Exelixis, Inc. Q4 2009 Earnings Call Transcript

| About: Exelixis, Inc. (EXEL)
This article is now exclusive for PRO subscribers.

Exelixis, Inc. (NASDAQ:EXEL) Q4 2009 Earnings Call March 9, 2010 8:00 AM ET


Charles Butler – VP, IR

George Scangos – President and CEO

Mike Morrissey – President, Research and Development

Frank Karbe – EVP and CFO


Cory Kasimov – J.P. Morgan

George Farmer – Canaccord Adams

Joel Sendek – Lazard Capital Markets

Edward Tenthoff – Piper Jaffray


Good day, ladies and gentlemen, and welcome to the fourth quarter 2009 Exelixis earnings conference call. My name is Stephanie, and I'll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) I would now like to turn the conference over to your host for today, Mr. Charles Butler, Vice President, Investor Relations. You may proceed.

Charles Butler

Thank you for joining us for the Exelixis fourth quarter and year-end 2009 conference call, earnings call. Joining me on today's call are, as usual, George Scangos, Frank Karbe, and Mike Morrissey, who will collectively review our corporate, financial, and development progress for the quarter and the year just completed; discuss our strategy for advancing 184, XL147 and 765, our most important and nearest term value drivers; and, outline our goals and objectives for 2010 and beyond.

Before we get started, I would like to note that during our presentation and question-and-answer session, today we will be making certain statements that are forward-looking, including without limitation statements related to our business, R&D, and financial goals for 2010 and beyond; the restructuring plan announced yesterday and its impact on our business; our development plans and goals for XL184, XL147, XL765, and other compounds in our pipeline; expectations regarding our 2010 year-end cash balance; and, our 2010 financial outlook with respect to revenues, operating expenses, and cost savings and charges related to the restructuring. These statements are only predictions and are based upon our current assumption and expectations.

Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements because of risks and uncertainties discussed in the presentation of materials, the comments made during this presentation, and the risk factors section of our 10-Q for the quarter ended October 2nd, 2009, and other reports filed with the Securities and Exchange Commission. We expressly disclaim any duty to make any updates or revisions to any forward-looking statements.

And with that, I'll turn the call over to George.

George Scangos

Okay. Thanks, Charles, and thanks to all of you for joining us today. The fourth quarter was I think a very strong finish to what was a transformative year for Exelixis. For the first time, we have advanced late-stage compounds that are in broad development programs in tumor types with significant market potential. Our lead compound, XL184, is in a Phase 3 trial for medullary thyroid cancer, Phase 2 trials for gliobastoma and non-small cell lung cancer as well as a randomized discontinuation trial that will assess its potential across nine different tumor types. The two PI3K inhibitors, XL147 and XL765, have entered broad Phase 2 program, and the emerging data for all of these compounds is quite promising. The hard work and financial investment that we made in discovery and early clinical development over the past several years, clearly, is bearing fruit.

Financially, 2009 was a very strong year. We finished the year with over $220 million in cash, easily meeting our stated goal of ending greater – of ending the year with greater than $200 million. We were successful in our business development efforts and find a major collaboration with Sanofi-Aventis as well as a collaboration with Boehringer Ingelheim, which brought in substantial cash.

Compared to 2008, our 2009 expenses and net loss were down, and our revenues were up. As you will hear in a few minutes, we expect this trend to continue in 2010, with 2010 revenues expected to be significantly greater than 2009, and 2010 net loss substantially less than 2009. We again expect to end 2010 with a healthy cash balance.

The substantial restructuring of our company that we announced yesterday is a consequence of the strategy that we described in our R&D Day in December. It is a reflection of our commitment to make good on that strategy. That strategy, remember, has three components, focus on our late stage assets, control expenses, and increase the ration of funded to unfunded expenses. The restructuring reflects our commitment to fulfill these priorities. And I'll have an R&D group that is balanced, focused, committed, and structured appropriately to reflect our priorities. We will aggressively move XL184, XL147, and XL765, and selected other compounds through clinical development. We've retained a vibrant discovery group that will continue to bring new compounds forward, although fewer of them.

Importantly, our discovery group is fully capable of meeting our commitments to our current partners and fulfilling potential obligations for partnerships that we have currently in discussion. With our retained discovery capabilities and our pipeline of early stage compounds, we expect that our business development activities for 2010 and 2011 will be unaffected by the restructuring. We're now poised to move forward aggressively to build value based on a select group of compounds about which our partners, our investigators, and we are excited.

Shifting the focus to the company, our goals for 2010 and into 2011 are quite simple, ensure that our organization is structurally and financially focused on the late-stage assets, expand our financial runway as long as possible, continue to reduce our unfunded expense base through tight management of costs and signing additional partnerships, and maintain a fully functional and balanced R&D organization with capabilities from discovery through late-stage development that can continue to deliver on our existing partnerships as well as those that we're currently discussing.

So at this point, I'll turn the call over to Mike to discuss how our announcement yesterday impacts the R&D organization. And then Frank will then discuss our 2009 financials and the impact of yesterday's announcement on the 2010 financial outlook. I'll then come back for a few closing remarks. Mike?

Mike Morrissey

Thanks, George. As announced yesterday, we are balancing the Exelixis R&D operations to fully align our resources with the strategy on focusing on mid and late-stage clinical compounds. We will prioritize our allocation of internal and external resources to advanced and full development program for XL184, XL147, and XL765. We will also scale our capacity in drug discovery through clinical development and only development to one new IND per year and a single Phase 1 compound.

Let me emphasize that we will maintain a fully functional and innovative R&D organization, and continue to execute the broad range of activities within drug discovery, pre-clinical development, translational medicine, and early clinical development that have enabled us to build one of the strongest and deepest pipelines in oncology R&D. In the simplest terms, we will maintain a clear focus on expediting the development of our advanced assets on moving forward with the lower operative new compounds than in previous years.

XL184, which we are co-developing with BMS, remains our lead compound and is therefore allocated the highest level of support from the Exelixis R&D team. We continue to be extremely excited about the potential of XL184 in numerous oncology indications, and enjoy broad support from world-class investigators and oncology thought leaders. Medullary thyroid cancer is the lead indication for XL184. And we expect to complete enrollments of the ongoing Phase 3 pivotal trial in MTC this year, and plan to file an NDA for this indication in the second half of 2011. We continue to aggressively pursue other potential indications, and have seen encouraging signs of clinical activity with XL184 as a single agent in patients with refractory gliobastoma, and in a combination with erlotinib in patients with non-small cell lung cancer.

We continue to investigate different doses and/or regimens in patients with first line GBM in combination with radiation and Temozolomide, and as a single agent in patients with refractory GBM. We plan to initiate pivotal trials in these GBM indications once we can confirm the dose for each setting with an optimal therapeutic window that demonstrates clinical activity, with overall tolerability. The ongoing randomized discontinuation therapy continues to enroll rapidly and is investigating nine different histologies. Anticipate that data from this trial will be employed to prioritize new indications for additional late-stage developments.

Our PI3K inhibitors, XL147 and XL765, continue to advance rapidly and remain the leading inhibitors of this important pathway and clinical development. We overview it closely with Sanofi-Aventis to complete enrollments in a total of six Phase 1 and Phase 1B2 studies as well as the MTC expansion cohort for our Phase 1 trial of XL147 in lymphoma.

In addition, we have recently initiated two Phase 2 – two new Phase 2 trials with XL147, one in second line endometrial cancer patients where XL147 is administered as a single agent, and second indications with refractory metastatic breast cancer where XL147 is administered with Trastuzumab, with the combination of Trastuzumab and Paclitaxel. We continue to work closely with Sanofi to finalize and initiate additional Phase 2 trials throughout 2010.

Finally, numerous abstracts were submitted to ASCO in January for XL184, XL147, and XL765, and several earlier compounds from our portfolio. If accepted, these presentations will provide an important opportunity to update you and the oncology community on our recent advances with our late-stage compounds.

I'll next take a minute to frame our overall bid on the portfolio in the context of yesterday's restructuring announcements. First, to reiterate XL184, XL147, and XL765 remain our lead compounds, and are fully resourced to expedite the development of these important new agents. Second, as part of yesterday’s announcements, we are scaling our investment in pre-clinical and early clinical developments to reflect our focus on late-stage compounds. We will continue to invest in a small number of select opportunities, which have the potential to quickly advance to their next decision points with a moderate investment of resources. This early portfolio of compounds will include XL139, XL413, which we are co-developing with BMS; XL888, which is currently in Phase 1; and, XL499, our new potent and selective PI3K delta inhibitor for both oncology and inflammation indications.

Third, compounds being developed by our pharma invested partners will not be affected by yesterday’s restructuring announcements. These compounds include XL880 or foretinib with GSK; XL518 with Genentech; XL652, XL041, and XL281 with BMS; XL550 with Daiichi-Sankyo; our FXR assets with Pfizer; our S1P1 agonist program with Boehringer Ingelheim; and, our isoform-selective PI3K alpha and beta inhibitors, which are covered under discovery collaborations with Sanofi-Aventis.

Finally, we have several early compounds, which we believe would be better served in the hands of a pharma or biotech partners. These compounds include XL228, XL388, XL541, and XL475. We do not anticipate making significant additional investments in these compounds until a partner is found for their further development and potential commercialization. To that end, we are engaged in numerous discussions for these compounds and have multiple term sheets on the table. We have the opportunity to realize significant upside if these partnering activities are successful.

So in closing, I believe that we are both well-positioned and committed to enhancing our highest priority clinical and corporate objectives, with strong alignment between our strategic goals and R&D resources. We maintain a critical mass of people and technologies in our innovative R&D team to advance compounds from the earlier stage or rediscovery through NDA filing.

I want to close by expressing my sincerest thanks to all members of the XL R&D team, both past and present, for their efforts in helping us build one of the strongest and most exciting oncology portfolios in the industry. So with that, I’ll turn the call over to Frank, who will review the financial results for 2009 and discuss the impact of the organizational realignment on our financial picture going forward. Frank?

Frank Karbe

Thank you, Mike. I will begin with the 2009 financial results. But before I dive into the details, let me summarize a few highlights. Our financial strategy for the year had three main elements to it. One, partner compounds with the aim to bring an upfront cash to share our future development expenses with the partners; two, reduced costs, which in conjunction with new partnerships was aimed at reducing our unfunded expense; and three, focus our international development on our most promising opportunities with the goal to aggressively advance assets in our pipeline that we believe have the greatest near term therapeutic and commercial potential. We have successfully executed against all three of these objectives. And the accomplishments in 2009 that George and Mike have alluded to earlier are clearly reflected in the significantly improved financial performance of the company.

Year-over-year, our revenue is up almost 29% due to new partnerships. Our operating expenses are down about 8% despite a very significant expansion of our development activities around our lead compounds. And our net loss is down 17% despite a number of significant run-off charges. Moreover, we ended the year with well over $200 million in cash, and a substantially higher share of operating expenses being funded by partners than in 2008.

Let me now turn to our financial results in detail for the quarter and year ended December 31st, 2009. And as usual, we are reporting our financial result on a GAAP-basis only. And a complete press release with our results can be accessed through our Web site at www.exelixis.com.

Revenues for the fourth quarter were $44.1 million, compared to $29.6 million for the comparable period in 2008. Close to 50% increase in revenues was primarily due to increased license revenue from our new collaboration with BMS, and with Sanofi-Aventis. These increases were partially offset by a decrease in milestones and the conclusion of various collaboration agreements with GSK, BMS, and Genentech. Revenues for the full year ’09 were $151.8 million, compared to $117.9 million in 2008. The increase in revenues for the full year of 29% was primarily due to increased revenue relating to our new collaborations with Sanofi-Aventis and BMS as well as with Boehringer Ingelheim. These increases were again partially offset by a decrease in milestones and the conclusion of various collaboration agreements mentioned previously.

R&D expenses for the quarter totaled $64.1 million, compared to $56.9 million for the comparable period in ’08. R&D expenses for the year were $234.7 million, compared to $257.4 million for 2008. Increase in expenses in the quarter is primarily due to the increased development activities related mainly to XL184. The decrease in expenses for the full year reflects decreased personnel costs into our November ’08 restructuring; the impact from other cost containment measures initiated in 2008; and, the wind down of the development expenses for discontinued programs, which were partially offset by increased development activities related mainly to XL184.

G&A expenses for the quarter were $8.5 million, compared to $9.1 million for the comparable period in 2008. General and administrative expenses for the year amounted to $34.4 million, compared to $36.9 million for 2008. The decrease in expenses for the quarter related primarily to a reduction in outside services and stock-based compensation expense. The decrease for the year also primarily reflects lower expenses for outside services as well as decreased personnel costs due to our November ’08 restructuring.

Collaboration costs and sharing expenses amounted to $1.8 million for the quarter and $4.6 million for the year, compared to $0.3 million of reimbursements for the comparable period in 2008.

Under other income expense, we recorded an expense of $5.8 million for the quarter, compared to an expense of $1.4 million for the comparable period in ’08. For the full year, we recorded an expense of $18.9 million, compared to an income of $3.7 million in 2008. Increase in expense for the quarter and the year primarily reflect a $9.8 million charge in connection with the deconsolidation of Symphony Evolution, higher interest expense relating to the termination of the different credit facilities, and significantly lower interest income due to lower average yields on our cash reserves.

We also incurred a tax benefit for the fourth quarter of $7.3 million and for the full year of $1.3 million. The tax benefit for the quarter was primarily due to an amendment of a tax treaty between the United States and France in December 2009, which results in a reversal of the $7 million charge recorded in the third quarter relating to withholding tax to the French authorities associated with our new collaboration with Sanofi-Aventis. The income tax benefit for the full year reflects a $1.3 million refundable income tax credit.

Net loss attributable to Exelixis for the quarter totaled $28.8 million or $0.27 per share, compared to $38 million or $0.36 per share for the comparable period in 2008. For the year, net loss was $135.2 million or $1.26 per share, compared to $162.9 million or $1.54 per share in 2008. The decrease in net loss for both the quarter and the full year was primarily due to increases in revenue from our various collaborations as mentioned earlier. Cash and cash equivalents, marketable securities, and restricted cash and investments totaled $221 million at December 31st, '09, compared to $284.2 million at the end of 2008.

Let me now turn to the impact of the restructuring on our financial outlook. In summary, our brand will be significantly reduced going forward. And while we retained fully integrated capabilities across discovery and development, our cost structure and resource allocations will be much more concentrated around our lead development compounds. This, in essence, reflects, as George pointed out, our commitment to the objectives outlined in our R&D Day at the end of last year.

At that time, we discussed three financial goals for 2010, focus resources on our most important assets, increase the ratio of our funded operating expense, and reduce costs. I think it is obvious that the restructuring hits on all three of these objectives, but I’d like to highlight some of the finer details. We have reduced headcount by approximately 40% or 270 people, or by the reductions are weighted towards discovery, with smaller cuts in development and commensurate cuts in G&A. The cuts reduced a portion of our expenses is currently not funded through partnerships. And as a result, our brand will be significantly reduced.

We estimate that accumulative cash expenditures through 2011 will be reduced by approximately $90 million, half the payment of restructuring costs. These savings are primarily related to reductions in compensation benefits, laboratory supplies, and clinical trial costs. Importantly, given our retained capabilities in all aspects of drug discovery as well as numerous unpartnered pre-clinical and clinical assets, our ability to pursue further business development transactions remains unaffected. As a result of this restructuring, we expect to record a charge of approximately $15 million in the first quarter of 2010, which may increase later in the year depending on potential facility related charges and other write-downs that have not yet been finalized.

The composition of our operating expense base is expected to change significantly. Share development related cost is expected to increase and will now constitute by far the greatest portion of our total operating expense in 2010. In line with our goal to focus on our core assets, we anticipate that XL184 and our PI3K assets, XL147 and XL765 will account for over 80% of all development costs. I would like to emphasize that the majority of the expenses related to these core assets, either are partially or fully funded by partners. BMS covers 65% of the cost for XL184, and Sanofi-Aventis funds 100% of the costs for XL147 and XL765.

The associated expense reimbursements are reflected in our revenues and our key driver for the significant increase in revenue projected for 2010. The portion of operating expense that is funded through collaborations has increased significantly over the past two years. We refer to this as the funding ratio, whereby the term "funded" generally refers to R&D funding under collaboration agreements. The restructuring reduces our operating expense that is not reimbursed, and consequently significantly reduces our brand, which brings us a big step closer towards our 2010 goal of achieving a funding ratio of at least 50%.

Let me finally turn to our financial outlook for 2010. For the full year 2010, we expect revenues in the range of $210 million to $240 million, and operating expenses in the range of $280 million to $310 million, including a restructuring charge of approximately $15 million as well as stock-based compensation and other non-cash charges of approximately $16 million.

I would like to reiterate that the restructuring charge may increase significantly later in the year depending on potential further charges that have not yet been finalized. Company’s cash and cash equivalents, marketable securities, and restricted cash balance at the end of 2010 is expected to be approximately $200 million, which includes assumptions about further business development transactions, potential milestone payments, and potentially a refinancing of the remaining portion of the GSK loan.

In summary, we've clearly set the company on a financial course and will maximize our opportunities for success going forward. While the decision to restructure was painful to all of us, it makes a significant contribution in providing the financial resources to pursue the late-stage clinical development of our lead compound XL184, which we co-developed and co-fund with BMS. With that, I’ll turn the call back to George.

George Scangos

Okay. Thanks, Frank. I’ll just make a few comments before closing and opening up the call for questions. 2009 certainly was a good year for Exelixis. We made substantial pipeline progress. We brought in significant new partnerships. And we ended the year with a healthy cash balance. We look forward to continued success in all three of these fronts in 2010.

Restructuring that we announced yesterday will result in approximately $90 million in cash savings in 2010 and '11. Our R&D group has been structured to reflect our priority to aggressively push our later stage compounds through clinical development in our current market. At the same time, we've retained a world-class rediscovery group that will continue to bring new compounds into development, although obviously fewer. Importantly, we've retained the ability to meet our commitments to our current partners. And based on our continuing drug discovery capabilities and our pipeline with partner, we expect that our business activities for 2010 and 2011will be unaffected by the restructuring.

Over the past few years, we built up one of the most promising oncology pipelines in the industry. The restructuring we announced yesterday is a reflection of our confidence in that pipeline and our commitment to aggressively move a selected group of compounds forward, important for us to think longer term now. Financially 2010 is unlikely to be an issue for us, especially clear from the numbers that Frank just presented. Yesterday’s action was taken so that we have the ability to continue our late-stage compounds as our programs mature and expand in 2011, '12, and beyond.

Finally, I want to say that although that we’re convinced that the restructuring we announced yesterday is the right thing for the company and positions us well to move into the future, as you can imagine, it’s extremely difficult to release many people who contributed substantially to the company over the years and who our friends and colleagues. Our hearts go out to those employees and their families. On behalf of the management team and the Board, I want to express our sincere and deeply-felt gratitude for the contribution of the many Exelixis employees who are part of the reduction as well as those employees who remain.

At this point, we’ll open up the call. We’ll be happy to take questions.

Question-and-Answer Session


(Operator Instructions) And please stand by while we compile a list. Your first question comes from the line of Cory Kasimov with J.P. Morgan. You may proceed.

Cory Kasimov – J.P. Morgan

Hi. Good morning, guys. Thank you for taking the questions. First, a financial question for you, Frank, when you say the restructuring charge may increase significantly later this year, how high might that get?

Frank Karbe

Those charges had not yet been finalized, so we can't really comment on the specific range yet.

Cory Kasimov – J.P. Morgan

So there’s no way to ballpark that?

Frank Karbe

No, we don't have a specific estimate at this point.

Cory Kasimov – J.P. Morgan

Okay. Fair enough. And then could you highlight what data we could potentially expect to see at ASCO this year?

Mike Morrissey

Yes. Cory, this is Mike. We have, as I said in the prepared remarks, submitted numerous abstracts around our lead trials for XL184, XL147, XL765 as well as a couple of earlier compounds. I’m a little hesitant to go too much more into detail about those submissions until we hear back on what was accepted. And I think once we have a good sense of exactly what we'll be talking about in terms of actual studies at ASCO, then we’ll be very forthright with sharing that the contact – the content of what we will have in due time.

Cory Kasimov – J.P. Morgan

Okay. And I guess the last one then, going into this restructuring yesterday. Now that you’re basically limiting ongoing investment in what you characterize as your non-core clinical assets, is it possible for you to maintain leverage in these ongoing partnership negotiations or should we just be expecting a series of small deals from this point forward?

George Scangos

Good question, Cory. I think the reason why we are comfortable making those statements in public is because we have multiple discussions going on. For some of those assets, we have multiple term sheets already on the table. And so we are fairly confident of being able to tie-in attractive collaborations around some of those assets.

Cory Kasimov – J.P. Morgan

Okay. Thanks for taking the questions.


Your next question comes from the line of George Farmer with Canaccord Adams. You may proceed.

George Farmer – Canaccord Adams

Hi, good morning. Thanks for taking my questions. Based on your pipeline review, it looks like you have one wholly-owned drug in Phase 1 and that would be XL888. That’s the HSP90 inhibitor. Is that correct? And what happens with that compound now going forward?

Mike Morrissey

That is correct from the standpoint of that will be the compound that we invest in moving forward. That compound is in ongoing Phase 1 trial. We’re seeing very good signs of pharmacodynamic activity in both tumors and plasma, along with I think pretty attractive tolerability profile. We think that the compound – we can get to the next milestone or decision point with a modest investment of resources. So if the goal was – is to push to that go or no-go decision some time later in the year, and then be prepared to move that forward if the data warrants further investment.

George Farmer – Canaccord Adams

Okay. Thanks.

George Scangos

And that’s of course the PI3K delta inhibitor that’s moving into development now is also fully-owned, and we’ll move that forward as well.

George Farmer – Canaccord Adams

Okay. Thanks, George. And Frank, what’s the status of the GSK note? Can you remind us again, and what happens with that this year? Did you say you were thinking of refinancing that potentially?

Frank Karbe

The status of the GSK loan, as you may recall, it was – the principal amount was for $85 million. It's insured in three trenches over three years starting October 2009. We've repaid the first trench in October of last year in cash. The next trench is due in October of this year. And the last trench is due in October 2011. And as I mentioned, we are evaluating opportunities potentially to refinance the remaining trenches outstanding.

George Farmer – Canaccord Adams

And you could pay that back with stock if you wanted to, correct?

Frank Karbe

We could also do that, yes.

George Farmer – Canaccord Adams

Okay. Thanks very much.


The next question comes from the line of Joel Sendek with Lazard Capital Markets. You may proceed.

Joel Sendek – Lazard Capital Markets

Thanks a lot. So regarding the restructuring, I’m just wondering if you can look – if I could ask you to share with us maybe even longer term – your longer term outlook on a couple of fronts, maybe you can't. But if you can, that'd be great. They said you’d end 2010 at about $200 million in cash. I’m wondering if how long of a runway that is.

And then related to that, it seems as though you’re going through a bit of a maturation process and we heard drugs are a little bit farther along now. Are you managing the company potentially to be profitable at some point? In which case, do you have a year or a number of years that you could share with us until you would be profitable?

And I guess the final of my third-part question there is, let’s say you have success with 184 or 147 and 765, and they start bringing in top line revenue. Would your objective be more inclined to become profitable or to reinvest those assets, and then start generating more IND (inaudible) and continue that cycle, if you could comment on these things? Thanks.

Frank Karbe

Joel, let me take that. So let me frame for you how we think about our runway. As I said in the prepared remarks, we expect the end of the year with about $200 million and assumed some level of re-activity and potential refinancing of the GSK loan. And assuming we meet our cash guidance as we have in the past and taking into account the effect of the restructuring, which significantly reduces our brand, we would go into 2011 with a healthy cash balance, significantly reduced brand, and we expect that this would extend our runway through 2011.

Now, longer term, of course, we’re trying to be profitable at some point in the future. We’re not in the business of accumulating losses forever. And how exactly we'd go about this and when that will be, that remains to be determined.

Joel Sendek- Lazard Capital Markets

Okay. And then just a quick update on one drug, the GSK collaboration, 880, is there – I think you mentioned that in your prepared comments, is there any update on that?

Mike Morrissey

I did not. Joel, this is Mike. I didn’t have any, let’s say, focused update on foretinib XL880. GSK continues to develop that compound. They have announced a recent trial, and this is on control side (inaudible), looking at 880 in Phase 2 in HGC, so that’s public information. But beyond that, I can’t share any additional information on the development program for 880.

Joel Sendek- Lazard Capital Markets

Okay. Thank you.


(Operator instructions) Your next question comes from the line of Edward Tenthoff with Piper Jaffray. You may proceed.

Edward Tenthoff – Piper Jaffray

Great. Thank you very much. Just looking at the competitive landscape in thyroid cancer, we’re expecting data from a couple of compounds at ASCO this year. Can you lay out how you think that world is changing?

Frank Karbe

I would say this – the opportunity for us is to certainly have a compound like XL184 with broad activity and by potent activity against what we think are some of the key drivers for medullary thyroid cancer being (inaudible) and met, and also very strong activity against that. From a competitive point of view, I think we are excited about what we’ve seen in Phase 1 where the activity of XL184 in terms of both objective responses as well as prolonged duration of response was observed in patients with prior TKI therapy, including compounds like vandetanib, (inaudible), et cetera.

So we’re pretty excited about this stage right now. And we believe we have a compound that is optimally designed to perform well in that space. So we’re certainly curious to see what’s going to come out of ASCO in June. But we’re again confident in the compound’s ability to work in that space.

Edward Tenthoff – Piper Jaffray

Okay. Thanks, Frank.


With no further questions, I will now turn the call over to Mr. George Scangos for any closing remarks. You may proceed.

George Scangos

Okay. Let me thank all of you for your time this morning. We’ve had a lot going on here. I think what has been going on is an increasing, let's say, confidence in the data coming in from our compound. We’re starting to be able to see the light at the end of the tunnel. We are making sure that we have the resources that we need to get ourselves there. We certainly do have a view to becoming profitable in the future. And the exciting thing is those days are foreseeable in the future assuming the continued good data coming in from our compound. So we’re excited about where we are and about the data, and looking forward to a good year in 2010 and a good year in 2011 as well. So with that, I’ll thank you all for your attention. And we’ll close the call.


Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect, and have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.


If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!