Exelixis Inc (EXEL) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q4 2010 Exelixis earnings conference call. My name is Keith and I'll be your Operator for today. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions)As a reminder, today's conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Charles Butler, Vice President Investor Relations. Please proceed, sir.

Thank you for joining us for the Exelixis fourth quarter and year-end 2010 earnings call. Joining me today as usual are Mike Morrissey, our President and CEO, and Frank Karbe, our CFO, who will review our financial results for the quarter and year ended December 31, 2010. They will also discuss our 2011 financial guidance, corporate strategy, recent clinical data, and development plans and priorities for Cabozantinib, our lead clinical development program, and provide a general business update.

Before we get started, I'd like to note that during our presentation and question and answer session today we will be making certain statements that are forward-looking, including without limitation, statements related to the clinical-- to the development financial objectives of our corporate strategy, the clinical therapeutic and commercial potential of Cabozantinib, the future development of Cabozantinib, and our plans related thereto, potential partnering activities with respect to Cabozantinib, our 2011 financial outlook and future presentations and releases of data.

These statements are only predictions and are based upon our current assumptions and expectations. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements because of risks and uncertainties discussed in the presentation materials, the comments made during this presentation and the Q&A session, the risk factors section of our 10-Q for the quarter ended October 1, 2010, and our other reports filed with the Securities and Exchange Commission. We expressly disclaim any duty to make any updates or revisions to any forward-looking statements.

As a reminder, we are reporting our financial results on a GAAP basis today and as usual, the complete press release with our results can be accessed through our website at www.exelixis.com. I will note that during today's presentation, we will discuss adjusted operating expense which is a non-GAAP financial measure. A reconciliation of the difference between this non-GAAP financial measure and the most directly comparable financial measure calculated and presented in accordance with GAAP is included in today's presentation materials. With that, I'll turn the call over to Mike Morrissey.

Thank you, Charles, and thanks to everyone for joining us on the call today. In December, I outlined our new corporate strategy, focused on three simple objectives by which we would take Exelixis forward. First, we would focus exclusively on Cabozantinib, which I'll refer as "Cabo" going forward today, with the goal of maximizing its clinical and commercial value. Second, we would expedite the development of Cabo in a variety of cancer indications with a clear initial focus on prostate cancer. And third, we would aggressively manage and improve our P&L. These efforts are geared towards building shareholder value and improving the treatment and outcomes of patients with cancer. I'm pleased to say today that we have made substantial progress in each of these three corporate objectives.

Let's first turn to our strategy to maximize the value of Cabo. Our decision to make this compound the focus of our efforts is based on a robust and growing body of data that support its near and long-term potential. We expect to file an NDA for Cabo for the treatment of medullary thyroid cancer, or MTC, in the second half of 2011. Beyond MTC, we believe that Cabo represents a potential franchise opportunity that could be used as the foundation for a variety of treatment regimens across diverse tumor indications. To date, we have observed objective responses in 12 of 13 tumor types including recent responses in small cell lung cancer, gastric cancer and differentiated thyroid cancer, from the RDT and other Cabo trials.

The broad activity of Cabo in both metastatic soft tissue and bone lesions represents the hallmark of the clinical activity with Cabo seen to date. Resolution of metastatic bone lesions by bone scan have been documented in patients with prostate cancer, melanoma, breast, renal and thyroid cancers and is often accompanied by rapid resolution of severe bone pain. While our emerging data sets in CRPC highlighted last Thursday at ASCO GU is very encouraging, Cabo is more than just a potential prostate cancer drug and it's more than a potential prostate cancer bone drug. The breadth of clinical indications that could be served by Cabo include potentially large market opportunities. Cabo may address currently underserved populations in prostate cancer, breast cancer, non-small cell lung cancer, renal carcinoma, hepatoma and melanoma among others.

Our strategy for achieving a clear focus on Cabo include a reorganization that reduced our headcount to about 240 FTEs in December and will result in a further reduction of approximately 35% to 40% of our existing FTEs over the next 2 years as we wind down our non-Cabo partnership obligations. Each of the remaining employees is focused on achieving key objectives for Cabo, and I believe that we have the appropriate critical mass of personnel, expertise and experience to execute on our comprehensive regulatory strategy and clinical development plan for Cabo in CRPC.

Consistent with our focus on Cabo, we've already stopped or are in the process of winding down unrelated and unfunded activities and programs. This process includes beginning to transition the development efforts for the PI3K inhibitors XL147 and XL765 to Sanofi-Aventis as we envisioned when the deal was originally signed and winding down our other collaborations as we have met our various obligations. We anticipate that we will complete the transition of XL147 and XL765 to Sanofi in the second quarter of 2011. Just to be clear, our downstream economics for these programs are unchanged. We are still eligible for substantial milestones and royalties in the mid-teens. The only change that is starting with the second half of 2011, we will no longer do any development work on XL147 and XL765 for which we are currently reimbursed. That also means that we will no longer book operating expenses relating to this work. We expect to continue our pre-clinical efforts on the discovery of isoform-specific PI3K inhibitors. The transition of XL147 and XL 765 to Sanofi will allow us to bring down our OpEx through additional headcount reductions and other associated cost savings.

Based on both the data and feedback from the recent ASCO GU meeting last week, Cabo has been rapidly elevated to a prominent position as one of the most exciting compounds in the current oncology landscape. The level and intensity of interest in this compound from investigators, investors and potential partners is unmatched in our long history. We also have several additional near-term opportunities to see the value of Cabo potentially further appreciate during the first half of 2011 as we expect to report top line data from our randomized pivotal trial for MTC and expect to present an expanded data set at the annual ASCO meeting in June.

We intend to maximize the value of Cabo in both the short and long term by strategically and pragmatically partnering this asset. From a partnering perspective we plan to retain North American commercial rights to Cabo and consider several potential region and/or indication specific opportunities that could provide near-term up front cash in milestones, development funding, regulatory expertise and commercial bandwidth. Clearly, it's in our best interest to strike the best deal possible and not necessarily the fastest deal possible from a timing perspective. We will continue to be thoughtful and pragmatic so that we maximize the value of Cabo for both cancer patients and shareholders alike.

Let's next move to our comprehensive development plan and regulatory strategy to advance Cabozantinib. We dramatically expanded enrollments for Cabo across multiple indications. First we continue to see rapid accrual into the RDT from 169 patients included in the data presented at the 2010 ASCO annual meeting to nearly 500 patients accrued to data cross all RDT cohorts. This reflects both our increased focus on this trial as well as substantial interest within the oncology community.

For the RDT prostate cohort, we've enrolled 170 patients to date and have stopped accruing at this number due to overt signs of clinical benefit. We amended the RDT protocol at the end of 2010 and are now enrolling into non-randomized extension cohorts, which we'll refer to as the NREs going forward, for both prostate and ovarian indications that will allow us to generate additional data in more homogeneous populations for each tumor type without a forced randomization at week 12. The ovarian NRE cohorts will include 150 patients with platinum resistant ovarian cancer who have also received either prior DOXIL or Topotecan, thus including a homogeneous population with an unmet medical need.

The prostate NRE will include 150 patients previously treated with docetaxel. Additionally a subset of 25% of these patients will have also received prior cabazitaxel. The amended protocol allows for any number of lines of prior hormonal therapies. We will stringently collect patient reported bone pain and narcotic use with the validated pain instruments. Additionally, we will collect information on bone markers, circulating tumor cell levels, and in a subset of patients repeat bone scan biopsies to further elucidate the mechanisms of action of the striking effects Cabo has shown on bone lesions by bone scan to date.

Prostate NRE cohort has two purposes. The first and foremost is to inform the finer details of the randomized Phase III composite endpoint trial in CRPC patients that we discussed in detail last Thursday at our investor event from Orlando. And second a potential subpart H filing to apply for [forward] approval could be based on the data from the CRPC NRE cohort. Let me be clear that a potential subpart H filing is not the foundation of our regulatory strategy for CRPC.Based on the advice from our clinical advisors with significant ODAC experience, we would only do so if we were able to recapitulate the totality of clinical benefit obtained from the RDT prostate cohort and the ongoing NRE prostate cohort. We readily and proactively acknowledge the probability of success in this regard is modest, but it is also not zero.

As demonstrated last week at ASCO GU, Cabo's unprecedented activity in CRPC is as convincing with larger patient numbers as it was with the initial data released last year. The interim data provided compelling rationale for making this indication the next one for which we would seek regulatory approval after the expected MTC filing. We have designed a comprehensive development plan for Cabo and CRPC that aligns the unique clinical attributes of Cabo with the individual stages of CRPC, that represent the greatest areas of unmet medical need with large underserved patient populations.

The first pivotal trial which we expect to initiate in the second half of 2011 intends to utilize a composite endpoint of bone scan resolution and improvement in bone pain. We're also planning additional pivotal trials in 2012 for the prevention of bone metastases and extending overall survival in patients with bone involvement. We're designing the Cabo CRPC composite endpoint trial in collaboration with Dr. Howard Scher and his colleague Dr. Ethan Basch, from Memorial Sloan Kettering Cancer Center. You all know Dr. Scher is one of the world's top prostate cancer experts and a lead investigator in the recent (inaudible) development programs.

Dr. Basch has unique expertise in that he was a guest worker at the FDA specializing in patient reported outcomes and was the FDA reviewer at the Satraplatin ODAC meeting. His expertise and insights have been critical to ensure that we are designing our composite endpoint trials in a rigorous fashion that is acceptable with the FDA and with the unique insights that come from being an FDA staffer and ODAC reviewer. With the guidance of Doctors Scher and Basch, we are collecting additional data in the CRPC NRE cohort including prospectively collecting pain data using a validated instrument for pain reporting. We will use these initial data to initiate discussions with the FDA for SPA which most likely will take place in the second quarter of 2011.

Last, but certainly not least, we have achieved our enrollment goal of 315 patients for the [EXAM] trial. The Phase III pivotal trial of Cabo in patients with advanced MTC. This program continues to move ahead as planned and we are on track to report top line results in the first half of 2011 and to submit an NDA in the second half of 2011. This is truly a major accomplishment for Exelixis and I'd like to take a moment to congratulate the team for their tireless efforts in seeing this trial through. This positions us well to submit our first NDA in the second half of 2011. If we are successful in getting Cabo to the market for MTC, it will give clinicians invaluable experience prior to potential label extensions for prostate cancer and other indications.

Conclude my introductory remarks today with a brief update on our progress to improve our P&L. As you saw from our significant headcount reductions last year, Exelixis is committed to making the necessary sacrifices and hard decisions that will enable us to invest shareholder capital wisely and will ensure that every dollar we spend builds shareholder value. The reorganizations in 2010 have allowed us to substantially bring down costs for 2011 and significantly extend our cash run rate but there is more work to be done. Following the head count completed -- or following the reductions in headcount completed last year, we have approximately 240 employees and we are working towards a target of approximately 150 employees by the end of 2012.

We are also in the process of aggressively reducing our real estate footprint. We are consolidating our staff into fewer buildings and are in active discussions to sublease our excess space. Based on these current discussions, we are hopeful that we'll be able to sublease at least some of our excess space in the near future.

We also took the additional step of suspending our employee bonus awards for 2010. This was another difficult decision, but we felt it was the right time to take this important step as we are still in the midst of strengthening our P&L and reallocating our financial resources to advance Cabo as our sole priority.

Frank will review the 2010 financials and our guidance for 2011 in a moment. The numbers will show you that we've made significant progress in getting our proprietary spend under control and have significantly extended our financial run rate, which will allow us to continue the aggressive development of Cabo. Additionally, we believe this new financial framework will provide us the leverage we need to pursue the right potential partnering outcome to maximize the value of Cabo for both cancer patients and shareholders alike. So I'll stop there for now and turn the call over to Frank who will go through the financials in more detail. Frank?

Thanks, Mike. Continuing with the new format we adopted last year, I will focus my comments and the highlights of our financial performance in the fourth quarter and full year 2010 and refer you to our press release and quarterly SEC filings for additional details. I will also provide financial guidance for year end 2011, which will reflect significant changes in our P&L, particularly relating to our reductions in our operating expenses as a result of our 2010 restructuring activities.

Let's first turn to our Q4 and year-end results. We continue to see the impact from our restructuring activities in March and December of 2010 bear out in a significant decrease of our net loss year-over-year both for Q4 as well as the full year 2010. Note that the decrease in net loss for the quarter as well as the full year was achieved despite the incurrence of significant restructuring expenses. These restructuring expenses relate mainly to the 65% reduction in our workforce in 2010 as well as the ongoing consolidation of our real estate footprint. Despite severance payments, we ended the year with $256 million in cash which puts us in a good financial position.

Revenues for the fourth quarter were slightly down year-over-year to $40.8 million mainly due to lower revenue recognition as a result of adjustments in the time frame over which certain revenue is recognized as well as lower R&D reimbursements and at some of our collaborations. The reduction in revenue compared to Q3 2010 is mainly due to the $17 million payment from BMS in connection with our opt out from the Cabo program which was recognized in full as revenue in the third quarter. Revenue for the full year increased by approximately $33 million, or 22%, to $185 million, mainly due to increased R&D support from Sanofi-Aventis and our collaboration for the PI3K compounds, XL147 and 765, increased R&D support from BMS for Cabo and XL 281 as well as the achievement of an IND milestone and our collaboration with Daiichi-Sankyo.

R&D expenses are down year-over-year for the quarter by approximately $22 million, or 34%, to $42.3 million and by approximately $24 million, or 10%, to $211 million for the full year, despite a significant increase in development costs for Cabo, driven mainly by the rapid enrollment and the randomized discontinuation trial as well as our Phase III pivotal trial in MTC which you heard from Mike is now fully enrolled. These decreases are mainly due to our restructuring activities and it is important to note that the cost reduction impact from both the March and particularly the December restructuring are only partially reflected in the full-year numbers. Net loss year-over-year for the quarter decreased by approximately $11 million, or 38%, and by approximately $43 million, or 32% for the full year, including restructuring charges of approximately $7 million for Q4 and close to $33 million for the full year 2010.

Let me now turn to our financial guidance for the full year 2011. We expect revenues in the range of $145 million to $160 million, operating expense in the range of $190 million to $220 million and a year-end cash balance of at least $200 million, which includes certain assumptions about cash in-flows from new business development activities as well as milestones from existing collaborations. The reduction in revenue as compared to 2010 is mainly due to the termination of R&D funding for Cabo from BMS as a result of their decision to opt out of this collaboration in June of last year as well as the reduction in R&D support from Sanofi-Aventis for XL147 and 765 in connection with the anticipated transfer of all development activities to Sanofi-Aventis by the end of the second quarter of 2011. The projected reduction in operating expense of approximately 20% to 30% as compared to the $276.4 million in 2010 is mainly due to the full-year impact of our 2010 restructuring activities, as well as the transfer of the PI3K development work to Sanofi-Aventis mentioned earlier.

We are providing an adjusted operating expense number which is intended to give you a better sense of our proprietary cash operating expense from continuous operations, in which essentially represents our burn from continuous operations associated with the development of Cabo. It is important to note that our operating expense guidance of $190 million to $220 million includes restructuring charges as well as a number of items that are either cash neutral to us because the associated expenses are fully reimbursed under our collaborations or are non-cash in nature such as stock-based compensation expense and depreciation.

So for 2011, we project R&D expense reimbursements of about $20 million to $25 million and our collaborations with Sanofi-Aventis for the PI3K assets as well as under our collaboration for BMS for XL 281. We further currently estimate restructuring expenses in the range of $25 million to $30 million as well as stock-based compensation and other non-cash charges of approximately $15 million to $20 million. If you adjust for these items, our proprietary cash operating expense from continuing operations is expected to be in the range of $130 million to $145 million.

Now while the total number is roughly in line with what it was in 2010, the composition of what we pay for is different. Specifically, the clinical expense related to Cabo are roughly similar in 2010 and 2011, but we are absorbing 100% of these expenses in 2011 while BMS funded a significant portion of the Cabo expenses for the first 3 quarters of 2010. We're nevertheless able to keep our proprietary cash operating expense roughly flat because we have eliminated essentially all proprietary or non-reimbursed discovery and development expenses that are not covered under existing collaborations.

Thus in summary, we're expecting to spend about $130 million to $145 million all in including G&A overhead on the development of Cabo in 2011, which based on cash balance of over $250 million at the beginning of the year, I think puts us in a good financial position to pursue our priorities for the [further] development of Cabo in 2011. And with that I'll turn the call back to Mike.

Okay, thanks, Frank. I think it's clear based on the latest encouraging data for Cabo and CRPC and our ability to transform our P&L in such a short period of time that we have started 2011 with a great deal of momentum. We plan to keep up our current pace, urgency and intensity moving forward as we have several important catalysts coming up in the first half of 2011. We have recently submitted 4 abstracts for Cabo to the annual ASCO meeting in June that will provide an exhaustive look at the range of potential oncology indications that appear to be available for cabo.

First and foremost is the CRPC cohort from the RDT trial. We anticipate that this report will include 170 patients from the completely enrolled cohort and give a thorough review of the key components of clinical benefit in men with advanced CRPC including bone scan resolution, symptomatic bone pain improvement, soft tissue responses, impact on key biomarkers and importantly, updated duration of response data.

We also plan to present a significant update on the ovarian cohort from the RDT in addition to our first substantive update on Cabo in RCC. We also submitted an update on the overall RDT which will allow us to present data and additional cohorts of interest.

As I mentioned earlier, we completed enrollment in the pivotal trial for MTC, and we plan to release top line results in the first half of this year once we've achieved the required number of events. In addition to all these activities, we'll also continue our planning for the pivotal trial program in prostate cancer, which we expect to initiate in the second half of 2011.

So I'll stop here today by thanking the entire Exelixis team for a job extremely well done. We've been through a lot together and recent events have certainly tested both our resilience and stamina. The significant progress we've made across all aspects of our business in the last six months reflect your individual and collective talents, commitment and sense of purpose, and I'm very proud of what we've accomplished together and look forward to working with all of you to move both Cabo and the Company forward. So with that I'll stop here by saying thanks to all for joining us today and open the call for questions. Operator?

Yes, sir. (Operator Instructions)Your first question is from the line of Ted Tenthoff with Piper Jaffray. Please proceed.

Thank you very much and congratulations on all the progress. I know it was a roller coaster year for you guys, so really congratulations. If I may just kind of picking up where we left off last week in Orlando, I think you mentioned that you guys are planning on potentially filing in the back half of this year on the 150 patient non-randomized cohort. Is that correct and can you give us a little bit more detail on what the endpoints are there? And I guess the big question is maybe tell us a little bit more about how the bone activity correlates to improvement, overall improvement in patients.

Thanks, Ted. It's Mike. Just to be absolutely clear, the only filing we expect and plan to do in the second half of 2011 is for MTC, so I think you might have got that part of it wrong last Thursday relative to a potential subpart H filing based on the CRPC NRE, okay? We haven't given any guidance on a potential filing timeline for that. Again, we need to fully accrue that cohort, we need to analyze the data, need to take a really hard look at if we've been able to recapitulate the data we saw in the RDT and the NRE, all those issues. So we have provided no specific guidance on any timing for a subpart H in regard to that. The only timing we have really focused on in terms of the second half of the year would be the initiation of the CRPC composite endpoint trial that we would expect to start in that time frame.

In regards to your other question if I remember it correctly, you talked about the correlation between improvement in bone scans or metastatic bone lesions by bone scan and the associated severe bone pain that is seen with many patients. We're generating that data right now. We talked about it I think to a fair degree last week in Orlando. That correlation is not 100% but it's pretty good relative to many patients that come on the study with documented bone pain as well as documented bone disease appear to have benefit, but certainly that's a big part of the NRE and CRPC is to be able to really, with all the stringent recording tools, correlate bone scan improvement with bone pain improvement and a decrease in narcotic usage. So I would say the early data looks promising and we're going to be doing a lot more of that with the NRE throughout 2011.

Thank you very much.

Your next question is from the line of Eric Schmidt with Cowen and Company. Please proceed.

All of your comments correctly it sounds like you're going to start to approach the FDA in Q2 regarding an SPA for the pivotal prostate cancer study?

The plan right now is to have an end of Phase 2 meeting with the agency some time in the second quarter. As we talked about last week, we'd like to go there with pain data that we've been able to generate from the CRPC NRE, that would certainly compliment the pain data and the correlating bone scan responses that we got in the RDT, and our current projections would suggest that we can do that in the second quarter.

So you'd need kind of minimal follow up from that NRE and that NRE seems to be enrolling well?

That is correct.

Okay, and then for Frank on the numbers, can you talk about what assumptions are embedded in the cash guidance for year end of greater than $200 million in terms of either new business development activities or financings?

Sure, Eric. So this includes certain assumptions about in-flows from new BD activities which could come from our proprietary assets outside of cabo. You may recall we have a number of assets that as of yet unpartnered and it could also potentially include a deal involving cabo. On top of that it also includes certain assumptions about milestones that we expect to hit in the course of the year.

Okay, and last question just maybe more out of curiosity than anything else, it sounded like you've done away with the employee incentive program and I guess I'm just kind of wondering whether that's permanent or whether you can-- whether you plan on instituting a different program in the future and I guess maybe a little bit more color as to why that was- that action was taken and basically I guess what you think you can get away with going forward without changing morale, et cetera?

So again, specifically what we did this year was agree to simply not pay out the 2010 bonus, cash bonus that is part of the overall compensation package. We are doing merit increases for 2011. We're doing promotions for 2011, so the overall compensation package remains unchanged. We simply did not pay out the bonus for 2010. That is a temporary step. It was done to again I think very effectively reallocate a significant amount of cash that we had accrued from the bonus and reinvest that, if you will, in the Cabo development program. And I think all of the employees, while everybody wants to get a bonus obviously, understand the rationale and understand that it's an important time for the Company to focus not only our efforts but also our spend. So that bonus amount, again and kind of as a bolus, will allow us to do a number of important additional say ISTs this year and other activities that we think can help build value in Cabo in the short term and it's one that I think I'm certainly and the Management team certainly is comfortable as a one off going forward to really again expedite the value creation process with Cabo at this important stage of the Company's history.

Got it. Thanks for the clarification.

Your next question is from the line of Cory Kasimov with JPMorgan. Please proceed.

Hi there. It's actually [Matt Lowe] in for Cory today. I appreciate it might be difficult to say too much on this, but I guess given the data today in prostate cancer and assuming an approval in MTC, first do you expect any kind of position demand for off label use potentially in prostate cancer?

Yes, Matt, it's Mike. It's really hard if not impossible to comment on that or opine a comment.Our goal is to get the filing for MTC done in the second half of this year and that is our main focus and to advance the prostate program as quickly as possible, to really speak to that is impossible, so don't know yet.

Okay, and then just a follow up, do you have any feedback you could share with us on any progress with the partnered programs?

With the current partnered programs, nothing that I can share today because those are all proprietary programs relative to what our partners are doing with the compounds either by themselves or in collaboration with us. I'm hoping but not promising that we'll have updates on many of those compounds at ASCO this year but again, that's really up to our partners in terms of the different compounds that we have currently in the clinic to make that decision. So we're excited about where those are going. We think there's a lot of embedded value in those compounds. We're not talking about those compounds very much anymore since that's not our main drive and our main focus going forward, but again our view is that we have an exciting additional compounds in the P13K space, in the MEK space, other areas that we think can build, again build value for patients and shareholders. So we're excited to have that and looking forward to that evolving over time.

Okay, thank you.

(Operator Instructions)Your next question is from the line of David Miller with Biotech. Please proceed.

Hi, thanks for taking my question and good job this past year. ODAC has previously said there are no surrogate endpoints that are approvable for CRPC and [Rick Pasner] said just a week or two ago and ODAC hardily concurred that single arm approval trials for cancer are not preferred, I'll use for the term, so can you talk about how you're thinking about and what makes you think that the FDA would entertain a subpart H approval based on the single arm NRE?

Yes, that's-- David, again that is based upon the feedback that we have received from several of our clinical investigators with significant ODAC experience that have told us that they would advise us and they would support us in the event that we had-- we were able to recapitulate the totality of clinical benefit that we saw in the RDT in the NRE, okay? So again-- and again, you were in Orlando you saw the breadth of data that we had suggesting that we had really good signs of clinical benefit across a variety of different components. But again, it's something that I mentioned in the prepared remarks is clearly a modest probability of success. It's not zero but it's not large, and it certainly is not the corner stone and the foundation of our comprehensive regulatory strategy. So we need to learn more about this cohort early in the process to begin with to really feel good about how we're going to power our other individual randomized pivotal trials, so we have to do that anyway. If the occasion arises and the data continues to look extremely good, then that's something that we would consider and we would do that with the guidance and the support of some pretty important players in the area. So I hope we've been very balanced in our approach here and how we are messaging this component of our plan and if not I'm happy to clarify that further.

Okay, you have, and I appreciate the additional comments. Do you think it would be a lower bar for this subpart H approval if it comes as an amendment after approval of MTC as opposed to the first time that the FDA takes a cut at approving this or does it not matter or are you not thinking of it that way?

Well, I think the timing of having MTC going first followed by a second potential filing whether it's a subpart H or a full filing is not fortuitous from the standpoint of how we're evolving the overall regulatory strategy around cabo. Certainly, it would allow us to derisk some of those secondary moves if we had a strong package going in for MTC. So yes, that's not fortuitous, that's all part of the plan and again it's all data dependent. We're a data driven organization. We have great advisors who have been able to give us very clear cut and I think great advice and we'll continue to operate in such a way that we can look at the totality of the data we have at these important milestones, or these important time points, and make the best decision for the Company and for hopefully patients and shareholders as well.

Great. And then I just have one follow-up question on the-- to what somebody asked before, you guided that you have we have $250 million roughly in cash now, you said you're going to spend about $130 million on cabo, and then you're going to end 2011 with about $200 million in cash. So the $80 million in-- or $70 million in delta there is a combination of potential milestones and potential deals for non-Cabo or does that include Cabo deals?

Okay, let me clarify this again. You're correct. This delta would be filled from a combination of things. As usual in our assumptions include a number of different elements. One element, potential deals around our proprietary assets other than cabo. There's a number of them that we have discontinued in the course of 2010 and around which we have a number of ongoing discussions. Secondly, there's a possibility of a deal around cabo, and what this deal could look like, it is I think too early to comment on or speculate about. What I will tell you though is in our assumptions here, we've obviously not assumed a very large deal around cabo.

And then thirdly, there's a number of other smaller items that also result in cash in-flows. For example, with the increase in our stock price we've seen a significant uptick in stock option exercise activity. We are auctioning off some of the equipment that is left over here following our restructuring and things like that, which if you add it all up, it's quite a few million. But as I said at the beginning, it's a bolus of things that goes into these assumptions. Not all of these have to happen. It's a subset of these that need to happen and we-- when we provide this guidance, make adjustments about our level of comfort in reaching that number and we obviously are comfortable with the $200 million number we gave.

Great, answers my questions. Thank you very much, appreciate it.

And there are no other questions at this time. I would like to turn the call back over to Mr. Morrissey for closing remarks.

Al right well thanks again for joining us today. Really appreciate your interest and support and we'll be looking forward to discussions throughout the quarter and certainly looking forward to seeing you all at ASCO in June. So we'll stop there. Thanks again. Bye.

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