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DATETuesday, May 5, 2026 at 5 p.m. ET
CALL PARTICIPANTSPresident and Chief Executive Officer — Michael M. MorrisseyChief Financial Officer — Christopher J. SennerExecutive Vice President, Research and Development — Dana T. AftabExecutive Vice President, Commercial — Patrick Joseph HaleyNeed a quote from a Motley Fool analyst? Email [email protected]
Exelixis (EXEL +0.45%) delivered revenue growth across its cabozantinib franchise and maintained leadership in key oncology segments while advancing ZANZA pipeline assets through pivotal trials. The company recorded its highest-ever new patient starts for CABOMETYX and capitalized on increasing U.S. and global demand. Regulatory review of ZANZA plus atezolizumab for third-line-plus colorectal cancer continued on track toward a December decision, with further data and new trial initiations expected midyear. Strategic capital allocation included $430.8 million in share repurchases and new authorization of a $50 million buyback plan, demonstrating ongoing investment in both internal R&D and shareholder returns. The broad clinical strategy and multiple Phase III trial initiations are set to expand Exelixis's market presence in solid tumors.
Management confirmed the STELLAR-316 trial will use the Signatera circulating tumor DNA assay for MRD status assessment and expects meaningful expansion in the colorectal cancer franchise if successful.The CABOMETYX sales team expansion emphasized prior experience in GI oncology and is expected to support new launches and customer engagement ahead of ZANZA’s market entry.Pending positive outcomes, STELLAR-201 could position ZANZA as the first systemic therapy for refractory meningioma patients lacking approved options.Christopher J. Senner said, “From a share buyback perspective, we believe that Exelixis, Inc. is a great opportunity and that the opportunity is not really being appreciated generally, and we think we are undervalued. So we are going to continue to buy back shares.”PJ Haley stated, “The third-line-plus CRC setting consists of approximately 23,000 patients in the U.S. and represents an overall market opportunity of approximately $1.5 billion in terms of contemporary pricing.”INDUSTRY GLOSSARYTKI: Tyrosine kinase inhibitor, a targeted therapy class used for cancer treatment by blocking signaling pathways involved in tumor growth and progression.MRD: Molecular residual disease, a biomarker signifying the presence of residual cancer cells detectable by sensitive assays after primary treatment and used as a prognostic factor.PDUFA date: The date by which the U.S. Food and Drug Administration must review and act on a new drug application under the Prescription Drug User Fee Act.NLM: Non–liver metastasis, a subset of patients in clinical trials defined by the absence of liver metastases, used for specific endpoint evaluation.mCRPC: Metastatic castration-resistant prostate cancer, prostate cancer that has spread and continues to progress despite hormonal therapy.SSTR2: Somatostatin receptor type 2, a protein commonly expressed in certain neuroendocrine tumors, targeted by specific diagnostic and therapeutic agents.ADCs: Antibody-drug conjugates, targeted biopharmaceutical drugs consisting of an antibody linked to a cytotoxic agent, designed to selectively deliver chemotherapy to tumor cells.Full Conference Call TranscriptMichael M. Morrissey, our President and CEO; Christopher J. Senner, our Chief Financial Officer; Dana T. Aftab, our Executive Vice President of Research and Development; and Patrick Joseph Haley, our Executive Vice President, Commercial, who will review our progress for the first quarter 2026 ended 03/31/2026. 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, potential growth opportunities, and government drug pricing policies and initiatives. Actual events or results could, of course, differ materially.
We refer you to the documents we file from time to time with the Securities and Exchange Commission which, under the heading Risk Factors, identify important factors that could cause actual results to differ materially from those expressed by the company verbally and in writing today, including, without limitation, risks and uncertainties related to product commercial success, market competition, regulatory review and approval processes, conducting clinical trials, compliance with applicable regulatory requirements, our dependence on collaboration partners, and the level of costs associated with discovery, product development, business development, and commercialization activities. With that, I will turn the call over to Mike.
Michael M. Morrissey: All right. Thank you, Andrew, and thanks everyone for joining us on the call today. Exelixis, Inc. is off to a strong start in 2026, with meaningful progress across our discovery, development, and commercial activities. Our strategy has a singular focus to build a multi-franchise business in solid tumor oncology focused on GU and GI histologies, based on the depth of the cabozantinib business, the potential breadth of the zanzalintinib opportunity, and the scope of our early-stage pipeline. Key highlights for the quarter include: first, we saw continued strong performance of the cabozantinib business in 2026.
CABOMETYX continued to grow in revenue, demand, and market share, as the leading TKI for RCC and the market leader for neuroendocrine tumors in the oral second-line-plus segment. Importantly, we expedited the buildout of our GI sales team in the first quarter to accelerate the growth of the CABOMETYX NET opportunity before ZANZA could come online for CRC later in 2026. First quarter 2026 U.S. cabo franchise net product revenues grew 8% year over year to $555 million compared to the first quarter 2025. Continuing its role as a worldwide leading TKI, global cabo franchise net product revenues generated by Exelixis, Inc. and its partners grew 12.5% year over year to $764 million in the first quarter 2026.
Chris and PJ will share our financial and commercial highlights in their prepared remarks. Second, ZANZA is in the pole position as our next potential oncology franchise opportunity. The NDA for the ZANZA + ATEZO combination in third-line-plus CRC based on the STELLAR-303 data is currently under review and is the top priority for the entire Exelixis, Inc. organization. The ZANZA development program is rapidly advancing with seven ongoing or soon-to-start pivotal trials, along with additional Phase II trials planned in prostate cancer and lung cancer. Dana will review the highlights for ZANZA and our extensive pipeline of early-stage assets in his prepared remarks.
Third, the goal of our development effort is to establish ZANZA as the TKI of choice in the 2030s for RCC and other important indications that could surpass the impact of cabo in the 2020s. ZANZA already has a meaningful development footprint in RCC, with three ongoing Phase 3 studies across multiple lines of therapy, underscoring both the breadth of our ambition and the confidence we and others have in this molecule.
At the same time, as our experience with COSMIC-313 highlighted, and as was also recently seen with news from competitive trials, navigating the complexities of first-line RCC to improve upon existing regimens is a challenging endeavor at best and requires careful selection of combination partners to improve efficacy parameters while managing tolerability and safety considerations. We remain committed to raising the bar in first-line RCC and continue to prioritize orthogonal MOAs to combine with ZANZA. In parallel, we seek to expand the breadth and depth of our ZANZA pivotal trial efforts, positioning ZANZA for durable leadership in RCC and other important tumor types.
Fourth and finally, we remain committed to running the business at the highest level of efficiency as we advance our R&D priorities, and at the same time generate substantial free cash to invest in the pipeline through the right targeted BD at the right price to access external sources of innovation and to continue our share repurchase program, including an additional $750 million that was just authorized by the Exelixis, Inc. Board. See our press release issued an hour ago for our first quarter 2026 financial results and an extensive list of key corporate milestones achieved in the quarter. I will now turn the call over to Chris.
Christopher J. Senner: Thanks, Mike. For the first quarter 2026, the company reported total revenues of approximately $611 million, which included cabozantinib franchise net product revenues of $555 million. CABOMETYX net product revenues were $552.8 million and included $3.6 million in clinical trial sales. As a continued reminder, clinical trial sales have historically been choppy between quarters and we expect this to continue into the future. Gross-to-net for the cabozantinib franchise in 2026 was 30.2%, which is higher than the gross-to-net we experienced in 2025. This increase in gross-to-net deductions in 2026 is primarily related to higher 340B volume, higher Medicare Part D discounts and rebates, and higher copay assistance when compared to the fourth quarter 2025.
Our CABOMETYX trade inventory was slightly lower at 2.1 weeks on hand at the end of the first quarter 2026 when compared to the fourth quarter 2025. Total revenues in the first quarter 2026 also include approximately $45.9 million in royalties earned from our partners Ipsen and Takeda on their sales of cabozantinib. Our total operating expenses for the first quarter 2026 were approximately $359 million compared to $363 million in 2025. The sequential decrease in these operating expenses was primarily driven by lower clinical trial costs, offset by higher FTE-related costs and stock-based compensation expense.
Provision for income taxes for the first quarter 2026 was approximately $57.2 million compared to a provision for income taxes of approximately $8.2 million for the fourth quarter 2025. This increase in tax provision was related to certain items that were recognized in the fourth quarter 2025. The company reported GAAP net income of approximately $210.5 million, or $0.81 per share basic and $0.79 per share diluted, for the first quarter 2026. The company also reported a non-GAAP net income of approximately $232.8 million, or $0.90 per share basic and $0.87 per share diluted. Non-GAAP net income excludes the impact of approximately $22.3 million of stock-based compensation expense net of the related income tax effect.
Cash and marketable securities for the quarter ended 03/31/2026 were approximately $1.4 billion. During the first quarter 2026, we repurchased approximately $430.8 million of the company's outstanding common stock, resulting in the retirement of approximately 10 million shares of the company's outstanding common stock at an average price per share of $42.99. As of the end of the first quarter 2026, we had $159.4 million remaining under the $750 million stock repurchase plan authorized by the company's board in October 2025. We expect to complete the October 2025 stock repurchase plan this month. Additionally, in May 2026, the company's board authorized a new $50 million stock repurchase plan that expires on 12/31/2027.
Finally, we are reiterating our full-year 2026 financial guidance, which is detailed on slide 16 of our earnings presentation. I will now turn the call over to PJ.
Patrick Joseph Haley: Thank you, Chris. The CABOMETYX business continued to grow in 2026. The team is executing at an extremely high level with CABOMETYX continuing to be the number one prescribed TKI in renal cell carcinoma, the number one TKI plus IO combination in first-line RCC, and the number one oral agent in second-line-plus neuroendocrine tumors. Importantly, Q1 had the highest number of new patient starts in a quarter ever for CABOMETYX, representing strong momentum in the business. At the same time, CABOMETYX plus nivolumab had the highest quarterly first-line RCC market share to date.
This is an exciting time for the team with zanzalutinib on the horizon as we prepare to launch our next franchise molecule, which would also expand the Exelixis, Inc. GI franchise. The prescription data in the oral TKI market basket of cabo, lenvatinib, axitinib, sunitinib, and pazopanib convey the strength of cabo relative to the competition. Looking at 2025 to Q1 2026, CABOMETYX grew three share points from 44% to 47%. Additionally, CABOMETYX TRx volume grew 14% in Q1 2026 compared to Q1 2025, outpacing the growth rate of the market basket, which was 7% for the same period.
Physicians are responding positively to the broad NET label and the contemporary trial design and perceive the efficacy and tolerability of cabo as favorable relative to other small molecule therapies in the space. Both academic and community prescribers are using cabo broadly across patient and tumor characteristics, including patients with neuroendocrine tumors arising in the pancreas, GI tract, and lung, across all tumor grades, functional and SSTR status, and those who have received prior treatment with Lutathera. Turning to new patient market share for second-line-plus neuroendocrine tumors in the first quarter, we are pleased that CABOMETYX remains the market leader in the oral therapy segment.
Additionally, our research indicates that there is opportunity to continue to grow market share, particularly in the community. For that reason, we expedited the expansion of our GI sales team in Q1, and the team was in the field providing greater reach into the community in order to continue to grow NET market share for CABOMETYX. Our new representatives joined us with significant oncology sales experience, particularly colorectal cancer and GI oncology. Importantly, the expanded team will be able to gain valuable experience selling cabo before we turn our focus to the potential launch of zanzalutamide in colorectal cancer.
If we are thinking about building on and expanding our GI franchise, we are thrilled with the results of STELLAR-303 and the PDUFA date set for later this year. Pending regulatory approval, we believe that these data would provide Exelixis, Inc. with a compelling commercial opportunity in one of the big four tumors. The third-line-plus CRC setting consists of approximately 23,000 patients in the U.S. and represents an overall market opportunity of approximately $1.5 billion in terms of contemporary pricing. Our market research and advisory boards demonstrate positive feedback and excitement for the STELLAR-303 data.
Physicians reiterate the significant unmet medical need for patients in the third-line-plus CRC setting and are excited for the potential to have an ICI option available for the broader population of CRC patients. In closing, we are pleased with the growth of the cabo business both in RCC and NETs. In neuroendocrine tumors, prescribers see CABOMETYX as a more favorable choice versus other previously approved generic small molecule therapies. Simultaneously, our internal team is in full launch preparation for ZANZA, and the excitement around these efforts is palpable. We look forward to the opportunity to launch the next Exelixis, Inc. franchise later in the year to be able to help appropriate patients with colorectal cancer.
Beyond STELLAR-303, we are enthusiastic about the significant development plan for ZANZA, which could position the ZANZA franchise to far exceed cabo in terms of the number of patients that could be impacted across tumor types and settings. And with that, I will turn the call over to Dana.
Dana T. Aftab: Thanks, PJ. Our strategy in R&D continues to focus on developing ZANZA as a multidimensional solid tumor oncology franchise molecule. As you will hear in my upcoming remarks, we continue to be focused on maximizing our productivity with disciplined investment in high-value opportunities for ZANZA as well as the rest of our portfolio. Today's update provides a little more clarity on the seven ongoing or soon-to-start pivotal studies for ZANZA, so my update today will be focused mostly on those trials. I will also spend some time on additional exploratory studies that we have designed to investigate ZANZA's potential in certain patients with prostate or lung tumors.
Starting with our NDA for ZANZA plus ATEZO in colorectal cancer, which is based on the results from the STELLAR-303 trial, our team has been highly engaged during the review process. From our standpoint, the review has been proceeding on schedule toward the PDUFA date in early December. As a quick reminder, the trial has dual primary endpoints designed to assess overall survival both in the broad intention-to-treat, or ITT, population, which includes patients both with and without liver metastases, as well as more specifically in the population of patients without liver metastases, which we refer to as the NLM patients or population.
The study met one of its dual primary endpoints, demonstrating a 20% reduction in the risk of death with the combination in the broad ITT population at final analysis, while data pertaining to the other dual primary endpoint of overall survival in the NLM population showed a trend in overall survival favoring the combination. The NLM data were immature at the data cutoff, and the trial has been proceeding to the planned final analysis for this endpoint, and we continue to expect to have those topline results around the middle of this year, depending on event rates.
The level of excitement here is really high right now about what a potential approval would mean for this large and underserved patient population, and as you heard from PJ, our preparations for launch are in full swing. We will be ready to go the moment we receive a positive decision. But as we have discussed since late last year, we believe there is significant additional franchise potential for ZANZA in colorectal cancer in an earlier stage of the disease.
To realize that potential, our team has been highly focused on launching the STELLAR-316 trial, which will investigate ZANZA with and without an immune checkpoint inhibitor in patients with resected stage 2 or 3 colorectal cancer who, following definitive therapy, have tested positive for molecular residual disease, or MRD, and have no radiographic evidence of disease. About 20% of patients are MRD-positive following definitive therapy, and these patients typically have a poor prognosis, with median disease-free survival times in the 6- to 8-month time frame.
Critically, these patients have no therapeutic options that have been shown in a Phase 3 trial to prevent or delay metastatic progression of their disease, so this represents a significant opportunity in the colorectal cancer landscape. As we have communicated in the past, MRD in STELLAR-316 will be determined with the Signatera circulating tumor DNA test, with Natera as our diagnostic partner. Their database, built from testing thousands of patients each year, has been incredibly helpful to us in terms of prioritizing activation of clinical trial sites that are already known to have the highest cadence of testing and the highest numbers of eligible patients.
We are quite pleased with the level of enthusiastic feedback on STELLAR-316 that we have gotten from key opinion leaders and other stakeholders, and we are on track for initiating the trial around midyear. Moving on to kidney cancer, ZANZA's target profile, including the TAM kinases, MET, and VEGF receptors, positions ZANZA for success given the known roles played by these kinases in kidney tumors. STELLAR-304 is our first pivotal trial for ZANZA in kidney cancer, evaluating the combination of ZANZA plus nivolumab versus sunitinib in patients with locally advanced or metastatic non–clear cell renal cell carcinoma.
The non–clear cell RCC space is underserved, with no positive readouts from a Phase 3 study specifically focused on these patients, despite them representing approximately a quarter of all RCC cases. If positive, 304 could potentially establish the first standard of care based on a randomized controlled Phase 3 trial for these patients. We completed enrollment last year, and given current event rates, we now expect topline results from the study in 2026, and, if positive, those results could lead to our second NDA filing for ZANZA. In terms of opportunities in the clear cell RCC space, progress continues with regard to the two pivotal studies that Merck is running in clear cell RCC evaluating ZANZA in combination with belzutifan.
LIGHTSPARK-033, which compares ZANZA plus belzutifan versus cabo as first-line therapy in patients who received anti–PD-1 or anti–PD-L1 therapy in the adjuvant setting, was initiated last year. In addition, Merck recently initiated LIGHTSPARK-034, a global Phase 3 pivotal trial evaluating ZANZA plus belzutifan versus belzutifan plus placebo in second- or third-line patients with advanced RCC who have progressed on or after both anti–PD-1 or PD-L1 and VEGFR TKI therapies, in sequence or in combination. We are certainly excited to see these Phase 3 studies in clear cell RCC moving forward, and based on our franchise experience in this indication, we believe there are other important opportunities to explore.
As we have mentioned previously, we continue to have discussions with potential collaborators to investigate novel combinations pairing ZANZA with other modalities and orthogonal mechanisms when there is strong scientific rationale for the combination. Given the demonstrated clinical differentiation we have seen with ZANZA and its potential to be the TKI of choice for combinations with immunotherapies and other mechanisms of action, we are looking to advance novel combinations in the future that have significant potential to move the needle for clear cell RCC patients. We hope to give further updates on these activities in the future as we get closer to launching the trial.
Moving on now to neuroendocrine tumors, STELLAR-311 is our Phase 3 trial evaluating ZANZA compared to everolimus as an initial oral therapy in patients with pancreatic and extrapancreatic neuroendocrine tumors. That study was initiated last year, and we have been quite pleased by the speed of enrollment in the trial. In fact, we are now far ahead of our initial enrollment projections. The sites and investigators are very enthusiastic about the trial, given their growing experience with cabo in later-line disease and the opportunity presented by STELLAR-311 to improve on the current treatment landscape in earlier lines, which has not seen anything new for over a decade.
That enthusiasm appears to be driving the very strong momentum we are seeing in the trial. Another opportunity for ZANZA that we have been discussing since late last year is in meningioma, which is the most common primary central nervous system tumor, accounting for approximately 40% of cases. Most meningiomas are benign, slow-growing neoplasms; however, up to 22% will recur after primary therapy, which consists of surgery and radiation. Importantly, there are no approved systemic therapies for meningioma that is refractory to local therapies, so this represents a very high unmet need in neuro-oncology.
Today, we announced that we have now initiated STELLAR-201, our Phase II trial evaluating ZANZA in patients with recurrent meningioma who are no longer responsive to or eligible for local therapies. The primary endpoint of the trial is objective response rate, with secondary efficacy endpoints including duration of response, progression-free survival, and overall survival. The trial will enroll up to 100 patients, and given the extremely high level of interest and enthusiasm for the trial among neuro-oncologists, we anticipate enrollment to be brisk. Pending favorable results, and given the absence of any approved systemic therapies in this setting, the STELLAR-201 trial represents an important opportunity for ZANZA to become the first systemic therapy that could improve outcomes for these patients.
Today, we also announced two additional studies exploring ZANZA combinations in indications where significant unmet need exists. STELLAR-202 is a planned Phase II trial in squamous non–small cell lung cancer that will explore the addition of ZANZA to pembro in the maintenance phase after induction with pembro plus chemotherapy. Part of the rationale for this trial comes from data we obtained from cabo plus atezo in the CONTACT-01 trial, where the subgroup of non–small cell lung cancer patients with squamous histology appeared to derive substantial benefit from the combination compared to chemotherapy.
This is an important opportunity given the relatively short PFS in the maintenance setting and the lack of any new approvals in the frontline squamous non–small cell lung cancer since KEYNOTE-407 established the current standard of care with pembro plus chemo. We are also planning an additional expansion cohort in the ongoing STELLAR-2 study to evaluate ZANZA in combination with docetaxel in patients with metastatic castration-resistant prostate cancer who have measurable disease. This is also based on initial observations with cabo, where a small Phase II study showed favorable outcomes when combined with docetaxel in metastatic CRPC patients.
This cohort in STELLAR-2 is particularly meaningful because, if ZANZA in combination with chemotherapy is shown to be safe and active, that could open up a number of opportunities across a range of solid tumors where chemo, or potentially even ADCs carrying chemo payloads, are standard of care. Our teams are super focused on launching these new studies soon, and we expect both to be initiated in the second half of this year. Now shifting to our early clinical pipeline, we have four molecules in this space that are currently in clinical development, namely XL309, XB010, XB628, and XB371, and the Phase I studies for these early molecules are progressing well.
In terms of earlier-stage development candidates, we are continuing to advance exciting new small molecule and ADC programs, and I look forward to sharing more details as these early pipeline programs advance. Our strategy with the early pipeline is focused on identifying the next potential franchise molecules beyond cabo and ZANZA, so we will continue our approach of getting to go/no-go decisions quickly and efficiently, leveraging our expertise to pick the winners and ultimately maximize impact for patients. With that, I will turn the call back over to Mike.
Michael M. Morrissey: All right. Thanks, Dana. I will wrap up here by thanking the entire Exelixis, Inc. team for their outstanding efforts in the first months of 2026. We think 2026 could be a potentially transformational year for the company, and everyone at Exelixis, Inc. is working together to move the needle for cancer patients and continue building value for all our stakeholders. We are focused on growing the cabo business at the same time advancing ZANZA as our second potential franchise opportunity, all while continuing to investigate our early-stage pipeline.
As always, I want to thank everyone at Exelixis, Inc. for their individual and collective efforts, great teamwork, and positive energy as we work every day to exceed expectations on our mission to help cancer patients recover stronger and live longer. We look forward to updating you on our progress in the future. Thank you for your continued support and interest in Exelixis, Inc. We will now open the call for questions.
Operator: Thank you. To ask a question, you will need to press 11 on your telephone. To withdraw your question, press 11 again. Due to time restraints, we ask that you please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question will come from the line of Paul Choi with Goldman Sachs. Your line is open.
Paul Choi: Thank you. Good afternoon, and thanks for taking the question. My question is for Dana, and in light of the recent miss from the LIGHTSPARK-12 study, can you maybe just comment on your updated thoughts or learnings from that trial results for your belzutifan plus ZANZA combination development program, specifically LIGHTSPARK-033 and -034? And just any learnings or, you know, potential trial considerations that you have had in the wake of that data? Thank you very much for taking the question.
Dana T. Aftab: Sure. Thanks for the question, Paul. First of all, our strategy with ZANZA is to really focus on creating the next franchise molecule in RCC and the top TKI combination therapy in clear cell RCC in the 2030s. The results from LIGHTSPARK-12, which was a triplet of pembro/lenva plus belzutifan versus pembro/lenva, reinforce that triplet therapy in clear cell renal cell carcinoma is not an easy game. Our strategy is really focused on trying to establish a standard of care that covers multiple possible outcomes based on trials that are going on now. We have multiple shots on goal with LIGHTSPARK-033 and -034. We have the STELLAR-304 data coming out hopefully soon in non–clear cell carcinoma.
As I mentioned earlier, we are evaluating a number of other potential novel and innovative combinations to further explore the clear cell RCC space, including molecules from our own early pipeline. If XB628, which is our novel and innovative bispecific with multiple IO arms on it, pans out, that could be a very interesting combination to explore in these patients. It would be very innovative, and nothing in that space has been explored so far. As Mike said earlier, we have multiple shots on goal that really establish and drive the ZANZA franchise into clear cell RCC in the future, focused on the 2030s.
Operator: One moment for our next question. That will come from the line of Yaron Werber with TD Cowen. Your line is open.
Yaron Werber: Hi, team. Congrats on the quarter, and thanks so much for the question. Just two quick questions from us. One, if you could please provide some color on the contribution in renal cell carcinoma versus NET for cabo. And then second, I recall that cabo failed as a monotherapy in advanced unselected non–small cell lung cancer and also on OS in Phase 3 for pancreatic even though it showed a response in PFS. So, you touched on some of the combo regimens that are showing early data, but could you maybe expand on the rationale for testing combo therapies in STELLAR-202 and -002. Thank you.
Michael M. Morrissey: And I think she was talking about prostate cancer. So what is the rationale for going into Phase II in non–small cell and then prostate cancer? Dana, why do you not take that second question first?
Dana T. Aftab: Sure. As I mentioned, data that support our hypothesis for testing zanzalutinib in patients with non–small cell lung cancer comes from the CONTACT-01 study, which I think you are referring to. This is the Phase 3 study evaluating cabozantinib plus atezolizumab versus docetaxel in a broad population of non–small cell lung cancer patients. In that study, the subpopulation of patients with squamous histology actually did quite well and appeared to have a favorable benefit compared to the control arm in the study. For that reason, the STELLAR-202 trial is focused 100% on the squamous patient population with non–small cell lung cancer.
In this population, the current standard of care is platinum-based chemotherapy plus pembrolizumab during induction, which is up to four cycles of chemotherapy or 12 weeks, and then they go on pembrolizumab maintenance. We are looking to add zanzalutinib onto the maintenance arm of pembrolizumab. We have already shown that ZANZA can sensitize patients to benefit with IO in the STELLAR-303 trial, a population of colorectal cancer patients that have historically been refractory to treatment with IO. So we think this is a very rational exploration to pursue for these patients with squamous histology non–small cell lung cancer and high unmet need. In prostate cancer, similarly, there was a small Phase I study combining cabozantinib with docetaxel.
The Phase 3 trials that failed were not cabozantinib with chemotherapy. In the small Phase I, however, we saw very favorable outcomes in the patients that were treated in this small study. So based on the results from that, we believe there is rationale to pursue that combination in the Phase I STELLAR-2 trial. Once we get data showing safety and potentially activity of that combination, that opens up a lot of different avenues of exploration, either in castration-resistant prostate cancer, potentially in lung cancer, and potentially in other indications where either chemo or chemo-based therapies, including ADCs, might be standard of care.
Operator: Thank you. One moment for our next question. That will come from the line of Sudan Loganathan with Stephens. Your line is open.
Sudan Naveen Loganathan: Hi, thank you for taking my question. So my first one, wanted to get your comments on the quantifiable metrics regarding cabo sales in NETs and how the sales team has grown over this time and how it will continue to. And then secondly, on ZANZA, ahead of the CRC launch, what are some quantifiable metrics there as well that we can keep in mind ahead of the potential launch towards the end of this year? Thanks.
Michael M. Morrissey: Great. Thanks. PJ, want to take that one?
Patrick Joseph Haley: Yeah. Thanks for the question. With regards to NET, we are really pleased with how the business is going. As I mentioned, overall in the first quarter, we had our highest new patient starts ever for CABOMETYX in a quarter, so that is certainly a really strong sign of the health of the business now. As those new patient starts ultimately translate to refills going forward, it puts us in a really good position. Our business in NET is broad, as I mentioned in the prepared remarks, really across all segments, and is viewed very favorably by physicians.
Importantly, we are the market leader in the second-line-plus oral segment, and our research and feedback really indicate that we have opportunity to continue to grow, particularly in the community setting, which is why we expedited the buildout of our GI sales force so we could really have that deeper reach into the community and drive further business there. I am really pleased to say that, as I mentioned, we brought in a very strong team with GI and CRC experience in sales, and we are already seeing impact from that team. We are very pleased with that.
Importantly, that team gets here and gets a chance to know the customers in the GI segment, gets experience selling cabo and a TKI, which is fantastic. As we think about looking forward to the potential approval of ZANZA in CRC, which, as I mentioned, we are all really excited about, our launch preparation is really in full swing, and the team is really focused on driving that forward. We are really excited to be able to optimize that launch and help patients with CRC. This is a really big and exciting opportunity for us in terms of the potential to be in one of the big four tumors.
For colorectal cancer, the third-line-plus setting, as I mentioned, is 23,000 patients, and as we look at that market in terms of contemporary pricing, that is a $1.5 billion opportunity. But really the way we are thinking about ZANZA is that, obviously, that initial launch will be really important, but we are thinking about it in terms of franchises and how we expand the CRC franchise with an earlier study such as STELLAR-316, and ultimately how we build it out in RCC, as Dana discussed, and potentially in lung, meningioma, etc. There are just so many exciting opportunities. We are really looking forward to getting going on ZANZA.
Operator: One moment for our next question. That will come from the line of Sean Laaman with Morgan Stanley. Your line is open.
Catherine: Hi, good afternoon. This is Catherine on for Sean. Thank you for taking our question. We just had one on the updated STELLAR-304 data readout timing. Could you provide a bit more color on whether the slower event accrual reflects better-than-expected disease control within a mix of the enrolled histologies, or other trial dynamics? Then as a quick follow-up, just given that the population is highly heterogeneous, how are you defining success against or across histologies? And are there specific subtypes where you believe the rationale is strongest here? Thanks so much.
Dana T. Aftab: Sure. Thanks for the question, Catherine. Regarding 304, again, it is our Phase 3 study comparing zanzolitinib combined with nivolumab versus sunitinib. As such, it really is the first Phase 3 trial to address this high unmet need patient population. Currently, there is no level one evidence supporting a standard of care in these patients, so we see a huge opportunity here for the combination of ZANZA plus nivo. Regarding the slight change in timing for events, I really do not want to speculate on what is driving that. We are just in the late stages of collecting events. As we mentioned, we expect to get those soon, sometime in the second half of the year.
Operator: One moment for our next question. That will come from the line of Andy with William Blair. Your line is open.
Andy Hsieh: Oh, great. Thanks for taking our question. Talking about the 316 for a little bit, there is an AdCom recently that kind of talks about a definition of progression or change of therapy that is based on non-radiographic progression. For the adjuvant CRC study, I am just curious about the back-and-forth with the FDA agreeing on an MRD positivity as a way to change therapy. Just to educate us on what the dialogue was and how you come to the conclusion that this is actually a regulatory approvable approach. Thank you.
Michael M. Morrissey: Thanks, Andy. Dana, do you want to take that one?
Dana T. Aftab: Sure. Thanks for the question, Andy. We have discussed the STELLAR-316 trial since December. We are super excited about this study because it really addresses a high unmet need population. It is the population of patients who are resected stage 2 or 3 colorectal cancer, have completed definitive therapy, and now are in a watch-and-wait game to see if they develop late-stage disease. The Signatera test has shown in a number of different studies to, with a high degree of accuracy, predict rapid progression of patients. The patients who are positive for the test typically have a median disease-free survival of around six months, so it is a very high unmet need population.
The trial has been well designed with a large degree of input from key opinion leaders, other stakeholders, as well as the agency, and we are very confident in our design. We are really excited to release more details as we get closer to launch. When we do, you will see a lot more design characteristics of the study, especially when it gets posted to clinicaltrials.gov. Just stay tuned for more information.
Operator: One moment for our next question. That will come from the line of Michael Schmidt with Guggenheim. Your line is open.
Michael Schmidt: Hey, thanks for taking my question. I had a question on RCC and just wanted to understand the size of the opportunity for the LIGHTSPARK-033 study. What percentage of patients would be qualified for this? And then, beyond 033 and 034, are there any other studies you are considering for RCC specifically with ZANZA? Thanks so much.
Michael M. Morrissey: Thanks, Michael. PJ?
Patrick Joseph Haley: Yeah, thanks for the question. With regards to LIGHTSPARK-033, and as we have talked about here, we are really thinking about RCC broadly, establishing ZANZA as a franchise in RCC and certainly beyond. That opportunity as you look at the first-line setting can be approximately a quarter of patients coming off of adjuvant therapy, and obviously that can evolve as more and more patients are getting adjuvant therapy. But approximately a quarter of the first-line setting.
I think the important thing too is really doing multiple studies, as we have laid out, in terms of LIGHTSPARK-33, -34, STELLAR-304, drawing off our experience from cabo, how we did multiple studies in RCC to really establish ourselves as the leading TKI of the 2020s, and we are building towards our vision of establishing ZANZA as a leading TKI of the 2030s. As Mike and Dana mentioned, we are looking at combinations with orthogonal MOAs and different approaches to continue to really raise the bar in the standard of care in the first-line setting and RCC generally.
Operator: One moment for our next question. That will come from the line of Silvan Tuerkcan with Citizens. Your line is open.
Silvan Tuerkcan: Yes, good afternoon, and thanks for taking my question. I just want to ask a little bit broader around your strategy around the allocation. You are running one of the broadest development strategies for an unapproved drug at this moment, and you even expanded it now. Obviously, you are sitting on a lot of data that we do not see, but that clearly makes you very excited on ZANZA. How do you balance that broad strategy with buybacks and potential M&A, which has not happened yet?
Michael M. Morrissey: Thank you. Chris, do you want to take that one?
Christopher J. Senner: Thanks for the question. From a capital allocation perspective—and that is how we look at it—how do we allocate capital against R&D, how do we allocate capital against BD opportunities, and how do we allocate capital against share repurchases? We are a financially strong company. We have significant cash flows. We are prioritizing our R&D spend on a constant basis so that we are understanding what projects are sticking their heads up and saying, “fund us,” and we will continue to do that. Andrew and Stefan and the team are continuing to look at BD opportunities, and we do have access to capital also.
We have a lot of things going on here that allow us to execute on all those three elements of R&D investments, BD investments, and share buybacks. From a share buyback perspective, we believe that Exelixis, Inc. is a great opportunity and that the opportunity is not really being appreciated generally, and we think we are undervalued. So we are going to continue to buy back shares.
Operator: One moment for our next question. That will come from the line of Jay Gerberry with Bank of America. Your line is open.
Chee: Hey guys, this is Chee on for Jason. Thanks for taking our question. My question is on LIGHTSPARK-034. Can you contextualize the choice of using belzutifan monotherapy as the control arm as opposed to, say, an alternative TKI monotherapy or perhaps even datopotamab plus lenvatinib given the pending sNDA review there? I also noticed that OS is listed as a dual primary endpoint. Would PFS alone be sufficient to support approval, or would you need an OS win there? Just thinking about both likelihood of success and regulatory bar, based on the recent LIGHTSPARK-011 data. Thanks so much.
Michael M. Morrissey: Yeah. Dana, go ahead.
Dana T. Aftab: Sure. LIGHTSPARK-034 is Merck's study, and, as you mentioned, it is evaluating ZANZA plus belzutifan versus belzutifan plus placebo in the second-line-plus setting in patients who have progressed both on an IO-based regimen and a VEGFR TKI–containing regimen, either in sequence or in combination. The dual primary endpoints are two different efficacy endpoints. In clear cell RCC, OS has really become a gold standard. Having two different efficacy endpoints in the trial typically requires both to hit, but it really depends on the data. It is always data-dependent, and the timing of when those results come in.
Regarding the population, this study, as well as many other studies that are ongoing now or planned for the future, really anticipates multiple potential treatment landscapes for patients. This is really in the landscape of patients who are going to be candidates for belzutifan alone, or belzutifan in combination with a TKI. These are typically patients who have already progressed on a TKI-containing regimen and an IO-containing regimen. That should be an important opportunity and important unmet need when this trial reads out.
Operator: One moment for our next question. That will come from the line of Leona Timischev with RBC. Your line is open.
Leonid Timashev: Hey, thanks for taking my question. I want to stick with the franchise approach by 2030 that you have been talking about. You have mentioned RCC. I wanted to focus on NETs and how you are thinking about the franchise there in the future. You are running 3.11, but are there any other combinations that you are looking at, especially if that treatment landscape evolves—radiopharmaceuticals, ADCs? How are you envisioning building out ZANZA into the 2030s in NETs? Thanks.
Michael M. Morrissey: Yeah. Thanks for the question. Why do we not tag-team this? PJ, why do you not go first, and then Dana can add some commentary?
Patrick Joseph Haley: Yeah, thanks for the question, Leonid. With regards to the way we are thinking about 311 in the marketplace, as I mentioned, cabo is off to a really strong start in terms of the second-line-plus setting, and that study is designed specifically to go head-to-head with everolimus as an active comparator, which is a first in this setting. It is really positioning that patient population in the first or second line—earlier lines of therapy—and obviously then a larger patient population, with the potential to beat an active comparator head-to-head. There is a lot of excitement around the study design, as Dana mentioned in his prepared remarks, and we are excited about that ZANZA opportunity.
Dana T. Aftab: And then beyond that, I would say that we are very committed to this patient population. We have seen how much benefit cabo is bringing to the table for these patients. We have seen the excitement around STELLAR-311, so we are really focused on how else we can address this patient population. As we discussed at R&D Day, we are looking at a number of other potential opportunities earlier in the discovery pipeline to either address specifically the neuroendocrine tumor patients who require treatment with an SSTR2 agonist—these are mainly patients with functional tumors, but also other patients who express the receptor and are known to be potentially sensitive to that type of treatment.
We are developing a small molecule that we hope to file an IND on later this year. That could be a novel approach to offer in combination with ZANZA if the STELLAR-311 trial is successful; we might do that type of combination in the future. Then broadening out to other types of neuroendocrine carcinomas—namely tumors that express DLL3, primarily small cell lung cancer, but a range of other neuroendocrine carcinomas that occur throughout the body in the GI tract and in the prostate—we presented some data this year for XB773, the DLL3-targeted ADC with a very novel, very small format and a topoisomerase inhibitor payload that we think is differentiated versus the other competitive molecules in the space right now.
That molecule can be quite exciting once we generate some data, and if it shows interesting activity, we can also explore combinations with ZANZA. So we have multiple irons in the fire exploring this space across histologies and different patient populations.
Operator: One moment for our next question. Our next question will come from the line of Kalpit Patel with Wolfe Research. Your line is open.
Kalpit Patel: Yes, hey, good afternoon, and thanks for taking the questions. Maybe one on the LIGHTSPARK-012 trial. There was no benefit of the triplet there compared to the doublets in that first-line setting. For your and Merck's strategy, would you ever entertain a triplet in that exact same first-line setting? Or what would that future study look like in ccRCC?
Dana T. Aftab: I will take the question, Kalpit. Thanks for the question. As you know, we are collaborating with Merck on LIGHTSPARK-033, which is evaluating ZANZA plus belzutifan in the frontline setting versus axitinib. This addresses a slightly different hypothesis. There is no IO in this combination because it assumes or requires that the patient is coming in after having been treated in the adjuvant setting with IO. As for other potential combinations beyond this, especially triplets, that requires a very specific and focused scientific rationale. We are not opposed to doing it; it just has to be the right molecule in the right setting.
As I mentioned in my prepared remarks, we have been looking at a lot of orthogonal MOAs to pair with zanzolitinib in this space, as well as investigating the combination of ZANZA plus our own novel bispecific IO in its Phase I study. Pending more discussions and more data that we can generate in Phase I, we will reveal or disclose more details about any of those trials as they come to fruition and get closer to launch.
Operator: One moment for our next question. That will come from the line of Esther DeRoot with Barclays. Your line is open.
Esther DeRoot: Hi, thanks for taking my question. First, how are you thinking about leveraging the non–liver metastasis data from STELLAR-303 given the December PDUFA date? Are you going to update your NDA to include that data? Then it would be interesting to hear your thoughts around the investigator-sponsored trial coming up at ASCO of cabo/nivo in non–clear cell renal cell carcinoma, and how to think about that dataset relative to ZANZA and 304.
Michael M. Morrissey: Dana, go ahead.
Dana T. Aftab: Sure. Thanks for the question. Regarding the STELLAR-303 trial, as I mentioned, we are on track to see those results of the non–liver metastasis subgroup—the primary endpoint that is focused on that subgroup—around midyear this year. We are still on track for that. Regarding the data and sharing with the FDA, we certainly plan to share those data, as well as any other data that the agency might ask for as part of the ongoing review. Again, as I mentioned, from our standpoint, that review is progressing on schedule toward the PDUFA date in early December.
Operator: One moment for our next question. That will come from the line of Ash Verma with UBS. Your line is open.
Ashwani Verma: Hi. I wanted to get the latest thoughts on combo competitiveness in RCC. Earlier we saw the LIGHTSPARK-022 study that had a PFS-positive result. Do you think it is unlikely to show OS separation because there is enough alpha not attributed to that analysis? Thanks.
Patrick Joseph Haley: Thanks for the question. I think we are really pleased with where we are competitively in RCC. Generally, we would not want to speculate on how other trials continue to read out their data. What I will say is, as we talked about earlier—building a franchise—we have done so many studies in RCC that we have strength of the business really in every segment.
This quarter we saw the highest frontline market share for CABOMETYX plus nivolumab in the first-line setting, which we are very pleased with, and we continue to see strong momentum there in the first-line setting given the breadth and depth of the data and also the experience that prescribers have using this combination now for so many years. We see potential to continue growing in RCC and particularly in the first-line setting.
Operator: At this time, there are no further questions. I will turn the call over to today's host, Andrew Peters. Mr. Peters?
Andrew Peters: Thank you, Sherry, 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. Thank you all again, and have a great rest of your week.
Operator: This concludes today's program. Thank you all for participating. You may now disconnect.