Exelixis Inc (EXEL) 2021 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Exelixis Second Quarter 2021 Financial Results Conference Call. My name is Franzie, and I will 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. Please proceed.

Thank you, Franzie, and thank you all for joining us for the Exelixis Second Quarter 2021 Financial Results Conference Call. Joining me on today's call are Mike Morrissey, our President and CEO; Chris Senner, our Chief Financial Officer; and P.J. Haley, our Executive Vice President of Commercial, who will together review our progress for the second quarter 2021 ended June 30, 2021. Peter Lamb, our Chief Scientific Officer, is also here and will join us for the question-and-answer session following our prepared remarks.

During the call today, we will refer to 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 these 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. 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 cost associated with discovery, product development, business development and commercialization activities.

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

All right. Thank you, Susan, and thanks to everyone for joining us on the call today. Exelixis had a strong second quarter across all segments of our business as we grew the CABOMETYX franchise and advanced our pipeline of promising early-stage programs. The company posted record cabozantinib franchise net product revenue and total revenue in Q2 based on strong demand for the CABOMETYX/nivolumab combination across all segments of the first-line RCC market.

Syndicated market research highlights that the cabo/nivo doublet plays a leading role in first-line RCC and reflects the strength of the efficacy, tolerability and quality of life data from the CheckMate 9ER trial. We maintained significant momentum with a 59% year-over-year growth in cabo net product revenue in the second quarter of 2021 compared to the same period in 2020. Our goal remains to exit 2022 with a $1.5 billion annualized run rate for RCC in the U.S.

Exelixis also advanced key 2021 discovery, development and regulatory activities in the second quarter. We reported top line results for the cabo/atezo doublet in first-line HCC from COSMIC-312 and in metastatic CRPC from COSMIC-021 cohort 6. And we'll update you on regulatory feedback and details for upcoming presentations for these 2 trials in due course. We plan to file new sNDAs for cabo in these indications, pending positive regulatory feedback, along with the submission of COSMIC-311 in DTC, which was accepted for Priority Review with the PDUFA date of December 4, 2021.

The full portfolio of late-stage COSMIC and CONTACT trials with cabozantinib-ICI combinations continues to move forward according to plan. Our early clinical pipeline is advancing with significant progress in the XL092 program, the XL102 Phase I trial and the initiation of clinical work with XB002, our first biologic to enter the clinic. The Exelixis discovery and preclinical teams continue to optimize and characterize new development candidates for both small molecule and ADC programs, which we believe will provide the foundation for new clinical candidates in the near future.

Finally, we view success by the number of patients that derive benefit from the drugs that we discover, develop and ultimately get approval to market. We currently estimate that more than 20,000 patients are treated quarterly with cabozantinib on a global basis. While we're proud to have achieved this magnitude of impact on people with cancer, we strive to excel at an even greater level every single day with cabo across existing and new indications and their emerging pipeline of drug candidates in clinical and preclinical evaluation.

With that, please see our press release issued an hour ago for our full second quarter financial results and an extensive list of key corporate highlights detailing our accomplishments in the quarter. I'll now turn the call over to Chris, who will review our second quarter 2021 financial results and provide an update to our full year 2021 financial guidance.

Thanks, Mike. For the second quarter of 2021, the company reported total revenues of $385.2 million. Total revenues for the quarter included cabozantinib franchise net product revenues of $284.2 million. Net product revenues in the second quarter of 2021 were impacted by higher demand for CABOMETYX. CABOMETYX wholesaler inventory increased in line with the change in demand and resulted in stable inventory weeks on hand. Total revenues also included $100.9 million in collaboration revenues from Ipsen, Takeda and Genentech.

Our total operating expenses for the second quarter of 2021 were $262.2 million compared to $274.8 million in the first quarter 2021. R&D expense was the primary driver of the decrease in total operating expenses, which was primarily related to lower clinical trial and licensing expenses.

Provision for income taxes for the second quarter of 2021 were $28.8 million compared to a benefit of $3.6 million for the first quarter of 2021. The company reported GAAP net income of $96.1 million or $0.30 per share on a fully diluted basis for the second quarter of 2021. The company also reported non-GAAP net income of $117.9 million or $0.37 per share on a fully diluted basis. Non-GAAP net income excludes the impact of approximately $21.8 million of stock-based compensation expense net of the related income tax effect. Cash and investments for the quarter ended June 30, 2021, was approximately $1.7 billion.

And finally, turning to our financial guidance for the full year 2021. We are updating the financial guidance for total revenues, net product revenues, R&D expenses and year-end cash provided earlier this year. We're increasing our total revenues guidance, which we now expect to be in the range of $1.3 billion and $1.4 billion due to higher net product, milestone and R&D reimbursement revenues. We are increasing our net product revenues guidance, which we now expect to be in the range of $1.05 billion and $1.15 billion.

Research and development expenses are increasing due primarily to higher forecasted licensing expenses and are now expected to be in the range of $650 million and $700 million, which includes noncash expenses related to stock-based compensation of approximately $45 million.

And finally, we are projecting cash and investments to be in the range of $1.7 billion and $1.8 billion at year-end 2021. This guidance does not include the impact of any potential new business development activities, which remains a key priority for the company.

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

Thank you, Chris. Today, I will discuss the CABOMETYX business with regards to Q2 2021, particularly in the context of the first full quarter after the approval of CABOMETYX in combination with an immune checkpoint inhibitor. As you know, on January 22, CABOMETYX received FDA approval for use in first-line RCC in combination with nivolumab. Following the approval, CABOMETYX first-line market share has grown significantly, driven by broad uptake in the marketplace.

In the second quarter, CABOMETYX was the #1 prescribed TKI in RCC. We are pleased with the growth of the CABOMETYX first-line combination new patient market share, which, according to IQVIA BrandImpact, has grown steadily since approval. As you can see, the average new patient market share of CABOMETYX in combination with nivolumab in Q2 was 28%. According to the data, the CABOMETYX combination has taken share from other ICI combinations and has increased the penetration of ICI combination therapy within the first-line RCC market.

As you know, the median duration of therapy for patients in the CheckMate 9ER study was approximately 1.5 years. So we believe that these new patient starts will drive demand growth for many quarters to come. We are also pleased that adoption was broad across a number of key segments with strong uptake in favorable, intermediate and poor clinical risk groups as the 9ER data is resonating with physicians broadly as they think about patients who are appropriate for the regimen. Furthermore, our market research shows that CABOMETYX in combination with nivo is taking share from all first-line competitors.

Uptake in the academic segment has been rapid as the market share for Q2 in this segment was 35% according to BrandImpact. Adoption in the community setting typically lags the academic setting in a launch. That said, we are pleased by the increase in market share in the community from 11% in Q1 to 25% in Q2, and we believe that CABOMETYX in combination with nivolumab has the opportunity to continue to grow new patient market share, particularly in the community segment.

In addition to the broad uptake of CABOMETYX plus nivolumab in the marketplace, perceptions of the 9ER data have been very positive. There has been a rapid increase in unaided awareness of the approval of this combination as well as favorable impressions of the efficacy of the combination based on the endpoints of overall survival, progression-free survival and objective response rate across key subgroups, including IMDC risk categories.

Importantly, the safety profile of the combination driven by the optimized cabo combination starting dose of 40 milligrams daily is viewed favorably by prescribers and is improving the overall perceptions of the safety and tolerability of CABOMETYX. Physicians also view the quality of life benefit demonstrated in 9ER is differentiating and important for their patients who may be on first-line therapy for extended length of time. Ultimately, the totality and balance of the efficacy and overall survival, safety and tolerability and quality of life data is viewed positively by prescribers.

Similar trends are seen in the prescription data from IQVIA, which demonstrated an inflection point this year in CABOMETYX demand. The growth is driven by both new and refill prescriptions from the 9ER launch and resulted in an increase of 28% growth in the first half of 2021 relative to the first half of 2020. As I mentioned previously, the growth is being driven by first-line combination uptake, while the second-line market share for CABOMETYX remains stable.

With regards to new prescriptions, NRx increased significantly in the first half of 2021 relative to the first half of 2020 at a rate of 29%. CABOMETYX NRx were stable in Q2 to 2021 relative to Q1 despite the overall CISV NRx market basket being down 5%. That said, our internal data for new patient starts shows larger increases for both these time period comparisons, but we won't be sharing the specifics of that data for competitive reasons.

The success of the CABOMETYX launch in combination with nivolumab is changing the mix of patients on CABOMETYX in RCC. First-line combination usage has increased the proportion of the new cabo prescriptions that are first line. Given the clinical data from the CheckMate 9ER study, we anticipate these first-line combination patients to receive therapy for approximately 1.5 years or more, thus driving a longer treatment duration for CABOMETYX. We are encouraged by the fact that, in our data, we see a near doubling of the amount of new patient starts at the 40-milligram dose relative to the same period last year. This is further indication that the combination uptake in the first-line setting is robust.

One other point to note is that the proportion of CABOMETYX third-line patients declined, and our third-line market share has decreased as many third-line patients have already received CABOMETYX. And looking at the market basket for RCC TKIs, CABOMETYX was the #1 prescribed TKI in Q2 and TRx market share increased to 38%. The TRx CISV market increased in volume by 5% in Q2 over Q1, and CABOMETYX TRx volume grew by 13% in the same time period.

The increase in CABOMETYX share and volume was driven by uptake of CABOMETYX in combination with nivolumab in the first-line setting. In July, NCCN updated their kidney cancer guidelines. And now cabozantinib, either as monotherapy or in combination, is a preferred agent in every setting in RCC regardless of clinical risk groups, line of therapy or disease histology. This will support the strong and focused execution that the Exelixis team is putting forth in the 9ER launch in RCC more broadly.

The strong Q2 performance and CABOMETYX launch trajectory position the cabozantinib franchise to continue significant revenue growth in 2021 and beyond. We're thrilled with the opportunity that 9ER provides Exelixis looking forward as we continue to build upon the foundation in RCC, where CABOMETYX is the #1 prescribed TKI. Our team remains highly focused and motivated to compete every day to bring the benefit of CABOMETYX to all eligible patients as we continue to build the franchise and maximize potential.

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

All right. Thanks, P.J. As you heard on the call today, we had a great second quarter with both record cabozantinib franchise net product revenue and total revenue, which led us to update components of our full year 2021 guidance. We're excited about the potential of our work, including the ongoing cabozantinib pivotal trials, the growing clinical development program for XL092 and our rapidly maturing early-stage pipeline as we advance in our mission to help cancer patients recover stronger and live longer.

As we previously announced, Dr. Gisela Schwab, our President of Product Development and Medical Affairs and Chief Medical Officer, began a medical leave of absence in June. We're grateful that she continues to engage and advise us during her leave. For more than 15 years, Gisela has been deeply committed to our mission and the patients we serve. Frankly, Exelixis would not be the company nor would cabozantinib be the drug that they are today without her passionate and tireless leadership. We simply can't thank Gisela enough for her countless contributions over the years, including her commitment to the mentorship and professional development of her team. We're all extremely proud of how the entire development organization has pulled even further together to keep our mini programs on track during her absence. We are now actively searching for our next CMO and hope to have that person on board in the near future.

I'll close by thanking the entire Exelixis team for their individual and collective efforts during a busy and productive second quarter. Exelixis has widely embraced the data supporting the efficacy and safety of the COVID-19 vaccines, and I'm proud to report that more than 90% of our team based both in Alameda and those working remotely have been vaccinated to date. With that foundation, we are looking forward to working together again with the energy and creativity that can only be truly experienced in working side by side as we discover, develop and commercialize the next generation of our medicines for cancer patients in need of better and more effective therapies.

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

(Operator Instructions) Your first question comes from the line of Asthika Goonewardene from Truist.

First, I want to offer my congratulations on this result. Absolutely outstanding. Well done to the team, and we hope to see more of this coming in the future. First question is the growth rate that we have here for cabo looks really good. And I just want to maybe spend a little time teasing out the relative contributions. Obviously, nivo/cabo in first-line RCC was a big amount. I'm just wondering if, P.J., maybe you can give us some sort of an idea of the proportion that came from nivo/cabo in first-line RCC, maybe what came from non-clear cell RCC and if there's any other stock impact. And then I've got a few more as well after.

Sure, Asthika. Thanks for the questions. It's P.J. I mean really looking at the comparisons we have of 28% demand growth sort of first half over the last first half for 29% NRx growth, looking at new prescriptions, which we're really pleased with, as you mentioned, I think they're quite strong. That's really driven, I would say, almost completely by the uptake we've seen in the CABOMETYX/nivo combination launch for the new patients that are coming on there and the refills that we're starting to get in that setting. And as I mentioned, it's certainly -- the clinical data there shows 1.5 years average duration of therapy, so we think they'll be on for some time. So it's really being driven by that.

I mean I think early days now, anecdotally, I'm sure we're getting a little bit more non-clear cell. But those -- the NCCN guidelines, as I mentioned, were just updated last month. We're really pleased with that. And now we have positioning in the NCCN guidelines in favorable intermediate poor first-line clear cell. We have second-line clear cell as well as now non-clear cell. So cabozantinib, either as a combination or monotherapy, across the guidelines is certainly great, and we think that will continue to drive growth in combination with the launch in the future. But really, the growth is predominantly the combination in the first-line setting.

And then I guess when you look down the line of future competition, maybe if you can tell us, what does the primary research tell us about how nivo/cabo will fare against maybe some of the future launches? Particularly wondering about pembro/len, if there's -- if you look at that as a big threat or if you think that you're pretty well protected given the familiarity that RCC have with nivo and cabo.

Yes. Thanks for the question. Certainly, the market has been competitive for many years, even in our prior monotherapy settings, but certainly in this combination first-line setting. So very pleased with our data and our team and the experience and ability to compete there. And what we've seen in our market research and our time on the market, with which we're really pleased by, right, already establishing the 28% first-line market share roughly 5 months after approval is really outstanding. And I think it speaks well to the execution of the team and certainly the strength of the data.

And what we hear from clinicians is it's really the totality of the data, the balance of the data, the efficacy, particularly the overall survival as well as the safety and tolerability we're seeing in the regimen, that physicians are seeing in the data coming from the optimized 40-milligram daily starting dose as well as our quality of life, which is important for patients, right, who are going to be on therapy for extended lengths of time.

All that and all our work, we think, positions us really well in the marketplace today and going forward. So we're really confident in our position, our team and our execution and look forward to continuing to grow and helping a lot more patients with RCC.

And then one quick one, if I can sneak in here. Gisela's presence is definitely missed on this call and I really hope that things are well with her. Mike, if you can channel your inner Gisela, could you maybe talk to us a little bit about what we can expect in terms of data for XL092 in the near term?

Yes, I'm happy to do that. I'll channel my inner Mike because I don't think I can do Gisela very well. Nothing new to really report in that regard. Here, our messaging at 092 is consistent today as it has been with the prior messaging. We are really excited about the profile of the next-gen cabo kind of profile that we've got with 092. We think there is a very exciting clinical and commercial opportunity with this molecule, and it obviously has a very high priority within the organization.

We are pleased to have now 3 clinical collaborations to be able to profile 092/ICI combinations with leading ICIs. And certainly, our collaborations with Roche-Genentech, with Merck KGaA and now BMS, I think, underscore the interest, the utility potential validation for the overall approach. So we're certainly very pleased with that.

Our priority today, as it has been for months and months now, is to really enhance and expedite the clinical program, to move 092 in the pivotal trials as soon as possible. Planning on this year, if we can make that work, that's the plan. So there's really no new guidance now or previous guidance on the next presentation of data. Obviously, when we have those details, we'll share those with you. You're likely to see us start either new trials, new combinations, new collaborations, et cetera, before you see that next data set.

Your next question comes from the line of Mike King from H.C. Wainwright.

Congrats on a great quarter, and let me convey my sentiments towards Gisela's well-being as well. I just wonder, for P.J., can we just talk about -- I think it's very interesting that you're willing to project out what you expect the average duration of therapy would be on cabo/nivo. Just for a reference standard, do you happen to know what the average time on cabo as a single agent is in the second line now?

Yes, Mike, this is P.J. Happy to take the questions. I mean in talking about projecting the data, I'm just really referring to what we saw in the clinical trial about -- with regards to 9ER. So that's what we certainly anchored to and obviously have to see a lot of data in the commercial setting and look at it retroactively before -- retrospectively, rather, before you can really see that in the marketplace.

What we've seen, and we're pleased, with regards to cabo's single agent is we saw -- we've seen it really more or less approximate what we saw in the METEOR trial in terms of duration of therapy, 7, 7.5 months in terms of the PFS generally. And the longer we've had patients on therapy, there are certainly some patients who do remain on for many years, which is certainly -- those patients can benefit. So what we've seen so far is it's a pretty good surrogate to use the trial and obviously something we'll track closely going forward.

Right. Okay. I appreciate that. Also, can you comment about whether -- on the NRxs, are these individuals who are already on an immune checkpoint or on nivo already? Or do you know if they're starting the combination sort of de novo?

Well, I guess I'll point to maybe 2 different pieces of data in our sort of presentation today. So the NRxs are just any CABOMETYX new prescription from IQVIA. So that could be in any setting, combination, line of therapy, et cetera. What I would point to really looking to dig into the combination utilization of CABOMETYX with nivolumab in the first line setting was the other IQVIA data we shared with regard to new patient market share, which we've seen get up to 28% now in Q2 with a steady increase and taking share from all competitors in the space. So really establishing a strong market share pretty quickly. So that's really the sort of de novo combination usage according to the BrandImpact data.

Okay. And then one other just quick one. I should know this, but can you just remind us what the status of the filing is in Europe for -- based on CheckMate 9ER?

That's a good question. I think they've been -- I don't want to speak to that. That's a good one that Gisela would normally answer. And obviously, she's not here. So Mike, we'll get back to you.

Yes. Sorry, I'll just jump in and say that, obviously, we work closely with our partners Ipsen there. And it's approved in Europe. And the -- they're working diligently on securing reimbursement across the various countries, which, as you know, is quite a workout and a focus. So it's sort of very early days in the launch over there, but they're certainly -- they're, I think -- we're pleased with the progress they're making and what we see.

Your next question comes from the line of Jason Gerberry from Bank of America.

So I guess just -- so I think the comments about a $1.5 billion run rate end of year -- year-end 2022 for, I believe that's RCC revenues. Just trying to flip that with sort of the guidance through the end of the year. I would think like fourth quarter, you might be like at 3.25 for renal sales, and at $1.5 billion run rate, you'd be at $375 million like per quarter. So it seems like with patient stacking, you're growing market share. Just wondering, is there some conservatism baked into the guidance for a $1.5 billion run rate year-end 2022, just kind of considering there will be another IO-TKI in the market, presumably with Merck? Just wondering how you guys are kind of conceptualizing the possibility of another competitor in the space.

Well, that's obviously something that we're focused on and think about a lot relative to the competitive dynamics here. I think P.J. framed it well. That's been the case with RCC since the day we started the METEOR trial and the day we got approved and the day we launched. So that's nothing new here. I think the $1.5 billion run rate guidance by the end of '22, again, that was put out there several quarters ago, well before we launched with, I think, the appropriate level of market research guiding that estimate and guiding kind of a long-term view on the ramp for market share and duration of therapy.

So I think we're sitting pretty good right now relative to being able to hit that mark. You can do the forward-looking math based upon these numbers, what it takes to get there over the next 6 quarters. I think those are numbers that are achievable even with competition coming up. So we feel good about that. And obviously, that's a baseline that we want to build off of with other trials in renal and certainly other indications going forward.

Got it. And if I could squeeze a follow-up in. Just on CRPC filing, I know the markets are skeptical. You can get there just on cohort 6. But what will be your lead arguments going into the FDA that cohort 6 should be an approvable basis as opposed to a more traditional Phase III pathway?

Yes. So I certainly don't want to comment on discussions or topics that we'll have with the agency. I think what I'll do is answer as I've done previously. A near 20% response rate by blinded independent review relative to standard of care, which by contemporaneous pivotal trials has been a second NHT with response rates in the low single digits, I think, is an encouraging signal.

If you look at the concordance between the 2 response assessments for PFS, for duration of response, for disease control rates, they're all, I think, promising and warrant, I think, a deep dive into the value of those on top of the response rate in the 20% range. So we feel good about that. We're encouraged by it. Obviously, the dialogue with the agency will define our steps forward.

We're seeking alignment there. If there's alignment, we'll file. So the skepticism that's out there, so be it. We're going to generate data in this case, in those discussions and have a path one way or the other based upon that feedback. But we feel good about the data. And certainly, as it -- I think as it portends for CONTACT-02, we feel good about that, too.

Your next question comes from the line of Andy Hsieh from William Blair.

Congratulations on a record-breaking quarter just like last quarter, and best regards to Gisela and her family. So in terms of questions, I'm just wondering, P.J., can you comment on kind of the RCC market size relative to pre-COVID-19 levels? So I think you've commented extensively about the market shrinking towards the back half of last year. So just maybe give us a sense of where we are currently relative to the pre-pandemic levels.

And also, I'm just curious on the -- on 2 data points that you have, which is in the second quarter, you mentioned about a shrinking in new total -- sorry, new scripts but an increase in total scripts. Just curious if there's any sort of idiosyncrasies here in the second quarter.

Yes. Thanks for the questions, Andy. I'll start with kind of, I guess, the market with regards to kind of the COVID dynamic. As we talked about last year, we certainly did see some impact in the market, particularly in kind of the middle of the year, Q2, Q3 as the pandemic was -- kind of first really started to have impact across the country. I'd say what we've seen generally is we've seen that sort of slowly recover, at least in the RCC market. I don't think we're kind of quite all the way back to normal by any means. And obviously, there's still Delta, new variants, et cetera. But I think it has certainly stabilized and recovered somewhat there.

And with regard to your other question, just to make sure, I'm clarifying, what we saw with regards -- I'll just point to NRx data. So what we saw was roughly stable NRx data from IQVIA in Q2 relative to Q1. For CABOMETYX, while the market there was down 5%, CABOMETYX is stable. And that's actually a pretty common thing. Seasonally, we see just Q1 new prescriptions are pretty big, and that can be insurance and a variety of other things.

I mentioned our third-line share has declined a bit, and that's because most patients at this point have seen CABOMETYX. So we're really pleased with that. We saw a leading second-line share. We get the majority of post-IO patients in the second line. And obviously, we've had really a lot of growth first line. And as I mentioned, too, just with regards to the NRx, what we see internally in our new patient starts, which we track very closely and have a lot of data that I'm not going to share publicly, but we've really seen some stronger and more robust numbers than what the IQVIA NRx data estimate.

So I think we're seeing really strong growth, and we're seeing an improving patient mix in terms of our new patients on CABOMETYX driven by the first-line combination usage. And I think the 28% market share that we're seeing there is really strong in driving that.

Yes, that's helpful. So for Peter, I think there is an increasing emphasis on ADCs in the pipeline. Six of the last ADCs were approved under accelerated approval program. Just curious if that is kind of the standard clinical trial or clinical development plan for XB002 going forward. Happy to kind of get a sense of your take on that.

Yes. Thanks, Andy. Appreciate the question. And yes, I think that's very much our view of it as well. I think as you commented, 6 approvals, I think, in the last 12 to 18 months based on accelerated approval. I think one of the attractive features of ADCs, especially contemporary ADCs, is if they're going to be active, you find out pretty early on. And it's really a matter of being able to balance kind of the therapeutic index in terms of obviously your activity versus side effect profile.

So for XB002, which is our kind of next-generation tissue factor targeting ADC -- and just to recap here, this is -- as I said, there's already a tissue factor targeting ADC that's been advanced into the clinic, tisotumab vedotin, which has shown an encouraging clinical activity in cervical cancer. So we've got to view tissue factor as a kind of derisked target from that point of view.

XB002 is a next-generation version that differs in a number of significant ways. It's a different antibody. It targets a different epitope on tissue factor. That should get around some of the bleeding issues that have been seen with tisotumab. The different linker payload, [kind of optimized], more stable linker, which should enable us, hopefully, to dose higher as well.

So we certainly see cervical cancer as an area of interest. The ongoing Phase I clinical trial is actually looking at a fair number of different solid tumor types based on what we know about over-expression of tissue factor. So in addition to cervical, we intend to have patients with lung, ovarian, urothelial, pancreatic and head and neck.

So there's lots of places to go from a development point of view. And certainly, from -- within this clinical trial, the intent, obviously, is to find an appropriate dose to take forward, expand out into a number of different cohorts in a Phase Ib setting and then follow the data.

So obviously, we start seeing encouraging signals. The trials are designed to enable you to enroll additional patients into those cohorts as appropriate. And I would say that's the general kind of philosophy that we have right now. It's not explicit for 002. So you'll see us kind of take that path a lot.

So last question, if you don't mind, I want to kind of revisit the $4 billion revenue guidance that you provided. Obviously, a lot of things have changed. I'm just curious if there's kind of any sort of high-level changes that you see pertaining to maybe the different contributions from -- across the different indications and things like that, strength and weaknesses across different segments. I'm happy to kind of hear your thoughts there, too.

Yes, Andy, I'll be happy to address that one. So just as a reminder, the whole goal behind putting out those numbers at JPMorgan in 2020 were really to define what success looks like, right? Assuming success across the board and generating differentiating clinical data, how big could the cabo franchise be, right? So as we've highlighted previously, we didn't risk adjust those numbers, just kind of frame shift going back a couple of years. We hadn't even seen 9ER then, right, in terms of that data.

So those were, again, aspirational in nature. They weren't meant to be updated, and we're not going to update them relative to what's happening. Slide 11 of that deck, which I've now got memorized, and I'm sure you do as well, has all the math. So if you want to adjust that based upon your assumptions, based upon your modeling, please have at it. Our focus is making sure we can advance the pipeline of really the cabo program across the board and then the pipeline across the board so we can, again, address more patients, bring more benefit to cancer patients who need better and more effective therapies and then build the business based on that.

Your next question comes from the line of Michael Schmidt from Guggenheim.

Congrats on the great second quarter results as well from me. A pipeline question. I guess how are you tracking towards top line data disclosure for COSMIC-313? And perhaps could you share your thoughts on how the triplet might potentially be incorporated into clinical practice relative to the CheckMate 9ER regimen? Is there perhaps an additional patient segment that is not currently addressed with the doublet that you think might benefit from the triplet?

Yes, sure. So as we talked about previously, COSMIC-313 achieved full enrollment, I believe, back at the end of Q1, in the March time frame of this year. So it's an event-based trial. So our projections end of this year, early next year. But it's always event-based. So I would view that estimate with pretty healthy air bars. And certainly, as we as we accrue more events, we'll have a better sense of timing per se. We're really excited about the (inaudible). Excuse me?

Got it. Got it. We are really excited about the opportunity there. Certainly, at a high level, think about combining the best of IO-IO with the best of IO-TKI in a framework for patients who could benefit further in terms of any number of different parameters in terms of increasing the number of patients who have some level of disease control, say, what you see with IO-IO, extending the tail in terms of -- raising the tail in terms of both IO-IO and IO-TKI.

So across the segments of opportunities, we think it's a very, very important next-generation trial. I think it's notable that this is the first triplet, I think, that's being done contemporaneously for an IO that we're necessarily excited to be part of. So lots of opportunity, lots of upside. Obviously, we're in the game of hazard ratios and p-values. So we have to see the data before we get too much -- too far ahead of ourselves, which we're not doing, obviously. But certainly, this is an opportunity for us to continue to build on the success of 9ER and then the success of METEOR and CABOSUN and really continue to build the franchise in renal.

That makes sense. Great. And then just a follow-up. You've obviously continued to invest in your early-stage pipeline now with 3 additional programs and clinical studies, presumably a few things going on preclinically as well. I guess in that context, to what degree has your philosophy towards business development shifted perhaps in the last couple of years? And what level of urgency do you have at this point to perhaps in-license a later-stage product candidate that's in -- maybe closer to market?

Yes. Look, I think our overall approach here has been consistent, and I think we've been executing on relative to a variety of early-stage deals that we've gotten done last year and this year and the queue that we're looking to complete in the relative near future. We continue to look at a variety of late-stage assets. I think the opportunity there is to really have conviction that whatever we build into or buy into or buy has the -- we have the conviction that not only is there a higher probability of clinical success and regulatory success, but maybe more importantly, commercial success.

And I think someone like you, I'm sure you've tracked this better than I have, but the -- there's a lot of oncology launches that have taken place over the last couple of years that just, quite frankly, haven't done that well. So getting over the goal line with, again, the right hazard ratio, the right p-value and an ultimate approval doesn't necessarily guarantee commercial success. And that's the game that we're in. So any big deals that we do, any big bets that we make, we need to have conviction that it's the right value, it's the right opportunity and that the probability of commercial success is very, very high.

Your next question comes from the line of Yaron Werber from Cowen and Co.

This is Gabe on to Yaron. Just focusing on the pipeline. The questions on cabo have been pretty much asked already. Any updates on 092 with the expansion cohorts or kind of just any updates on that? And then future INDs timing mentioned previously, potentially some more in fiscal year '21, just curious if those remain on track.

Yes. So I think we've said all we plan to say about 092 already in the prepared remarks and I think the question from Asthika. So I'll pass the pipeline question with new INDs over to Peter.

Yes, sure. So you probably saw on the pipeline slide we do have a compound called XL114. It's a compound we have referred to a little bit previously. It's coming from our Aurigene collaboration. It's a novel small molecule, has a novel mechanism of action, which for now at least, we're not going to be speaking about. It does remain on track for an IND this year. We see the primary indication for this compound being a heme indication, although we are also exploring preclinically potential for different solid tumor indications.

Do you have any other questions? Or do you want us to move on?

That's it.

Your next question comes from the line of Jay Olson from Oppenheimer.

This is Cheng on the line for Jay. And our best wishes to Gisela. We just want to ask about the cabo/nivo in the academic and the community settings. It seems like in the Q2, you have stronger growth in the community settings over the academic. Just curious about your thoughts on the growth rate in these 2 settings moving forward. Also, just wondering if the adoption in the community centers is more related to the in-person interaction between your sales team and the prescribers.

Yes. Thanks for the question. I think with regards to the academic and community kind of split, as I kind of mentioned, we -- academics typically adopt quicker, and we saw that. We're very pleased with that. And certainly, I think we have some potential to grow there. But we're particularly pleased by the performance in the community setting going from a market share in Q1 there of 11% to 25% in Q2. And I think there's a lot to that.

I think typically, it takes a little longer to sort of reach and educate broader in the community to drive that uptake in the education. And I think we're still relatively in the early days of that. So we think we certainly have the opportunity to grow a lot more in the community setting, which is really 75% to 80%, give or take, of the business in RCC.

And I think you're kind of right on with regards to kind of navigating the pandemic. It certainly makes particularly educating in the community setting a little more complicated. And I am really proud and pleased with our team. They have done a great job of engaging there where appropriate in person, certainly virtually via Zoom and in a variety of different mechanisms digitally in terms of nonpersonal promotion.

And we have seen things sort of kind of open up over the past couple of quarters. Obviously, now with the Delta variant and kind of the trends we're seeing in COVID now, this is -- things are yet evolving. And often, this is regional and even account by account as we see that.

But I think we've got great momentum there. And our story is just resonating really well, as I referred to earlier. So I see certainly a lot more potential there if things continue in the community as well. So very pleased with the performance. And I think the 28% market share in really the first full quarter after launch is really just a great start and speaks well to the work of the team and importantly the data resonating with physicians.

Your next question comes from the line of Peter Lawson from Barclays.

Just around the aspirational guidance. Is that something that would be updated on kind of an annual basis or every couple of years? Just how do you kind of think about that and kind of communicating that with The Street.

Yes. Thanks, Peter. I think you might have missed, I think, the question that Andy asked. Almost verbatim, exactly the same. And I won't repeat myself again. But yes, I already answered that question. So why don't you go ahead?

That's not something you'll be thinking about updating every year or every couple of years.

Yes. Maybe you missed it when I answered the question previously with Andy. But yes, we said we're not going to update that. That was aspirational view of what success looked like prior to having any data. And it was based on the idea that if we were able to generate compelling, differentiating clinical data, that would define the market. So...

Got you. But would that be updated, do you think, after you get additional approvals just to kind of -- is that how you're thinking about those updates as you get more...

I think I just answered the question, Peter. Let's move on to the next question.

Yes, we do provide annual guidance, right?

Annual, yearly guidance. Yes. Yes.

Your next question comes from the line of Kennen MacKay from RBC Capital Markets.

Mike, I was hoping on that aspirational -- no, I'm kidding. I'm kidding.

Please ask it again. Come on. You can do it.

I was actually -- I did have a cabo question. I can go on cabo all day. I know you're getting a lot of information channel back from your commercial teams. And I was hoping to hear sort of any anecdotal evidence you're collecting for why docs are reaching for cabo/nivo in front-line RCC versus some of the competitive combo regimens out there. We've heard over and over again that docs prefer cabo/nivo in more advanced tumors for cabo's rapid effect -- onset of effect. Wondering if you're seeing at all or hearing at all an increase in those more advanced tumors given the COVID-19 pandemic and decreased cancer surveillance and biomarker screening. Or if that's not playing out, if there are any other anecdotes that you are hearing. Congrats again on the quarter.

Yes. Thank you. Yes, let me say a few words, and then P.J. can provide some additional color commentary. Look, again, the individual components, cabo and nivo have been the mainstay within kidney cancer since their introductions back in the 2015, 2016 time frame. So there is a long history and familiarity with these 2 drugs, and to be quite frank, almost a clamoring for the combination.

I remember when -- on July 21, 2015 when our data and the BMS data came out together, some of the initial feedback we got from KOLs, I mean, on the day of the top line results was let's start combining these molecules because you can really see some good activity if they were put together. So there's been a history here. There's been momentum building for years. The 9ER data was in a large -- to a large degree exceeded expectations in terms of efficacy, tolerability and quality of life.

And one of the things that we really believe in is if you combine great data with a great team, you can really make headway very, very quickly. And to go from a standing start in January to having a leading -- either a co-leading or a leading share within 5 months is just a testament to the data that the clinical teams put together and then just the great commercial efforts. So again, I think it -- the broad uptake speaks for itself, and we're looking to capitalize that and build on that going forward.

P.J., other words?

Yes. No. I mean I certainly agree, the experience of physicians with these drugs and the sort of long-standing excitement to use them certainly helps really across the board. And we hear a lot of, I guess, anecdotes, Kennen, to your question. But I don't really -- I think they're very broad in the sense that I think physicians see the totality of the data in a way that they can find lots of different patients to utilize them in, whether it's rapidly progressing patients, whether it's a favorable patient where they may be really thinking about the tolerability profile if they view it favorably, which many do.

So I think there's -- what we see, it's really represented well in the NCCN guidelines, is that it really gives them the option to use these broadly. And I think one thing we'll continue to see in the community is they don't see as many kidney cancer patients on a per capita basis. So as they get comfortable with CABOMETYX and nivo on kind of a use basis, they can really have the potential to use it across the board for all their kidney cancer patients.

And particularly, when we got -- talking about the tolerability profile, really the optimized 40-milligram dosing daily has played really well in the combination. And I think that's really reframed how folks think about the tolerability profile of CABOMETYX. So it's great that we're able to do that well in combination. But I think it just has a lot of potential benefits for a variety of patients, and physicians are seeing that across the board.

Your next question comes from the line of Chris Shibutani of Goldman Sachs.

Very healthy cash balance, obviously, generating cash flow extremely strongly from the cabo success commercially. Can you comment upon how you're thinking about capital allocation strategies? Remind me whether or not you have a share repurchase allocation and maybe how frequently you sort of revisit the prioritization of those types of decisions.

Thanks, Chris. It's Chris Senner. So I think we break it down in a couple of pieces, right? We're going to continue to do the BD that Mike talked about earlier. The smaller deals, looking at the same size and scope that we've been doing. We continue to look for other opportunities to continue to enhance the pipeline. And right now, we think that's the best investment of our cash balance.

But we do -- Mike and I talked about capital allocation and cash utilization all the time. And we do that continually. And we do it in a way that we're trying to understand what's the best answer from a shareholder perspective and how do we return capital to shareholders. And so that's basically the way we look at it.

And do you have any share repurchase allocation currently?

We do not have a share repurchase allocation currently. But as I said, we continue to look at the capital allocation and see what's the best return on capital.

Got it. And then in terms of the generic challenges, is there anything that you might be able to share with us updating on progress? I believe we are still on track for the trial in May of 2022. Anything on that front, incremental news?

Yes, Chris, thanks. It's Mike. Yes, nothing that I can really share here. The process is the process, and I think it's evolving as we expect. But I really can't go into details publicly. So...

Okay. And then finally, I share the commentary and support for others with Gisela. Obviously, you have a very strong clinical development bench on your team based upon cabo's success. As you think about furthering the direction of that group of people, that core group of people, are there any different things that you're looking about -- looking for, any strengthening, particularly as you think about the ADCs that are in your pipeline just in terms of the C-suite and guiding some of those clinical decisions? Any updates there?

Yes. No, it's a good question. It's one that we're looking at very carefully. Obviously, we're never going to replace, Gisela. I think that's, I think, a really fair way to look at it. We're looking to bring somebody in with their own unique skill sets, their own unique perspective, somebody who can help us go to the next level for the years to come. So it's one that Gisela has been a key, key, key part of this team and this organization and building this culture. And I want to take her opportunity, her success, her impact on the organization and help go to the next level now.

And she'll be part of that process, right? We talk on a regular basis. We're brainstorming about opportunities and kind of candidates, those kinds of things already. So I'm looking forward to continuing that collaboration to be able to bring this next CMO in and help us go to the next level.

Your next question comes from the line of Stephen Willey from Stifel.

Yes. And congrats on the quarter and best wishes to Gisela. Just a quick question, I guess, with respect to utilization that might be occurring within specific subgroups or risk subgroups. I know that you're talking about seeing adoption across all risk subgroups. But I guess when I just kind of look at some of the TKI data -- and I know that you're outpacing the market, the TKI market. But it looks like, I guess, both this quarter and last quarter, a lot of the share gains seem to be coming at the expense of VOTRIENT and SUTENT, which we know are also the single-agent TKIs that are most commonly prescribed in favorable risk patients.

So just wondering if you guys have a sense as to how much of this initial adoption you're seeing in the front-line setting is a replacement of just single-agent TKI therapy within that favorable risk segment.

Yes. Steve, it's Mike. I'm not sure what data you're looking at to come to those conclusions. I think our view on that is markedly different in terms of how the share of all the different either combinations or single agents are going down at a pretty good clip with the introduction of cabo/nivo. So that's our view based upon both syndicated data as well as internal market research.

Maybe P.J. can provide some more color commentary there.

Yes, I would agree. It's -- we're certainly seeing significant uptake at the expense of other IO combinations. And as we did say, we are expanding the amount of combination utilization within the marketplace with the launch of CABOMETYX/nivolumab. So by definition there, we're taking from other single agents, so that's probably the correlation there in the prescription data where you see SUTENT and VOTRIENT kind of declining. So I think it all makes sense. It's really being driven by CABOMETYX/nivo taking share from really across the board, all competitors. But certainly, I think first and foremost, really the other combinations.

Your next question comes from the line of Mike King from H.C. Wainwright.

Yes. Sorry, I was just trying to get myself off mute. I don't want to be a buzzkill, but I just wanted to ask you guys about COSMIC-312. And I presume that you'll show the data to FDA before you had presented at a peer-reviewed meeting. So I guess that's part A of the question.

Part B is having expressed the expectation that the overall survival endpoint will be futile, do you expect that the -- you can't expect what the FDA will do. But is that something that you think will have -- FDA will have an issue with a filing on that with -- on the primary?

And thirdly, if they say that the study results are inadequate to file, would you consider taking 092 into that same setting rather than trying to run another study with cabo?

Yes. So let me work backwards. First, at a high level, this isn't a buzzkill question. We're proud of that data. It was a great trial from the standpoint of execution during a time of global upheaval. And the team did a remarkable job in getting that done really on schedule, both from the standpoint of enrollment as well as readouts. So kudos to them.

I'm disappointed that we didn't hit survival at the first interim. And as we said previously, it's unlikely that we will. Not impossible, but unlikely. So we're trying to be transparent and direct with investors about expectations. That's old news, but that's -- yes, that's the game we're in, right? Again, we're in the game of hazard ratios and p-values and being on the run that we had since 2015. We're literally batting 1,000 in that time frame. So it's not completely unexpected that things are going to go sideways once in a while, especially with all the moving pieces of COVID.

So all that being said, I'm not going to speculate on what the FDA might say, what they might do. Now we have a trial that had 1 of the 2 primaries hit with a very good hazard ratio and the appropriate level of significance. So with no decrement in survival, which is the important framework there. So a variety of KOLs that we talk to think that's approvable. We'll see. We'll talk to the agency and see. When you'll see the data in terms of presentations is really more an issue of when meetings will take place. Certainly with the complications from Delta, meetings are being postponed or question marks about what will happen when.

So our goal is to get the data out and the nearness behind what happened with the dichotomy between PFS and OS out as soon as possible. Obviously, we have to get alignment with the agency around filing, and I think we have a good story to tell there. But we'll see. I'm not going to speculate on that before the fact. And once we have information to share that's material in this context, we'll obviously share that with you.

In terms of next trials, and this goes for virtually everything beyond the CONTACTs, it will be done with 092, right? And that's -- we've said that previously. So whether we're talking about liver, about more renal, about lung, about prostate, any network of different tumor types that we've seen activity with cabo in, in the past but haven't pursued in terms of full development, that's going to come then into the purview of 092 going forward.

So -- but that obviously will get defined in the time ahead, and we're certainly very excited about the opportunity and about all these clinical collaborations that we've got now with various ICI doublets and triplets that we think can bring a lot of value. So it's a work in progress. But hey, no excuses, no hung heads. We're going to just keep our eye on the ball and make sure that we can deliver every day for patients who need better therapies.

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

Yes. Thank you, Franzie, and thank you all for joining us today. We welcome your follow-up calls with any additional questions you may have that we were unable to address during today's call.

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