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Executives

Mike Morrissey - President and CEO

Charles Butler - VP, IR

Analysts

Exelixis, Inc. (EXEL) 30th Annual JPMorgan Healthcare Conference Call January 11, 2012 6:30 PM ET

Cory Kasimov

Good afternoon, everybody. I'm Cory Kasimov, the Senior Biotech Analyst at JPMorgan. And it's my pleasure to introduce our next company, which is Exelixis. Presenting for Exelixis will be the President and CEO, Mike Morrissey. And following Mike's presentation, there will be a breakout down the hall in the Olympic Room. So Mike?

Mike Morrissey

So before I start, Charles Butler, our VP of IR, will read a brief forward-looking statement.

Charles Butler

During the course of this presentation, we'll be making forward-looking statements regarding future events and future performance of the company. Actual events and 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, specifically the company's most recent Form 10-Q filed on October 27, 2011. These documents contain and identify under the heading Risk Factors important factors that could cause actual results to differ materially from those contained in any forward-looking statements including risks related to the potential failure of cabozantinib to demonstrate safety and efficacy in clinical testing, our ability to conduct clinical trials of cabozantinib sufficient to achieve a positive completion, the sufficiency of Exelixis' capital and other resources and any uncertainty of the FDA review and approval process.

Mike Morrissey

All right, Charles, thank you. Good afternoon, everybody. Thanks for sticking around late today to hear about Exelixis. I have about 15 or so slides that give you update on where we're going in 2012. I'd like to be able to start by framing where we're today with really we were about a year ago to give you a sense of where we've come and help put that in the context of where we're going in 2012 and beyond.

So about a year ago, we had just released our first update in the CRPC with our lead compound called cabozantinib, which I will call cabo for short throughout the day. That's a dual inhibitor of MET and VEGF. We had some very striking results in a small patient cohort of 20 patients in regard to a bone scan resolution which in prostate cancer patients is very predominant as part of their disease.

Since that time, we have now enrolled approximately 300 patients into the prostate cohort between our work and some work that's been done at Mass General with an IST by Matthew Smith and have really been able to understand to a great degree the scope and the magnitude in the clinical utility and differentiation of cabo in this space compared to other compounds, hormonal compounds, hormonal targeting therapies, chemo therapies, et cetera.

So we have a very, very unique clinical profile with cabo in terms of CRPC and other tumor indications. We'll talk about that today. But it certainly provides a pretty compelling and important overview for where we're trying to take cabo commercially. And then our goal here is really very simple. It's to convert an emerging differentiated clinical profile and build that into a differentiated commercial profile to be able to then be effective in patients with prostate cancer and other tumor types.

We have a very good activity over the last few months in terms of showing that cabo has anti-tumor activity. We had our first pivotal trial readout in Q4 of 2011 where we had positive data from the Exam trial. That's a randomized pivotal trial in medullary thyroid cancer, which showed a very nice hazard ratio in the late-stage population, really underscoring any tumor activity of the compound.

In addition, we've had a great deal of regulatory clarity around our pivotal trial plan, which I'll talk about in more detail in a few minutes. Those are in process to be able to get started now. And again, moving towards, again having the opportunity to provide a very clear differentiated commercial platform for cabo.

We have all the news flow coming up for the year. We've been very productive in terms of at least presenting clinical data on a regular basis in the past, and I will certainly continue in 2012 starting the with ASCO GI and ASCO GU meetings both in San Francisco over the next month or so, followed by what we hope to be a very productive ASCO meeting in Chicago in June.

Financially, we'll have our Q4 call in February. So I won't provide any details today. Again, we're on a good overall position financially. And importantly, we own the cabozantinib compound asset and have really significant optionality to partner and monetize this asset to be able to build value with cabo and other assets as well. So we'll talk about that as we go along, but just a brief introduction for where we're going in 2012.

In terms of clinical differentiation, I think this is an important slide, because it really helps set the foundation for what we've seen in these first 200 patients with cabo in CRPC. We have profiled cabo to date in approximately 1,500 patients overall over the last five or six years since we filed the IND. We have seen the very broad and deep activity with cabo across multiple tumor types. To date, we have seen RECIST objective responses in 12 of 13 tumor types to date, and we've seen that activity in a variety of compartments where tumor metastasis can travel to.

So we've seen soft tissue or nodal disease result. We've seen visceral disease in the liver and the lung. Those lesions certainly have very clear activity in the CNS with some of that we did in 2010 in GBM and then recently in terms of again resolving metastatic bone lesions in CRPC under tumor types.

So this broad activity is very atypical for inhibitor of tyrosine kinases, a multi-targeted kinase inhibitor and one that we think is very important to again build value for patients and for shareholders.

Certainly the resolution of existing metastatic bone lesions is one very unique finding that we've seen and been able to reproduce across a very wide range of patients in prostate cancer and for other tumor types to date. And at ASCO, Maha Hussain, one of our lead investigators in the broad Phase II program for CRPC, provided the first evidence that a bone scan response can associate with various signs of clinical benefit around progression-free survival at six months around pain reduction, narcotic reductions. So the first evidence that a bone scan response and its novelty can really drive clinical benefit.

I think one of the key features about cabo over the last several years has been its tolerability. We've had the opportunity as with most inhibitors of tyrosine kinases to be able to do dose reductions as patients stand the drug for months and sometimes years to maintain good exposure and good tolerability at lower doses.

We've also used recently again in collaboration with Dr. Matthew Smith the opportunity to do a very elegant dose range finding study using prostate cancer as a platform to be able to find more optimal better tolerated in active doses. And the thinking here is very simple. Again, you want to be able to have enough patients with a relevant disease, a relevant biomarker to be able to rapidly understand the dose response relationship with most tumor types. That's relatively hard in terms of the scarcity of patients, the relatively low, but meaningful response rate sometimes.

In prostate cancer, most patients, most immune with advanced prostate cancer have bone disease. Most of those men with bone disease with cabo actually showed a bone scan response. So we're able to very quickly in collaboration with Matthew generate data at lower doses and we had some data in November at EORTC which showed that at lower doses with very good tolerability we were able to picture like the very high level of bone scan response in those patients.

So it really opens up a lot of possibilities for us in prostate cancer, other tumor types, either single agent or potential combination strategies again in those different indications and certainly with the recently signed CRADA agreement we have with the NCI and CTEP. We're looking forward to again beginning to now look at different combination strategies across tumor types to be able to really maximize the benefit for patients and certainly build a strong overall franchise for cabo in those lines.

So this is a good slide. It reiterates some of the features I mentioned before. Again, we've seen broad activity in these different tumor types. We've focused primarily on prostate cancer with this as a list of different tumor types that we've seen activity in as part of our Phase I or Phase II evaluation of the compound. Again, very broad activity, again response rates in the 5% to 25% range in terms of RECIST responses, again emerging signs of progression-free survival that look very encouraging as well, different readouts in terms of biomarker CTCs, et cetera, circulating in tumor cells in this broad patient population.

So we're certainly focused on prostate cancer as our main effort therapeutically and from a commercial point of view. But I think this is an important slide, because it really helps us frame the broad value of cabo across multiple different tumor types. And I think the part of the challenge now is through the CTEP collaboration and other ISTs, investigator-sponsored trial, to continue to generate important new data that will help us prioritize where we move next in conjunction with what's going on in prostate cancer.

Probably the most advanced indication, that's medullary thyroid cancer or MTC, again this is a relatively small, relatively rare tumor type, about 4% to 5% of patients with thyroid cancer have medullary thyroid cancer. So a relatively indolent disease until late in that disease state when it becomes very advanced and very aggressive. Patients normally die within a couple of years of having a rapidly progressing disease.

So we ran a pivotal trial that we provide topline data for in October. Again, very strong sign of clinical benefit has a ratio for progression-free survival with 0.28, about a threefold increase in PFS for the cabo arm compared to placebo. We certainly are moving forward with this compound for filing. And we had a pre-NDA meeting in December. I think that went well. We are doing a rolling filing. We have initiated that in December and plan to have the file completed in the first half of 2012 and then we'll see with that feedback from the agency if we have a priority or regular review on that.

In terms of prostate cancer, again the key issue here is clinical and commercial differentiation. We're not the first compound in this space. This is becoming somewhat congested and crowded with compounds that have overall survival in their label. We were never going to be the first compound here. We found our index patient at the University of Michigan around June of 2010. And that was already after pivotal trials have started with abiraterone, with Medivation 3100, with Alpharadin.

So we're clearly not going to be first. We're not going to be second. So it really underscores the importance of being different and potentially being better. And that's been our main focus over the last years to understand the clinical differentiation and then put together a pivotal trial plan and then work with our emerging clinical or commercial team to devise the best strategy going forward that would allow us to show this clinical differentiation and we could persuade in the commercial setting.

So again, in terms of what we're seeing with cabo, why we're different, how we think we can maximize the value there, clearly we have a good anti-tumor activity and we've seen that as part of the 300 or so patients that we've evaluated with prostate cancer. We see good tumor shrinkage. The waterfall that we had at ASCO is very indicative of that on top of the very strong PFS data for MTC and the randomized portion of the CRPC trial.

Importantly, we see consistent, rapid and very dramatic improvement in reduction in the bone scan. So these metastatic bone lesions appear to respond very nicely to cabo. That apparently based upon empirical data leads to a very rapid and dramatic decrease in bone pain, which for these patients is very important, and I'll speak to that in a few minutes.

We've seen pretty robust reduction in the use of narcotics in patients and we've qualified that now in data I'll show you shortly. In some cases, that completely discontinued patients from the narcotic. So again, that's a relatively rare finding with other compounds or other tumor types. And again, all these signals combined lead us to believe that we will hopefully see an improvement in overall survival with trials that are about to start shortly. And certainly that's been the case with PFS from the randomized discontinuation trial.

So here in a even res screen, you can see how metastatic bone lesions can really be a predominant side of metastatis in patients with advanced prostate cancer. On the left hand scan here is a typical patient with late-stage prostate cancer. The bone scan really lights up with those dark lesions. On the right is six weeks after cabozantinib. We see more or less complete resolution in this patient.

So a hallmark of that disease is the metastatic lesions going to the bone, lighting up the bone scan, driving a series of complications, and really been the key driver for the morbidity and mortality in patients with late-stage prostate cancer. And it's a very serious disease. It's certainly the point of view of quality of life and the time of survival. So once patients progress on androgen deprivation therapy, the median survival is only about two years.

So it's important to note that pain, and I'll get into this more in a few minutes. Alkaline phosphatase, which is a biomarker for osteoblast which are activated in this disease state and lower hemoglobin, all associate correlate with lower survival. And those are three important parameters that cabo based upon our clinical data appears to modulate in a positive fashion.

Talked about the dose range finding work, again we have very good emerging data now at lower well-tolerated doses. We ran the randomized discontinuation trial at 100 mg starting dose with effective dose reductions. We were able to again see a good progression-free survival, good impact on a variety of clinical parameters. Again, with the work I mentioned that's going on at Mass General with Matthew Smith, we're looking at lower doses.

Importantly, from the point of view of one metric in terms of how these doses compare, at the 100 mg in the RDT, we saw about a 50% dose reduction and dose interruption rate. At 40 mg in a small cohort, but still very important that we saw no dose reductions or interruption. So with the same level of 85%, 90% impact on bone scan responses. So I think very compelling, really speaks to the importance of optimizing the dose in this population which is abundant and certainly has an important and relevant biomarker and one that we're moving forward to.

In terms of our pivotal trial plan, again the 306, the pain trial; the 307, the survival trial, we'll start with 60 mg dose. We have several hundred patients worth of data there that helps us feel good about that dose. It's AE profile. And we have the flexibility and the optionality again to lower doses as needed to doses that are active and again well tolerated.

So I touched on these trials briefly. This is a snapshot of our pivotal trial plan. Again, we're running the survival trial. We plan to run the survival trial and the pain palliation trial 307 and 306 respectively in a concurrent fashion. Again, the goals to build this label that has the key attributes around survival, around pain, around narcotic reductions or discontinuation and bone scan response with these trials, both populations will look at a patient population post docetaxel and either abiraterone or Medivation 3100.

With the 307, we plan to start this trial in the first half of 2012. The pain palliation trial, 306, again is looking at reduction in pain using the brief pain inventory of validated pain instruments, looking at narcotic reduction, looking at bone scan correlations with those, we were able to bring the first site up in December. So we have one site activated and certainly the full cohort presser to get this trial up and running in the first quarter.

The last trial that we have here is one that we've talked about previously, looking at the ability of cabo to enhance bone metastatis-free survival, similar to what has been done previously and will be opined upon shortly at ODAC for demab and the 147 study. We're not investing any time or money here until we see how that regulatory review proceeds and we have a sense on if that trial designed will pass regulatory approval.

So again, just a little bit more detail on 307. Again we're comparing cabo starting dose of 60 mg against prednisone to the one randomization, 960 patients, again in the population we talked about before. Relatively simple trial, looking again at the overall survival as the main endpoint and then bone scan response by IRF as a secondary endpoint. And again, the plan is to get this moving in the first half of 2012.

There is lot of data in terms of correlations between different components of clinical benefit and how they impact on survival. We have three very good pieces of correlative data based upon our Phase II efforts, which I think highlight the utility of cabo in the space. First, we're certainly seeing profound anti-tumor activity both from the MTC pivotal trial with a hazard ratio of 0.28 and the randomized portion of the prostate cancer cohort, the RDT portion, with an HR, hazard ratio, of 0.13, small population obviously, but nonetheless I think compelling in its numerical value.

It's been shown with a variety of different compounds and settings and trials that patients with more pain often die faster. Compounds that are effective at relieving that pain help patients live longer. That's the phenom type which we've seen with cabo in Phase II. So we think we can use our pain-targeted activity, if you will, to help increase survival. And then CTC, circulating tumor cells, emerging body of data which shows that compounds which decrease CTC to convert them from high to low or have an overall absolute reduction in CTCs can also correlate with overall survival benefits. And again, as we talked about at our R&D day in December, which is showing good activity in terms of knocking down CTCs with cabo in a variety of Phase II CRPC studies.

So 306, again we talked about his a lot. I don't believe there is a point of comparing cabo to active control of mitoxantrone/prednisone. Small trial, 246 patients, small number of sites in the U.S. and U.K., again keeping the trial very tight if you're under control so we can collect as much data as possible. The success of any PRL is really based upon the ability to collect as much data as you can.

And certainly having experience now with our non-randomized extension cohort, the data I'll show you next, and having sites used to that level of rigor I think will certainly bode well for us as we implement and execute the 306 trial.

So this is data that we showed at the EORTC meeting in November. It's looking at patients from our non-randomized extension cohort or NRE cohorts who had severe to moderate bone pain. So on the BPI scale of pain of score of 4 or more, which has been validated to represent that level of pain and then looking at reduction as their best pain reduction across the 29 patients in this waterfall who had that level of pain.

You can see here graphically, most patients had pain reduction. That pain reduction was often very rapid. We saw that for most patients within the first three weeks, which again brings benefit to patients obviously and is a very good time in terms of the rapidity of that response. Nearly half the patients had a durable pain response at approximately week six and week 12, which again is I think very compelling in terms of what we hope to see in the 306 trial.

From the standpoint of narcotics, about 60% of patients had some level of narcotic reduction. And again, a quarter of patients in this cohort completely discontinued their narcotic. So again, what we're told from various KOLs is a very rare event with other compounds, chemotherapies, targeted therapies, hormonal therapies. So again, very important data set, one that we hope to build upon with 306 and again with the goal of building a differentiated label that will allow us to compete effectively in the marketplace with CRPC.

So I want to just wrap up. I'm running out of time here. Again, we've focused the company on cabozantinib. It is truly a unique compound from the standpoint of its clinical activity, the depth and breadth of activity. I've highlighted some of that today. We have a large pipeline of compounds that we have partnered in the past as part of our previous business model where we were doing really high throughput, very high-end drug discovery and early development.

We haven't talked about these compounds a lot over the last year or so. We certainly had arguably more important things to talk about and worry about. But I wanted to take a minute today and just remind you that this pipeline of compounds that we have some level of ownership in through these collaborations is maturing. We have five compounds shown here with Roche, with Sanofi, with GSK, with BMS in the oncology space that are all in that sweet spot in the final world that are in broad Phase II evaluation, expected to be moving towards a go, no-go decision for Phase III in the short-term, mid-term that would really drive a lot more value for these compounds in terms of our ability to collect milestones, but also really build more value around the portfolio of assets.

In this case, we're not investing in these compounds, but will certainly benefit in their success. So keep an eye on that. Again, as meetings come up, you'll start seeing more about these compounds both of our PI3K inhibitors we talked about at the San Antonio Breast Meeting in December at ASH as well. So it's starting to get some traction there across the board.

In terms of news flow for the year, it's important to point out that I think we'll be busy again in terms of different updates throughout the year, starting with ASCO GI and GU, big ASCO meeting abstracts. I'll do in other months. So we're very busy in clinically those abstracts. But I think we have a very, very important set of opportunities this year to highlight the activity with cabo across different tumor types, certainly focused on CRPC, but will give us the opportunity to really highlight the maturing data set.

Again, we've evaluated 1,500 patients to date and with that level of depth around clinical data, I think as it matures, it will be very important to get that out and inform both investigators and investors about our progress.

So my last slide is here. I'm almost out of time. Again, thanks Charles for joining us today. It's so late in the day. Again, we're focused on cabozantinib. It's a solely, wholly-owned asset with Exelixis. Again, we have I think very unique striking data in the prostate cancer space. Our focus is to be able to convert that clinical differentiation and the commercial differentiation and move the compound forward to build value for patients and shareholders.

So with that, I will stop and look forward to questions in the breakout room. Thank you.

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