Exelixis' (EXEL) CEO Mike Morrissey on Q4 2016 Results - Earnings Call Transcript

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Exelixis, Inc. (NASDAQ:EXEL) Q4 2016 Results Earnings Conference Call February 27, 2017 5:00 PM ET

Executives

Susan Hubbard - Executive Vice President of Public Affairs and Investor Relations

Mike Morrissey - President, Chief Executive Officer, Director

Chris Senner - Chief Financial Officer, Executive Vice President

P.J. Haley - Senior Vice President of Commercial

Gisela Schwab - President, Product Development and Medical Affairs and Chief Medical Officer

Peter Lamb - Executive Vice President of Scientific Strategy, Chief Scientific Officer

Analysts

Eric Schmidt - Cowen & Company

Stephen Willey - Stifel

Michael Schmidt - Leerink Partners

Ted Tenthoff - Piper Jaffray

Andy Fae - William Blair

Andrew Peters - Deutsche Bank

Asthika Goonewardene - Bloomberg Intelligence

Operator

Good day ladies and gentlemen and welcome to the Exelixis' fourth quarter and full-year 2016 financial results conference call. My name is Tikia and I will be your operator for today. As a reminder, this conference call is being recorded for replay purposes.

I would now like to turn the call over to your host for today, Ms. Susan Hubbard, Investor Relations. Please proceed.

Susan Hubbard

Thank you Tikia and thank you all for joining us for the Exelixis' fourth quarter and full-year 2016 financial results conference call. Joining me on today's call are Mike Morrissey, our President and CEO, Chris Senner, our Chief Financial Officer, P.J. Haley, our Senior Vice President of Commercial, Gisela Schwab, our Chief Medical Officer and Peter Lamb, our Chief Scientific Officer who will together review our corporate, financial, commercial and development progress for the quarter ended December 31, 2016 as well as recent key developments and corporate events.

As a reminder, we are reporting our financial results on a GAAP basis only and as usual the complete press release with our results can be accessed through our website at exelixis.com.

During the course of this presentation, we will be making forward-looking statements regarding future events and the future performance of the company. This includes statements about possible developments regarding clinical, regulatory, commercial, financial and strategic matters. Actual events or results could, of course, differ materially.

We refer you to the documents we file from time-to-time with the Securities and Exchange Commission which under the heading Risk Factors identify important factors that could cause actual results to differ materially from those expressed by the company verbally and in writing today, including without limitation, risk and uncertainties related to product commercial success, market competition, regulatory review and approval processes, conducting clinical trials, compliance with applicable regulatory requirements, the availability of data at the reference time, our dependence on collaboration partners and our ability to maintain our rights under existing collaborations and the level of cost associated with commercialization, research and development and other activities.

Now with that I will turn the call over to Mike.

Mike Morrissey

All right. Thank you Susan and thanks to everyone for joining us this afternoon. We have a lot to cover on today's call. So I will start with a brief summary of the key events for the fourth quarter and early 2017 and then turn the call over to Chris, P.J., Gisela and Peter who will review and provide extensive update for our Q4 financials, the ongoing Cabometyx launch and development activities for both cabozantinib and cobimetinib.

Key highlights include first, the strong fourth quarter commercial performance of Cabometyx in advanced RCC resulting in $51.9 million of cabozantinib franchise product revenue. Second, our continued success in monetizing cabozantinib ex-U.S. by achieving $30 million in upfront and milestone payment from Ipsen in the fourth quarter and also receiving an additional $50 million from the Takeda upfront payment in 2017. Third, the expanded development activities for both cabozantinib and cobimetinib including the agreements announced today with BMS and Roche to broadly explore potential of cabozantinib in combination with immunotherapies. In addition three new cobimetinib Phase 3 trials were initiated or announced by Genentech in the last nine months, highlighting this important progress.

As we look forward, we expect to have an extremely busy 2017 and anticipate filing an sNDA for cabozantinib in first line RCC as well as data from the CELESTIAL pivotal trial of cabozantinib in second line HCC. As you will hear from Chris, we ended 2016 in a sound financial position and we began 2017 with a healthy cash balance and greatly reduced debt. Our success in monetizing cabozantinib ex-U.S. added $340 million in nondilutive cash to our balance sheet over the last year. Coupled with robust Cabometyx U.S. revenues, wee plan to further optimize our balance sheet of supporting the expanded development of the cabozantinib franchise through I-O combinations and exploring the appropriate strategic investments to expand our pipeline beyond cabozantinib through a measured restart of our in-house discovery efforts and targeted in-licensing activities.

In closing, Exelixis had a strong fourth- quarter across all components of our business and is on track for a productive 2017.

So with that, I will turn the call over to Chris who will provide more details on our fourth quarter and full year 2016 financials.

Chris Senner

Thanks Mike. Total revenues for the quarter ended December 31, 2016 were $77.6 million compared to $9.9 million for the comparable period in 2015. Total revenues for the year ended December 31, 2016 were $191.5 million compared to $37.2 million for the comparable period in 2015. Total revenues for the quarter ended December 31, 2016 include $51.9 million of net product revenues compared to $9.9 million for the comparable period in 2015.

Net product revenues for the year ended December 31, 2016 were $135.4 million compared to $34.2 million for the comparable period in 2015. The increase in net product revenues for both the quarter and year ended December 31, 2016, as compared to the same period in 2015 primarily reflects the impact of the commercial launch of Cabometyx in late April 2016.

Total revenues for the quarter ended December 31, 2016 also includes two $10 million milestones achieved for the first commercial sales of Cabometyx by Ipsen in Germany and the United Kingdom. Total revenues for the year ended December 31, 2016 also includes the recognition of $20 million of revenue for milestones from to our collaboration partners, Daiichi Sankyo and Merck. Total revenues for the quarter and year ended December 31, 2016 also includes $1 million and $2.8 million respectively of royalty revenues from Ipsen and Roche and $4.7 million and $13.3 million respectively of license revenues related to the amortization of the upfront and approval milestones from Ipsen. In comparison, during the year ended December 31, 2015, we recognized $3 million of contract revenues for a milestone payment received from Merck.

Research and development expenses for the quarter ended December 31, 2016 were $23.8 million compared to $23.5 million for the comparable period in 2015. Research and development expenses for the year ended December 31, 2016 were $96 million, compared $96.4 million for the comparable period in 2015. For both the quarter and year ended December 31, 2016, as compared to the same period in 2015, decreases in share-based compensation and the allocation of general corporate costs were offset by increases in personnel related expenses resulting from an increase in headcount predominantly associated with the buildout of the Exelixis Medical Affairs organization. For the year ended December 31, 2016, as compared to the same period in 2015, there were also decreases in clinical trial costs for METEOR, our Phase 3 trial in advanced RCC.

Selling, general and administrative expenses for the quarter ended December 31, 2016 were $13 million compared to $17.1 million for the comparable period in 2015. Selling, general and administrative expenses for the year ended December 31, 2016 were $116.1 million compared to $57.3 million for the comparable period in 2015. For both the quarter and year ended December 31, 2016, as compared to same periods in 2015, there were increases in personnel related expenses resulting from an increase in headcount connected with the buildout of our U.S. commercial organization and outside services to support the launch and commercialization of Cabometyx. These increases were offset by decrease in marketing costs related to losses on our collaboration with Genentech.

As we announced in January of this year, Genentech unilaterally changed both retroactively and prospectively the manner in which it allocates promotional expenses of the Cotellic plus Zelboraf combination therapy. As a result, Exelixis is relieved of $18.7 million of disputed costs previously reported by Exelixis and Exelixis has invoiced Genentech for expenses with interest that Exelixis had previously paid. Accordingly, during the quarter ended December 31, 2016, we offset selling, general and administrative expenses for a $23.1 million recovery of net losses, which have been recorded from 2013 through September 30, 2016, including $13.3 million of losses that have been recognized and recorded prior to 2016. During the quarter and year ended December 31, 2016, we also recognized a net gain of $600,000 and a net loss of $4.5 million respectively for current U.S. activities in those periods under the collaboration agreement as computed under Genentech's revised cost allocation approach.

Other income and expense net for the quarter ended December 31, 2016 was a net expense of $3.8 million compared to $9.9 million for the comparable period in 2015. Other income and expense net for the year ended December 31, 2016 was a net expense of $42.1 million compared to $40.3 million for the comparable period in 2015. The decrease in other income and expense net for the quarter ended December 31, 2016, as compared to 2015 was primarily due to the reduction in interest expense as a result of the conversion and redemption of $287.5 million in aggregate principal amount of our 2019 notes. For the year ended December 31, 2016, the reduction in interest expense was offset by $13.9 million of loss associated with the conversion of our 2019 notes for approximately 54 million shares of our common stock.

Net income for the quarter ended December 31, 2016 were $35.1 million or $0.12 per share compared to a net loss of $41.6 million or $0.18 per share for the comparable period in 2015. Net loss for the year ended December 31, 2016 was $70.2 million or $0.28 per share compared to a net loss of $161.7 million or $0.77 per share for the comparable period in 2015. The decrease in net loss for the quarter and year ended December 31, 2016 was primarily due to increases in net product revenues, increases in collaboration revenues, the recovery of net losses previously recorded under our collaboration agreement with Genentech and a decrease in interest expense, partially offset by increases in personnel expenses associated with the increase in headcount connected to the buildout of our U.S. commercial and Medical Affairs organizations and other costs associated with the launch of Cabometyx. For the year ended December 31, 2016, the decrease in net loss was also partially offset by a loss associated with the conversion of 2019 notes.

Cash and cash equivalents, short and long-term investments and long-term restricted cash and investments totaled $479.6 million at December 31, 2016, as compared to $253.3 million at December 31, 2015. The December 2016 cash balance does not include the $50 million upfront payment received from Takeda in February 2017. As you will see in the 10-K we filed earlier today, we have classified the Deerfield Notes as a current liability because we have the ability and the intent of retiring the Deerfield Notes in the July 2017 timeframe, which is approximately one year prior to the maturity date. This will save the company approximately $12 million net of the termination fee over the remaining life of the notes. As we look to the future, with the maturity of the Silicon Valley Bank term loan in May 2017 and the early retirement the Deerfield Notes, we will substantially delever our balance sheet in 2017 which positions the company with significant amount of cash to support our growing business at virtually no leverage.

Now turning to our 2017 financial guidance. The company is providing guidance that total costs and operating expenses for the full year will be between $290 million and $310 million. This guidance includes approximately $25 million of non-cash cost and expenses related primarily to stock-based compensation expense and includes our portion of funding to initiate additional mid and late stage cabozantinib I-O combination trials that we announced earlier today. We will not be providing revenue guidance at this time as Cabometyx is still relatively early in its launch phase having just completed its second full quarter since approval.

And in closing, 2016 was the year in which was significantly enhanced our financial position. We added over $200 million in cash to our balance sheet. We converted approximately $287 million of debt to equity which significantly delevered the balance sheet and at the same time maintained our goal of aggressively managing our expenses while successfully launching Cabometyx in the U.S.

And with that, I will turn the call over to P.J.

P.J. Haley

Thank you Chris. We are very pleased with the progress of the Cabometyx launch and the Q4 cabozantinib franchise net revenue of $51.9 million. Q4 Cabometyx net revenue of $44.7 million compares favorably with the Q3 net revenue of $31.2 million, representing growth of approximately 45%. The success of the launch underlying this revenue growth is being driven by two key factors. First, demand trends are robust in terms of both volume of units shipped and new patient starts. Second, the breadth of the demand as measured by growth in prescribers in ordering outlets such as hospitals and oncology clinics is encouraging.

Demand for Cabometyx increased by approximately 40% in Q4 relative to Q3 in terms of units shipped. During the same time period, we saw an increase of new patient starts of approximately 20%. We are also pleased with the trends that demonstrated the breadth of this demand increased in Q4 relative to Q3. In Q4, the prescriber base of Cabometyx increased by approximately 60% through the specialty pharmacy channel.

Additionally, we are very encouraged by the growth we have seen in the specialty distributor channel of our business. In addition to strong volume growth in this segment, the number of outlets that have ordered Cabometyx increased by 50% in Q4. This growth is coming from dispensing community oncology practices, hospitals and academic institutions as well as government facilities. We are particularly pleased with the growth in community oncologists dispensing clinics as we have deployed tactics and resources to drive growth in these key practices.

Taken together, these data depict solid fundamentals and momentum of the Cabometyx business. We are gratified to see that our strategy and approach to the RCC marketplace for producing impactful results. RCC is a mature market with a relatively small number of high-volume prescribers and beyond that there are a large number of low-volume RCC prescribers. Early in launch, we focused more of our promotional efforts on thought leaders and clinicians who treated a high-volume of RCC and we saw rapid adoption among this cohort.

After the first few months of launch, we shifted our efforts to broadening the prescriber base and promoting Cabometyx to the community oncology segment. In Q4, we saw increasing adoption, which was driven by community oncologists indicating that our promotional efforts are broadening the prescriber base which continues to be a strategic focus for the team. More than 70% of our growth in Q4 was from community oncologists. This trend is encouraging and confirms feedback from market research that Cabometyx is being well received, not only by KOLs, but also by the community because we continue to promote to this larger segment with a variety of sales and marketing tactics.

The rapid new prescriber adoption and the increased demand that we are seeing confirms our conviction that Cabometyx addresses a significant unmet medical need in advanced RCC. Furthermore, we know from both market research and direct customer feedback that oncologists familiar with the METEOR data will prescribe the drug. It's encouraging is there still a large number of oncologists who have yet to prescribe Cabometyx, underscoring opportunity for future growth.

The increase in demand from Q3 to Q4 is also reflected in the 23% increase in our second line plus new patient market share, which increased from 22% to 27%. It is also consistent with our internal quarterly tracking studies that monitor the market share of new patient starts. This market research indicated an increase in Cabometyx new patient market share in both the second and third line settings. In the second line, Cabometyx took share from nivolumab as well as other oral agents. In the third line, share gains were primarily at the expense of oral agents. This is also confirmatory of feedback we are receiving from customers that they are moving Cabometyx forward in their treatment algorithm as they gain more experience using it.

As you know, there are six large pharmaceutical companies promoting and co-promoting 11 therapies in the RCC market. The inroads that Cabometyx is making in this competitive and dynamic space can be seen in recent earnings reports that have detailed the decline of products such as everolimus and sorafinib partially attributed to competitive pressure in renal cell carcinoma. In Q4, Cabometyx NRx grew by 26% relative to Q3. While at the same time, axitinib NRx were down 10%.

U.S. net revenue for axitinib which is only indicated for RCC was down 38% in Q4 of 2016 relative to the same time period in 2015. Also lenvatinib U.S. revenue in Q4 had no growth over Q3 despite receiving approval in advanced RCC in May last year. This is attributed to significant competition in the RCC marketplace. We believe that opportunity remains to grow our market share in both the second and third line settings by increasing the breadth of new prescribers and driving incremental utilization from our current prescribers where we focus on the second line patient opportunity. We hope to accomplish this by highlighting the points to differentiate Cabometyx from the competition.

Although it is still early in the launch to quantify duration of therapy, we closely monitor our refill and persistence rates. We are pleased with the data that we have analyzed so far. Additionally, there may be the potential for improvement and persistence over time as we see more Cabometyx used in the second line setting relative to later lines of therapy. Our experienced team has generated a very competitive, if not market-leading, share of voice and is executing at a very high level as we work to ensure appropriate patients with advanced RCC have the opportunity to benefit from Cabometyx. We have great data and a superior label and are off to a solid start. That said, we fully recognize that there is significant opportunity to increase demand of Cabometyx by differentiating from the competition to increase our market share, particularly in the second line setting.

We believe there is also opportunity for growth as we continue to expand our promotional efforts in order to reach more physicians who have yet to prescribe Cabometyx. We are motivated to compete in this dynamic market to bring the benefit of Cabometyx to every eligible patient as we continue to build on the positive momentum of our launch.

Additionally, our team is preparing for potential future launches for Cabometyx in the scenario where we get a label for either first line RCC or second line HCC. We have always taken the approach that we will scale the organization commensurate to the commercial opportunity that we are pursuing. Were we to get additional indications, the investment in infrastructure required to optimize these opportunities would only be incremental relative to the resources we have in place as we leverage the capabilities of our existing [indiscernible].

With that I will turn the call over to Gisela.

Gisela Schwab

Thank you, P.J. I will provide an overview of the development and regulatory progress in the quarter and cover progress towards a regulatory filing for first-line RCC on the basis of CABOSUN, the status of CELESTIAL, an important new development plans for combining cabozantinib with immune checkpoint inhibitors that have been announced earlier today.

Let me start with CABOSUN, a randomized Phase 2 trial that compares cabozantinib and sunitinib in the first-line treatment of intermediate or poor risk RCC patient. Results of this trial were presented at the ESMO conference last September and published in the Journal of Clinical Oncology later in 2016. This study is being conducted by The Alliance for Clinical Trials in Oncology in collaboration with NCI-CTEP.

The trial met its primary endpoint of significantly improving progression free survival as assessed by investigator in the cabozantinib arm compared to sunitinib. The results showed a clinically meaningful and significant improvement for cabozantinib as compared to sunitinib in PFS and objective response rate and a trend in overall survival, a secondary endpoint in the study. With this positive outcome of the study, we are intensely focused on all activities supporting a planned supplemental NDA filing for cabozantinib in first line RCC as our highest priority.

As a reminder, given that this was an externally sponsored study, much of the work we would typically have underway in advance of receiving the final endpoint analysis was only started upon on our receipt of all of the relevant data. So we are working on such aspects that are needed to support a filing including source data verification and preparation of the data sets we have now received from The Alliance, consistent with expectations for the regulatory filing. This requires extensive programming work before we can perform the analyses with these prepared data sets.

I want to remind everyone that this is work that we would normally do at study startup about studies accruing patients before any study we intend to file on, if successful. An additional important effort is the collection of all imaging scans from Alliance sites after we have secured individual IRB approvals and all legal and contractual aspects were in place with The Alliance cooperative group and individual sites. We are making good progress here with the majority of sites now having obtained IRB approval enabling such scan collection and transmitting the images to the independent radiology facility for the central independent radiology read. With all these activities and different work streams underway, we are working toward an sNDA filing in the third quarter of 2017. We will provide additional updates on progress toward this important goal as appropriate.

Now on to a brief update on CELESTIAL, our Phase 3 study in second line HCC. The randomized placebo-controlled study is designed to enroll patients who have previously received sorafenib with a total of two prior systemic therapies allowed per protocol. The primary endpoint of the trial is overall survival. The trial continues to enroll patients globally. The next interim IDMC review will take place when 75% of the events have occurred and we remain on track to have data in 2017.

And lastly, I would like to turn now to the third important topic in today's development update, the broader development and lifecycle management plan for cabozantinib. As recently announced, we are very excited to start multiple initiatives evaluating cabozantinib in combination with immune checkpoint inhibitors in collaboration with BMS and Genentech/Roche. Cabozantinib and the immune checkpoint inhibitors, nivolumab, ipilimumab and atezolizumab have all shown efficacy and are approved in various cancer indications. The combination of such active compounds with different mechanisms of action provides a very compelling opportunity for the next wave of late stage trials for cabozantinib moving forward.

We have discussed previously that there is a strong rationale for combining cabozantinib with immune checkpoint inhibitors as cabozantinib treatment has been shown to result in a more immune permissive tumor environment. Through preclinical and preliminary clinical evaluation, Cabozantinib treatment has been shown to affect tumor cells and the tumor microenvironment in a manner that would potentially make them more sensitive to immune mediated attack. In vitro and in vivo experiments employing a murine colon carcinoma cell line demonstrated that cabozantinib treatment altered immune modulation and immune sepsis conditioning.

Specifically, treatment of tumor cells with cabozantinib in vitro led to increased tumor cell expression of major histocompatibility complex class 1 or MHC-1 antigen and greater sensitivity of tumor cells to T-cell mediated killing. In a mouse tumor model, cabozantinib treatment led to increased peripheral CD8+ T-cell counts, decreased regulatory T-cells and myeloid-derived suppressor cells and decreased T rate suppressor activity. Further, substantial increases in CD8+ T-cell infiltration into the tumor were observed.

In the clinical setting, reductions in immunosuppressive Tregs lymphocytes following treatment with cabozantinib were observed in the Phase 2 study of subjects with advanced refractory urothelial cancer. In a Phase 2 study in mid metastatic triple negative breast cancer, cabozantinib treated subjects experienced a persistent increase in the fraction of circulating CD3+ T lymphocytes and a persistent decrease in the CD14 positive monocytes, possibly reflecting activation of systemic antitumor immunity.

In addition to regulating cells of the adaptive immune system, cabozantinib may impact innate immune cells as well. The TAM kinases, AXL, MER and TYRO3 are potently inhibited by cabozantinib and are believed to play a role in maintaining tumor associated macrophages and an immunosuppressive state. We are exploring the possibility that cabozantinib might promote a switch in macrophage phenotype to a more immune permissive state that could promote antitumor immune response.

Further, a Phase 1B trial combining cabozantinib with nivolumab or nivolumab and ipilimumab has shown encouraging results in patients with advanced genitourinary cancers. Results for the cabozantinib and nivolumab combination were presented by Andrea Apolo at ESMO 2016. The objective response rate was 43% among 23 evaluable patients with various genitourinary cancers. And four of six patients with urothelial cancer, 67% achieved a response. The safety and tolerability profile of the combination was acceptable and a dose of 40 miligrams cabozantinib daily and three milligrams per kilogram every two weeks of nivolumab was identified as the recommended dose for ongoing indication specific expansion cohorts in RCC and bladder cancer.

Updated results for this part of the study along with results from the triple combination of cabozantinib, nivolumab and ipilimumab were presented at the recent ASCO GU conference in Orlando and continue to show antitumor activity in heavily pretreated patients for the duplet of nivolumab and cabozantinib and now also for the triplet of nivolumab, ipilimumab and cabozantinib in patients with various advanced genitourinary malignancies with encouraging response rates of 38% and 18% respectively. Both the duplet and the triplet combinations were generally well-tolerated and the recommended dose for the triplet combination is 40 milligrams of cabozantinib daily combined with three milligrams per kilogram nivolumab and one milligram per kilogram of ipilimumab.

With this background information and rationale, we are very pleased to enter into a clinical collaboration with BMS combining cabozantinib with nivolumab alone or both nivolumab and ipilimumab in a Phase 3 study in first line RCC with plans to also study the combination in other indications including in additional trials in bladder cancer and HCC. BMS and Exelixis will be sharing costs for these trials.

Furthermore, we have also entered into a collaboration with Genentech/Roche to evaluate the combination of cabozantinib and atezolizumab in an initial dose ranging study with planned cohort expansion in four different settings, including patients with previously untreated advanced RCC patients with previously treated bladder cancer and patients with previously untreated both with platinum eligible and ineligible bladder cancer. Genentech/Roche will be providing atezolizumab for this evaluation.

Our partner Ipsen has opted in to participate and co-fund the Phase 1B trial with atezolizumab and the Phase 3 first line RCC trial with BMS checkpoint inhibitors and will have access to the results to support potential future regulatory submissions in their territories. Ipsen will have the opportunity to participate in future combination trials in accordance with the collaboration agreement. And Takeda will also have the opportunity to participate in these global trials per the collaboration agreement between Exelixis and Takeda. We look forward to these trials that will be executed by ourselves or our clinical partner in the near-term, starting in the first half of 2017 and we will provide further details on the specific trials when they are being initiated.

In addition to our internal and clinical partner efforts, there are also multiple study proposals going through advanced review at NCI-CTEP and our investigative sponsor trial program of Phase 2 trials combining cabozantinib with immune checkpoint inhibitors in various indications including non-small cell lung cancer, triple negative breast cancer, endometrial cancer and other tumor types. As always, we will keep you updated on the progress of all these programs at the appropriate time.

And with that, I will hand the call over to Peter to provide an update on cobimetinib.

Peter Lamb

Thanks Gisela. So I will turn to cobimetinib or cobi, for short, the Exelixis discovered MEK inhibitor that's being developed by our partner Genentech. 2016 was a very active and exciting year in terms of the evolution of cobi development and resulted in three new Phase 3 trials being initiated or announced, all based on encouraging signals from earlier phase trials. All of these studies incorporate a combination of cobi with an immunotherapy, namely Genentech's PD-L1 antibody atezolizumab. So I will start with an overview of the preclinical rationale to support this approach.

Innovation of MEK has positive effects with respect to the immune microenvironment on both tumor cells and immune cells, notably T-cells. On tumor cells, MEK inhibition leads to an increased expression of class 1 MHC on the cell surface rendering the cells more difficult the immune system. Increased MHC class 1 expression facilitates presentation of tumor specific antigens to immune cells and increases the vulnerability of tumors to immune mediated killing. This effect has been documented in a tumor from patient taking cobi with the pretreatment biopsy sample showing low levels of MHC class 1 but the post-treatment biopsy showing significantly elevated levels.

Second, MEK inhibition increases the number of effected T-cells in tumors by protecting them from death as a result of chronic stimulation. Repeat tumor biopsies from patients enrolled in cobi clinical trials have also shown an increase in CD8+ T-cell following cobi treatment. Consistent with this in a preclinical tumor model, the combination of a MEK inhibitor and a PD-L1 antibody was more effective than either agent alone.

These data supported the initiation of a Phase 1B trial combining cobi and atezolizumab that enrolled patients into one of four expansion cohorts following the establishment of an appropriate combination dose. Each cohort was initially intended to enroll 20 patients and comprised colorectal carcinoma, metastatic melanoma and non-small cell lung carcinoma cohorts as well as in advanced solid tumor cohort primarily intended to allow the collection of biopsies.

Data from two of these cohorts were reported at major medical meeting last year and resulted in the advancement of additional Phase 3 trials. Data from the metastatic CRC cohort, which enrolled predominantly KRAS mutant patients who failed at least two prior lines of chemotherapy was presented at ASCO and update at ESMO. The 20 KRAS mutant patients enrolled in the study showed an objective response rate of 20%.

Notably, responses were seen in patients whose tumors were microsatellite stable, a phenotype that responds very poorly to single agent immunotherapy agents. The microsatellite stable or MSS phenotype accounts for 95% of CLC with the microsatellite instability high or MSI phenotype which is highly responsive to immunotherapy, comprising the remaining 5%. No unanticipated safety signals emerged from the trial.

These results provided the rationale for initiating the currently ongoing Phase 3 trial that compares cobi combined with atezolizumab to atezolizumab alone or regorafenib alone in the third line setting of CLC. The trial will enroll 360 patients and the primary endpoint is overall survival. For reference, median overall survival for patients taking regorafenib is 6.4 months and the overall response rate is 1%.

The trial initiated in the second quarter of last year and involves over 100 sites worldwide. Of note, a recent update to the trial listing on clinicaltrials.gov shows that the status of a majority of these sites is now active but no longer recruiting, suggesting that enrollment at those sites is complete.

In the context of metastatic CRC, I also want to highlight another ongoing trial which initiated in the third quarter of last year. This is a Phase 1B trial testing the combination of cobi with atezolizumab and bevacizumab in patients who have received at least one prior line of chemotherapy and whose tumors are microsatellite stable. The study has a safety run-in cohort to be followed by an expansion cohorts and a biopsy cohort and will enroll up to 33 patients.

Results from the metastatic melanoma cohort of the Phase 1B study of cobi in combination with atezolizumab were presented at the Society for Melanoma Research meeting in November last year. This cohort enrolled BRAF mutant and BRAF wild type patients. Notably, in the BRAF wild type patients was 50% overall response rate and a preliminary progression free survival estimate of 15.7 months. Duration of response was encouraging with a median duration not yet reached after 18.9 months of follow-up. No unanticipated safety signals emerged.

As a result, Genentech has announced plans to initiate a Phase 3 trial comparing the combination of cobi and atezolizumab with pembrolizumab in previously untreated patients with metastatic or unresectable locally advanced BRAF wild type melanoma. The study will enroll 500 patients and has co-primary endpoint of PFS and OS. The first patient is anticipated to enroll in the second quarter of this year.

Also presented last year at ESMO was the result from a separate Phase 1B trial studying the combination of cob with vemurafenib and atezolizumab in patients with BRAF mutant metastatic melanoma. In the 29 response evaluable patients, there was an objective response rate of 83% including 10% complete responses. No new safety signals were identified in this trial. On the basis of these results, a pivotal placebo-controlled Phase 3 trial evaluating the combination of cobi, vemurafenib and atezolizumab compared to cobi, vemurafenib and placebo in previously untreated patients with metastatic or unresectable locally advanced BRAF mutant melanoma was initiated in January and has planned to enroll 500 patients with a primary endpoint of PFS.

Finally, data were presented from the Phase 1B dose ranging stage of the COLET study in triple negative breast cancer patients, combining cobi with paclitaxel. Eight of 16 patients or 50% achieved a tumor response with paclitaxel and cobi and the combination was tolerable with no new safety signals emerging. A randomized Phase 2 stage of the trial comparing paclitaxel to cobi plus paclitaxel is now fully enrolled and two new cohorts have been added to the study testing the combination of cobi with paclitaxel and atezolizumab or cobi with nabpaclitaxel and atezolizumab.

As is evident from the activity in the last nine months, the evolving development path for cobi is focused on exploring its potential to be a broadly applicable combination partners for atezolizumab. This includes testing the ability of cobi to improve clinical outcomes in tumor types that are someone sensitive to atezolizumab such as melanoma as well as those that have historically been refractory to single agent immunotherapies such as microsatellite stable CRC. In principle, this approach could be applied to many additional tumor types and we look forward to updating you with respect to future cobi development as it evolves.

We also note that a trial sponsored by BMS was initiated late last year testing the combination of cobi with nivolumab and ipilimumab in colorectal carcinoma patient population demonstrating that interest in this approach is not restricted to Genentech.

I will now turn the call back to Mike.

Mike Morrissey

All right. Thank you Peter. In closing, 2016 was an important year for Exelixis and proved to be inflection point for the entire organization. As pleased as we are with our progress, we remain steadfast and focused on the critical opportunities that are ahead of us. On a personal note, I am most proud of the amazing we have here at Exelixis. Both individually and collectively we work hard every minute of every day to help patients with cancer. This is a tough business where success is never taken for granted. We continue to strive to push both our science and our business forward with great deal of urgency as we tackle the challenges that we face going forward.

The achievements and financial results for 2016 highlight the significant progress we have made towards driving the business to positive cash flow. We look forward to the opportunity to reinvest in cabozantinib development and to rebuild our pipeline through internal R&D efforts as well as to potentially in-license and/or acquire compounds where appropriate. Our unwavering focus on disciplined expense management where new R&D initiatives are aligned with robust growth in product revenues will continue to be our guiding principle as we move forward in 2017 and beyond.

We look forward to updating you on our progress. Thank you for your continued support and interest in Exelixis. We are happy to now open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions]. Your first question comes from the line of Eric Schmidt with Cowen & Company. Your line is open.

Eric Schmidt

Thanks to my questions and congrats on the progress. Maybe for Gisela or Mike, it sounds like you have got a little bit greater confidence in a filing for cabozantinib on RCC indication yet it was not clear to me at least what's driving that confidence as I don't think you have done much to complete your independent reviews. Is that correct? Or could you clarify?

Gisela Schwab

Yes. Absolutely. This is Gisela. We are working very hard as the highest priority really throughout entire organization to complete the filing on the time line as specified which is, we are seeing in the third quarter of 2017. We are working as one of the work streams on collecting the images from The Alliance sites to enable an independent radiology read. So that has not been completed but we have made good progress towards collecting the images and continue to work along those lines. There are also other work things that are ongoing and I mentioned a source data verification programming efforts in preparing the data sets for a regulatory filing. So we are certainly pleased with the results that we have seen from this study as were presented at ESMO and also published in the JCO. So we are really focused now on pulling everything together for the sNDA filing in the third quarter.

Eric Schmidt

Okay.

Mike Morrissey

Yes. Eric, this is Mike. Let me add a little bit more color here. Again, our confidence in the filing hasn't changed at all since the Q3 call. Again, at ESMO in 2016, we gave at our investor briefing very clear guidance that we intend to file an sNDA and that is still the case. Obviously, we have had more time. We have generated the additional data as we have gotten the data sets in-house and the data in-house. So we are talking more about it today and providing more clarity on our progress and the timelines for submission. But our confidence has been and remains high.

Eric Schmidt

Okay. Thank you. For PJ on sales trends, clearly you are optimistic for additional share gains, maybe even optimistic for some duration gains. We have seen that you have been able to add about $10 million to $15 million on a quarter-to-quarter basis to aggregate sales of Cabometyx in the U.S. Is that a reasonably steady kind of outlook for the drug in 2017 in the absence of any real guidance?

P.J. Haley

Yes. Thanks for the question, Eric. What I will say is, we are very pleased with the quarter that we just had in Q4 and the growth that we had relative to Q3 as we had net revenue growth of approximately 45% over Q3 and the demand growth was approximately 40%. I guess sort of beyond that, we are really pleased with the breadth of the business metrics that we saw around that seeing 60% new prescribers through RSP channels, seeing at 50% increase in outlets in our specialty distributor channel and we really do see opportunity for continued growth moving forward as we continue to differentiate Cabometyx from the competition, particularly in the second line setting and also with the numerous prescribers who have yet to prescribe Cabometyx.

Eric Schmidt

Well, maybe I will the question differently. You really didn't mention any challenges or potential concerns in your future outlook for the drug. Should we take that to mean that there isn't any restriction on the steady growth that you have been projecting??

Chris Senner

Eric, this is Chris. The way I would look at it is this. We are very happy with what we have seen so far from a revenue point of view, but were definitely not satisfied. And we are going to continue to invest in the product for the future growth. But it is still really early in the launch phase. As I mentioned, we just completed our second full quarter and to a large degree, there is still a lot of competition out there. There is 11 products, as P.J. mentioned. And three of those products have all launched essentially in the last 12 months. So we are confident of where we are and we are confident of where we are going, but we are not going to provide you guidance at this point in time.

Eric Schmidt

Okay. That's fair. Chris. One quick one for you and then I will hop off. In terms of the OpEx guidance for 2017, can you give any kind of a breakdown between SG&A and R&D? And I assume that guidance includes a healthy lever of investment around the nivo collaboration and maybe also the atezolizumab collaboration as well as the change in Cotellic accounting going forward?

Chris Senner

Yes, it does. So I will break that down for you a little bit here. So if you look at where we ended 2016, you have got to remember also that on an as reported basis, our 2016 expenses were lower because we had the $23 million of Genentech expenses we took back to the P&L. Now if you look at it, about half of our increase on as reported basis will come from R&D and a lot of that increase or much of that increase is coming from the investments that we are assuming from cabozantinib I-O combination trials and those will ramp as we look at the back end of the year. Those locals expenses will start to ramp up. It will be slow in the first part of the year, but they will ramp up in the second part of the year. And then when you look at SG&A expense which is the other half essentially, that will come back to say earlier 2016 levels in the first quarter and then they will grow as we get in the second, third and fourth quarter.

Eric Schmidt

Great. Thanks and congrats on progress once again.

Gisela Schwab

Okay. Thanks you Eric.

Operator

Thank you. Your next question comes from Stephen Willey with Stifel. Please proceed.

Stephen Willey

Yes. Thanks for taking the questions and congrats on all the progress here. Just maybe a question for Mike. Just wondering if you can maybe elaborate a little bit on the strategic decision making process behind the collaborations that you announced this morning. There's obviously a lot of overlap/redundancy on the GU malignancy front between Roche and Bristol. So just kind of wondering if there was maybe exclusive option that was on the table? Or if this was just kind of a strategy whereby the company wanted to, get its chips right across the table.

Mike Morrissey

Yes. Steve, thanks for the question. I would frame it as we have talked about publicly in the past. Again we are looking at, I would say, the broad opportunity to combine cabozantinib across arguably sensitive tumor types to both single agent Cabo and single agent PD1 or PD-L1 molecules. That's been shown in the past. And then also across the different I-O opportunities. So I talked about that previously as a matrix, if you will. Sensitive histologies on the x-axis and the different I-O opportunities on the y-axis. And our goal ultimately is to fill in as much of that real estate as we can in a P&L friendly fashion. And I think today's announcements with both BMS and Roche really I think are the first step in that regard in terms of working with two of the leaders in the I-O space in tumor types that we think are sensitive and important and certainly have some important unmet medical need that we would like to be able to address.

On the RCC side, I think that's the simplest when you look at the Phase 3 profile for both Cabo and nivo in the second line space. Those are the only two agents that have improved overall survival in a global pivotal trial. So it really begs the question to combine those and ask the question of what that can do and then with the idea of adding even ipi on top of that. So again, we are agnostic in terms of where we are going to go from here. We would like to work again across that matrix as much as we can to continue to build value for patients and for our shareholders as we move those trials forward.

Stephen Willey

Okay. So maybe just a follow-up on the Bristol collaboration. We just saw refractory data in combination with nivo in refractory bladder setting and just wondering if you are comfortable enough, I guess, with the activity of the drug at this point to maybe think about initiating a frontline bladder study as part of the Bristol collaboration, specifically a registrational study?

Mike Morrissey

Yes. Good question. I will pass it over to Gisela.

Gisela Schwab

Yes. I think the bladder cancer space is certainly evolving as we speak with approvals for various agents coming through in bladder cancer and we feel there is certainly remaining unmet medical need, both in the frontline setting in different patient population as well as in the later line of therapy. And as we are moving forward with formulating our thoughts on the design of these trials, we will certainly provide updates and share our thoughts with you.

Stephen Willey

Okay. And then maybe just another one for either Mike or Chris, just with respect to the ongoing arbitration with Genentech. You have obviously cleared up things on the cost-sharing side. I know that there was some prior mention around a discussion regarding pricing. And just wondering if you can provide us an update as to maybe where that conversation stands and when we may be able to anticipate some kind of resolution there. Thanks.

Mike Morrissey

Yes, Steve. Fair question. You are correct. We certainly made some progress on the cost allocation variable of that complex equation in January. I am really not in a position to provide any more details around the overall process. That's a confidential process, one that we are certainly pursuing very seriously. But we want to maintain that confidentiality going forward. It's not possible to speculate on timing for overall parts of the process either. So unfortunately, I just can't provide a lot more information for you today, except to say that as we get definitive feedback, we will be able to share that with you then. Okay. So fair question. Stay tuned.

Stephen Willey

All right. Thanks for the color.

Operator

Thank you. Your next question comes from the line of Michael Schmidt with Leerink Partners. Please proceed.

Michael Schmidt

Hi guys. Congrats on a good quarter and thanks for the detailed update. I had a couple of follow-on questions. Maybe one on the Bristol collaboration. So it sounds like you are in pretty advanced stages in terms of ramping up or getting ready for the frontline RCC trial. Just want to confirm that you said you anticipate to start that in the first half of this year? And the follow-up question is, what is the gaining factor to initiating the other planned trial with Bristol? Is there additional Phase 1 work that's necessary? Or are you basically ready to go?

Gisela Schwab

So, yes and this is Gisela. Regarding the first line RCC effort, we are hoping to see that initiate in the first half of the year of 2017 and there is certainly work ongoing towards that and we will provide updates as we proceed along those lines. We are also looking obviously at other tumor types and those are discussions that are ongoing at this point. We mentioned bladder cancer. We also mentioned hepatocellular cancer, where both cabozantinib and nivolumab has shown single agent activity. So both agents are being evaluated in Phase 3 studies where an initial study could evaluate the preliminary activity and safety and tolerability of the two agents. So those are the near-term goals for this collaboration and there is certainly opportunity for other tumor types as well where single agent activity has been seen for both agents.

Michael Schmidt

Okay. So it sounds like you will have the front line combination study initiated by the time you will submit the sNDA with the CABOSUN trail. And I guess the follow-up question is, where do you stand with conducting additional survival analysis in the CABOSUN study? And would you be able to include that in the sNDA filing potentially?

Gisela Schwab

Yes. The Alliance and specifically the PI for the CABODUN study, Dr. Choueiri, had mentioned at ESMO and also that The Alliance would eventually conduct additional analyses for overall survival. We don't have any timing guidance at this point regarding the findings. We will submit the most up-to-date data that we are in possession of, at the time.

Michael Schmidt

Okay. Thanks. And then a housekeeping question on the Cabometyx quarter. Did you see any changes in gross to net adjustment and/or an inventory channel changes?

Chris Senner

Yes. Michael, thanks, this is Chris. So we didn't see any change in inventory. It still in the three to four week range which is consistent to the way we ended the third quarter. And on a gross to net basis for Cabometyx, we didn't see a big change. We are still in the 10% or so, 10% to 11% range of gross to net on Cabometyx and we see that as the percentage going forward as of now.

Michael Schmidt

Okay. And one more, if I may. So you did provide several metrics, market uptick metrics. And it seems like you have a focus, a strong focus on addressing or targeting community physicians. And I guess my question is, can you provide us with some information, I guess what percentage of the overall target in a prescriber base has prescribed Cabo at this point?

P.J. Haley

Yes. This is P.J. I will take that question. We are really focusing on expanding our business by broadening the prescriber base in the community. We have talked about previously, there is really a small number of really high-volume KOLs or academic prescribers and that's really on the order of hundreds of prescribers where there is broader opportunity among the community oncologists, where there is thousands of oncologists that do see RCC patients of the metastatic diagnosis on a yearly basis. So really, it's a small percentage that are sort of high-volume academic KOLs and really a much bigger percentage in the community and we believe we have continued opportunity to increase that which is why we are deploying tactics across sales, marketing, nonpersonal promotion, digital marketing, GPO group purchasing organization tactics to really continue to get our message in many ways to the community oncology setting.

Michael Schmidt

Okay. Well, great. Thank you and congrats on the progress.

Gisela Schwab

Thanks, Michael.

Operator

Thank you. Your next question comes from the line of Ted Tenthoff with Piper Jaffray. Please proceed.

Ted Tenthoff

Great. Thank you very much. I have a couple of quick questions, if I may. First, for Chris. I just want to make \sure I am getting this right. So the way you describe it, in the fourth quarter you actually have a net gain from Cotellic and Roche. So is that what was included in the royalty line?

Chris Senner

No. Ted, this is Chris obviously. So the royalty we received from Cotellic is only for ex-U.S. Any of the profit share or loss and we had a loss for the year of around $4.5 million runs through the SG&A expense. However, I will say that when we looked and I think Eric asked this question too, when we look at 2017, the expense guidance assumes that the Cotellic profit or loss P&L will be a profit in 2017 and therefore we will be recording that as collaboration revenue as of up to 2017.

Ted Tenthoff

Great. Excellent. That's helpful. Cool. And then one for Gisela. With respect to CELESTIAL, do we have any clearer timing on readout about when that may come this year? And also any comments on current duration of therapy for Cabo?

Gisela Schwab

The CELESTIAL, as you know, is a blinded study and it's ongoing enrollment, as I mentioned, is continuing. We are expecting data in 2017. We haven't really guided towards any specific time in the year. We will certainly update you as we get closer. So, given that it's a blinded study, we are not looking at Cabo duration on treatment.

Ted Tenthoff

I am sorry. So Cabo in RCC, any update on --

Gisela Schwab

I am sorry. I thought you -- I didn't hear you there.

P.J. Haley

Yes. Ted, this is P.J. I can discuss that with regards to duration. So for duration in the commercial setting, it is a bit early to get an update to have a retrospective look at duration of therapy. We are really closely monitoring our refill rates and the persistence of therapy and we are really pleased with the data that we are analyzing at this point. And as we were moving forward into Q4, we had more second line patients which were healthier which could potentially have a better persistency rates than later line patients relative to earlier in the launch. So we do believe that as that trend continues and we see more early line of therapy patients a.k.a. second line we could have a little bit of upside in the persistency.

Ted Tenthoff

Okay. Cool. It would be great to get some clarity on that, if you can ever share. Thanks so much.

Gisela Schwab

Thanks Ted.

Operator

Thank you. Your next question comes from the line of Andy Fae with William Blair. Please proceed.

Andy Fae

Hi. This is Andy Fae, on for John Sonnier. Congrats on the year progress and a very successful quarter. We have two questions. First question is for Mike. Would you mind mapping out for us the company's growth strategies in the mid and longer-term? And second question is for P.J., as you are changing the commercial initiatives, were you able to correlate what you are doing you i.e. focus on doctors who have not prescribed Cabo and changes in script trends, especially given the fact that there seems to be an apparent acceleration starting in January? Thank you.

Mike Morrissey

Okay. Why don't I start. I will give you some sense of our aspirational goals as we go forward. Look, we are very focused on building value, again for patients and shareholders. We made a decision five or so years ago to focus on cabozantinib to really help fully catalyze the transition from a development stage company to a commercial company. Again, that wasn't a strategy, per se. We didn't wake up one morning and say, let's be a Cabo only company because that's a good strategy.

It was a tactic to be able to really advance the company forward to, if successful, be able to generate free cash that we could then organically invest in the business and grow the business based upon that free cash flow really driving our investments going forward. And that's, I think, has happened or starting to happen now. Certainly we see growth potential in cabozantinib and certainly the announcements today I think would start to lay the foundation for that. How we then generate the next wave of pivotal trials. Obviously first-line RCC would come first, but we are certainly excited about the possibility of doing more in the short to mid term as warranted by data.

Beyond that, certainly cobimetinib is going to play a very important role potentially in driving the growth of our business. Again, as we talked about previously, we don't pay for any development that is going on with that compound. And obviously with the discussion that Peter had today and you heard from our friends at Genentech and Roche about what they are doing, how they are investing in different cobi combos, especially cobi and atezo combos. There is a big program going there that we are excited about and certainly would benefit from success from a commercial point of view if those different trials in colon, in melanoma, maybe others were successful.

And beyond that, as we talked about today several times, we are looking very closely at either generating a pipeline of compounds through our restart of internal discovery, which Peter is leading and/or through in-licensing and/or acquisition efforts around early-stage clinical compounds that we can then develop broadly and move into product. So again, it's a pretty broad strategy. It's one that we are excited about. It's one that we think we have really made that transition from development stage focused to a commercial focus and now we can come back full circle around internal discovery to allow us to build a portfolio of products that our very well will trained experienced sales team that can go out and sell at the appropriate time. So lots of work to do but we certainly like our momentum going forward.

Okay. P.J.

P.J. Haley

Yes. Thanks Andy. I will address your question to me. With regards to broadening sort of our prescriber base in the community, one of my comments on what we saw in Q4, with regards to that, what we know is the data, the METEOR data from market research, advisory boards, et cetera are very compelling and when physicians see it, they do want to prescribe the drug. As it's really the second quarter of the launch and really early innings of the launch, so to speak, we are just really starting to get our marketing tactics out to the broader community base. So I think a lot of those physicians don't see as much renal cell carcinoma, but as they hear the message, that's what kind of led to that 60% increase in prescriber growth that we saw in Q4.

And there are still many physicians who have yet to prescribe the drug. So I think it's really they good data and a good strategy and marketing mix. It's getting the data out there more broadly in the second half of the year and as we continue to differentiate from the competition through our trifecta of efficacy with the only drug in a global pivotal Phase 3 trial that's yielded overall survival benefit, progression free survival benefit and objective response rate benefit that really resonates with physicians and gives us hope that we can continue those trends as we continue to get more physicians to prescribe the drug and broaden our prescriber base as well as grow our market share, particularly in the second line setting.

Operator

Thank you. Your next question comes from the line of Andrew Peters with Deutsche Bank. Please proceed.

Andrew Peters

Hi guys. Thanks for taking my questions and congrats on the progress as well. So I guess I just wanted to focus on a couple of things. I guess first, the language in that Bristol press release earlier today and some of what you have discussed today talks about expanding Cabo combinations into other indications beyond RCC and HCC. So I just wanted to get a better sense of the limiting steps to getting those studies off the ground. For example, would you likely need to run some kind of Phase 1/2 studies first similar to the NCI bladder study? Or would you potentially go straight into pivotals? And then just secondly, as you think about that frontline RCC study, how do you kind of think about the competitive dynamics there as you are thinking about use of capital with kind of many other ongoing large Phase 3 frontline RCC trials? How do you think about incremental differentiation of Cabo plus nivo or the triple relative to those? Thank you.

Mike Morrissey

Hi Andrew. This is Mike. Thanks for the question. Why don't we have Gisela take the first one and I will take the second one.

Gisela Schwab

Yes. I think the combination has been evaluated now in phase 1 through the NCI study of cabozantinib and nivolumab and also cabozantinib, nivolumab and ipilimumab. Doses for recommended Phase 2 doses have been established with 40 milligrams of cabozantinib and full dose of the other compounds. And so I think we can take those forward into new trials. We have obviously with RCC indication where both modalities have shown very nice activities, showing survival benefit in the second line setting and so here we have a lot to go on and to move forward into Phase 3.

We have, as you know, with cabozantinib a single agent activity across a wide variety of different tumor types. We have had results and we have talked about those previously. For instance, in lung cancer generated a randomized Phase 2 study erlotinib where cabozantinib either as a single agent or in combination with erlotinib more than doubled PFS and overall survival, compared to erlotinib. So there is clearly a single agent activity. There is clearly single agent activity for the immuno-oncology compound. So in such indications, we think we have a lot to go on to move forward into later stage trials and certainly more discussions will follow on that.

Mike Morrissey

As a follow up on your second question, I think the whole goal behind these cost-sharing arrangements in these pivotal trial, especially for example, with first-line renal was to be able to share the cost and share the risk and then be able to do more, broadly speaking, across different tumor types, different I-O, a combination opportunity. So very consistent with our past discussions on the topic. This is a starting point and it's one that we hope to build on the go forward.

Andrew Peters

Okay. Thanks. So just to make sure that I understand. Based on the previous monotherapy activity you have seen before and in indications like lung, you would expects to be able to move straight into pivotal trials instead of, say, running a smaller lead-in Phase 2, for example? Is that correct?

Mike Morrissey

Yes. I wouldn't go that far, just to clarify. We are not giving any guidance on what our plan is here and we are not going to speculate on any specific trials or combinations, any details until we are ready to announce that. I think what Gisela said is correct. We will look at each situation carefully in the context of the data we have got, what we see as our risk profile and certainly do that in the conjunction of a new collaborator with their own views on these topic as well. So I would just say, stay tuned, right. We are going to look at this very carefully. We have done, I think, a pretty good job of evaluating the risk and moving forward with some pretty good trials in the past and we will continue to do so in these collaborations as we go forward.

Andrew Peters

Okay. Great. And then just one on that the commercial side. I think if I heard you correctly, you mentioned you have roughly around the 27% market share right now. Should we think about kind of the quarterly sales run rate as what you would expect with a kind of 27%-ish share drug in second, third line RCC? Or how do you think about kind of the way you view market share as it translates to the commercial opportunity? Thank you.

Mike Morrissey

Yes. Andrew, it's Mike. Look, it's a far question. It's a good question. It's one that gets ultimately to the guidance going forward and we are just not comfortable giving that perspective today. I am sure you can appreciate. We are still relatively early in the launch. As Chris and P.J. both said, it's a very competitive space. I can assure you that we are working very, very hard from a commercial sales, marketing, market access point of view to really reach every possible patient that we can and as we go forward you will see the numbers as we generate them and from the public sources and just stay tuned. Okay.

Andrew Peters

Great. Thank you.

Operator

Thank you. [Operator Instructions]. Our next question comes from the line of Asthika Goonewardene from Bloomberg Intelligence. Please proceed.

Asthika Goonewardene

Hi guys. Thanks for taking my question. And again, congrats on the quarter. So let me start off with one on cobimetinib. The data that we have for reimbursement of the drug looks pretty good and besides a detailing effort, I am curious to know what are the catalysts that you guys have in the year that could help drive volume growth?

P.J. Haley

Well, thanks for the question. This is P.J. I will say a few things. Obviously, we are pleased as we have discussed today with regards to the growth we have seen going from Q3 to Q4 with regards to revenue, volume and prescriber growth. I think you mentioned reimbursement. We are actually very pleased at the last call, we had about 224 million covered lives. Now, we were up to about 250 million covered lives. So very pleased with coverage of the drug. We are working very hard with our Exelixis Access Services program to ensure that appropriate patients have therapy and we are happy that that's going very well. So I think as we look forward, we have the opportunity to grow as we get more prescribers, many who haven't yet written the drug to prescribe the drug and continue to differentiate in the second line setting to really drive market share there in that patient population.

Asthika Goonewardene

Great, P.J. Is there any other data presentations that you are expecting this year? Maybe at certain conferences that could help stimulate growth a little bit more?

Mike Morrissey

Yes. It's Mike. Look, there is a number of international medical meetings, oncology meetings that we normally are at. It's a little bit too early to prospectively talk about what will have at those meetings. So as those abstracts are submitted and accepted, our practice is to get that information out. But there is plenty of opportunity between ASCO and ESMO and things in between to be able to continue to talk about the data, talk about the compound. Certainly the milestone around the sNDA filing is an important milestone for us internally that we are working towards very carefully. So thanks for the question.

Asthika Goonewardene

Excellent. Thank you. And one last one for Gisela, if I may. ClinicalTrials say that the CELESTIAL study is still recruiting, but the last update on that was, I think, in August. Is that an accurate representation of the trial's recruitment status?

Gisela Schwab

Yes. The study is still recruiting globally. That is correct.

Asthika Goonewardene

Okay. Lovely. Thank you guys and congrats again for the quarter.

Gisela Schwab

Thank you.

Operator

Thank you. At this time, there are no further questions. And so, I will turn call back over today's host, Susan Hubbard. Ms. Hubbard.

Susan Hubbard

Okay. Great. Thanks Tikia and thank you all for joining us today. We welcome your follow-up calls with any additional questions you may have that we were unable to address on today's call.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone have a great day.

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