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Exelixis, Inc. (NASDAQ:EXEL)

Lazard Capital Market 8th Annual Healthcare Conference

November 16, 2012 10:00 AM ET

Executives

Michael Morrissey – President and Chief Executive Officer

Charles Butler – Vice President, Investor Relations and Corporate Communications

Analysts

Ryan Martins – Lazard Capital Markets

Ryan Martins

Hi, I’m Ryan Martins Biotech analyst here at Lazard Capital Markets. Our next presenting company is Exelixis and I’ll have Charles Butler come in and read a statement to us.

Charles Butler

Yeah, I’ll just quickly read the forward-looking statement. During the course of this presentation, we'll be making forward-looking statements regarding future events for the future performance of the company. Actual events and results of course could differ materially. I refer you to the documents that the Company files from time-to -time with the Securities and Exchange Commission, specifically our most recent 10-Q filed 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, Exelixis’s ability to conduct clinical trials of cabozantinib sufficient to achieve a positive completion, the sufficiency of Exelixis’s capital and other resources and any uncertainty of the FDA review and approval process.

Michael Morrissey

Okay, thanks, Charles. I will go from there. So good morning everybody. I had a very, very busy year and we are looking forward to 2012 with I think clear signs of activity and the ability to move kind of go forward. Let me start today by putting cabozantinib our lead component in perspective relative to the prostate cancer in the CRPC space.

We’ve been working this in this area now for about 17 months. The index patients that we first described at ASCO in 2010 has really evolved I think fairly dramatically in the last 17 months we’ve been rolled now since that time over 270 patients into this cohort to-date with another 50 on the way as part of the non-randomized essential cohort.

I think what we’ve learned there, I think very important is that we have a clinically differentiated profile with cabo and we are seeing very different activity with cabo in terms of its ability as a tumor agent, it’s impact on reducing pain, reducing narcotics, certainly the bone scan resolution as well.

Very clear different clinical signal and our challenge going forward, is to convert that clinical differentiation into commercial differentiation and that’s our plan going forward in the CRPC space. First and foremost and then to be able to follow up on that broadly with other tumor types that are shown to be sensitive to cabo.

So we have, in that regard, announced that we had positive top line data from our randomized Phase 3 pivotal trial in medullary thyroid cancer MTC. Again very strong hazard ratio favoring cabo. We’ll talk more about that in a few minutes but again as a sign of I think very promising any tumor activity from that randomized Phase 3 trial in very advanced late-stage patients with MTC.

And then in prostate cancer, a pivotal trial plan has been strengthened and clarified over the last few weeks with regulatory feedback and discussions. I will talk more about that today and certainly really focused on that as part of our R&D Day on December 1. In terms of news flow, this year was a very productive year. We had major updates at both ASCO GU, ASCO and then this week at EORTC about cabo in prostate cancer across a variety of different tumor types.

We think that will continue moving into 2012 and beyond. Again, very large broad data set of patients who are on combo right now for prostate cancer other tumor types emerging trials, Phase 2 trials, ISTs coming up from a variety of different investigators and tumor types. So we expect that news flow about depth and breadth of activity with cabo to continue into 2012 and beyond.

We had our 3Q call recently. Again we are in a very good spot financially on top of which we have sole ownership of cabo and have all the optionality to partner that compound built into that sole ownership.

We also have five assets from previous collaborations that are in that sweet spot between late Phase 2 and moving eventually into Phase 3 with assets that we could monetize from milestones and royalty perspectives. So lots of optionality from a financing point of view. If you do our historic interest in developing compounds first-in-class, best-in-class compounds and certainly sole ownership in cabo.

But the main message today and the main message going forward is our desire, our focus on again taking the existing level of clinical differentiation and validation and converting that into commercial differentiation. We think it’s an important component to the overall cabo story and one certainly in prostate cancer that we think we can build value on as we go forward.

So again, in terms of its activity, we talk a lot about it, lots this year again, our activity profile in the overall oncology space is very, very attractive. We see a waterfall of very deep and broad activity with cabo across a variety of different tumor types. Certainly the most provocative is our activity in resolving existing metastatic bone lesions.

We’ve seen that in prostate cancer and for the tumor types to-date, it’s very, very important component to-date in terms of a major unmet medical many tumor types actually metastasized to bone are involved, that bone involvement that bone disease is involved in driving the morbidity, and the mortality in those patients very large underserved population that we think we have insight into.

We’ve shown both in terms of the most recent, at the ASCO that a bone scan responds can associate with clear signs of clinical benefits. Maha Hussain at the ASCO Meeting this year gave very clear insight in terms of that association between a bone scan response and tumor shrinkage the extension of progression free survival of six months, narcotic reduction, pain reduction, bone biomarkers all associating with improvements in a bone scan.

So that was done retrospectively big part of the non-randomized extension cohort is to show that prove that prospectively. We have the first update on pain data from the NRE this week at the EORTC, I’ll show that to you in a minute, but again that’s looking very promising.

Beyond prostate cancer, beyond thyroid cancer, we’ve seen broad activity. To-date we’ve seen resists objective responses in 12 of 13 tumor types and we’ve seen those responses in nodal disease, visceral disease, CNS disease and bone disease. So, very broad activities from the standpoint of different tumor types but also different compartments that metastases travel to.

So, again very unique activity. Tolerability has been an area of great focus with cabo over the last six months or so and we’ll talk more about that today. We clearly now have lower acid doses, again we talked about Matt Smith’s IST at ASCO or at EORTC on Sunday, showing good activity at a 40 milligram starting dose with very good tolerability. I’ll show you some data in a minute.

In that regard, I think the important point here is now, with these lower active well-tolerated doses you can vision a variety of combination strategies in prostate cancer, outside of prostate cancer. Earlier lines of therapy to make it most potential even larger for cabo and I will get into that in a minute.

But again, the main focus now is to take this clinical difference, this clinical differentiation and move that forward from a commercial point of view. Upfront pushed is medullary thyroid cancer MTC, and we have top line data read out few weeks ago from that trial.

Again this is a global trial involved 315 plus patients, the hazard ratio was 0.28 it’s highly significant. Very low hazard ratio from a PFS perspective at very good sign of any tumor activity. We saw in approximately three-fold increase in PFS for cabo versus the controlled versus placebo and we are actively engaged in preparing for the filing.

We have an end of or pre-NDA meeting in late December from which we hope to then implement rolling filing with the goal of having that filed completely submitted in the first half of 2012 and we’ll keep investors updated on that as we go forward.

In terms of prostate cancer, again this has been our main focus. We’ve certainly enrolled a lot of patients here. It’s gotten a lot of visibility in the context of just very novel provocative activity with certainly the bone scan response. Certainly as you all know this is becoming a relatively crowded space.

Many compounds have shown a three to five month enhancement in overall survival. There is four to-date that have done that and few more on the way. We think that’s certainly important for patients opting for GU oncologists. Our view is that we think cabo’s again differentiated clinical profile can do more than that.

And if we are successful in proving that to pivotal trials and then we’ll be in a very good spots of the markets in the phase of significant competition with a label potentially that had more than overall survival that’s built into it. So what does that look like? First we have promising any tumor activity.

Again, we’ve seen tumor shrinkage in most patients in terms of their nodal disease, visceral disease and we’ve seen a very remarkable reduction in circulating tumor cells or CTCs again a read out that actually correlates well with overall survival. The consistence and dramatic reduction of bone scans now has been optimized and certainly shown for a large number of patients.

So that’s a real effect that we’ve seen in patients on cabo for many months. We’ve seen actual bone remineralization bone healing which only happens when you have an impact on actually slowing the osteoblastic growth in these patients. So, very clear signs of activity beyond the initial bone scan response.

I think the repetity and the durability of the pain response which we’ve seen anecdotally as part of the RDT and now be able to quantitate as part of the EORTC update in the non-randomized extension cohort really tips to the key issue of this compound having more than just any tumor activity but by going after both the tumor in the bone and the bone.

This abnormal osteoblastic bone growth can actually get to one of the main symptoms which is morbidity and mortality in patients with late-stage disease. We’ve also seen a decrease or a complete reduction, discontinuation of narcotic usage in these patients again a very rare finding which you normally don’t see with other kinds of chemotherapies and targeted therapies in this space.

So, again very promising in terms of totality of data that suggests that really the clinical profile is very different than what’s been seen previously with hormonal therapies immunotherapies, targeted therapies, chemotherapies, et cetera. So, and again we hope to build on this and capture this in much more detail as part of our plans for pivotal trials.

So again in terms of just high level background. Again, prostate cancer is somewhat unique in that metastases go predominantly to the bone. This osteoblastic, abnormal osteoblastic bone growth leads to mechanically compromised bone which is usually fractured which can lead to again very high levels of symptomatic bone pain anemia, all of the symptoms all the co-morbidities which then really in terms of the totality of the late-stage disease can drive the actual survival of that in depth in many patients.

The median overall survival in patients, once they failed energy deprivation therapy is approximately two years. It has been shown to actually correlate with increased pain, increases ALP alkaline phosphatase, which is a bone biomarker for osteoblasts and for anemia.

So those three factors or all factors that we’ve shown in Phase 2 cabo can actually impact and move in the right direction. We see a decrease in pain, we see decrease in ALP, we see an increased hemoglobin in terms of actually reversing anemia. So again a very unique signal which is there for cabo in which I think increases our confidence to be able to move forward as part of a pivotal trial planned and then document these improved of these different attributes and their impact on both a survival endpoint as well as a pain endpoint.

So we had several posters this week at the Triple Meeting the AECR, NCI, EORTC Meeting in San Francisco that was focused on the non-randomized extension cohorts which is the part of the amended protocol for the randomized discontinuation trial. The NRE is enrolling a 150 new patients post Pasteur. Many of them with symptomatic disease.

The pain study which Howard Scher, from Sloan-Kettering presented yesterday highlighted on the patients from the NRE cohorts who had moderate to severe bone pain is judged by the Brief Pain Inventory or BPI and on that scale from zero to 10, zero being no pain, 10 being worst than imaginable, a pain of four a scale, four or more is in that moderate to severe bone pain.

And what we saw here and that data is shown here which I think reflects our interest in pursuing this compound in the context of the relief of pain and other symptoms in prostate cancer. So a lot of pretty impressive 20 to 29 patients actually saw their pain improve. We saw that pain improve is rolling us three weeks that was the first mandated look at pain assessment, three weeks many patients saw that pain subsides.

The median best pain response for the BPI was about 46%. So almost 50%, about 50% of patients had a 30% or more increase in the actual decrease in pain which is I think a very good place to look in terms of a pain response, in terms of that quantitative criteria and about half the patients in this cohort has a terrible pain decrease over six and twelve weeks.

So again a meaningful response that lasts for a relatively long time. In terms of narcotic decrease, about 56% of the patients saw a decrease in their narcotics and then a quarter of all these patients actually discontinued their narcotic utilization. And again these are patients that have moderate to severe bone pain that it drives their disability, drives their immobility and it’s a very striking result which I think most GU oncologists would agree.

It’s a relatively rare event with other chemotherapies other targeted therapies in this disease. Maybe most importantly, is that the pain reduction correlated well with both an increase in sleep and the improvements in activities of daily living. So, the compound by itself is actually an impact beyond just reduction of pain. So this I think is a directionally important update.

Several new answers that are different here than what we’ll do in the pivotal trial for pain palliation, a different population different dose, so it’s not exactly the same as what we’ll look at into but it’s directionally very instructive into what we’ve seen so far relative to a late-stage population with a high degree of symptoms and pain.

In terms of some of the low-dose work that we talked about in this meeting as well. So again the ISPs from Nash General done in Matthew Smith’s lab again looked at or clinic looked at again looking at a 40 milligram starting dose. Again, we saw using a bone scan response as a biomarker for activity very good signs of bone scan response in this case, done by a CAT-based system via a CRO with an independent radiology confirmation if you will so very, very tight numbers in terms of the actual quantification of this bone scan response.

You can see that 10 out of 11 patients at the 40 milligram starting dose have either a partial response ore a complete response that was durable out to 12 plus weeks and 80% of those patients importantly comparing to earlier data from the RDT, there were no dose interruptions or reductions in the first 12 weeks that compares very well with what we see at a 100 milligrams starting dose where half of the patients are either reduced or discontinued or interrupted due to tolerability issues.

So we’ve got a very well-tolerated dose here. Only one patient progressed for a drug-related activity in patient with worsening of pre-existing fatigue and anorexia everybody else again had the complete dosages over that 12 week cycle. So we are doing more to further validate this.

It’s a relatively small number of patients and we are doing more as part of this IST and then as well as in the NRE looking at 50 additional patients from 40. I would say as importance we’ve established a low-effect dose within the pharmacological experiment you want to be able to push that and with the high number of prostate cancer patients, most of those patients having bone disease, most of those patients with bone disease responding to cabo.

We could actually look at lower doses as well and really establish a low effect or no effect dose. So from going from 20, or going from 40 milligrams daily, to 20 milligrams daily, we are able to show that 20 is much less effective at inducing a bone scan response. So we know that at 40% and that range is probably the best place to play in terms of the lowest active dose going forward and we certainly characterize that as we proceed further.

We also had some updates from a Phase 1 study in Japan. This time looking outside of prostate cancer we were pleased to see two confirmed resist responses in patients with non-small cell lung cancer when a dose – at a starting dose of 40 milligrams daily. One example is shown here, very dramatic response of this patient’s lung lesion.

This is a patient who is heavily pre-treated and has a activating EGFR Exon 19 deletion. These patients are often sensitive to the action of EGFR inhibitors and this patient was treated with a lot there that’s one of their six prior therapies, they had progressed through those therapies and we saw a very dramatic response in terms of his lung lesion with cabo at a dose that was again well tolerated.

No grade 3AEs in this patient minor grade 2s in terms of hypertension and therapy. So overall, again a good confirmation of the activity of this dose outside of prostate cancer in a tough-to-treat set of patients with lung cancer who have been refractory to many other types of chemotherapies.

So with that information been in mind we’ve been able to talk about the early look, prospectively with the NREs looking at pain palliation. We see again a very dramatic drop in pain, drop in op utilization durable pain response as well the 40 milligram dose I think such the floor for where the activity is in terms of a starting dose with good tolerability.

How do we then move forward? As parts of our plan to again reinforce a clinical differentiation in the commercial setting and we have the opportunity to really prove this now as part of our broad comprehensive development plan and pivotal trial plan in prostate cancer. And that’s outlined here and we’ll spend certainly a good part of the R&D Day in a few weeks going into the details.

So I won’t elaborate on that today. But the plan is to basically run current Phase 3 pivotal trials the CRPC to look at separately in two different trials overall survival in one and then pain palliation or relief in the other. And if successful then we have the opportunity to build a label that has both of those built in as a primary focus for oncologists and then prescribe the drug and this would be really based upon the broad dataset from other compounds.

Other competitors in the class, few of the only compounds that can go beyond survival improve a pain palliation effect, prove potentially a reduction in narcotics at bone scan response that would help us then I think actively market in the phase of some pretty some pretty good competition.

So the 307 trial, again this has been on the books for almost a year now we talked about doing this survival study in the context of our R&D Day in December of 2010. Again this will be looking at extending overall survival and patients post chemotherapy taxotere and post-abiraterone.

Again the very large population and that could go in either directions. So as abiraterone moves up in the treatment paradigm either on label or by off-label use, we can capture those patients as part of this trial. The plan is to finalize the details here over the next few months and to start the trial sometime in the first half of 2012 and certainly provide a lot more update on that as we go forward at our R&D Day. The pain palliation trial 306 again is focused on improving pain and reducing or discontinuing narcotics.

Again in this same population or CRPC post-taxotere, post-abi, again those patients advance rapidly upon progression of both those drugs. If you look at the Cougar 301 data, the interval between when a patient progresses by PSA and the median overall survival is relatively short. So this is a trial that we think we can enroll and run relatively quickly and have readouts in approximately the same timeframe as the overall 306 trials.

So our timelines are still, I would say relatively conservative, but looking at the ability to move in terms of topline data for both in the early 2014 timeframe which we think is a certainly a good space to be from the standpoint of the overall competitive environment and last but not least, we talked about this previously, very interested in the ability of cabo to lock the progression of nets from the primary tissue to bone.

So looking at non-metastatic patients, and block the progression to bone and this is a trial that is thematically is based upon what has already happened what’s already been done with demab in the Amgen 147 study. Obviously that study has been filed and is viewed from a regulatory point of view over the next several months their PDUFA date is in April 2012.

So we now expect to do a lot more on 308 until we have clear regulatory insight on that whole framework of that trial the endpoints have voided if that and we’ll then plan accordingly based upon how that actually works out. So again, very broad comprehensive enrollment plan in CRPC one that we think we can build commercial differentiation upon and then move forward in a very streamlined fashion.

Well again, we have a lot more activity beyond prostate cancer. Cabo is more than just a prostate cancer bone drug. It’s more than just a prostate cancer drug. It has the ability to impact a variety of different tumor types and we’ve shown that over the last several years. Again we have activity in total of 13 tumor types. I won’t read to this list now but all these different tumor types are sensitive to the actions of cabo in terms of both objective resist responses and durable responses that can last for many, many months.

We have a variety of investigator sponsored trials and other phase 2 trials, either by ourselves or with a variety of different groups, cooperative groups if you will, individual institutions that will help us move this forward while we are focusing on prostate continue to broaden the overall profile of cabo across different tumor types. So we are very excited about that as we go forward.

One example of that activity is and what we did with cabo in differentiated thyroid cancer. Again the MTC medullary thyroid cancer is a rare sub-form of all thyroid cancer. The differentiated thyroid cancer population really forms the largest majority of those patients. So we had a update at the American Thyroid Association Meeting a few weeks ago. This is the waterfall from that study. Again small number of patients but I think reflects a high degree of activity in patients who have predominantly progressed and other VEGF-targeting TKIs. Our objective response rate was over 50%.

The durability was quite good many patients were factoring to close to a year on drug after progressing on sunitinib and other VEGF-targeting TKIs. So I think speaks well to again the depth and breadth of activity beyond prostate cancer and certainly in 2012 we’ll be speaking to more data, different tumor types on different indications that we hope to be able to highlight this effect after the current dose and lower doses as well.

So with that I’ll stop and I just summarize again, again it’s a very busy 2011. Moving, I think aggressively into 2012 certainly have a clear picture on what our plans are, and what the goals are again that converts clinical differentiation and commercial differentiation and be able to build a strong product profile with cabo based upon the emerging data with CRPC and beyond. So with that, I will stop and thank you.

Question-and-Answer-Session

Unidentified Participant

(inaudible)

Michael Morrissey

We have published data at ASCO and at CFS and again that population all had metastases. It was part of the RDT design. Every patient coming into that study had measurable soft tissue with visceral disease which is a demographic which is a typical for prostate cancer.

Most patients have bone disease with minimal measurable or not – basically non-measurable disease. So that study, so the 171 patients that were examined in that study, the median PFS for the whole population was 29 weeks, okay. We are collecting survival data now and we’ll update a community on that next year as that data has not been collected.

We also had a portion of that population in terms of the RD design that were randomized, they had stable disease, we told so they were randomized to either cabo or placebo and with those study one patient be it Heflin Myer the hazard ratio is favoring cabo was 0.17 the median PFS for our placebo was six weeks.

The median PFS for cabo was 21 weeks and the median PFS for placebo and that experiment correlates very nicely to what you see for placebo and the TROPIC study which was the label enabling study for Cabazitaxel. So it’s again, if you are comparing apples to oranges to a certain degree but the placebo arm performed as you would have thought based upon prior data. So we are clearly seeing a PFS benefit. And we think that’s due to a combination of any tumor activity and the bone activity that we’ve been able to show with that. Thank you.

Unidentified Participant

Good.

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