Exelixis Inc

NASDAQ:EXEL

Earnings Call Transcript 2021-Q1

[Operator]

Good day, ladies and gentlemen, and welcome to the Exelixis’ First Quarter 2021 Financial Results Conference Call. My name is Daphne, 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.

[Susan Hubbard]

Thank you, Daphne, and thank you all for joining us for the Exelixis’ First 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; P.J. Haley, our Executive Vice President of Commercial and Gisela Schwab, our Chief Medical Officer, who will together review our corporate, financial, development, and commercial progress for the First Quarter 2021 ended March 31, 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, 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 activity.

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

[Mike Morrissey, President and Chief Executive Officer]

All right. Thank you, Susan and thanks to everyone for joining us on the call today. Exelixis ended 2021 with a strong first quarter, where we saw significant revenue growth from the Cabo nivo first-line RCC launch and post their highest quarterly net product revenue, since the initial Cabo medics approval in 2016. Please see our press release that was issued an hour ago for our first quarter financial results and an extensive list of key corporate accomplishments.

We'll keep today's prepared remarks short so we can get to your important questions. Obviously we're thrilled with the early performance of the Cabo nivo launch in first-line RCC, which we believe reflects the strengths and breadth of the efficacy, tolerability and quality of life data from the checkmate 90 our trial, we continue to build momentum with a combined 35% growth in revenue over the last two quarters and anticipate a near doubling of Cabo RCC revenues by the end of 2022, when we expect to exit with a $1.5 billion annualized run rate in the U S if our launch assumptions and trajectory continue on its current course.

Also in the first quarter, we advanced the key 2021 discovery development and regulatory activities. We remain on track to report line results for the Cabo atezo doublet first-line HCC from cosmic three 12 and in metastatic CRPC from Cosmic 021cohort six, and expect to file up to three new S and DA's for Cabo across these indications pending positive results. Along with the filing for cosmic 311, our early clinical pipeline also advanced nicely in the quarter with significant progress in the XL092 program, initiation of the phase one clinical trial of XL102, our novel CDK seven inhibitor, and the ind filing for XB002, which was accepted by the FDA in April.

Our discovery and pre-clinical teams continue to make important progress towards the optimization and characterization of new development candidates for both small molecule and EDC programs, which we believe will provide the foundation for new clinical candidates in the near future. I'll close here by saying that the Exelixis team has hit the ground running in 2021 and is building on the urgency and focus from our recent progress to maximize our chance for success across the range of milestones ahead of us.

I'm incredibly proud to say that we're coming out of COVID stronger than ever as we drive our business forward to help cancer patients live longer and recover stronger. So with that, I'll turn the call over to Chris who will provide an update on our first quarter 2021 financial results. Chris?

[Chris Senner, Chief Financial Officer]

Thanks Mike. For the first quarter of 2021, the company reported total revenues of $270.2 million total revenues for the quarter included Cabos entity, franchise net product revenues of $227.2 million net product revenues. In the first quarter of 2021, we're impacted by higher demand for Cabo, medics, and a decrease in wholesale or inventory. Telemedics wholesale inventory decreased by approximately 300 units and when combined with the higher demand resulted in a decrease in our inventory weeks on hand for approximately 3.1 weeks on hand.

In the fourth quarter of 2022, approximately 2.3 weeks on hand, the first quarter of 2021 total revenues also included $43 million in collaboration revenues from Ibsen, Takeda and genetic total operating that's just for the first quarter of 2021 we're $274.8 million compared to $245.8 million in the fourth quarter 2020.

SG&A expense as the primary driver of the increase in total operating expenses, which was primarily employee-related expenses, including an increase, the stock based compensation expense also impacting our total operating expenses for the first quarter of 2021 was approximately $24 million in licensing upfront, and milestone fees benefit from income taxes for the first quarter of 2021 was $3.6 million compared to the benefit of $300,000 in the fourth quarter of 2020, the company reported gap net income of $1.6 million or 0 cents per share on a fully diluted basis for the first quarter of 2021.

The company also reported non-gap net income of $28.5 million or 9 cents per share on a fully diluted basis. Non-Gap net income excludes the impact of approximately $26.9 million of stock based compensation, expense net of the related income tax effect, cash and investments for the quarter ended March 31 2021 was approximately $1.6 billion. And finally, according to our financial guidance for the full year of 2021, we're maintaining the financial guidance that we provided earlier year. Sure. And with that, I'll turn the call over to PJ.

[P.J. Haley, Executive Vice President-Commercial]

Thank you, Chris. Today I will discuss the Cabo medics business with regards to Q1 2021, particularly in the context of the first approval for Cabo medics in combination with an immune checkpoint inhibitor, as you know, on January 22nd, Cabo medics received FDA approval for use in first-line RCC. In combination with nivolumab, the team was fully prepared to hit the ground sprinting. And we were pleased with the execution of the launch, which result is resulting in rapid and importantly broad uptake of Cabo medics.

Top Homedics was the only TKI in Q1 among the Tableau medics Enlighta Sutent and Votrient or CISV market basket to grow NRX market share increasing from 32% in Q4 to 36%. According to QVC data, importantly, Cabo medics NRX volume group 31% Q1 2021 over Q4 2020 driven primarily by uptake of the combination of Cabo and nivo in the first line setting.

Additionally Cabo medics TRX volume increased by 21% in Q1 relative to Q4 of 2020. We are also pleased. Adoption was broad across a number of key segments with strong uptake in favorable intermediate and poor clinical risk groups. As the nine yard data is resonating with physicians broadly, as they think about patients who are appropriate for the regimen. Our market research shows that Cabo medics in combination with Nivo is taking share from all first-line competitors already at this early stage of the launch beyond these initial metrics, we won't be providing other details for competitive reasons, specifically market share by line of therapy, which I'm sure you can appreciate uptaken.

The academic segment has been rapid and we're seeing strong adoption in the community setting as well. We believe there is significant opportunity for continued growth in new patient market share, particularly in the community setting. Recently we've begun to see many community accounts begin to reopen access to industry representatives given improving trends in the pandemic.

Well, this is variable depending on the account and geography. Our belief is that this will continue to improve facilitation of education and discussions of the 90 our data, which prescribers find compelling and important for their patients with RCC, who, who have yet to receive a therapy. This trend coupled with our comprehensive launch plan for execution of both virtual and in-person tactics should continue to drive new patient market share in the community setting. In addition to the broad uptake of Cabo medics plus Nivo in the marketplace, perceptions of the 90 yard data have been very positive.

There's been a rapid increase in unaided awareness that the approval of this combination, as well as favorable impressions of the efficacy of the combination based on the end points of O S PFS and Orr across key subgroups, including IMTC 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.

It is improving the overall perceptions of safety and tolerability of Cabo. Medics physicians also view the quality of life benefit demonstrated in are as differentiating and important for their patients who may be on first-line therapy for extended lengths of time. The excellence of teams continuing strong and focused execution on the launch. These efforts are aided by the recently published cabozantinib data at ASCO GPU, including a presentation focused on quality of life. Furthermore, the publication of 90 are in the new England journal of medicine on March 3rd and the recent update of the NCCN guidelines on April 21st, which positioned [inaudible] is the only FDA approved preferred category.

One regimen across all clinical risk groups should continue to support the broad uptake of the combination. Strong Q1 performance in Cabo medics, launched trajectory position, the capos answered of franchise to continue significant revenue growth in 2021 and beyond. We're thrilled with the opportunity that nine yard provides excellent service looking forward.

As we continue to build upon the foundation in RCC where Cabo medics is the number one prescribed TKI beyond 90 are we are our, excuse me, we're already working on plans to optimize potential future access of the cabozantinib development program. As it moves forward broadly across multiple indications and with different combination partners, we look forward to building on this momentum and RCC, HCC, DTC, and other potential future indications, such as prostate and lung as our development program, evaluating Kaaba in combination with immune checkpoint inhibitors advances, our team remains highly focused and motivated to compete every day to bring the benefit of Cabo medics, to all eligible patients, as we continue to build the franchise and maximize its clinical and commercial potential.

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

[Gisela Schwab, Chief Medical Officer]

Thank you, PJ. I'm pleased to provide an update on the development programs. 2021 is certainly off to a great start for a cup of non-gender regulatory and development progress, as well as a growing clinical pipeline programs, including Excel Oni to Excel porno too. And XP002, starting with the COVID regulatory progress after January, 2021 approval by FDA for the Cubs, Geneva and the volume of combination for the first-line treatment of patients with advanced RCC.

The combination achieved a positive CHMP opinion in the EU in February and quickly thereafter in late March, the European commission approved the combination for the first-line treatment of RCC patients in the EU after having reported exciting presentations in advanced RCC at ASCO GU hookup is on chip in combination with new volume up from checkmate nine, ER, as well as single agent cupboards onto net results, including from the puppet study.

We are now looking forward to the upcoming ASCO conference with further data presentations based on the checkmate nine yards and also single agent results from mix 311, a phase three trial in differentiated thyroid cancer, turning to an update on our ongoing program for Cubs on Geneva. We have continued our execution of the COSMIC 021, 311, 312 and 315 studies are on track for milestones on these trials as previously shared, including three potential new covers on chip as NDA signings.

I'll provide a brief summary on key highlights for the program for cosmic 311 and radio iodine, refractory DTC patients who have received prior a GFR targeted therapy. We have working towards an NDA submission based on the strong results in a patient population with unmet medical needs. As announced previously the trial met its primary endpoint of progression pre-survival was covered highly significantly, improving a progression free survival versus placebo and FDA granted a breakthrough therapy designation for the indication during the quarter, based on these results, real focused on an SNDA filing that we expect to complete in the second quarter,

COSMIC 312, a phase three trial of [inaudible] versus Serafenib for the first line treatment of advanced HPC completed a cruel and the global study in mid 2020. And we anticipate top-line results of the event driven PFS analysis and the concurrent interim analysis for overall survival in the second quarter of 2021. And if warranted by the data and results, we are expecting to file an NDA in the fourth quarter of 2021

For cosmic 021, we'll look forward to the final analysis of score objective response rates by the independent radiology committee of cohort six and metastatic CRPC in May, 2021 and plan for regulatory submission of the results data providing and that's for cosmic three 13, comparing the triplet of [inaudible] new volume of, and if your mum up versus nivolumab and ipilimumab in first line RCC patients with intermediate or poor risk per IMTC.

We completed a patient enrollment and late March, and we are now looking forward to top line results of the event driven analysis for the study in 2022 for the ongoing contact to phase three program under our collaboration with Roche, we are actively enrolling patients globally across all three phase three trials and checkpoint inhibitors, pretreated non-small cell lung cancer and RCC patients, and in novel hormonal therapy, pretreated CRPC patients.

So in summary, the cupboards program continues to make significant progress and we remain on track for data readouts in the next couple of months, as well as data providing potential supplemental NDA, finding no turn to progress on our XL 092 program and our new IND compounds phase one programs for escalation trials and XP 002, first Excel 092 or next generation met Axel Mer and Mitchell are charging kindness inhibitor with a shorter pharmacokinetic cost.

Life is advancing and phase one and we are in the midst of evaluating the combination with atezolizumab in a parallel phase1B part of the study. Importantly, we have recently entered into a clinical collaboration agreement with Merck KGA under which we will evaluate XL092 in combination with a Valium up in various urothelial cancer cohorts, including in the maintenance setting after prior first-line platinum containing chemotherapy, as well as in the second line setting in patients who have failed prior checkpoint inhibitor containing therapy and further are actively discussing additional combination approaches with various checkpoint inhibitors and agents targeting novel mechanisms pre-clinically and clinically to continue to define opportunities for this important development program.

We have a deep and solid foundation and utterly thing, Kinase inhibitors, and extensive experience with covenants [inaudible] it, and see many opportunities to build on and expand on the therapeutic settings. As we plan for potential tumor indications in lines of therapy for XL 092 combinations. Given this extensive experience, review the XL092 development risk profile as potentially being greatly improved versus more typical early stage programs. So with that, we are driving [inaudible] development plan forward. That includes a broad and comprehensive program across various tumor indications lines of therapy and setting of broad therapeutic interests.

We intend to pursue the comprehensive evaluation of XL092 in combination with various established checkpoint inhibitors and potential new combinations, including promising new checkpoint inhibitors, tablets, as well as other combination partners with the goal to potentially start late stage pivotal trials. As soon as 2021, we are focusing on advancing our phase 1 B dose ranging in combination with checkpoint inhibitors rapidly to move into expansion cohorts that may support data-driven late-stage development options across a variety of too much hype

And second team excited to report progress with our latest Ind candidates in 2021 XL 102 or CDK seven inhibitor, we have already started the phase1 trial and the cohort dose escalation phase is ongoing. And also we have recently announced FDA's acceptance of the XP002, IND for our first biologic product candidate [inaudible] and antibody drug conjugate, or ADC targeting tissue factor. That's been rationally designed such that the binding site of the antibody does not interfere with the coagulation cascade based on this design and the available preclinical profile.

We believe that XP002 may have the potential for a best-in-class ADC targeting tissue factor. They're looking forward to progress on the phase one studies for both compounds, the trials have been designed as efficient Joseph's collation trials with these specific expansion cords to allow for early assessment of initial antitumor activity. Now look forward to updating you on progress and our clinical pipeline in the future. And with that, I'll hand the call back to Mike.

[Mike Morrissey, President and Chief Executive Officer]

All right, thanks case law. As you heard on the call today, we're off to a great start in 2021 just last week, we marked the fifth anniversary of the first regulatory approval and launch of Cabo medics in the us that milestone based on best in class data for Cabo in the phase three meteor trial in second line RCC, Cenex Alexis on the path to becoming the company. It is today over the last five years, we've expanded the opportunity for compass antenna to treat patients with thyroid renal and liver cancer, and have helped tens of thousands of patients in the U S in a similar number globally with our partners, Ipsen and Cicada. We're so excited about the potential of our work, including the ongoing Cabos antonym pivotal trials, the grilling clinical development program for XL 092, and our diverse and rapidly maturing early stage pipeline.

As we advance in our mission to help cancer patients live longer and recover stronger. I'll close today by thanking everyone in Exelixis for their efforts in the first quarter and their individual and collective commitment, dedication, and resilience under what were obviously extremely challenging conditions during COVID. As I mentioned in my intro, we're exiting a global pandemic stronger than when it started 14 months ago, and that's a true Testament to the quality of the people we have working day in and day out as we discovered, 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, and thank you for your continued support and interest in Exelixis. We're happy to now open the call for questions and Daphne, please proceed. Thank You.

[Operator]

[Operator Instructions] Your first question comes from the line of Asthika Goonewardene with Truist Securities. Please proceed.

[Asthika Goonewardene, Truist Securities]

Hi guys and Daphane thanks for getting my name almost right there. I got didn't speak together and got some of the quarter and the strong Cabo rebound that we saw. PJ, I was wondering, I know you don't want to give too much detail, but I was wondering if you could maybe share with us, which of the first-line competitors you feel that Cabo nivo maybe gain more share than some of the others. And then I got a couple of questions for Gisela.

[P.J. Haley, Executive Vice President-Commercial]

Yeah. Thanks for the question Asthika and yeah, we're extremely pleased with the beginnings of the launch. You know, what I guess I'll say is we're as I mentioned, my prepared remarks extremely pleased with the, the rapid broad uptake across not only competitive segment segments, but clinical risk categories favorable, intermediate poor academic and community. So it will go into a lot more detail with respect to that in the numbers.

But what I will say is, as we as we look at the quarter were approved as I mentioned you in late January, so we basically had two full months on the market February and March. And if we look at our new patient market share in those two months we're, we're very pleased that we see a market share in the mid teens at that point and, you know, vectoring in a good direction exiting the quarter. So, so we're very pleased with that.

[Asthika Goonewardene, Truist Securities]

Right. Do you I was thinking about this, this is sort of, my video team has already declared that some of the tumor types that you have outlined in your plan to XP002, but not all of them. Could you tell us based on a tissue factor expression and the higher dosing that you can push with XP002, where do you think you might have an edge over to [indiscernible]? Thanks.

[Gisela Schwab, Chief Medical Officer]

Thank you for the question. And think as I mentioned we see opportunity for XP002 and it's rational design and that it the antibody does not bind and aware that it could interfere with the coagulation cascade, which should hopefully trans for, into a favorable safety profile. Number one, number two tissue factor is pretty broadly expressed and we intend to evaluate the compound across a variety of tumor types assisting of course expression profiles in the patient population and drive the program forward accordingly as we collect clinical data. So I think we have a broad opportunity and intend to pursue it aggressively.

[Asthika Goonewardene, Truist Securities]

Yeah. Ask maybe Peter could provide some color commentary here too.

[Peter Lamb, Chief Scientific Officer]

Yeah. Just to add on to what [inaudible] said in a different, in addition to the normal episode for the antibody, which has the advantage of the she outlined it does contain any kind of next generation warhead linker construct, which we believe has some advantages over the first-generation construct. This is one that Zenworks has, has advanced and developed. And then from a expression point of view, say to practice fairly broadly expressed, obviously we have clinical proof of concept, or there is clinical proof of concept with cervical cancer.

We actually presented [inaudible] iconic within the preclinical data late last year in pancreatic, I think head and neck gastric cancer. And there were several of us only two months that we haven't explored preclinically yet. So the opportunity is broad.

[Asthika Goonewardene, Truist Securities]

Right. Thanks for that guys.

[Operator]

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

[Jason Gerberry, Bank of America]

Hey guys, thanks for taking my question. One, just a housekeeping. So when you do update cosmic three, one, two, I'm wondering if we're actually going to get hazard ratios like we did with the nine E R update I believe with, or there was an issue of materiality and a need to disclose that because it was so important to the business. Whereas I wonder what HTC, if that's the same situation. And then second question, just on the second paragraph, four challenge to Cabo from Teva, it looks like they're certifying on some of the later expiring patents of how the formulation and method of use these aren't patents that are being disputed in the MSN case.

So just wondering if, if, if the reason why is because you chose not to enforce those patents or and the reason I ask is it seems like more IP is getting added to the MSN case. And so just wondering, because it seems like the Street's assuming that this product is going to go off of a cliff in 2026? Thanks.

[Mike Morrissey, President and Chief Executive Officer]

Yeah. Thanks for the questions. It's Mike I'll try to address both of them. So on the first question about the COSMIC 312 data press release. When that finally hits top line results, you know, again, we are, our practice is to normally put in some level of data. And I wouldn't want to speculate on what that would be today, but at some level of data to provide a framework for the relative activity because it's so material to us, I would argue that 312 is probably as important as a 90 yard is relative to the size of that market. Then the opportunity there in terms of a relatively nascent opportunity compared to where we know is currently. So, you know, we'll certainly, I think continue that practice with the details will be defined when we get that data. And we understand what we've got.

Okay. In terms of the second end up from Tebow, I think you think you covered all the facts pretty well. So you know, again, as we mentioned in our filings and our press release that second and came in we saw only that paragraph four letter, again, they're only challenging three orange book listed patents that expire in 2031 or later. So this is, this is relatively new news to us.

So I certainly wouldn't want to speculate on what they're thinking on what they're doing, or how we're thinking about it ourselves, or how we might proceed. You know, it's, it's something that we're certainly not surprised by any man and reform, as we've said before, you know, we expect these types of challenges to come in when you've got great compounds with great data and certainly growing revenues. And you know, we have strong data, strong IP. That's really great team who are pursuing this very, very aggressively. And we have every intention to continue to defend our patent estate vigorously to all the legal challenge channels that we've got. And we will provide updates as necessary.

[Operator]

Your next question comes from the line Akash Tiwari with Wolfe Wolfe Research,.

[Amy Leon, Wolfe Research]

Hi, this is Amy Leon for Akash. Thanks so much for taking our questions. So the first question on RCC it seems like your current guide is baking in around 13 months of durability on treatment. Do you see any sort of upside to this number? Could PFS get better with longer follow-up and how will cosmic three, one, three impact this? And then I have another one in HTC.

[P.J. Haley, Executive Vice President-Commercial]

Yeah. Hi Amy. This is PJ. Thanks for the question. You know, I, I won't comment specifically on how we are you know, thinking about modeling duration, but I think if you look at the, the PFS in the study you know, certainly very strong in patients in these clinical studies of the combinations and certainly the 90, our study are on therapy for, you know, year and a half for potentially longer. And I think it's important to remember that you know, the data is he studies mature and get presented.

Sometimes the it's not the median duration the mean or average duration continued to increase over time, but I'll kind of leave it at that, but we're certainly you know, very optimistic about the opportunity for revenue growth, as I mentioned in my prepared remarks. And I think, you know, it's early days for us in a launch, so certainly look forward to getting more and more patients on the regimen and then you know, refills they're reflecting patients benefiting from that for some time to come.

[Amy Leon, Wolfe Research]

Great. Thanks so much for the color. And then on HCC given that we're not seeing much of a differentiation on safety and efficacy with the early Cabo and nivo common combo data from check made Oh four a what's the internal expectation on how COSMIC 312 will stack up against in brave or leap 002. And what would you consider as competitive data internally? Mike?

[Mike Morrissey, President and Chief Executive Officer]

Thanks for the question. I think it's really challenging to do any kind of cross trial comparisons between a Global Pivotal trial 1 was two different molecules compared to what we had with a doublet and a triplet that were different from embraced. not only that was, you know, the, it was smaller. It was really non-randomized to with control, had a mix of first and second line patients. So I wouldn't I draw the same conclusions you are around how similar that data might be for all kinds of reasons.

So look, we're, we're very excited about the opportunity you know, certainly when you look at how we designed and enrolled three 12 relative to embrace populations are very similar, obviously Atezo is the same in both they're, they're relatively contemporaneous trials, a lot of similar sites and investigators.

The only difference is Cabo versus bevacizumab. And, you know, you can look at the single agent activity for those two agents to cross various tumor types. And I think come to your own conclusions about how Cabo might fair out there relative to Bev. So o end of the day, you've got to run the trial and, you know, get the data and look at the P values and the hazard ratios. And you know, we'll go off that to really judge our conclusions as we go forward.

[Operator]

Next question comes from the line of Peter Lawson with Barclays, Peter?

[Peter Lawson, Barclays]

Thanks for taking our questions. I know you're still waiting to do the analysis there, but when can we potentially see, see the data and what are you looking for in that data set to sort of not only support approval, but helps you provide a competitive offering in prostate cancer. And then I have a follow-up. Can you take that one?

[Gisela Schwab, Chief Medical Officer]

So the question, yeah, I think regarding cosmic or to one, we are certainly very pleased with the progress made in the study. It's a large phase 1 B trial it's been involving really well. We are excited about the data and as we look at the data, we're seeing various cohorts mature very nicely, and we would expect to begin presenting results across various cohorts and native this year and next. And so with regards to moving forward then in CRPC likewise here, as I mentioned earlier in the call, we were looking to obtain the BRC, the independent radiology review for COVID six in the next few weeks or a couple of months in the mid year timeframe.

And as without dying, of course earlier on as well, there's a lot going on in the next couple of months with the plan as NDA finding for Cosmetic 311 and also HCC top line readout in the second quarter as well. And the CRPC tough non JJ for cohort six being in the mix there as well. So certainly a lot of important milestones coming up. But we would expect to of course announced important data as we have them and obtain them. And that goes for this cohort as well. And then look forward to, to presenting data and scientific conferences and peer reviewed journal system.

[Peter Lawson, Barclays]

That's, that's really helpful. And just on your XL092, can we see data from the phase 1 B studies?

[Gisela Schwab, Chief Medical Officer]

Yeah. so XL092 is making good progress. As I mentioned earlier as well, the phase one study in phase 1 B evaluation, it's moving along. In general, I think as I mentioned also a little bit earlier we're building on a lot of experience and the successful development of cupboards on Jeanette and with that we feel that the program is importantly a de-risk. And with that experience, we are making progress in the dose escalation for single agent XL092, and the combination with checkpoint inhibitors, it's usually the MK notably, and as we are expecting or have expected from our Cabo experience, we're beginning to see preliminary promising antitumor activity and heavily pretreated phase one patients. And we also have already presented the pharmacokinetic data and we're seeing the safety profile that is consistent with our expectation and knowledge of the pathway.

So with that I think we are very, very focused on driving the program forward and introducing further combinations. As I mentioned on the call a little bit earlier and we certainly also expect to drive forward the development program towards start of pivotal studies in 2021 data providing. And so certainly with that we also will presented data on Xcel Oneida to alone or in combination when the time comes, but related, focused on advancing the development program as the primary priority.

[Operator]

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

[Andy Hsieh, William Blair]

Great. Thanks for taking my questions and congratulations on that for out quarter to, for PJ I think for all the commentaries on the initial trajectory of the CAPA launch. So I am interested in knowing, you know, taking a macro view. You mentioned that the TKA TKI market grew 19%. I do remember you mentioned about kind of the shrinking market during the rest of the the COVID-19 pandemic. Can you provide us with some commentary outlook you're seeing relative to kind of the diagnosis rate patient pool and where we are in the pandemic?

[P.J. Haley, Executive Vice President-Commercial]

Yeah. Andy Hsieh, PJ here, thanks for the question. I'm certainly happy to provide a little more commentary there. As you mentioned we did see in Q1 according to the QVR data, that NRX is for the for the market basket, as we define it CISV grew by 19% Cabo medics for NRX group 31% quarter over quarter. So very pleased with that. And as I mentioned we were the only product in that market basket to grow share. So I'm excited with regards to that. And as we mentioned, it was driven by the combination launch.

So that's great. I, I do think, you know, with regards to kind of what we're seeing and hearing anecdotally from our customers is you know, things are obviously with regards to the pandemic, it is regional, it's varied and things are dynamic and they do change, but you know, generally we see things getting back you know, to, to some semblance of normalcy. And, you know, I would expect that as we get you know, deeper into the year that we'll, we'll kind of continue it certainly helping us with access to our customers and, and, and education of them. And you know, we're hearing from them that things are, I mentioned kind of slowly getting back more to normal, but I think there's still some you know, some opportunity for that to continue improve broadly.

[Andy Hsieh, William Blair]

Okay. All right. That's helpful. Thank you. And also for, you know regarding the FCA outcome last week any potential implications for the second line HCC market dynamics I think the panelists recommended pulling off the though, but retaining KEYTRUDA label in that study?

[P.J. Haley, Executive Vice President-Commercial]

Yeah. thanks for the question again, Andy it's PJ you know, certainly something we're tracking very closely with regards to all of those. You know, obviously won't speculate on what FDA will do there, but what I would say with regards to you know, Opdivo, or even generally monotherapy in HCC which is, you know, primarily in that second line setting as we've talked about for some time now with the atezo Bev you know, being approved for about a year now and building kind of that first-line combination market becoming standard of care there.

What we've seen is that shift of, of IO utilization from, you know, second line monotherapy going to the first line while that hasn't completed that, that shift is kind of already well underway it happening which opens up more room for single-agent TKI utilization in the second line. So I think, you know, if anything depending on how, how that plays out or the kind of the coverage there just, you know, might potentially accelerate that a little bit, but I think the market's shifting as is, and obviously we'll see how three, one, two reads out soon and, you know, there'll be more potential for that market to, to dynamically change.

And you know, I think importantly, there in HCC, we're seeing and expect to continue to see more patients coming into that. So to speak first-line funnel with more and more you know, therapeutic options that are going to be helpful for patients available.

[Andy Hsieh, William Blair]

Thanks, PJ. And maybe one kinda strict question for us, for Mike or Peter. I was just the wondering -- Exelixis foundation and kind of the new really gained and biologics is think outside the box. So basically beyond the traditional framework of kind of like an antibody link payload contract for ADC.

[Mike Morrissey, President and Chief Executive Officer]

Thanks, Andy. That, that's a great question for Peter. So I'm going to pass it over to him.

[Peter Lamb, Chief Scientific Officer]

Thanks. I think it's a great question, period. And I think your view of it is essentially correct. If you look at the history, of ABCs and we've had what, 20 years of, of ADC discovery and development at this point the vast majority of the payloads that people have used to fallen into, you know, broadly three or four classes of mechanisms of action, and it's predominantly been microtubule de-stabilizing agents of one kind or another, or DNA damaging type agents, topoisomerase type inhibitors.

So I think there's a lot of interest in trying to develop novel tailors, starting to see it a little bit, obviously the number of folks working on immune stimulatory, payloads of various classes. So if you point out with our kind of 20 plus year history in in medicinal chemistry here it hadn't escaped on notice that this might be an attractive area to to explore further.

I think there's a lot of opportunity there. I think it would dovetail very well with the collaborations that we established late last year with MBE and Katelyn to access their site-specific conjugation technologies and the ongoing efforts that we have to assemble a kind of essentially a library of Andy votings and binders that would be attract against attractive targets for ATCs either through our inventor collaboration or opportunities to lead through the collaboration. So all the licenses we did with with we see like most here and this week with, with, with gala map. So the question state state stay tuned on that point and look forward to updating everyone broadly on, on what we're doing in ADC is going forward.

[Operator]

Your next question comes from the line of Yaron Werber with Cowen

[Kevin, Cowen and Company]

Hey, this is Kevin for Yaron. Thanks for taking my question. This is a follow-up to one of the previous questions about Cabo. You guys are obviously making great progress quarter over quarter in first-line renal cell. Could you share what fraction of all NRX is, are going to Cabo in Q1 compared to Q4? And, and what little color maybe on what's the feedback you're getting from physicians or payers as to why they may be sticking with other one option first-line options besides Cabo and Nivo in certain cases as opposed to you know, embracing many are pretty much across the board. Thank you.

[P.J. Haley, Executive Vice President-Commercial]

Yeah, thanks for the question. This is PJ. So I guess first I'll start with the numbers and the data. You know, what we had in Q4 was an NRX market share the market basket of 32%. And in Q1, the NRX market share for Cabo, medics was 36% and the volume growth for Cabo medics. She won over Q4 was 31%. And I guess the way way I of think about that is we're really pleased with the start there.

Particularly since our, our approval came in late January and we're seeing actually a, you mentioned payers we're seeing really you know, minimal pushback on the payer side of the data. So sort of clear cut that's great sourcing, great you know, adoption of policies broadly from a payer perspective. And I think you know, the physician perceptions, as I mentioned, if the data really good and you know, we're really pleased with that level of education. I think we have continued opportunity to continue to educate really in the community, particularly as things open up more with regards to you know, optimism around the pandemic. And I think the more we get to get in front of physicians with our database on what we're seeing, we'll continue to make progress. They're certainly optimistic.

[Operator]

Thank you. Our next question comes from the line of Michael Schmidt with Guggenheim.

[Michael Schmidt, Guggenheim]

Hey guys, thanks for taking my questions. Congrats on the great first quarter. I actually had a couple of pipeline questions as well, first, perhaps on XL092 mechanistic question here. So it's pretty obvious that the shorter half-life of this molecule relative to Cabometyx we'll probably make it easier to deal with and, and Nash the toxicity profile. Could you just help us understand how that mechanistically could translate into a potential improved efficacy benefit relative to your experience with Cabo medics? And then I had a second question.

[Mike Morrissey, President and Chief Executive Officer]

Yeah. Why don't we, why don't we let Peter take a crack at that, and maybe he can provide some color commentary to go ahead, Peter?

[Peter Lamb, Chief Scientific Officer]

So I think the goal is to as you correctly stated, was one to maintain the overall target profile of cabins antenatal hitting all the same major targets and pretty much the same ratios so that we could build off the extensive experience that we have with, with Kevin's Antony clinically, this is a single agent and in combination, but, but would use the offline. So you know, make some appropriate chemical modifications aimed at doing this last and happily that has played out well in the clinic.

The aim of you stated is to provide a, a, a way to manage the dosing and site management of side effects as fast as possible. And the shorter half-life certainly helps you do that. So I would say, overruled, anytime you can you know, optimize your dose and dosing for individual patients, you maximize the chance of providing them with clinical benefit.

[Michael Schmidt, Guggenheim]

Great. Thank you. Any thoughts there?

[Gisela Schwab, Chief Medical Officer]

I agree with everything Peter said and perhaps just to add of course it's, it's about continued dosing and as patients benefit to maintain dosing for the duration as long as patient's device benefit the other thing to offer, perhaps in addition as one additional spot is of course combined stability. And, and there, I think Fastenal dose adjustment whereas the shorter half-life comes in handy that is perhaps another consideration.

[Michael Schmidt, Guggenheim]

Great, thanks. And then just one on XL102 there, we've noticed a lot more interest now in although cell cycle targets, for example, such as a CDK two, or we one and others P 53, et cetera, just remind us where CDK seven sets in here, and whether that's a target that is expected to be broadly active or whether this is the inhibition of CDK seven would be you know, preferentially pursued in a certain genetic context or a biomarker positive patient population. Thanks so much.

[Peter Lamb, Chief Scientific Officer]

Yeah. Be happy to take that one. So again, you're absolutely right. This has been another uptake in interest in CDK is broadly. And I would say CDK seven specifically [inaudible] fits actually upstream of the classical cell cycle CDKs, which you'll see the K102 and it's responsible for activating those Kinases. It's also upstream of, of CDK four and six, which are, which were obviously the target for the cyclical cost of, of, of approved of approved drugs. So it does play a major role in orchestrating orchestrating the cell cycle. There is also maybe some role for it as well in regulating the initiation of transcription to its ability to either directly phosphorolate transcription factors or help mediate the assembly of the kind of transcription or pre-initiation complex. So it plays more than one role, but producting sprinkle predominantly on the, on the cell cycle side.

So if you look at the profile of CDK seven inhibitors, including our own in vitro in vivo, it's, it's broadly active, as you might expect for something working on the cell cycle. A lot of the indications that are being contemplated do tend to focus more on tumors that have genetic lesions that affect the activity of CDK is such as R B deletion, for example, or amplifications in various cycling genes. Another obvious place for it is potentially as a, as a treatment in tumors that become resistant to CDK four, six inhibitors and CDK seven is, is upstream of those. So there's a lot of to go the reputedly, potentially with a CDK seven inhibitor. And I think that's helping drive a lot of the interest including around.

[Operator]

Your next question comes from the line Jay Olson with Oppenheimer

[Jay Olson, Oppenheimer]

Hey, congrats on all the progress. And thanks for taking the questions. CONTACT 01 is successful. Could you comment on the potential to move Cabo plus atezo or, or maybe Oh, nine two plus atezo into first-line non-small cell lung cancer. And would that depend on PD one expression levels or some other biomarker driven approach?

[Gisela Schwab, Chief Medical Officer]

Sure. thank you. Yeah. so just to explain CONTACT 01 of course is in the previously treated patient population who have received prior CHECKPOINT inhibitors and that Phase 3 studies ongoing with already presented data from the COSMIC 312 study. And I've seen encouraging activity for the combination of CABOMETYX in this setting and ICI pretreated patients. I think as we're thinking about earlier lines of therapy and perhaps also combinations that could then be relevant for XL102 as we go forward certainly very interested in the Taser combination that is ongoing and this space with XL092 and further combinations and, and certainly the work that Genentech Roche is conducting in non-small cell lung cancer, combining [inaudible] with the TIGIT antibodies of interest, and there's some intriguing data and earlier line setting, whether or not that will be then confined to patients selected by PD one PD-L1 expression thing that remains to be seen. And perhaps there is opportunity when combining with TKI to broaden the patient population. So certainly a lot to evaluate but it's a very interesting space and a lot of opportunity I think for XL092 and also of course for covenant.

[Jay Olson, Oppenheimer]

Thank you. That's very helpful. And if I could maybe sneak in another question XL109, have you seen any preclinical data that shows potential synergy between any of your early stage ADC or small molecules?

[Peter Lamb, Chief Scientific Officer]

Yeah, that's a great question. That kind of work is actually in progress right now, so I can't comment on it yet, but stay tuned.

[Operator]

The next question comes from the line of Kennen MacKay with RBC Capital Markets

[Kennen MacKay, RBC Capital Markets]

Hey, thanks for squeezing me in and congrats on the quarter, sort of a qualitative question on the frontline market here. I'm just wondering where you're gaining more traction, whether it's academic community X, and then some of the feedback we've had is from some physicians that you know, what they appreciate most about the combination is its potential to induce super, super fast and deep CRS or, or dare their DPRs. And as a result of that, there, there may be using it in patients with bulkier tumors wanted to hear if that was something that team was, was hearing as well, or you know, whether it's just such a broad market to, I would say. Thanks. Thank you guys again.

[P.J. Haley, Executive Vice President-Commercial]

Yeah. Hi Kennen, it's PJ. Thanks for the question. You know, as I mentioned, I think that the uptake is really it has been broad and the feedback that we've received is that it really is you know, the data resonating across sort of a variety of clinical you know subsets, so to speak, or, you know, if you want to be as specific as defining it as the IMTC risk categories. So favorable, intermediate and poor, I'd say, you know, it, this early stage, we're seeing it broadly. And I wouldn't really say differentially based on the curly data, but stay tuned.

You know your comments specifically about say kind of a symptomatic patient you know, needing a response. That's something that you know, generally I think has been a hallmark of Cabo Moto therapy in a later setting, but certainly as physicians began to see the data and 90 are, I think that's certainly a place it's, it's thought of to be used in those types of patients, which are certainly you know, gratifying know that said even on the other end of the spectrum, you see you see us doing really well in the favorable risk category.

And you know, we've just recently gotten NCCN category one recommendations across all those risk groups. I think that'll continue to provide momentum for us particularly in that favorable setting. But you know, we're gratified we're seeing uptake across all patient types and, and from physicians that it's benefiting their patients.

[Operator]

Your next question comes from the line of Paul Choi with Goldman Sachs

[Paul Choi, Goldman Sachs]

Hi, good afternoon, everyone. And let me also have my congratulations on the quarter. My first question is for Gisela with regards to the contact one and two programs, I know you indicated that both those studies are enrolling, but could you maybe indicate whether there's some early initial data from early, early enrolled patients might be possible by later this year, and then I had a follow-up on the commercial or financial side for Chris.

[Gisela Schwab, Chief Medical Officer]

Thanks. Yes. I'm CONTACT one and two and three for that matter. All of these Phase 3 studies and involving patients globally, and we're pleased with the progress and the studies for sure. The data is not expected to be available this year. These are relatively sizable, large Phase 3 studies, and of course the end points are a time to event endpoints depending on the study PFS and your words or, or itself. So that will take a little bit longer and it's to be expected not before 2022.

[Paul Choi, Goldman Sachs]

Okay, thank you for clarifying that. And then as a one for Chris, I think last quarter, you highlighted a seven and a half million inventory benefit. I was wondering if you could quantify it for it for this quarter as well. And then you know, just give it a strong start, start to the year. You, you left guidance on chain. So I was just curious, you know, what was the sort of thinking at least behind not raising the low end of the revenue guidance? Thank you very much.

[Chris Senner, Chief Financial Officer]

All right. Hey, Paul, thanks for the question. So on the inventory side, I mean we didn't quantify it this time, but it's about 300 units and in the $6 million range at our at our wholesale acquisition costs and you know, about four and a half, if you think about it, net net benefit perspective.

So our net detriment to this quarter perspective. And then from a guy's perspective you know, we were very pleased with where we started the year. We continue to be said it was, we had about two months into the, into the quarter for two months in the quarter from a from a performance perspective. And you know, we continue, we're going to continue to monitor it. It's a very dynamic market. There's, there's a lot of, there's a lot of competition in the market and we're going to continue to, and it's very early in the launch. So you know, we'll continue to look at it and revisit it in the in the future quarters.

[Operator]

[Operator Instructions] And your last question comes from the line of Stephen Willey with Stiefel.

[Stephen Willey, Stifel]

Good afternoon, guys. Thanks for squeezing me in and congratulations on the quarter, just a couple of quick prostate questions. So I guess at time of the COHORT 6 disclosure indoor presentation will we see some of the additional cohort COHORT data that's been embedded within this COSMIC 021 trial design in terms of, I think there's a single agent, Atezo a single agent Cabo Cohort. Just wondering if you plan to present that in conjunction with a COHORT six disclosure and then just have a quick follow.

[Mike Morrissey, President and Chief Executive Officer]

It's Mike, it’s probably a little bit too early to opine upon or speculate on how we'll roll all that out. You know, we understand the importance of the data relative to both keeping investors up to date on what's happening, but also in relative to a filing. So Stacy, but w let's get that done and then we'll roll out data at the appropriate time.

[Stephen Willey, Stifel]

Perfect. And, and I guess in any of the regulatory dialogue, tad with FDA, would, would do you think that a label here is going to be limited to, to, to patients with measurable disease at baseline? Or do you think that there's an opportunity that you could get a bit of a broader language that would allow you to treat some of these patients that have bone only disease as well? Thank you.

[Mike Morrissey, President and Chief Executive Officer]

Yeah. Look, I wouldn't want to speculate on, you know those on the outcome of those discussions that we have, and I wouldn't want to talk about the discussions either. I think it's probably safe to say that labels usually wine with populations that were studying. So I would think about it from that point of view. I think that's probably the safest way to go, but you know, we'll, again, when we get that far and we're thinking about you know releasing that information we'll be happy to share that with you at the appropriate time.

[Operator]

At this time. There are no further questions and so I will turn the call over to today's host Susan Hubbard. Thank you.

[Susan Hubbard]

Yeah, thank you, definitely. And thanks everybody for joining us today. Certainly happy to take your follow-up calls with any additional questions you may have after we conclude. Thanks again,

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. And you may now disconnect.