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Executives

Charles Butler – Executive Director, Corporate Communications and Investor Relations

Michael M. Morrissey – President and Chief Executive Officer

Gisela M. Schwab – Executive Vice President and Chief Medical Officer

Analysts

Karen Jay – JPMorgan

Terence Flynn – Goldman Sachs

David Miller – Biotech Stocks Research

Ryan Martins – Lazard Capital Markets

Imran Badar – Cowen and Company

David K. Peng – Canaccord Genuity

John Sonnier – William Blair & Company

Maged Shenouda – Stifel Nicolaus

Byron Emend – Jefferies

Exelixis, Inc. (EXEL) Special Conference Call October 31, 2011 6:00 PM ET

Operator

Good day ladies and gentlemen and welcome to the Exelixis, Incorporated Conference Call. My name is [Ernesia], and I will 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 the conference. (Operator Instructions) I will now like to turn the call over to Mr. Charles Butler. Please proceed.

Charles Butler

Thank you. Thank you for joining us this afternoon for our call regarding the planned ‘306 and ‘307 trials in metastatic castration-resistant prostate cancer and feedback from the FDA through the Company's SPA process.

Joining me on today's call is Mike Morrissey, our President and CEO; Gisela Schwab, our Executive Vice President and Chief Medical Officer; and Scott Garland, our Executive Vice President and Chief Commercial Officer. Mike will start off with an update on our ‘306 and ‘307 trial plans and our SPA process with the FDA, and we'll then turn things over to Gisela who will provide details regarding the trials followed by Q&A.

As a reminder, during this call we will be making certain statements that are forward-looking including without limitations statements related to the continued development and clinical, therapeutic and commercial potential of and opportunities for cabozantinib, plans to initiate the ‘306 trial and the timing thereof, plans to initiate the ‘307 trial and the timing thereof, the design and conduct of the ‘306 and ‘307 trials, the potential success of the ‘306 and ‘307 trials, the Company's ability to address the FDA's concerns and recommendations set forth in the October FDA response to our SPA submission and prior communications.

A potential regulatory submission for product approval and the FDA's response thereto, and potential commercialization of cabozantinib and the timing thereof. Words such as intend, expect, planned, optimistic, believe, designed, will, may, encourage, potential, would, goal and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on Exelixis' current plans, assumptions, beliefs and expectations. Forward-looking statements involve risk and uncertainties.

Our actual results and timing of event could differ materially from those anticipated in our forward-looking statements because of risks and uncertainties discussed under risk factors in Exelixis' quarterly report on Form 10-Q for the quarter ended September 30, 2011 filed with the Securities and Exchange Commission, including, without limitations, risk related to the potential failure of cabozantinib to demonstrate safety and efficacy in clinical testing, Exelixis' ability to conduct clinical trials of cabozantinib sufficient to achieve a positive completion, the sufficiency of Exelixis' capital and other resources, and the uncertainty of the FDA review and approval process. We expressly disclaims any duty to make any updates or revisions to any forward-looking statements.

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

Michael M. Morrissey

All right, thanks for joining us on the call today. We are announcing that Exelixis is moving forward with the '306 trial within the normal regulatory framework. Although we had a valuable dialogue with the FDA on key components of a SPA for this trial, including that pain palliation can be appropriate as a primary endpoint. We were unable to come to a timely agreement regarding all aspects of the trial protocol. Given the previous feedback we had received, this outcome was both surprising and unexpected.

That said, we would emphasize that we've had a valuable dialogue with the FDA regarding the '306 trial and that the protocol has been improved as a result.

Reaching agreements on the pre-determined quantitative criteria for success proved challenging and was driven primarily by the concern about the potential for inadvertent unblinding, the magnitude of pain palliation effect in support of evidence of any tumor activity.

These are difficult issues to address in the absence of a complete set of clinical data, and as such we did not see the value of entering into a protracted discussion with the agency regarding these questions and a further attempt to secure SPA.

Instead, we intend to proceed with initiating the '306 trial, allowing generation of the data that will define cabozantinib's clinical benefit in very tangible terms, and if the data are supportive, would allow us to proceed using the normal regulatory path.

We remain optimistic that '306 will have a positive pain palliation read out based on the totality of our clinical data from the ongoing RDT, NRE and low starting dose cohorts in patients with metastatic CRPC which will be presented in a few weeks at the upcoming EORTC meeting.

As a reminder, moderate to severe bone pain is a clear unmet medical need in patients with symptomatic metastatic CRPC. One hallmark of this advanced disease is that disabling, debilitating and immobilizing bone pain can lead to both the morbidity and mortality often seen in this population.

In addition none of the recently approved agents for metastatic CRPC have a pain label for this indication. We have been encouraged by key investigators and regulatory consultants to move forward with a '306 trial with out an SPA in the interest of both metastatic CRPC patients with pain and in the context of our overall development plan in this indication.

I’ll take a few minutes to step through the feedback we received as well as the rationale for moving forward with this trial expeditiously. Gisela will then follow up with a detailed overview of the '306 protocol and review our near-term plans for the initiation of the '307 trial which as discussed previously will have an overall survival as the primary endpoint. As you know, we submitted a ‘306 protocol for at the end of June received FDA's initial response in late August, which reviewed has encouraging. At the time, the FDA stated that pain response can be acceptable primary endpoint for the ‘306 trial if the treatment effect is pronounced. And provided comments that we believed were addressable, consistent principally of the following.

First the patient population should be one that has failed prior docetaxel and abiraterone. Second bone scan response should be an exploratory endpoint rather than a co-primary endpoint with bone pain. Third, overall survival should be included, as a secondary endpoint to ensure that there is no decreased in survival in the cabozantinib arm. And fourth detailed input regarding the definition of pain responses and narcotic optimization was provided. Our response at the time, we agreed to substantially all of agencies request our original protocol. In our view, there were no outstanding significant issues.

However, the FDA's latest response raised additional issues that were mentioned, but not highlighted as rate limiting in terms of obtaining the SPA in previous feedback, namely first concerns about the potential impact at inadvertent un-blinding on the PRO endpoint. Second you we assumed magnitude of the pain improvement, third symptomatic improvement should be supported by evidence of any tumor activity. It should translate into an improvement in overall survival. And last the recommendation that if we use pain response as a primary efficacy endpoint, we conduct two trials to demonstrate effectiveness.

In the context of its consideration of a SPA for the '306 trial, the FDA also recommended in the October FDA response, at overall survival be the primary efficacy endpoint. It’s important to note that the fundamental approach of using pain as an endpoint for our pivotal trial in the metastatic CRPC setting may be acceptable, pending a positive outcome of the study. It's also important to reemphasize that our inability to reach agreement on the SPA in a timely fashion does not reflect negatively on the clinical importance of pain in metastatic CRPC and we do not believe that it precludes our ability to get approval based upon a pain endpoint if supported by the data. The FDA explicitly acknowledged that we could conduct this trial without a SPA under the standard regulatory framework.

Although we would have obviously preferred to proceed with '306 under a SPA, we strongly believe that advancing the '306 trial under the current circumstances is the best path forward. We believe the potential for the trial to be successful is high and that a successful trial would provide a significant opportunity to enhance the commercial potential of cabozantinib.

Our belief is based on the following considerations. First, the agency has indicated that pain can be an acceptable endpoint in metastatic CRPC, if the treatment effect is profound. Second, the EMEA has provided us the scientific advice on the ‘306 protocol and positive feedback regarding its acceptability for consideration for approval in the EU.

Third, concerns about the potential for inadvertent unblinding and the magnitude of the pain response are offset by the robust pain results observed to date in the ongoing RDT and NRE cohorts and our plan to use cabozantinib at 60 milligrams daily as a well tolerated starting dose.

Fourth, consistent enthusiasm and support for the '306 trial from leading investigators including approximately 25 clinical sites that have already agreed to participate in ‘306 including the majority of member institutions in the prostate cancer clinical trial consortium.

And finally, we believe our phase 3 trials will demonstrate any tumor activity as seen currently in the RDT and NRE cohorts, and that we can address the FDA's recommendation that we conduct two pain trials to the conduct of the ‘307 trial concurrently with the ‘306 trial, which I will describe in more detail in a moment.

In addition, the FDA has recommended that a phase 3 trial with a primary endpoint of overall survival be conducted. They have previously articulated a comprehensive development plan and regulatory strategy in CRPC that includes a pivotal trial focused on improving overall survival. In our view, running the ‘307 trial concurrently with ‘306 addresses the FDA's recommendation to demonstrate overall survival and increases the probability of success from a regulatory perspective. In that context, we plan to initiate a 307 trial in the first half of 2012.

Importantly, the timing of the ‘306 and ‘307 studies is now such that if all goes as planned and the data are positive, it could read out in an approximate similar timeframe. The potential for demonstrating an improvement in pain and overall survival in ‘306 and ‘307 would provide us with the data set that is both clinically meaningful and that we believe would clearly differentiate cabozantinib from other compounds approved or in development for metastatic CRPC.

The ‘307 trial will compare single agent cabozantinib versus prednisone in the metastatic CRPC setting. We considered a range of options for an overall survival study including going head-to-head against docetaxel in first line chemotherapy naive patients. After consulting with key opinion leaders in the field, we have now chosen the fastest approach for ‘307 that we believe maximizes our probability of success by studying the same population as in ‘306. That is post taxotere and abiraterone in any order and comparing against prednisone. In doing so, we believe we have a higher probability of success and increased chance of quickly moving cabozantinib to market in metastatic CRPC.

Today's announcement that we intend to initiate both the '306 and '307 trials and roughly similar timelines reflects a refinement of our strategy based on the regulatory feedback we have received. Importantly, we expect to be able to maintain our original timeline for potentially entering the metastatic CRPC market with opportunities for approval based on having data from two pivotal trials and a roughly similar timeframe.

Our goal and focus all along has been to leverage cabozantinib's unique profile, thereby maximizing its potential in prostate cancer and to move it to the market as quickly as possible. We believe our updated plan will facilitate achieving that goal while mitigating downside risks and significantly increasing the probability of success.

So with that, I'll turn the call over to Gisela to discuss the '306 and '307 trials in detail. Gisela?

Gisela M. Schwab

Thank you, Mike. As Mike just mentioned, we are moving forward with the '306 trial and plan to initiate the trial before year-end. The key elements of the '306 trial are as follows: alleviation of pain in CRPC patients with bone metastases will be the primary endpoint; overall survival will be a secondary endpoint; single agent cabozantinib will be compared to mitoxantrone and prednisone.

For the purposes of the statistical design of the trial, the following assumptions were made: the cabozantinib arm will have a 25% confirmed pain response; while in the mitoxantrone and prednisone arm will have 80% confirmed pain response in a landmark analysis at week nine and 15. The trial is designed to involve 246 patients with a CRPC that has metastasized to the bone and who have moderate to severe bone pain despite optimized narcotic medication.

Patients will have to have received and failed prior docetaxel and abiraterone in no particular secrets. The detailed trial design, end points, planned data collection and analysis plans have also been reviewed by the ENA through a central scientific advice procedure and which we have received favorable feedback on the '306 trial plans.

Let me take a few minutes to expand on the specifics of the protocol. First, the '306 trial will be a double-blind trial in patients with CRPC that has metastasized to the bone and who have moderate to severe bone pain with a brief pain inventory score or BPI of greater than or equal to four, despite optimized narcotic medication.

We plan to enroll 246 patients with metastatic CRPC in the trial to be considered for inclusion, patients must have investigator – prostate cancer progression on both docetaxel and abiraterone in no particular order.

Patients may have received prior cabazitaxel therapy but this is not required. These inclusion criteria will provide a large pool of patients who could participate in the '306 trial which could help expedite recruitment and be the foundation for an expanded commercial opportunity.

Alleviation of pain in CRPC patients with bone metastases will be the primary endpoint for the trial. This endpoint will be measured by comparing the percentage of patients in each treatment arm who has a pain response at week 9 that is confirmed at week 15. Based on our encouraging non-randomized extension cohort data set, we believe that this endpoint is both achievable and clinically meaningful. With respect to the pain endpoint, a responder is a patient who has at least a 30% decrease from base line and the average of the daily worst pain intensity collected over seven days in week 9 and again in week 15.

The worst pain intensity is derived from the brief pain inventory or BPI, which is widely used and accepted in contemporary pain studies. A pain responder cannot have either a concomitant increased in average daily dose of any narcotic pain medication or addition of any new narcotic pain medication.

Prior to randomization on the trial, patients will undergo a period during which their pain medication is optimized using one long-acting narcotic and one immediate-release narcotic medication. This optimization is following a standard approach defined in the National Comprehensive Cancer Network guidelines.

The trial is 90% power for the primary endpoint. Data from the traffic study, the registration trial for cabazitaxel, showed that approximately 8% of patients in the mitoxantrone and prednisone arm experienced a pain response. We assume that more than three times as many patients or 25% of patients on the cabozantinib arm will achieve a confirm pain response per the landmark analysis.

Based on the extensive prior work published in the literature on the BPI and the emerging data from the CRPC cohort of the ongoing NRE using the BPI, we believe that both the methodology for collecting pain data and the endpoint definition are appropriate. We also believe that the landmark analysis at weeks 9 and 15 has a high probability of showing a favorable outcome for cabozantinib providing us with confidence that this trial can meet its primary endpoint.

Second, patients in the cabozantinib arm will be dosed at 60 milligram daily until the patient no longer receives clinical benefit. This dose is based on an in-depth analysis of CRPC patients treated with cabozantinib in previous and ongoing clinical trials that has provided us with a thorough understanding of the time to response, onset of adverse events, and our ability to maintain a response at 60 milligram daily.

The median time to dose reduction was above 30 days with further dose reductions being much less frequent. Patients who were dose reduced to 60 milligrams here to maintain their pain and tumor response with an improve tolerability profile. Third, overall survival will be a secondary endpoint to ensure no negative impact and patient survival.

Conversely, the trial has 80% power to demonstrate an improvement in overall survival. This assumes a seven-month median overall survival time on the mitoxantrone and prednisone arm and a hazard ratio of 0.67, which was the observed treatment effect in the Cougar ‘301 trial and the subset of patients with moderate to severe pain at baseline.

In light of not proceeding under an SPA, we have decided to evaluate bone scan response as a secondary endpoint rather than an exploratory endpoint. Our definition of a bone scan response, using the computer-aided lesion detection or CAD methodology, is defined as a greater than or equal to 30% decrease in the lesion area of all bone lesions as compared to the baseline bone scan, per IRF analysis. To be a bone scan responder, patients must have both a response on bone scan and the absence of soft tissue progression.

Including bone scan as a secondary endpoint in the ‘306 trial represents a significant step toward validating bone scan response in CRPC and correlating bone scan response with other meaningful clinical outcomes. Moreover, the inclusion of bone scan response supports our long-term plan for developing cabozantinib in multiple prostate cancer indications.

While we were working through the SPA process and obtaining central scientific advise from EU regulators, our clinical operations team has been focused in lining up the key elements required to initiate the ‘306 trial. As a result, Exelixis is well positioned to rapidly execute on our plans for the first of what we expect will be multiple pivotal trials in different prostate cancer indications. We have already submitted the protocol to trial sites to expedite the IRB approval process and we are on track to initiate the ‘306 trial by the end of the year.

We also to plan to expeditiously initiate the '307 trial. The primary endpoint of '307 will be overall survival. The trial will be conducted in CRPC patients with bone metastasis who have failed prior docetaxel and abiraterone.

Patients will be randomized to receive cabozantinib, a 60 milligram qd or prednisone. This trial is expected to be executed globally and has non-overlapping sites with '306. The concurring readout of both the pain alleviation benefit supported by '306 and the overall survival benefit supported by '307 may, if positive, provide the cabozantinib with a unique and differentiated product label.

With this I’ll open for questions.

Question-and-Answer-Session

Operator

(Operator Instructions) And the first question comes from the line of Karen Jay with [VB Martin] Please proceed.

Karen Jay – JPMorgan

Hi, it’s actually Karen Jay from JPMorgan. Thanks for taking my question. I have a couple. The first is, could you share any details on the [KOS] feedback that swayed you against the head-to-head trial? Was it something to do with catalyst profile or difficulties in doing a trial in earlier settings?

Gisela M. Schwab

Really we wanted to maximize the speed and probability of technical success of this study, which is why we decided to move forward with the trial as described. And that is a comparison of cabozantinib versus prednisone in the later line of therapy. The KOL feedback certainly supported moving forward towards such a design.

We have been evaluating over the last month a number of possible trial designs and are deciding on the prednisone comparison as the one with the highest probability of technical success. And that is not to say we wouldn’t be doing are there trials that address overall survival in earlier lines of therapy at a later point in time.

Karen Jay – JPMorgan

Okay. And then my second question again on the '307 study, the 60 milligram that you've chosen, can you share with us how you came to choose that dose? Is there anything from the data coming up at EORTC that might have guided you towards that dose?

Gisela M. Schwab

60 milligram we have body of data available to us for this dose level. We have obviously data emerging from the RDT with 171 patients who have the on-going non-randomized extension cohorts and in this experience we know that 50% roughly of patients dose reduced from 100 to 60 milligrams and so we’ve been looking at this data generated on 60 milligrams carefully and we see an improved tolerability profile and we see an ability of the patients to maintain a pain response as well as the tumor response on that dose level.

Additionally, we have data as you know from Mathew Smith's dose ranging study that shows that on 40 milligrams the – we have a high rate of bone scan response the data will also be published at the upcoming ERTC meeting and so I think with that information and the good tolerability of 60 milligrams in dose-reduced setting we feel confident that that is a good dose to go forward with.

Karen Jay – JPMorgan

Okay, great thank you.

Operator

And next question comes from the line of Terence Flynn with Goldman Sachs. Please proceed.

Terence Flynn – Goldman Sachs

Hi, thanks for taking my questions. First, I was just wondering, in terms of the ‘306 trial, can you comment on the delta of pain improvement that you're looking for I know you – you said the response 25% versus 8% I was just wondering number one, what those rates were based on I think you mentioned. But I missed it in terms of the 8% for mitoxantrone. And then how you came up with the 25% if that was based on FDA feedback or that was KOL feedback how do you came with that number.

And then the second question I have was in terms of the actual filing strategy here are you guys planning to weight for data from both the ‘306 and ‘307 trials prior to filing and in terms your guidance that they might read out the same timeframe. Can you just walk me through the ‘307 trial and how the timing there might be on par with the ‘306 trials just you know given patient population duration of treatment survival endpoint et cetera, was just wondering your thoughts there. Thanks a lot.

Gisela M. Schwab

Great, great questions thank you. So regarding this ‘306 trial first , the delta in pain improvement you quoted it correctly. We are assuming an 8% pain response rate and remember is a landmark analysis. That is look assessing confirmed pain response at week 9 and 15 only people who make it to that point in time and have a pain response would be responders. So that is taken from the available data of mitoxantrone and prednisone in the tropic study where mitoxantrone and prednisone was the comparative. And we are assuming a roughly tripling of such a pain – confirmed pain response per landmark analysis with 25%. And this is for purposes of sizing this study. We feel with the data that are emerging from the NRE study, confident that we will surpass that hurdle.

Now regarding the filing strategy. We are conducting these two studies concurrently starting with the ‘306 before year-end and then initiating, planning to initiate the ‘307 trial in the first half and early 2012. And both trials are effectively standalone studies and they can actually move forward in parallel, but we view in particular the ‘306 trial data providing as a study that can support licensure if positive.

Now regarding the timelines for '307. We are modeling that after other studies that have been done in the late line of therapy in prostate cancer, in particular the Cougar study for abiraterone. That study enrolled a large number of patients within roughly one year and I think our plan to roll the ‘307 globally as well, leads us to a similar assumption to run the timing of enrollment and then follow-up it’s relatively short as you know in this patient population.

Terence Flynn – Goldman Sachs

Okay. So did FDA give you any buy in terms of the response rate you were looking for, the magnitude? I know you said it was for sizing purposes of the study, but in terms of ‘306 did FDA actually weigh in on the delta? Because I think one of the points you mentioned during the SPA process was if you were going forward on filing on one study they wanted it to be robust. So I’m just wondering what their commentary was on the delta there?

Gisela M. Schwab

Yeah, FDA provided feedback with respect to the delta having to be substantive profound in order to be certain that there is no placebo effect, if you will.

Terence Flynn – Goldman Sachs

Okay. Let me go out.

Gisela M. Schwab

Yeah.

Operator

And the next question comes from the line of David Miller with Biotech Stocks Research. Please proceed.

David Miller – Biotech Stocks Research

Hi. Thanks for taking my questions. Maybe I missed it, but are you or are you not tracking the survival endpoint in the ‘306 study.

Gisela M. Schwab

We are tracking at survival endpoint, it is a secondary endpoint in this study and this study will be considered positive if there is no negative impact on survival as it just ended in the trial. In the positive case however, which is a 246 patients that we are planning to involve the trial has 80% power to detect through 50% difference.

David Miller – Biotech Stocks Research

Okay. I’m a little confused as to why you need both trials. If you just run the ‘307 trial you would pick up functionally out in the real world. You would pick up the patients that you are enrolling in the ‘306 trial, because doctors would go ahead and use based upon the label from '307 go ahead and use cabo in these patients anyway. So I am confused as to why you’re running both trials. I mean, I understand why you need '307 to get approval for '306 but I don’t understand why the reverse is true.

Gisela M. Schwab

I think just to clarify, we don't believe we need '307 in order to support '306. We view that as two separate trials that are both in their own right capable of supporting registration. Now what these individual trials are assessing is; number one, '306 assesses symptom relief, pain alleviation as the primary endpoint. And that is an endpoint that is hard to assess in a very large globally run study.

As has been demonstrated by the fact that none of the recently approved drugs have a pain label, although they collected pain information. And the reason is that if you have a large study rolling out that enrolling globally, it is difficult to standardize the instrument and ensure that the translations and language of the instrument that is supporting pain connection is acceptable in all these languages.

And the other issue is that oftentimes in large studies that are enrolling quickly, pain information is collected with less rigor. And so you end up with a lot of missing data. So that's in part why we believe other compounds that have collected some pain information have not received a pain label. So that’s why we want to run a dedicated pain study. In addition, we want to run a dedicated overall survival study that will be a simple study that can roll quickly and that we can rollout globally. So with both really we are supporting a very compelling potential label that addresses both the quantity as well as the quality of life in prostate cancer patients.

David Miller – Biotech Stocks Research

Okay. That is helpful.

Michael M. Morrissey

David it’s Mike. Maybe if you would allow us maybe Scott could comment on that same topic from a commercial perspective.

J. Scott Garland

Yea Scott Garland, Chief Commercial Officer and I think it is worth pointing this out. Because the trials I think is a package offer. What I think is uniquely differentiable about Cabo, so investigating pains of primary end point in a well designed Phase 3 study will allow us to potentially speak to it in the market place if it’s an approved indication.

It’s worth pointing out that none of the other drugs that are approved today have been able to demonstrate a pain in their label, a pain improvement in their label and so we think this opportunity to deliver a package that allows us to both point to anti-tumor activity through overall survival but also pain improvement will be differentiable and will ultimately if approved be successful in the marketplace.

David Miller – Biotech Stocks Research

Right. I get that. Last question I have is how much money is it going to cost to run the '306 and '307 trials and do you have the money in hand to complete that?

Michael M. Morrissey

Yeah this is Mike, Frank is out today, he would be the natural person to answer that question. We’re working through all those numbers right now again we refreshed our numbers last Thursday on the earnings call and feel that we’re in a very strong position moving forward again ‘306 is a small trial it is really only a fraction of what would be involved in ‘307 from survival large survival trial perspective.

David Miller – Biotech Stocks Research

Okay, thank you very much.

Operator

And the next question comes from the line of Ryan Martins with Lazard Capital Markets. Please proceed.

Ryan Martins – Lazard Capital Markets

Thanks for taking my questions. I just really wanted to understand from your perspective how you feel you may be addressing the concerns the FDA had around pain specifically maintaining the blind and the magnitude of pain improvement with the ‘306 trial that you are conducting?

Gisela M. Schwab

Thanks for the question. I think that is an important question. Regarding how we are going about maintaining the blind, first of all it is a double blind study that we are going to conduct. So all components of the treatment are going to blinded cabozantinib, mitoxantrone, as well as prednisone.

So that the first, secondly we chose mitoxantrone, prednisone as the comparator because mitoxantrone and prednisone, as you know, has a pain label and really patients and physicians are going into the trial with the expectation of some pain alleviation and that is supported by the fact that mitoxantrone and prednisone have a label to do so. And then to your other point, are we confident regarding the magnitude of effect of cabozantinib. I think the emerging data from the non-randomized extension cohort that will be shown at the upcoming ERTC meeting will provide some color on that I think the existing body of data that we have been able to present at ASCO and now the additional data give us confidence that we will be surpassing the hurdle that we have put in the protocol for sizing of the trial.

Ryan Martins – Lazard Capital Market

It seems like that FDA also had a concern on the blind more related to the toxicity profile of mitoxantrone versus cabo?

Gisela M. Schwab

Yes. There is always a possibility that unblinding occurs because of differential toxicity profiles. I think the 60 milligram dose level, we are confident that, that it’s like certain issue.

Ryan Martins – Lazard Capital Market

Okay. And then one final one is just on the optimization of the pain medication. Has that been done in any prior trials that you've done with cabozantinib?

Gisela M. Schwab

That has not yet been done in prior trials. We are in being non-randomized extension, cohort collecting pain was using exactly the same tools as we are trying to use in the ‘306 study. However, we are not restricting in the NRE cohort, the patient population to pain patients. So we haven’t included the pain – the narcotic optimization in this particular protocol, but it is an approach that is very standard in pain trials.

Ryan Martins – Lazard Capital Market

Okay, thank you.

Operator

And the next question comes from the line of Imran Badar with Cowen and Company. Please proceed.

Imran Badar – Cowen and Company

Hi, thank you so much. This is Imran from Cowen here for Eric Schmidt. So I have a couple of questions. So you've touched on this, but I'm wondering if you could talk a little bit more specifically about the timelines for ‘306 and ‘307 and in particular, how they might correspond with each other. And I guess sort of a second part of that, will you file simply based on the pain results in ‘306. Yes. If you could comment on those and I have another question after that?

Gisela M. Schwab

Okay. So regarding the timelines, the ‘306 trial will initiate before year-end, the ‘307 trial shortly there after in the first half of 2012, both will involve in parallel and our anticipation is and our modelling predicts that we will have a data in that supportive filing in the 2014 timeframe, so both trial should approximately read out at the same time frame.

Imran Badar – Cowen and Company

Okay. At the same time.

Gisela M. Schwab

Regarding the question of whether we would file with ‘306 alone, I think the data providing, if the data are warranting it we could go forward in our view with ‘306 alone as we view it as a standalone study and then subsequent with the ‘307 trial when the data is available.

Imran Badar – Cowen and Company

Okay. Great, great and I guess, the second question is, I’m wondering if you comment a little bit more about Europe and Europe’s view on pain and potentially talk about their perspective in contrast to that in the US?

Gisela M. Schwab

So, we’ve gone through scientific, central scientific advise at the EMEA and that is a very rigorous process as I’m sure you’re aware provided the protocol is being reviewed and the analysis plans a whole are reviewed and very detailed feedback is provided and we’ve received a favorable feedback regarding pain end point and the way we are collecting the information and the way we are intending to analyze the information and end point definition. So, clearly that was positively received and I think regarding the specifics around pain endpoint definition and collection of data and analysis plans, there is no difference really regarding the pain endpoint between the feedback received from the EMEA and FDA.

Imran Badar – Cowen and Company

Okay. Thank you.

Operator

And the next question comes from the line of George Farmer with Canaccord. Please proceed.

David K. Peng – Canaccord Genuity

Hi, this is David Peng filling in for George. Thanks for taking the question. You mentioned the FDA's latest response coming as a surprise. Just wondering if you can describe in anymore detail the comments from FDA that may have lent you some initial confidence that you could achieve the SPA from '306?

Gisela M. Schwab

Certainly. So we have submitted, as you know, in late June for the first time around for the SPA. And we have received a feedback in late August. The feedback from FDA was rather detailed. It related to the primary endpoint that at the time of the primary submission to FDA, as you recall, was proposed to be a combined endpoint of pain alleviation and bone scan response.

With respect to that endpoint FDA came back and suggested that pain should be the sole primary endpoint and bone scan response an exploratory endpoint. And they agreed basically with how we defined bone scan response at the time.

They also asked for overall survival to be a secondary end point in the study, which we have included as detailed earlier on. They have provided some detailed comments on our pain collection and definitions we've all accommodated and then we have also been discussing with them the patient population and that input from FDA resulted in the patient population being a patient population that has received and failed prior docetaxel and abiraterone.

So this was really the key feedback that we received, we’ve addressed all these comments that they had and have resubmitted very shortly after having received the feedback. Does that help?

David K. Peng – Canaccord Genuity

It does help. Thank you very much.

Operator

And the next question comes from the line of John Sonnier with William Blair. Please proceed.

John Sonnier – William Blair & Company

Hey thanks for taking the question. Just a couple. One is, Mike, I'm trying to reconcile the timelines, not of the revised '306 versus '307 but I think you suggested the time to market should everything work out here, it will be the same as it was or would have been the SPA.

But does that suggest that the '306 proposal under the SPA was a much larger, much longer trial given that now you’re also attracting overall survival.

Michael M. Morrissey

I don’t believe so from the standpoint of the patient numbers as part of the SPA discussion went up slightly to be able to power at again at the 80% level. I think all in all that component was relatively consistent. Gisela, do you want to…

Gisela M. Schwab

So the number of patients went up minimally and really and 246 which is the number that was just communicated as well. So the trial size really was not affected by that feedback.

Michael M. Morrissey

Yeah I think the challenge with '306 is finding the right patients. And that's relative to '307 where obviously a numbers are larger in terms of a survival endpoint, but there is more of them as well. So that’s the balancing act that goes on in those two trials going concurrently in more or less the same timeframe.

John Sonnier – William Blair & Company

I know Frank's out. But can you talk a little bit about how I guess you see if any change in the value strategically of the asset. But this revised clinical plan, I know you would had ongoing discussions potentially doing something in Asia that got elongated did you disclosed that on your last call, but how does this change the strategic discussion and how do we think about that going forward?

Michael M. Morrissey

Well again, I think it's safe to say that you know the asset is still a very valuable one. It's a wholly owned oncology compound that has a very strong signal in MTC, which is I mean a relatively small population, but you don't see hazard ratios in the 0.2s every day which is what we saw with a 0.28 hazard ratio with ‘301. So I think the value of the assets has grown over the last several weeks based upon that data. I think its safe to say that as we mentioned in prepared remarks we would rather moved forward with ‘306 under the SPA that was our intention we had a very you know a very valuable discussion with the agency we think the protocol actually improved because of that. And we’re moving forward now in a way that takes us with both ‘306 and ‘307 again running, and what we think we’ll be roughly, concurrently – concurrent fashion that I guess if we’re successful, we’ll move the compound forward with a label if you will. That could reflect activity in terms of clinical benefit, in terms of both the survival and pain improvement. And we think as Scott said, very eloquently, and again, I think having a true commercial expert in the company now helping us navigate these issues really reinforces the fact that our goal is to clearly differentiate cabo in the CRPC marketplace. And we think having these two trials doing concurrently, and with the data that we have supporting those two different approaches. And we think it’s a very strong way to proceed and we’ll continue to help us build the value in the asset.

So again, we have lots of different ways and options that we talked about previously you mentioned to monetize the asset if needed, as we move forward, as we kind of work to those options to move that in that direction. But I think as we stand strategically, we’re very excited about the assets, we’re very excited about the data and we think we have a plan that makes a lot of sense even in the absence of a SPA for ‘306.

John Sonnier – William Blair & Company

There’s one final and I appreciate their response. And I apologize if I missed this. This ‘308 now get postponed until you get the readout from ‘306, ‘307 or is this still a trial you start next year?

Michael M. Morrissey

Yeah. I think it’s safe to stay that ‘308, our view is really dependent upon the regulatory landscape that evolves in that non-metastatic space for CRPC based primarily upon what comes out with the [DNAB] 147 regulatory review. So again, we’re not planning on moving that forward until we understand with great clarity how that file plays out, because to a large degree that will define the boundary conditions for how we could move forward in that space.

Again, I would like at ‘307, we’ve moved it up by three plus months maybe three or six months depending upon time lines as they were evolving. We’ve focused on a population with the competitor that we think we can win on. Again, I think increases the probability of the success and the time to that success. And I think as Scott said very well, again, the combined label would be a powerful tool to them going with the marketplace and compete other compounds.

John Sonnier – William Blair & Company

And they brought a sense. Thanks.

Operator

(Operator Instructions) And the next question comes from the line of Maged Shenouda with Stifel Nicolaus. Please proceed.

Maged Shenouda – Stifel Nicolaus

Hey, sure, hi. So I may have missed this. How many patients do you expect to enroll in the ‘307 trial?

Gisela M. Schwab

Well the ‘307 trial is not completely designed yet. It will start in the first half of 2012, but I would expect between 800 and 1,000 patients to be enrolled.

Maged Shenouda – Stifel Nicolaus

Okay, great. And then just a follow-up, can you elaborate on the FDA’s issues with bone scan response as a feedback.

Gisela M. Schwab

The feedback was that, they felt bone scan response should be an exploratory end point rather than a co-primary end point or a combined end point with pain and they were very comfortable it seemed with our definition of bone scan response. And the CAT aided assessment. So a computer aided lesion detection system that the central IRF will be using to determine a bone scan response and quantify a bone scan response. All that was laid out in front of FDA and they were comfortable with that. It's just that they felt that the regulatory experience with that endpoint is not quite there and that’s why they want it to be an exploratory endpoint.

Maged Shenouda – Stifel Nicolaus

And then just one final question if I may. How will the patient profile in '306 differ potentially from patients in '307; that also wasn’t quite clear from your comments.

Gisela M. Schwab

Yeah, I think there is some overlap in terms of the required prior lines of therapy. So we want patients to have received and failed prior docetaxel and abiraterone, and they could have also received and failed prior cabazitaxel, but that's not a requirement. And that is going to be the same in both studies. Patients however in the '306 study at baseline have to have a moderate to severe pain as indicated by a BPI of greater than four despite optimized narcotic medication. And that will not be a strict requirement for the '307 study.

Maged Shenouda – Stifel Nicolaus

Okay. Thank you very much Gisela.

Gisela M. Schwab

Okay.

Operator

And the next question comes from the line of Byron Emend with Jefferies. Please proceed.

Byron Emend – Jefferies

Yeah, thanks for taking my question. I have a few. So given your regulatory strategy of potentially filing a '306 as a standalone, is that predicated on observing overall survival or statistical significance with overall survival in the secondary.

Gisela M. Schwab

That is not the assumption now. The secondary overall survival endpoint should show no decrement. So in the situations where we would have a positive outcome on the pain endpoint and no decrement in the survival on the secondary endpoint that would be viewed as a positive study.

Byron Emend – Jefferies

Okay. And the second question on the '307 trial. How will the company minimize crossover contamination risk given alpha rating could be on the market in the 2013 time period?

Gisela M. Schwab

So the idea is that '307 will be a study that will involve globally, and I think timeline for alpha rating approval and adoption is probably very different in different regions. And we have a sense of urgency around enrolling the '307 very quickly in view of obviously the potential of subsequent therapies that are available and could in any study confound the readout.

Byron Emend – Jefferies

Great. Thanks for taking my question.

Operator

Ladies and gentlemen, this concludes the question-and-answer session for today’s call. I would now like to hand the call over to Mr. Michael Morrissey for closing remarks.

Michael M. Morrissey

Okay, thanks again to everybody for joining us today. I appreciate your time and interest in the cabozantinib and the trials we discussed today and we will look forward to following up on these topics and issues in more detail at our R&D Day on December 1. So thanks again.

Operator

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

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