Jacobs Solutions Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 1, 2023

There are 17 speakers on the call.

Operator

Day, ladies and gentlemen, and welcome to the Exelix's Second Quarter 2023 Financial Results Conference Call. My name is Towanda, and I'll be your operator for today. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to your host for today, Ms. Susan Hubbard, Executive Vice President of Public Affairs and Investor Relations.

Operator

You may begin.

Speaker 1

Thank you, Shawanda, and thank you all for joining us for the Exelixis Q2 2023 financial results conference call. Joining me on today's call are Mike Morrissey, our President and CEO Chris Fenner, our Chief Financial Officer P. J. Haley, our Executive Vice President of Commercial Dana Aftab, our Chief Scientific Officer and Vicki Goodman, our Chief Medical Officer, who will review our progress for the Q2 2023 ended June 30, 2023. Peter Lamb, our EVP of Scientific Strategy will join

Operator

us for the Q

Speaker 1

and A portion of the call. During the call today, we will be making financial measures not calculated according to generally accepted accounting principles. Please refer to today's press release, which is posted on our website for an explanation of our reasons for using such non GAAP measures as well as tables deriving those measures from our GAAP results. 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 discovery, product development, regulatory, commercial, financial and strategic matters.

Speaker 1

Actual events or results could, of course, differ materially. We refer you to the documents we file from time to time with the SEC, 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, risks and uncertainties related to product commercial success, Market competition, regulatory review and approval processes, conducting clinical trials, compliance with applicable regulatory requirements, our dependence on collaboration partners and the level of costs associated with discovery, product development, business development and commercialization activities. And with that, I will turn the call over to Mike.

Speaker 2

All right. Thank you, Susan, and thanks to everyone for joining us on the call today. Exelixis had a strong second quarter across all components of our business. We're pleased to see continued growth of the cabozantinib franchise, while at the same time, we expedite a range of discovery and development programs to build the Exelixis pipeline of the future with the goal of helping many more cancer patients. Key highlights for the Q2 include first, strong performance of the cabozantinib business with continued growth Demand and revenue in the U.

Speaker 2

S. Hovomedics maintained its status as the leading TKI for RCC in both the first line IOTKI market and the second line monotherapy segment. 2nd quarter year over year compared to Q2 2022. Global cabo franchise net product revenues generated by Exelixis and its partners We're approximately $577,000,000 in Q2 2023 and also grew 18% year over year compared to Q2 2022. Chris and PJ will update our progress in the quarter and provide additional commentary on our financial and commercial activities.

Speaker 2

2nd, Xcel's top priority in R and D is to deliver a pipeline of clinically and commercially differentiated medicines For large populations of cancer patients with high unmet medical need, our singular goal is to improve standard of care for patients with cancer. The more patients we help, the more value we create for patients, their families, healthcare providers and our shareholders. We have an integrated R and D strategy spanning drug discovery, development and commercialization activities and are developing a pipeline Biologics and small molecules that have the potential to significantly move the needle for cancer patients. Dana and Vicki will highlight our second I'm pleased to announce that we'll present our R and D efforts at an investor event on December 2 in New York City. 3rd, business development activities remain a priority as we continue to seek opportunities to access clinical assets with the potential to generate differentiating clinical data in solid tumor indications.

Speaker 2

We have several late stage discussions ongoing And while there's no guarantee of success in closing these transactions, we look to continue using this approach to fortify our product portfolio. Finally, 4th, Exelixis entered into a settlement and license agreement with Teva to resolve patent litigation where Exelixis would grant Teva a license To market its generic version of CABOMETYX in the U. S. Beginning on January 1, 2031, If approved by the FDA and subject to conditions and exceptions common to agreements of this type. Our attention and resources remain squarely focused on the second MSM So with that, please see our press release issued an hour ago for our Q2 financial results and an extensive list of key corporate highlights achieved in the quarter.

Speaker 2

I'll now turn the call over to Chris. Thanks, Mike.

Speaker 3

For the Q2 of 2023, the company reported total revenues of approximately $470,000,000 which included cabozantin and franchise net product revenues of $409,600,000 CABOMETYX net product revenues were $403,300,000 and included approximately $21,000,000 in clinical trial sales. As a reminder, clinical trial sales have historically been choppy between quarters and we expect this to continue in future quarters. Gross to net for the cabozantinib franchise in the Q2 of 2023 was 27.3%, which is lower than the gross to net we experienced in the Q1 of 2023. This decrease in gross to net deductions in the Q2 of 2023 is primarily related to lower Medicare Part D and co pay assistance expenses. Based on our gross to net in the first half of twenty twenty three, we are projecting gross to net will be between 29% 30% for the full year of 2023.

Speaker 3

Our CABOMETYX trade inventory decreased by approximately 3 40 units when compared to the Q1 of 2023. Total revenues also included approximately $60,000,000 in collaboration revenues, including approximately $37,000,000 of royalties earned from Ipsen and Takeda on their sales of net sales above $150,000,000 Our total operating expenses for the Q2 of 2023 were approximately $392,000,000 compared to $380,000,000 in the Q1 of 2023. The increase in total operating expenses sequentially was driven by higher SG expenses in the Q2 of 2023, which was primarily related to costs associated with the 2023 proxy contest. Provision for income taxes for the Q2 of 2023 was approximately $19,200,000 compared to a provision for income taxes of approximately $8,300,000 for the Q1 of 2023. The company reported GAAP net income of $81,200,000 or $0.25 per share on a fully diluted basis for the Q2 of 2023.

Speaker 3

The company also reported Non GAAP net income of approximately $100,300,000 or $0.31 per share on a fully diluted basis. Non GAAP net income excludes the impact of approximately $19,000,000 of stock based compensation expense net of the related income tax effect. Cash and investments for the quarter ended June 30, 2023 was approximately $2,100,000,000 This level of cash and investments supported by our ongoing cash flow from operations Provides Exelixis with the flexibility to invest in internal discovery activities, to pursue external business development opportunities to Our pipeline allows us to return capital to our shareholders through the $550,000,000 share repurchase program we announced in March of this year. During the Q2 of 2023, we repurchased approximately $127,000,000 of Exelixis shares at an average price of $19.22 The Q2 share repurchase activity commenced a few days after our Q1 earnings release on May 9. We remain committed to fully executing on the $550,000,000 share repurchase program this year.

Speaker 3

And finally, we are reiterating our full year 20 3 financial guidance, which is detailed on Slide 14 of our earnings presentation. I'll now turn the call over to P. J.

Speaker 4

J. Haley:] Thank you, Chris. The Q2 of 2023 was a strong quarter for the cabozantinib franchise. The team continues to execute at a high level, which has resulted in CABOMETYX continuing to be the number one prescribed TKI in RCC and second line HCC. Additionally, CABOMETYX in combination with nivolumab remains the number one TKI plus IO combination in first line renal cell carcinoma.

Speaker 4

In terms of the business, CABOMETYX TRx volume grew by 9% year over year in Q2 2023 Relative to Q2 2022, TRx volume for CABOMETYX grew 4% in Q2 compared to Q1 this year. Additionally, new patient starts and demand remained strong in the Q2. CABOMETYX continued to perform well in Q2 from both A marketplace and competitive perspective, CABOMETYX again led the TKI market basket in TRx share at 39%. As we have discussed previously, the first line RCC market is extremely competitive and we are pleased with the performance of CABOMETYX in combination with nivolumab in this setting. Q2 was the 3rd full quarter in which CABOMETYX plus nivolumab was the number one prescribed TKI plus IO combination in first line RCC.

Speaker 4

Uptake in First line RCC is broad across clinical risk groups and practice settings. Importantly, physicians continue to report A positive prescriber experience, which is consistent with the balance of efficacy, safety and quality of life seen in the CheckMate 9ER data. These perceptions were reinforced at ASCO, which was a very productive meeting for Exelixis and provided a great opportunity for us to continue to highlight and promote a 44 month long term follow-up CheckMate 9ER data. You may recall, the median overall survival for CABOMETYX plus nivolumab is 49.5 months, representing an improvement of 14 months over the comparator arm sunitinib with a hazard ratio of 0.70. The overall survival data are differentiating relative to the TKI plus IO competitors and also compelling to prescribers who view these data as clinically meaningful.

Speaker 4

Furthermore, physicians believe that the data support their experience of using the combination in terms of efficacy, safety, tolerability And quality of life. Prescribers believe that this balance of data and the low discontinuation rate of CABOMETYX plus nivolumab enable patients to stay on therapy longer to achieve these results. Additionally, the CONTACT III data presented at ASCO Reinforce the body of evidence with regards to cabo monotherapy given the strong results of the cabozantinib control arm. Collectively, these data reinforce the leadership position that CABOMETYX has in the RCC marketplace. We believe these data position CABOMETYX for continued momentum and growth as our entire team works every day to ensure that appropriate patients have the opportunity to benefit from cabo.

Speaker 4

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

Speaker 5

Thanks, P. J. So during the last earnings call in May, I discussed our overall strategy for drug discovery, which is designed to prioritize targets based on the strength of the science and to leverage internal discovery capabilities for both small molecules and biotherapeutics to address the highest priority targets. Today, I'm going to go into A bit more detail regarding where we're at in terms of filing INDs for the current development compounds in the pipeline as well as progress towards nomination of new development As a brief reminder, our biotherapeutics programs are focused primarily on antibody drug conjugates as well as bispecifics and monoclonal antibodies Our internal biotherapeutics discovery team leverages several strategic partnerships that supply antibodies and various site All of which have contributed to a significant level of productivity over the past several years. Our small molecule discovery programs are focused primarily on synthetic lethal targets, which are attractive because they present clear patient selection strategies And drugging them typically results in a good therapeutic index, but we're not limiting ourselves to this approach and in some cases we're pursuing drugs target dominant oncogenic drivers like mutant KRAS, where patient selection is straightforward and opportunities towards achieving best in class are apparent.

Speaker 5

So here is the pipeline beyond cabozantinib with the preclinical assets highlighted at the bottom. These 4 biotherapeutics were declared as development compounds last year and are progressing toward IND filings, 3 of which are expected to be filed in 2024. The first IND we expect to file for these will be for XB-ten, which is a next generation antibody drug conjugate that targets 5T4, a broadly expressed tumor antigen and delivers a cytotoxic antitubulin payload. XP-ten uses Catalent's site specific conjugation and proprietary linker payload technology And as a result shows improvement in intact antibody drug conjugate pharmacokinetics and reduction in free payload compared to the most advanced competitor. XB-ten also represents the first biotherapeutics that we have had full responsibility for and oversight of all stages of chemistry manufacturing and TROL or CMC.

Speaker 5

As I'm sure many of you are aware, the manufacturing process for antibody drug conjugates is highly complex. And I'm happy to say that our internal CMC team, which comprises highly experienced scientists and leaders from the likes of Genentech, Merck, Novartis and AstraZeneca has expertly managed that process for XB-ten. Our GLP compliant toxicology study is underway We are on track for delivering the GMP material next year, which will enable us to file our IND for that program around mid-twenty 24. The second IND expected from these programs is for XB-six twenty eight, a first in class bispecific antibody that combines the known pharmacology of PD L1 inhibition with inhibition of MKG2A, a complementary natural killer cell checkpoint. XB-six twenty eight is designed to simultaneously address both adaptive and innate immune checkpoint and to act as a natural killer cell engager promoting the activity of cytotoxic T cells and the robust tumor cycle activity of NK cells.

Speaker 5

We expect it to be active in tumors such as renal and lung that are This program is targeted for IND filing in the second half of The 3rd program expected to reach IND filing is XB-three seventy one, a next generation tissue factor targeting antibody drug conjugate that follows on from XB-two. XB-three seventy one also uses Catalent site specific conjugation and linker payload technology and carries the topoisomerase 1 inhibitor payload instead of the microtubule targeting payload on XB-two. This program is on track for an IND filing in late 2024. Finally, XB-fourteen is a bispecific antibody that carries This program is progressing more slowly than the others due to a potential safety signal we observed in non GLP toxicology testing, which has required additional modeling and experimentation to determine if we have an acceptable predicted safety margin to move forward with an IND filing. In addition to these programs, we have multiple programs in discovery at earlier stages of maturity, both small molecules and biotherapeutics from which we expect to nominate development compounds this year.

Speaker 5

We are currently on track to reach our stated goal of up to 5 new development compounds this year, which will potentially include new antibody drug conjugates, a monoclonal antibody targeting a novel immune checkpoint pathway And small molecules addressing synthetic lethal targets for well defined patient populations with substantial unmet need. All of these programs represent 1st or best in class approaches and have the potential to meaningfully contribute toward our mission of helping cancer patients And with that, I'll turn the call over to Vicki.

Speaker 6

Thanks, Dana. Today, I will provide updates as well as the cabozantinib registrational trial. XL-one hundred and two continues in dose escalation and we are focused Reaching a go, no go decision later this year. As we continue to refine the strategic approach for each of our pipeline assets, We retain a strong focus on clinical trial execution to rapidly advance our pipeline molecules with the ultimate goal of improving outcomes for cancer patients. I'll begin with vanzolitinib, our next generation tyrosine kinase inhibitor, which entered full development last year.

Speaker 6

On our last earnings call, we shared top line results

Speaker 4

for a

Speaker 6

fully enrolled cohort of 32 pretreated clear cell renal cell carcinoma patients from STELLAR-one demonstrating robust activity with responses in both cabo naive and cabo pretreated patients. These data provide evidence for the activity of zanzolitinib in a cabo sensitive tumor type and provide additional support for leveraging cabo data to An abstract with the complete RCC dataset has been submitted to an upcoming medical conference and we'll share further details as they become available. We have also completed enrollment on several other STELLAR-one cohorts Looking forward to sharing the data as they mature. INTELLAR-two enrollment of the XANZZA plus Nivo doublet expansion cohorts is ongoing and we have now completed enrollment on the dose escalation cohorts for the triplet combination Ozansa, plus nivo and rilapimab and established a recommended dose. This combination is now advancing into multiple solid tumor expansion cohorts.

Speaker 6

Data from STELLAR-one and STELLAR-two will inform future registrational plans for XANZZA. Turning now to our ZANZZA Phase 3 studies. STILLAR-three zero three compares the combination of ZANZZA with atezolizumab versus regorafenib in patients with non MSI high proficient MMR late line colorectal cancer. We are currently amending the trial based on emerging data, including data presented for the LEAP-seventeen trial of pembrolizumab Plus lumbatinib versus standard of care at ESMO GI last month, which suggests that colorectal cancer patients without liver metastases at baseline Appear to derive more benefit from I O combination including IOTKI combination compared to subjects with Liberumet at baseline. Based on recent Phase 3 trials performed in similar settings, the prevalence of liver metastases appears to be around 63% to 74% of late line metastatic CRC patients.

Speaker 6

In the amended design, A total of approximately 874 patients will be enrolled regardless of RAS status and including patients with and without liver metastases. Stratification factors, which already include the presence or absence of Liberumet will not change. The primary endpoint will be overall survival in patients without Liberumet with a secondary endpoint of OS in patients irrespective of the presence of Liberumet, which will be statistically tested if the primary OS is positive. This will preserve the possibility to demonstrate benefit in all comers, while increasing the probability of success by focusing the primary analysis on the patients most likely to benefit. STELLAR-three zero four, A Phase 3 trial comparing the combination of ZANZZA and nivolumab to sunitinib in patients with certain non clear cell RCC histologic subtypes also on track for the initiation of additional Phase 3 trials this year.

Speaker 6

We are pleased to announce our next planned registration directed study, STELLAR-three zero five, a Phase twothree, which will evaluate vanzolitinib in combination with pembrolizumab versus pembrolizumab alone in patients with first line PD L1 positive recurrent or metastatic squamous cell carcinoma of the head and neck. The study will enroll approximately 500 patients and PFS and OS are dual primary endpoints. Pembrolizumab as a single agent approval in the setting based on overall survival, however, fewer than 1 in 5 patients have an objective response. With a 54% response rate seen for cabo in this setting in an investigator sponsored trial As well as the favorable emerging safety profile for zandalitinib, we believe this may provide an opportunity to improve outcomes versus single agent pembro with a regimen that is tolerable for this population with multiple comorbidities. Moving on to SB002, our first antibody drug conjugate, which targets tissue factor.

Speaker 6

We have now established a recommended dose and we are carrying that dose along with a lower dose to fulfill FDA's project optimist requirements for dose optimization into expansion cohorts in multiple solid tumors, which are now open to enrollment. I'm pleased to share that the first patient has now been dosed on one of those expansion cohorts. These signal detection cohorts will inform the drug safety and efficacy profile and allow us to pivot quickly into registration directed trials. Additionally, we continue to enroll on the dose escalation cohorts for the nivolumab and bevacizumab combinations to determine a recommended dose for each combination to carry forward into expansion and we will continue to seek out other promising combination approaches in sensitive tumor types. For cabozantinib, we expect the readout of the progression free survival primary endpoint for CONTACT-two, Our Phase 3 study in combination with atezolizumab in metastatic castrate resistant prostate cancer this year.

Speaker 6

The 2nd interim analysis for OS for COSMIC-three thirteen is also on track for this year. In summary, we continue to make progress advancing our pipeline molecules and believe that the emerging data for both dansolitinib and XB-two are encouraging. We look forward to sharing the emerging data at upcoming medical conferences as they mature and continuing to expedite the development of these promising assets for the benefit of patients with cancer. With that, I'll turn the call back over to Mike.

Speaker 2

All right. Thanks, Vicki. As you heard on the call today, Exelixis is off to a great start in 2023. We're excited to have the momentum from our cabozantinib franchise drive increased growth across all components of the business As we at Exelixis work to help many more cancer patients as we discover and develop our pipeline of the future. We look forward to sharing our latest pipeline results and plans at our R and D Day in December.

Speaker 2

I'll close by thanking the Exelixis team for their collective efforts to Our discovery, development and commercial activities. The team is highly motivated to achieve our mission to help cancer patients recover stronger and live longer. We drive our results every single day with urgency and purpose to build on a foundation of innovation and collaboration. We look forward to updating you on our progress in the future. Thank you for your continued support and interest in Exelixis and we're happy to now open the call for questions.

Operator

Our first question comes from the line of Asthika Goonewardene with Truist. Your line is open.

Speaker 7

Hi, guys. Good afternoon, and thanks for taking my question. First off, I want to congratulate the team on just another quarter of

Speaker 2

I guess I got a bunch

Speaker 7

of questions for Vicki. So Vicki, On your Phase 1 STELLAR-one study, you've mentioned on the slides here that you completed enrollment Several dose escalation and expansion cohorts. I was wondering if you might be able to tell us which expansion cohorts have you completed enrollment so far? And I got a couple of follow ups.

Speaker 6

Yes. So, yes, so as I mentioned in my remarks that we've completed enrollment on a number of Cohorts, we'll be prepared to share more details on that as the data mature. I think you've On our last earnings call that we shared the data for the clear cell RCC cohort, which had not only completed enrollment, but also had adequate follow-up to make an assessment. So, more to come on that.

Speaker 7

Got it. And then maybe at ESMO sorry, at a medical meeting where you will be Presenting data later this year, will they have multiple cohorts or just one cohort?

Speaker 6

Yes. Those data to clarify that point are specifically the clear cell RCC cohort, the 32 patients. We'll have updated data Including both efficacy and safety in that presentation.

Speaker 7

Got it. Okay. And then, I guess, at the last Earnings call, you mentioned that in that, you mentioned the 34% and the 50% ORRs. And since then, I was wondering, you had one patient who was unconfirmed The last time we spoke in May, did that patient end up becoming a confirmed PR? And any chance you might be able to tell us what In STELLAR-two, if the XANZA if the triplet that you study, is that Exclusively, XANZANEVO, RLEA or does it also include XANZANEVO and ipi as well?

Speaker 6

Yes. So again, we'll share the updated efficacy data in the presentation. So you'll get more details on Updated response rate as well as again the safety data. As for STELLAR-two, we have Ongoing expansion cohorts for XANSA in combination with vivo and we're now advancing the RELATRIPlet into

Speaker 1

You bet. Thank you, Jessica.

Operator

Thank you. Please stand by for our next question. Our next question comes from the line of Jason Gerberry with Bank of America Securities. Your line is open.

Speaker 8

Hey, thanks for taking my questions. Just 2 for me. Just wondering quickly if you could Of your roughly 30% gross to net deductions on cabo, like roughly is a big proportion of that the catastrophic coverage costs and donut hole costs? Just trying to get a sense directionally, IRA implications around cabo pricing. And then just on the Teva settlement that you guys announced, that looks like a very positive and favorable deal for you guys.

Speaker 8

Wondering if there's anything in that precludes you from giving MSM, the lead challenger, slightly better terms? Thanks.

Speaker 2

Yes, Jason, thanks for the questions. Chris can handle the gross to net and I'll speak to the Calisthen.

Speaker 9

All right.

Speaker 3

Jason, it's Chris. From a gross to net perspective, we do as we've talked about before, we do see higher gross to net The donor hold piece is not necessarily catastrophic, but the donor hold piece has a big impact in Q1, Particularly when we have those patients that roll over from prior year to the current year and they roll through many of them roll through the donut hole when we Because of just being on cabo as it roll over the year. So a lot of it is donut hole and not necessarily on the catastrophic side.

Speaker 2

And then on the question regarding Teva, it probably won't be a surprise to you. I'm But love to comment in much detail on that settlement and its, I would say, interrelatability to other Settlements or other things we might do in the future, we're certainly very pleased to have the action date that we got in the Teva settlement of January 1, 2021, and I think that's consistent with some of the messaging we've been sending over time. And obviously, we're going to continue to be very aggressive about Taking our IPs, going forward. So, but as you would imagine, can't really say much about how the 2 would, interact.

Speaker 8

Have a try.

Speaker 6

Okay. Thanks, Jason.

Operator

Thank you. Please stand by for our next question. Our next question comes from the line of Michael Schmidt with Guggenheim. Your line is open.

Speaker 2

Hey guys, thanks for taking my questions. I had one on the upcoming CONTAKT-two study data. Could you remind us what the bar is for 2nd for PFS for a second hormone therapy In this population, and you obviously have dual endpoints, PFS and OS. Is there Potential opportunity to file just based on PFS or would you need both endpoints in order to file for this indication? And then I had a bigger picture follow-up.

Speaker 6

Yes. Thanks for the question, Michael. So in terms of So far, again, these are patients with metastatic castrate resistant prostate cancer who've already received a first Non hormonal therapy. So they tend not to have actually quite short PFS on their second line NHT, which is given in advance of chemotherapy, so somewhere around the order of about 2.5 to 4 months PFS. In terms of would we file on PFS alone or OS, what I would say is we're going to evaluate the totality of the data As they come in, in terms of the overall benefit risk profile that we see and if

Speaker 2

Great. Thanks. And then, thanks for the Additional detail on your R and D efforts and pipeline activities. So obviously, you're focusing more now on advancing Internal programs into clinical development, to what degree does that affect your Business development strategy, is that still a priority at this point, given your strong balance sheet? Or Are you shifting more towards investing into the internal pipeline capabilities?

Speaker 2

Thanks so much. Yes, Michael, it's Mike. Yes, no, That's a great question and thanks for that. We specifically added a bullet in my intro around BD And our interest and the priority we have in continuing our business development activities to access new clinical assets. So that's a priority for us.

Speaker 2

Again, we're agnostic to where High conviction assets come from, obviously, we're making a lot of progress on our internal R and D efforts, but there There's still some molecules out there that we like a lot that we're pursuing. So that's still an important part of our process. And again, No guarantee we'll be able to complete those transactions, but it's certainly a main focus for us right now. Great. Thanks so much.

Speaker 1

Thanks, my colleagues.

Operator

Thank you. Please stand by for our next question. Our next question comes from the line of Andy Hsieh with William Blair. Your line is open.

Speaker 10

Thanks for taking our questions. I got a couple here. So, Vicki, thanks for the update regarding the STELLAR-three zero three study. I'm just curious about this emerging observation about liver mets. Is that dependent on the RAS Status, whether it's mutated or wild type, just kind of curious about that 2 variable kind of 2 by 2 matrix?

Speaker 6

Yes. Thanks for the question. So the current STELLAR-three zero three design Did have as a primary endpoint the overall survival in RAS wild type patients. So to just Maybe clarify a little bit of detail there. Under the amended design, we will be enrolling patients without regard to RAS status.

Speaker 6

We will be analyzing the data without regard to breast status. The change that we're making It's really to improve the probability of success of the trial based on emerging data. So, the LEAP-seventeen data were presented approximately a month ago. Prior to that, there were some single arm datasets where IO combinations, including IOTKI combination such as regorafenib and nivolumab had been looked at in terms of response rate and what was seen in small data sets and retrospectively was that patients without Liberumet had higher response rates than Patients with Libermat. So what has changed in the LEAP-seventeen data is we now have a Phase 3 trial, which read out negative for overall survival despite some improvements in response rate and progression free survival.

Speaker 6

The OS hazard ratio was 0.83 in the overall population, but the biggest predictor of whether or not there was benefit in OS The subgroup analyses was in patients with or without Libermets, so that the patients without Libermets Had a hazard ratio for overall survival of 0.65, while those with liver mets, it was 0.91. So we believe that the totality of the data is now and our steering committee and other key opinion leaders we've spoken to also agree That the weight of the evidence supports moving into a non liver mets population as our primary endpoint. And so this is what we plan to do again with the primary analysis focusing on patients without Liberumet and a secondary analysis In all commerce, which would include patients with Liberumet in that ITT, I mean, again, regardless of RAT status. And again, this is an opportunity for us Based on emerging data from external to the trial and external to our own programs, it really increased the probability of of the study and make sure that the patients who are most likely to benefit from therapy have an opportunity to do so.

Speaker 10

Got it. That's very helpful. Regarding the tissue factor agnostic opportunity, I'm just curious about how you think about potentially a regulatory strategy there? And also how big is that tissue factor positive solid tumor opportunity?

Speaker 6

Yes. So at this point, I think it's too early to talk about our regulatory path there. This is really an exploratory cohort That gives us an opportunity to look at tumor types that we're not studying in specific tumor directed cohorts based on tissue factor expression. It may help us identify other signals for tumor types outside of the ones that we are currently studying. It also may give us some indication on whether tissue factor expression, which we're looking at across the board in this in all patients on study, Appears to be predictive for response.

Speaker 10

Great. And maybe lastly on CVS-twelve, Curious about your view on the data presented at ASCO and remind us What are some conditions for opt in?

Speaker 6

Yes. So CVS12 is continuing in dose escalation. We're certainly encouraged to see Responses that have been emerging in the data and the opt in decision really will have to wait and see in expansion cohorts Once we've confirmed the activity and the safety profile of the asset.

Speaker 7

Okay, great.

Speaker 10

Thank you so much.

Speaker 1

Thank you, Andy.

Operator

Thank you. Please stand by for our next question. Our next question comes from the line of Jay Olson with Oppenheimer. Your line is open.

Speaker 11

Hey, congrats on the quarter and thank you for taking the questions. Based on the strong CABO sales, can you just comment on the rationale for Keeping the original guidance and what your expectation is for the growth rate for CABO in the second half and Maybe just some thoughts on the market share at 39%. Lynvatum had a strong quarter over quarter growth, maybe Any color on the competitive landscape for TKIs in the RCC market? And then I have a pipeline follow on if I could.

Speaker 2

All right, Jay, thanks. Why don't we start with the second part of that question first. P. J. Can talk about the market dynamics In the RCC space and then Chris can briefly comment on guidance.

Speaker 4

Yes. Thanks for the question. So with regards to the market, as I mentioned, we are now the market leaders in first line TKI plus IO combinations for the 3rd quarter in a row. So a lot of strength there and in the TRx market, in the market basket, we're 39% share. And that market increased quarter over quarter.

Speaker 4

So I think we have strong momentum. As I mentioned, we're seeing growth In both demand and new patient starts and I think what we're really seeing is that the Our data, particularly the long term follow-up data from CheckMate 9ER, now with 44 months follow-up and strong Balance of data, but particularly the overall survival data, we're 14 months in the combination beyond sunitinib, which is really We feel good about our sort of continued momentum and opportunity for growth in the marketplace.

Speaker 3

Chris? Thanks, P. J. So from a guidance perspective, as you just heard from P. J, we had a strong quarter.

Speaker 3

We continue to have strong growth. And based on that strong growth that we've seen in the first half of the year, we think we're confident that CABO has the ability to grow into the second half of the year and that's why we reiterated the guidance range we did today.

Speaker 11

Okay, great. Thank you. And if I could squeeze in a pipeline question, congrats on the CBX-twelve data at ASCO. Can you just comment on whether or not you'll be starting a Q3 w dosing cohort? And How far away do you think you are from recommending a Phase 2 dose?

Speaker 6

Yes. So thanks for the question. We are moving into every 3 weekly dosing. Actually, I think, CIBREXZA has that cohort Ongoing now. Ultimately, in terms of selection of a dose, I think there are multiple factors here in terms of Doses, different schedules and we have to consider the requirements of FDA's Project Optimus and dose optimization.

Speaker 6

So we're in discussions now with SYBREXZA on exactly what that might look like, but making sure that we have a solid foundation for selecting a dose

Speaker 11

Great. Thanks for taking the questions.

Speaker 1

Of course, Jay. Thank you.

Operator

Thank you. Please standby for our next question. Our next question comes from the line of Silvan Turcan with JMP Securities. Your line is open.

Speaker 9

Thank you for taking my questions and congrats on the great quarter. I have a question about If you can please outline the scenarios for COSMIC-three thirteen with the data upcoming in the second half of the year. What are kind of the scenarios and how do we get from this data to supplemental NDA? And then I have a follow-up question.

Speaker 6

Yes. So COSMIC-three thirteen, of course, we reported top line results for the progression free survival endpoint just about a year ago, in which we showed an improvement in progression free survival for the combination cabozantinib with nivolumab and ipilimumab versus nivo and ipi alone in patients with poor and intermediate risk Renal cell carcinoma. At that time, NEOS data were immature and in conversations With FDA, they made it clear that they wanted to see overall survival data, prior to considering any filing. So with respect to 313, This is the next interim analysis of overall survival and data dependent if the data Seem to support a favorable benefit risk and we were going to consider a filing we'd have that discussion with FDA.

Speaker 9

Is there a way that you could file only on a subset of patients like the I recall there was a differential in benefit between the Low risk versus medium to high risk patients?

Speaker 6

Yes. I really can't speculate on that. Again, based on the data, we'll have the conversation about filing potential with FDA.

Speaker 9

Great. Well, thank you so much for taking my question.

Speaker 1

Yes, of course, Heather. Thank you.

Operator

Thank you. We stand by for our next question. Our next question comes from the line of Etzer Dharat with BMO Capital Markets. Your line is open.

Speaker 12

Great. Thanks for taking the question. A couple for me, both on sort of the pipeline. First on STELLAR-three zero three, Wondered if you could talk at all about the performance of revorafenib in patients with Or without Liberumets and whether or not that impacts sort of the performance of the control group at all? And then For the planned STELLAR-five study, I'm assuming this will be maybe IKEINO-forty eight with PEL1 scores CPS greater than 1?

Speaker 12

And I guess, is that what the primary analysis would be based on the CPS greater than 1

Speaker 6

Yes, sure. So I'll take the 303 question first. I mean regorafenib Response rates are very low, around 2% kind of across the board. So we don't really see Much differentiation there between liver mets and non liver mets from a response perspective. Again, I think when we look at the data for the various IO combos, it's becoming increasingly clear that from an IO The benefit appears to be in the non liver meth patients.

Speaker 6

And again, that's where we think we have the greatest probability of a successful outcome. There really is an unmet need in both patient populations. And so we are enrolling regardless of liver mets to give us an opportunity

Speaker 2

To be

Speaker 6

able to show benefit if it's there in both patients with and without Liberumet. Again, it's Big unmet need here with core options in terms of standard of care. So in terms of 305, Pembro is again approved in this setting. So we'll be studying the population in which pembro is approved. They demonstrated an overall survival benefit relative to standard of care, which led to the approval as you pointed out in EPS greater than or equal to 1.

Speaker 6

And however, the response rates here are quite low. So we believe there really is Opportunity, again, to add benefit here and with Danza's safety profile, we believe that we're well poised to do that, Again, based on activity that we did see with cabo in combination with pembro and those data were presented Last year at ASCO with a response rate of 54%.

Speaker 12

Great. Thank you.

Operator

Our next question comes from the line of Derek Archila with Wells Fargo.

Speaker 4

Just 2 from us. So to piggyback on an earlier question on Contact 2, If you can just help frame the market opportunity you see for cabotezo combo in the pre chemo setting in prostate? And then second question, With the recent changes to the Board, are there any plans to kind of review the current cost base to identify any efficiencies? And If so, when would that be communicated? Thank you.

Speaker 2

Thanks for the questions. PJ, you want to take the first one about Contact O2?

Speaker 7

Yes. I mean, I think a couple of

Speaker 4

things with regards to the market. Certainly, should we have positive data and approval, it would be a market we're excited about. Prostate cancer is obviously a very large market and even in that kind of second Line Plus metastatic CRPC setting, there's well north of 50,000 patients In that setting, and I guess what I'd say more broadly is in our market research and conversations with KOLs, Couple of things. There's significant unmet medical need in the setting, just generally speaking, and there's also a strong desire to Delayed chemo. So I think a combination of checkpoint inhibitor And the TKI would be extremely well received based on the feedback we've gotten in that setting.

Speaker 4

Yes, we're certainly optimistic about the potential opportunity.

Speaker 2

In the context it's Mike. In the context Of Board deliberations etcetera around our strategy and our tactics, Board has been together now for a couple of months. We've met individually, small groups, committees, school board, Really pleased with the tenor, the tone, the collaboration, the focus on what we're doing Both strategically and tactically as a company, again, focused on building value for patients and therefore building value for shareholders. As you can tell by the content on today's call, we are all in on pushing forward our R and D agenda to be able to really enable the full pipeline towards pivotal trials and eventually Commercialization, if we have traction there clinically in generating differentiating data and we're really excited about our future and where we're going. So Stay tuned.

Speaker 2

Obviously, there's a lot going on with us and we're very excited about that and we think we've got a lot of room to maneuver Relative to the strength of the balance sheet and the Kallo commercial opportunity and just The depth you heard from Dana and Vicki today within RNG.

Speaker 4

Got it. Sounds great. Thanks. Congrats on the quarter.

Operator

Our next question comes from the line of Joe Catanzaro with Piper Sandler. Your line is open.

Speaker 5

Hey, everybody. Thanks so much for taking my questions here. Just 2 on the pipeline side of things. First one on XBO-zero Dosing, so TYBDAX approved on every 3 week dosing, but it's since done some work with the schedule that generated some interesting data outside of cervical. So wondering How much you've considered the schedule with which you move forward with BRO-two?

Speaker 5

And then second question, just wondering if you have any updated thoughts on your efforts

Speaker 2

Thanks for the question. Vicki can handle the question for ex CEO, Luchila, and then we'll pivot over to Dana for Discussion around some of our CD47 efforts. Vicki?

Speaker 6

Yes. So in terms of XB-two, The dose that we're taking forward into expansion cohorts is 2.25 mg per kg With a lower dose of 1.7 mg per kg into expansion in order again to meet the requirements of Project Optimus, We will be doing PK modeling to better understand exposure response across the board. I will note with respect to the TIVDAC dosing, we've looked at our PK profile carefully. And what we're seeing there, I think is very encouraging. So 2 kind of key points.

Speaker 6

One is in terms The level of free payload, which contributes to off target toxicity, but not to efficacy, we're seeing substantially lower levels of free orastatin compared to TIVDAC at the approved dose. And that seems to be playing out in the safety profile as well. So at our chosen higher dose of 2.25, We have about 5 fold lower levels of payload relative to TypDAC. In terms of the overall intact ADC, Correspondingly, we're seeing higher exposure and really compared to TIVDAC at 2 mg per kg, In our case, in doses that 1.5 milligram per kilogram and above, we're seeing higher exposures of intact ADC. And at the selected dose of 2.25, it's 3 fold higher than TypTap at the approved dose.

Speaker 6

So we're quite confident that We have a solid dose to move forward with in terms of both of our doses. And really now it's about The efficacy and safety profile, but the intact ADC really should be driving the response, While the low levels of free payload may help contribute to a differentiated safety profile.

Speaker 5

And this is Dana. Thanks for the question on CD47. So as you mentioned, Gilead announced Fairly recently that a Phase 3 trial of migrolumab or magro, which targets CD47 Was in a Phase 3 trial in hematologic malignancy and in patients with high risk MDS and That time was stopped due to futility. They didn't make any other announcements on their other programs, which They have many, which are proceeding in a large array of indications. So we still have a strong belief in the CD47 serve pathway, our most advanced agent as I mentioned on the call and in the prepared remarks is XP-forty four, which we feel is an important next generation approach that was really designed based on the known clinical profile of 1st generation CD47 targeting agents like Magro.

Speaker 5

And it also includes a strong preclinical rationale for combining inhibition of PD-onePD L1, which is as you know a key adaptive immune checkpoint with inhibition of the CD47 SIRPalpha pathway, which is a key innate immune checkpoint. We feel this is still a compelling mechanism of action in solid tumors, and we also believe that investing carefully in agents that can Target this pathway from multiple angles is prudent, including with, ADU-eighteen oh five from SIEROPA, Which as you're aware is also a next generation approach targeting multiple alleles of SIRPalpha very potently and selectively.

Speaker 4

So we're still

Speaker 5

solid on our strategy to target this pathway. Okay, great. Thanks so much for taking my questions.

Speaker 1

Thank you.

Operator

Thank you. Please standby for our next question. Our next question comes from the line of Jeff Hung with Morgan Stanley. Your line is open.

Speaker 13

Could you provide an update on the ADU-eighteen oh five Phase 1 study and when we might see initial data? And then I have a follow-up.

Speaker 6

Yes. So that is ongoing in dose escalation. We're working closely with the SIroPA team on that. It's too early to discuss when we'll have a data presentation.

Speaker 13

Okay. And then on XB-three seventy one, the payload differs from XB-two, but given that they share the same TS targeting, is the goal to mitigate risk for adverse events while maintaining selectivity? And then do you expect 371 to behave similarly 2,002 in terms of levels of intact ADC or free payload? Thanks.

Speaker 5

Yes. This is Dana. Thanks for the question. So Again, 371 carries a topoisomerase 1 inhibitor payload on the same antibody that we use for XB-two, which has the antitubulent payload. With 371, it does have the next generation site specific linker payload technology.

Speaker 5

It's honestly too early to tell if we will see any specific differences in safety. That really remains to be seen once we get into the clinic. But we're very excited about 371 mainly because of the differentiation of the payload For giving us traction in cancers that are known to be sensitive to topoisomerase 1 inhibitors, But are also known to not be sensitive to antitubulin payloads. So that's really the overall strategy for that molecule and we'll wait to

Operator

Our next question comes from the line of Peter Lawson with Barclays. Your line is open.

Speaker 14

Hi, good afternoon. This is Alex on for Peter. Thanks Thank you for taking our questions. Just one, just given your cash position, your plans for BD and internal investments, Do you see potential to increase your share buyback program potentially? Thank you.

Speaker 3

Alex, this is Chris. Thanks for the question. So right now we're committed to the $550,000,000 share repurchase program we got authorized in March. And as we as Time goes on, we'll continue to evaluate how we allocate capital across the multiple areas of the business, including

Speaker 1

Thank you. Let's take the next question, operator.

Operator

Please stand by for our next question. Our next question comes from the line of Stephen Willey with Stifel. Your line is open.

Speaker 15

Yes, good afternoon. Thanks for squeezing me in. Just going back to 303, Can you just speak to the proportion of enrollment that was completed prior to making the protocol amendments? And I guess, will there now Any attempt to preferentially enroll patients just to get a better representation of either RAS status and or liver mets? And then I guess Does the increase in sample size also contemplate a change in your underlying control arm assumption?

Speaker 15

I know The 9 plus month control arm that emerged out of LEAP, which I think included both regorapiv and TAS-one hundred and two Was a bit higher than what many folks kind of thought would be the case? Thanks.

Speaker 6

Yes. So in terms of 303 enrollment, that's been going well. We're still in still have a number of sites to activate. So We're confident that once we have those sites up and running, we'll be able to enroll even the additional Roughly 50% increase in patients relatively quickly. All of the patients that Have already been enrolled.

Speaker 6

They're certainly relevant to the patient population. So, we don't have any concerns there about any kind of Excuse me, the patient population. The increase, it's driven by the fact again coming back To the incidence of patients with liver metastases being quite high. So in order to have a representative patient population that looks Somewhere near the incidence of Liberumet, we have to enroll a substantial fraction of patients With Liberumet in addition to those without. So again, the primary analysis will be in that smaller population, but again to show a benefit in a smaller population, While preserving the possibility of showing a benefit in the overall population, we have to enroll a somewhat higher number.

Speaker 6

But again, we think we can make up some time Given how well we've been recruiting to the study.

Speaker 15

Great. Thanks for taking the question.

Speaker 1

You bet, Steve.

Operator

Thank you. Please stand by for our next question. Our next question comes from the line of Chris Shibutani with Goldman Sachs. Your line is open.

Speaker 2

Great. Thank you. Can I just clarify on 303 with the answer to Stephen's question? Does the amendment have any implications or effect on potential Time lines. And then, just more broadly,

Speaker 4

I guess you have the

Speaker 2

R and D day planned in December, but could you just give us a sense for Your plans for disclosing additional data across the ZANZIP program and across the Phase 3 studies, Is it pretty much going to await for December Analyst Day or help us out a little bit with when we can get more data? It seems a lot of the responses are we'll have to wait and Okay. So you want to take the first part of that question and I'll take the second.

Speaker 6

Yes. I mean, so we've increased the sample size By 50%. So of course, we do expect that it will take longer to enroll. Again, the patients that we've already enrolled are You know, remain relevant to the patient population under study and we've had robust recruitment again with still some sites That we're still bringing on board lots of investigator enthusiasm. So we think that we can ultimately make up some time there.

Speaker 2

Yes, Chris, in terms of the R and D Day agenda and content, I don't want to get too far ahead of ourselves. That's in December. It's barely August, so we've got some time to figure that out. Obviously, we're committed as we have historically So presenting mature data when it's available across not only the cabo spectrum, but the entire pipeline. We're on track to do that this year with Zanza and certainly if you have the opportunity with mature data Later in the year, we'll find a way to get that out.

Speaker 2

And certainly, that will be the case as this data matures, which In some ways, it's on its own course relative to how that data matures, but when appropriate. So appreciate your patience. You understand you've been in this business for a long time. So you understand that Some of these things just take a lot of it than you'd like, but I think we're very comfortable with the depth of R and D that we've got Cross discovery and development and collaborations and other stuff that we're working on right now that we'll have a very fulsome morning in New York to share The latest and greatest data with when we're there.

Operator

Our next question comes from the line of Yaron Weber with TD Cowen. Your line is open.

Speaker 16

Great. Thanks for taking the question. I got a couple of questions. Maybe, Chris, for you first. On the tax rate, The tax rate has been terrifically low in the first half and you're maintaining your guidance.

Speaker 16

Can you just Clarify, are you expecting the tax rate to increase in the second half? Any specific items you can kind of call out for us? And then secondly, on STELLAR-three zero three, Just can you give us a little bit of a sense of the powering now with the new sort of focus on patients without liver meds With the expanded study, I imagine the powering is very high. So what's the delta or treatment effect that you're looking for? Thank you.

Speaker 3

Hey, Yaron, it's Chris. So, yes, you're right. Our tax rate is for the first half of the year has been below Our guidance range, but there's a lot of things that go into that when you look at the entirety of the year and there's some expenses that may or may not happen in the second So we're maintaining our

Speaker 4

guidance for that reason. Okay, good. Thanks. And then

Speaker 6

with respect to STELLAR-three zero three, In terms of the power for overall survival, we're looking for a clinically meaningful effect in both The non liver mesh population as well as in the ITT.

Speaker 16

And what do you consider to be clinically meaningful? I don't know if

Speaker 6

Without getting into the statistics, I would just say again, when we think about interactions that we have with regulatory agencies as well as with Payers and what they're looking for in terms of overall survival benefits, you can also look to the LEAP-seventeen data and see the difference In the OS hazard ratios, as I mentioned earlier, for what they saw in the non liver menses population.

Operator

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to your host, Susan Hubbard for closing remarks.

Speaker 1

Great. Thanks, Tawana. Thank you all for joining us today. We welcome your follow-up call

Operator

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now

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Earnings Conference Call
Jacobs Solutions Q2 2023
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