixis anticipates the one-time restructuring charge associated with the workforce reduction to be approximately $6 million to $8 million with the majority to be completed by the end of Q4, 2014. Exelixis will provide additional financial details in its third quarter 2014 financial report.

I would like to personally express my deep appreciation to the talented and dedicated Exelixis’ employees who will be impacted by these actions for their commitment to Exelixis and their tremendous contributions to patients with cancer.

I will now turn the call over to Gisela to discuss the specifics of the topline results.

Gisela M. Schwab

Thank you, Mike. COMET-1 as you know compared cabozantinib versus prednisone in Metastatic Castration-Resistant Prostate Cancer patients who have received and progressed on or following prior docetaxel as well as abiraterone and/or enzalutamide. The primary endpoint of the study is overall survival. The planned enrollment of 960 patients was achieved in September 2013, and the final analysis has now been conducted according to the statistical plan for the study. The data sweep for the final analysis was triggered when 578 events or deaths had occurred.

The analysis of overall survival showed a median duration of overall survival of 11 months for the cabozantinib arm and 9.8 month on the prednisone arm. This was not statically significant with a hazard ratio of 0.9, a 95% confidence interval of 0.76 to 1.06, and a P value of 0.212. The results are the subject of ongoing analysis and additional data including secondary and exploratory endpoints will be submitted for presentation at a future medical conference.

Besides overall survival, Progression-Free Survival or PFS as assessed by the investigators, an exploratory endpoint in the trial is the only time to event based endpoint for which data are currently available. Median PFS was 5.5 months for the cabozantinib arm of the trial versus 2.8 months for the prednisone arm with a hazard ratio of 0.50, a 95% confidence interval of 0.42 to 0.6 and a P value less than 0.0001.

Safety data were consistent with those observed in earlier-stage trials of cabozantinib in Metastatic Castration-Resistant Prostate Cancer. This analysis follows a thorough data sweep for overall survival, during which the status of each patient on study was determined once we knew that all events required for the final analysis had occurred.

The teams at [CRL] [ph] and at Exelixis did an outstanding job executing this data sweep in a very short-time and ensuring the integrity and accuracy of the data down to the site level. This is obviously a challenging task in a large global study with over 270 participating sites. And I would like to commend the entire team for their efforts.

Turning to COMET-2, we have stopped enrollment of patients in the trial, which is our second Phase III study in Metastatic Castration-Resistant Prostate Cancer patients, evaluating cabozantinib versus mitoxantrone/prednisone for pain palliation. As a reminder the primary endpoint of this trial is pain response at week six of treatment confirmed at week 12.

We will not provide any specifics or details about COMET-2 until we unblind the study and communicate topline data later this year. Additionally, another company sponsored study in earlier line mCRPC a randomized Phase II study of cabozantinib in combination with abiraterone is also being halted.

Finally, enrollment in our further Phase III studies in metastatic renal cell cancer and advanced hepatocellular cancer is proceeding well. We continue to anticipate results of these studies starting with the renal cell cancer results anticipated in 2015, followed by the hepatocellular cancer results anticipated in 2017.

And with that I will hand the call back to Mike.

Michael M. Morrissey

All right, thanks Gisela. Before we open up the call for questions, I want to take a moment to reiterate that Exelixis will continue to develop cabozantinib with focused commitment and drive in order to investigate it to its full potential. We remain focused on the execution of our key priorities for the remainder of 2014, including first to obtain topline results for the COMET-2 study and evaluate the potential regulatory path in metastatic CRPC if there is any, and second to complete enrollment for METEOR and second-line renal cancer in anticipation for topline results in 2015.

We will now move to the Q&A section of the call. Before we start, I’ll ask for your patience and understanding in advance, if we are not able to respond to all your questions with detailed answers about the study results and other actions discussed today, it is still very early in the data review process.

So operator, we can now take the first question please.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from the line of Brian Klein. Go ahead please.

Brian Klein – Stifel, Nicolaus & Company, Inc.

Thank you for taking my questions and I feel for you guys with the disappointing news. I guess the first question here, could you may be provide a hypothesis as to why you think the benefits seen in PFS didn’t translate into a survival benefit?

Michael M. Morrissey

Yes, Gisela I want you to start with that question.

Gisela M. Schwab

Yes. As you say, the overall survival readout was not positive where as we saw an improvement in progression-free survival. Now we are still very early in the process of course and we are looking into the data in great detail. So we can’t provide conclusive answers at this point, but obviously the relationship of progression-free survival and overall survival will be evaluated. Progression-free survival is not necessarily predictive in prostate cancer for overall survival outcomes. So that’s where we are today. Obviously other factors can play a role, such as subsequent therapies as well.

Brian Klein – Stifel, Nicolaus & Company, Inc.

Okay, great. Can you give us an update as to where you are right now in the COMET-2 enrollment and how much of that – how robust will that ultimate data set be?

Gisela M. Schwab

Yes. It’s an important question, clearly and as I said earlier we are stopping enrollment in COMET-2, we are today not providing any details on COMET-2, but we anticipate results in 2014 and we would go into detail at that point in time.

Brian Klein – Stifel, Nicolaus & Company, Inc.

Okay. Great and then one last question please. In terms of cabo for RCC, can you give us a sense of enrollment there and if it’s meeting your expectations?

Gisela M. Schwab

Yes, our enrollment in the METEOR study is proceeding very well and we anticipate completing enrollment in 2014 and so that is going forward as planned.

Brian Klein – Stifel, Nicolaus & Company, Inc.

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Cristina Ghenoiu from Cowen. Go ahead, please.

Cristina Ghenoiu - Cowen and Company

Hi and thank you for taking my questions. I was wondering in regards to the PFS endpoint, in your discussion with the FDA, did they mentioned what magnitude of PFS they were looking for and also if it should have been associated with trend in survival?

Gisela M. Schwab

Well, PFS is not an endpoint that has supported regulatory approval for other products in prostate cancer. So I think that is an important notion, also PFS was investigator assessed and is a exploratory endpoint in the study. In terms of the other question how that relates to overall survival, I think I addressed that in the previous answer.

Cristina Ghenoiu - Cowen and Company

Thank you, and one question about your bank loan with Silicon Valley. I know that you need to keep a cash reserve of about $82 million. So is the estimate that you provided in terms of having enough cash through RCC readout, does it include that?

Michael M. Morrissey

Yes, Debby, do you want to take that?

Deborah Burke

Sure, sure. Yes it does, we've factored in all our debt payments in net cash.

Cristina Ghenoiu - Cowen and Company

Okay. Thank you very much.

Operator

Thanks. Our next question comes from the line of Cory Kasimov from JP Morgan. Go ahead please.

Whitney G. Ijem – JPMorgan

Hi, good morning this is actually Whitney on for Cory. Question. If you can just remind us of the design of the RCC and HCC trials and I’m thinking specifically about the dose that’s being explored versus the average dose that was used in the earlier stage trials in both of those indications, and then secondly if you can just talk about your confidence in those trials in light of the prostate cancer data?

Gisela M. Schwab

Yes, thanks of the question. So just starting with the design of the RCC and HCC studies, METEOR – the RCC study is a trial set in the second or later line treatment of patients with metastatic renal cell cancer who have received and failed at least one prior VEGFR targeting agent. This is a study that compared to cabozantinib given at 60 mgs daily versus everolimus which is a standard treatment in the second-line setting. The primary endpoint for the study is progression-free survival and a secondary endpoint is overall survival.

In terms of the dose used in this study and this and in all other Phase III studies that we’re talking about including the prostate cancer studies, HCC and METEOR 60 mg daily dosing is being utilized and that is based on extensive dose work across multiple indications where we scaled back from a higher dose that was originally used in the medullary thyroid cancer setting and also in the earlier renal cell cancer study, where we saw that patients does reduced frequently the median average daily dose. In the RCC study, in the earlier RCC study where it’s about 75 mgs, so very close to the 60 mg.

Now, onto the CELESTIAL or HCC study that is a trial set in patients in the second line with advanced hepatocellular cancer, these are patients who have received and failed prior sorafenib and the study is a two to one randomization of cabozantinib versus prednisone and the primary endpoint is overall survival.

Whitney G. Ijem – JPMorgan

Great, and then just the expectations or confidence in those trials, has it changed all in light of the data announced yesterday?

Gisela M. Schwab

I don’t believe that the confidence has changed; I think we have seen a nice data in earlier studies in these settings, RCC and HCC respectively. And I don’t see a connection between prostate cancer and these indications.

Whitney G. Ijem – JPMorgan

Great. Thanks for taking the questions.

Operator

Thank you. Our next question comes from the line of Biren Amin. Go ahead please.

Biren Amin – Jefferies & Company, Inc.

Yes. Thanks for taking my question. I guess a couple of questions for you Mike. You’ve announced the reduction in the workforce of about 70%. What's that kind of lead to as far as costs savings for the second half of the year and maybe for next year? Thanks.

Michael M. Morrissey

Yes. Biren, thanks for the question. We will discuss those details in terms of 2014 on our Q3 call and give you additional clarity as we work through those numbers and then 2015 obviously, I wouldn’t want to comment on that right now, but we will deal with 2015 guidance in 2015.

Biren Amin – Jefferies & Company, Inc.

And, I guess on your previous call, you had guided for cash position year-end of more than $200 million. Do you have any updates on that guidance?

Michael M. Morrissey

Not today. Again, as I said before, we will update all that information on the Q3 call.

Biren Amin – Jefferies & Company, Inc.

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Terence Flynn with Goldman Sachs. Go ahead please.

Unidentified Analyst

Hi, thanks for taking our question, this is actually [Olivia] (ph) in for Terence. Can you disclose the rates of response and stable disease for cabo versus prednisone in COMET-1 and if I may for the second one, can you remind us of the ongoing co-op group trials for cabo and does this news impact the current plans for these trials? Thanks.

Gisela M. Schwab

Yes. Thanks for the questions. It’s early days still and we are analyzing the data as we speak and in weeks to come. So, beyond the topline data that we have discussed this morning, we can’t provide further information. And regarding the cooperative group trials, investigator-sponsored trials or investigators performing CRPC studies will be informed of the outcome of COMET-1 and obviously they are holding the [IND] [ph] for these trials and they will make their own decisions as to how they proceed.

Susan Hubbard

Can we take the next question please?

Operator

Certainly. (Operator Instructions) Our next question comes from the line of Michael Schmidt from Leerink Partners. Go ahead please.

Jonathan Chang – Leerink Partners LLC

Hi, it’s actually Jonathan Chang stepping in for Michael Schmidt. Thanks for taking my questions. Can you provide any color on the dropout rates and rates of dose reduction in COMET-1?

Gisela M. Schwab

Thanks for the question. Again, it’s early days and we don’t have all the details, we are stepping through the analyses and we anticipate presenting all these data at a future medical conference. So stay tuned.

Jonathan Chang – Leerink Partners LLC

Okay. And second question. So kidney cancer is a pretty competitive space with of course just small molecule kinase inhibitors. How competitive do you believe cabozantinib’s toxicity profile will be in kidney cancer compared to some of the newer TKIs?

Gisela M. Schwab

The general tolerability in kidney cancer has been quite good for cabozantinib, this is a younger population and we have seen as you may recall in the earlier phase study nice response rates of 28% and a long progression-free survival of about 13-months or so, which is quite long in the second or later line setting and in this particular study they were heavily pre-treated patients and the fact that patients were able to tolerate the drug for such a long time speaks for the tolerability profile in kidney cancer.

Jonathan Chang – Leerink Partners LLC

Great. Thanks and just one last question. In terms of the current cash guidance, taking into account the workforce reduction you have guided to have enough cash to support operations through the release of topline METEOR results next year. Is this new cash guidance different from the past cash guidance?

Michael M. Morrissey

Yes, it’s Mike. So we've consistently talked about having the ability to get through the METEOR readout and that holds for today. The reduction in workforce is a matter of aligning our resources with our new priorities, our evolving priorities relative to the COMET-1 data release and our action taken to deprioritize the metastatic CRPC indication for cabozantinib.

Jonathan Chang – Leerink Partners LLC

Okay, thank you.

Operator

Thank you. Our next question comes from the line of Cristina Ghenoiu from Cowen. Go ahead please.

Cristina Ghenoiu - Cowen and Company

Hi, thank you for taking my question again. Actually my question was about PFS in RCC, so just to repeat it, I was wondering if in your discussions with the FDA, did they mention anything about the kind of [inaudible] magnitude they would like to see and if it should be associated with the trend in survival?

Gisela M. Schwab

So the study is designed on the assumption that the progression-free survival on the everolimus arm would be about five months which is what has been repeatedly published for this drug in the second or later line setting, and the assumption is that on the cabozantinib arm we would be seeing an improvement in progression-free survival up to 7.5 months.

And as I mentioned earlier on in previous earlier phase studies, we have seen much longer progression-free survival giving us some room here on this primary endpoint. In terms of the design, this has been discussed with FDA and other agencies in Europe and various countries and the design was deemed acceptable.

Cristina Ghenoiu - Cowen and Company

And did they mention anything about trend in survival?

Gisela M. Schwab

Overall survival is a secondary endpoint that we would readout at a latter point in time, but the expectation would be to file on the data on progression-free survival. Obviously it’s always anticipated that overall survival should not trend negatively.

Cristina Ghenoiu - Cowen and Company

Thank you very much.

Operator

Thank you. I would now like to hand the call back to Susan Hubbard for closing remarks.

Susan Hubbard

Great, thank you all and thank you operator. We appreciate you joining us today. We welcome your follow-up calls with any additional questions you may have that we were unable to address on today’s call.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Good day.

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