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Good afternoon, ladies and gentlemen, and welcome to the Exelixis' First Quarter 2020 Financial Results Conference Call. [Operator Instructions]
As a reminder, this conference is being recorded. I would now like to hand the conference over to your host, Ms. Susan Hubbard, EVP of Public Affairs and Investor Relations. Please proceed.
Thank you, Anita, and thank you all for joining us for the Exelixis' first quarter 2020 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 together will review our corporate financial, commercial and development progress for the first quarter 2020 ended March 31, 2020. Peter Lamb, our Chief Scientific Officer, is also with us and will be joining for the Q&A session, following our prepared remarks.
During the call today, we will refer to financial measures not calculated according to general 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 as well as the impact of the COVID-19 pandemic on Exelixis' business operations.
Actual events or results could of course differ materially. We refer you to the documents we file from time to time with the SEC, which under the heading Risk Factors identify important factors that could cause actual results to differ materially from those expressed by the company verbally and in writing today. Including without limitation, risks and uncertainties related to product commercial success, market competition, regulatory review, and approval processes, conducting clinical trials, compliance with applicable regulatory requirements, our dependence on collaboration partners, and the level of cost associated with discovery, product development, business development, and commercialization activities.
And now with that, I will turn it over to Mike.
All right. Thank you, Susan, and thanks to everyone for joining us on the call today.
Exelixis had a strong first quarter across all components of our business. Our entire team working remotely as a cohesive unit continues to navigate the challenges of the COVID-19 pandemic with a singular focus of ensuring that we do everything in our power to maximize access to cabozantinib for cancer patients through either commercial channels or clinical trials.
We recognize that cancer patients need to take the treatments as directed and we've gone to great lengths to ensure patient access to our medicines in these challenging times. We'll keep our prepared remarks short and address your questions as the main part of today's update.
Please see our press release that was issued an hour ago for our first quarter 2020 financial results and an extensive list of corporate highlights. Before we review the performance of our business in the quarter, I want to provide a brief update on how Exelixis has responded to COVID-19 at an organizational level.
Our top priority is the health and safety of the Exelixis workforce, so we implemented our work from home policy ahead of the California shelter-in-place order and quickly pivoted our sales force to move to virtual touch points with prescribers.
At the same time, the 600 plus members of our Exelixis team have engaged in the fight against COVID-19 on the community level by donating to charitable organizations supporting cancer patients during the pandemic, which Exelixis has matched at the corporate level and through the donation of personal protective equipment to a local care facility.
We'd like to think that tough times bring us - brings out the best in people and I'm proud to say that's certainly the case at Exelixis. The COVID-19 pandemic continues to evolve quickly and has had a relatively modest impact on our business to date. We remain optimistic that the 2020 and 2021 timeframe can be a period of focused execution and achievement for Exelixis.
While the pandemic is imposing challenges on our day-to-day operations and gives rise to a level of uncertainty, we remain on track to have 12 label-enabling trials for cabozantinib enrolling by year-end and achieved six top line data readouts over the course of the year, which could lead to four new potential indications for cabo in 2021.
We also expect to advance XL092 into immune checkpoint inhibitor or ICI combination cohorts and file up to three new INDs for compounds from internal or collaborative effort. Obviously, everything is fluid at this stage and we'll continue to update you, as we progress throughout the year.
The recent success of CheckMate-9ER with the cabo-nivo combination in first-line RCC highlights the important role cabozantinib can play as a TKI backbone in driving both compelling efficacy and tolerability and ICI combination strategies and provides potential encouraging read through for ongoing and planned pivotal trials for other ICI combinations in new indications.
Finally, as you know we have an ongoing and the litigation against MSN. Earlier today, we received notice that MSN has filed additional Paragraph IV Certifications challenging the cabozantinib composition of matter patents and a method of use patent, two already book-listed patents, not asserted in their original Paragraph IV letter.
We are not surprised by this development, as such challenges standard in the ordinary course of pharmaceutical business. We are well prepared to respond and vigorously defend what I believe to be a very strong intellectual property estates that protects cabozantinib, an innovative drug of growing medical importance.
So with that, I'll turn the call over to Gisela, who will provide an update on CheckMate-9ER and other 2020 development activities. Gisela?
Thank you, Mike.
I'm very pleased to provide a brief update on development and regulatory progress in the quarter. I'll start with a very exciting recent announcement for the pivotal Phase 3 study CheckMate-9ER by our sales and BMS. This important Phase 3 trial compares cabozantinib plus nivolumab with sunitinib in previously untreated patients with RCC including all IMDC risk groups.
The study completed enrollment earlier in 2019 and as projected has now achieved top-line results as announced on April 20, 2020. We are extremely pleased with the results that showed that CheckMate-9ER met all three efficacy endpoint.
The primary endpoint was progression-free survival assist by independent radiology committee cabozantinib in combination with nivolumab significantly reduce the risk of disease progression or death compared with sunitinib within hazard ratio of 0.51 and a p-value of less than 0.0001.
The secondary endpoints were overall survival and objective response rate. The combination of cabozantinib with nivolumab also significantly improved overall survival compared with sunitinib with a hazard ratio of 0.60 and a p-value equal to 0.001 and the objective response rate with a deep and durable responses observed.
The median follow-up time was 18.1 months. The preliminary analysis of the CheckMate-9ER safety data showed a favorable safety profile with the combination of a 40 milligram dose of cabozantinib combined with nivolumab with a low frequency of treatment discontinuations due to adverse events.
We would like to thank the patients who participated in this trial as well as the investigators and site personnel for their perseverance during the conduct of the study and for ultimately delivering this important results for patients in the midst of the COVID-19 pandemic.
We'd also like to congratulate our collaborators at Bristol Myers Squibb, who sponsored the trial and look forward to our continued collaboration with BMS, as we work toward regulatory filings in the near future. We also look forward to the detailed results of CheckMate-9ER that will be submitted for presentation at an upcoming medical conference.
These striking results provide further clinical support for the concept that cabozantinib may enhance the activity of immune checkpoint inhibitors and add to the growing body of preclinical and clinical data for scientific rationale for combining cabozantinib with immune checkpoint inhibitors.
Moreover, the tolerable safety profile as seen in the preliminary analysis of safety data from CheckMate-9ER further reinforces the 40 milligrams cabozantinib starting dose in combination with nivolumab and it expands on similar observations and the CheckMate 040 Phase 1b trial in hepatocellular cancer presented at ASCO GI and also our Phase 1b trial of cabozantinib and atezolizumab in COSMIC-021 cohort 6 in prostate cancer presented at ASCO GU this year.
The scientific rationale for combining cabozantinib and checkpoint inhibitors is directly relevant for our broader ongoing and near term planned development programs for cabozantinib across different tumor types.
This program spends a 12 ongoing or near-term planned pivotal studies including our ongoing Phase 3 trial of cabozantinib in combination with nivolumab and ipilimumab versus atezolizumab and ipilimumab in first-line RCC the COSMIC-313 trial, as well as the Phase 3 trial COSMIC-312 in first-line HCC comparing cabozantinib in the atezolizumab versus sorafenib and our large multi-cohort Phase 1b study evaluating the combination of cabozantinib and atezolizumab in 24 cohorts across many different tumor types and settings. As well as our near-term plan Phase 3 studies in non-small cell lung cancer, CRPC and renal cell cancer under our wells to 50-50 clinical collaboration agreement.
This broad late-stage cabozantinib development program is making very good progress even in the face of the challenges that the COVID-19 pandemic presents for patients and sites given travel restrictions and quarantine.
And to close, just a few words regarding the upcoming ASCO Conference. We look forward to presenting results from three cohorts of our COSMIC-021 study evaluating cabozantinib and atezolizumab and checkpoint inhibitor pre-treated non-small cell lung cancer and second line bladder cancer as well as biomarker results from our cohort 6 in prostate cancer and additional presentations including a randomized Phase 2 study comparing cabozantinib and nivolumab with single agent nivolumab in endometrial cancer from the NCI's future program.
And with that, I will turn the call over to Chris.
Thanks Gisela.
For the first quarter 2020, the company reported total revenues of $226.9 million. Total revenues for the quarter included cabozantinib franchise net product revenues of $193.9 million. Compared to the fourth quarter of 2019, inventory of CABOMETYX held at our customer increased by approximately 500 units and inventory weeks on hand increased to approximately 2.9 weeks from 2.6 weeks and remains within the typical range of inventory weeks on hand. Total revenues also included $33 million in collaboration revenues from the company's commercial collaboration partners, Ipsen, Takeda and Genentech.
Our total operating expenses for the first quarter of 2020 were $174.1 million compared to $163 million in the fourth quarter of 2019. R&D expense was the primary driver of the increase in total operating expenses, which increased by approximately $7 million and was primarily related to increases in clinical trial expenses, as we continue to invest in maximizing the full clinical and commercial potential of cabozantinib.
Provision for income taxes for the first quarter 2020 was $11.4 million and our effective tax rate for the quarter was 19% compared to $16.3 million and 19.1% for the fourth quarter of 2019. Company reported GAAP net income of $48.6 million or $0.15 per share on a fully diluted basis for the first quarter of 2020. Company also reported non-GAAP net income of $59.4 million or $0.19 per share on a fully diluted basis.
Non-GAAP net income excludes the impact of approximately $10.8 million of stock-based compensation expense, net of the related income tax effect. Cash and investments increased by approximately $52 million during the quarter ended March 31, 2020 to over $1.4 billion.
Now turning to our financial guidance, while we recognize the impact of COVID-19 pandemic is a very fluid situation, we continue to believe in the strength of our business and therefore, we are maintaining the financial guidance we provided earlier this year. Total revenues are expected to be in the range of $850 million and $900 million, net product revenues are expect to be in the range of $725 million and $775 million, cost of goods sold is expected to be between 4% and 5% of net product revenues.
Research and development expenses are expected to be in the range of $460 million and $500 million and includes non-cash expenses related to stock-based compensation of approximately $25 million.
Selling, general, administrative expenses are expected to be in the range of $230 million and $250 million and include non-cash expenses related to stock-based compensation of approximately $30 million. Our guidance for the effective tax rate in 2020 expect to be between 20% and 22%.
And finally, we are projecting cash and investments to be in the range of $1.5 billion and $1.6 billion. This cash and investments guidance does not include the impact of any potential new business development activities.
With that, I'll turn the call over to P.J.
Thank you, Chris.
I'm pleased to review the commercial performance of CABOMETYX for the first quarter 2020. CABOMETYX continues to be the number one prescribed TKI in RCC, which is notable in the context of an increasingly competitive market, which now includes three first-line immune checkpoint inhibitor or ICI combinations. With regards to the business, we did not see a significant impact of COVID-19 in the first quarter, as CABOMETYX we demand was stable in Q1 2020 relative to Q4 2019.
Our team has been and continues to be focused on compliantly supporting the healthcare providers who treat CABOMETYX patients since the pandemic has taken hold in the US. We are proactively communicating the availability of drug supply to our customers as well as supporting them by continuing to educate on the Exelixis Access Services or EASE Program.
We are doing this through virtual speaker programs, lunches, phone calls and digital tactics. Our customers appreciate this focus on ensuring their patients have appropriate access to CABOMETYX therapy in these challenging times. In Q1, the prescriber base of CABOMETYX continued to grow and CABOMETYX continues to be used broadly in RCC across academic and community settings, clinical risk groups, and lines of therapy.
As we have previously mentioned, the first-line RCC market stabilized in the second half of 2019 and this continued into Q1 or CABOMETYX first-line new patient share remained steady and ICI combos continue to capture the majority of the first-line new patient market share with approximately 75% of the market. We are excited by the recent outcome of the CheckMate-9ER study, as these results pending regulatory approval will provide us with the opportunity to grow CABOMETYX market share and increase duration of therapy in the first line.
As we have now been in this market for over four years, our team has deep knowledge and experience in RCC and we would look forward to the opportunity to educate physicians on this data at the appropriate time, so that more patients have the opportunity to benefit from CABOMETYX therapy in the first-line setting.
We are particularly pleased with the progress that CABOMETYX has made in the second line setting in Q1, where new patient market share increased to 45%. This was driven by more ICI combination pre-treated patients progressing into the second line setting, where CABOMETYX continues to be the treatment of choice for the majority of these patients, primarily due to the fact that is the only TKI with a strong OS benefit per the label in the second-line population. We are pleased to see this trend play out in the marketplace and anticipate that the strength in the second-line market will continue.
Turning briefly to HCC. The US CABOMETYX business remains stable. We anticipate the combination of atezolizumab and bevacizumab will receive approval in first-line HCC soon. Subsequently, the HCC landscape will likely evolve in a similar fashion to what we saw in the RCC market with ICI combination therapy moving to the front line, which could be an important new standard of care for treatment-naive liver cancer patients and serve to expand the first-line market.
We anticipate this will in turn increase TKI monotherapy utilization in the second line setting, the second line ICI monotherapy use decreases over time. Additionally, we look forward to further ICI combination data with cabo in HCC to add to the CheckMate 040 data presented earlier this year. COSMIC 312 will provide the next Phase 3 readout of cabozantinib in combination with an immune checkpoint inhibitor and represents another potential growth opportunity for the franchise.
We strongly believe that there are many more eligible patients, who could benefit from CABOMETYX. CABOMETYX remains the number one prescribed TKI and RCC and we look forward to building on this momentum in RCC, HCC, and other potential future indications such as prostate and lung as our development as program evaluating cabozantinib in combination with immune checkpoint inhibitors expands and progresses.
The exciting data from 9ER is the first of these Phase 3 combination trials to read out and we look forward to the opportunity to bring this combination to markets, as we continue to build the cabo franchise. Our team remains highly focused and motivated to compete every day to bring the benefit of CABOMETYX to all eligible patients, as we continue to build the franchise and maximize its clinical and commercial potential.
With that, I will turn the call back over to Mike.
All right. P.J., thank you.
As I said in the intro, we're off to a strong start in 2020. While we recognize the risk to our business, should the pandemic grow in severity or continue unabated, as of now, we expect a data-rich year, as we advance cabo towards new potential indications and additional compounds into the clinic.
We're excited to present new data throughout the year and specifically at the upcoming virtual ASCO meeting. Most importantly, we hope to build on the momentum from the CheckMate-9ER, our top line results as we continue to chart our path to additional indications for cabo and build out a diverse portfolio of next-generation Exelixis cancer medicines.
I'll close by thanking everyone in Exelixis for their truly herculean efforts since early March. Our team has been working from home for almost two months now, continuing their efforts on behalf of cancer patients while also juggling the personal challenges that everyone is facing in these troubling and uncertain times.
I have never been more proud or inspired by the team's resilience, focus, and commitment. The entire team is dedicated to making every day count even now under such trying conditions as we discover, develop, and commercialize the next generation of our medicines for cancer patients in need of better and more effective therapies.
We look forward to updating you on our progress in the future. Thank you for your continued support and interest in Exelixis and we're happy to now open the call for questions.
[Operator Instructions] And your first question comes from the line of Asthika Goonewardene with SunTrust.
This is Asthika Goonewardene from SunTrust. I find some very interesting iterations of my name on these calls. Thanks for taking the question and I want to say Congrats on continuing to execute well. So with ASCO ahead, I got a question for Gisela here, I have two. I'm not going to ask you about the lung cancer. But you had some more time to analyze and do some of the biomarker results for the prostate - business in prostate cancer from cohort 6. You had some time to kick the ties and Gisela, I want to know, I'm not asking what the data is, but I would like to get your view on what you think is most interesting translational analysis that we'll see in this data set. And then I've got a couple of quick follow-ups after that.
So for the COSMIC-021 study, we have a pretty broad biomarker program and that looks at various components of the immune cells, tumor cells, expression patterns, and genetic alteration, so it's a broad program and without preempting here what the data says, it's certainly looking forward to provide the information on the CRPC cohort, which we'd seen already the clinical data at ASCO.
And then, so overall, if you've delivered on RCC, CRPC non-small lung cell coming around the corner and hopefully HCC late this year. But what's the next tumor type, maybe that's coming out of 021 that - that's going to be really exciting beyond these.
So we have a number of plans in this line, so to speak and ongoing studies, and you mentioned yourself, we have the 312 study and first-line HCC that is ongoing and comparing cabozantinib plus atezolizumab versus sorafenib. We have the 313 study in RCC on the backbone of nivo-ipi adding in cabozantinib and certainly a lot of indications go into evaluation in the COSMIC-021 study.
We also - one indication you haven't mentioned I think as our single-agent evaluation of cabozantinib in differentiated thyroid cancer is looking in the second, third line setting cabozantinib versus placebo in this COSMIC-311 study. For that trial, we've involved 100 patients in February and we look forward with a sufficient follow-up of a minimum of six months to evaluate the objective response rate in the trial. So that's ongoing and certainly lots to come as the years goes on.
And last one for Michael is that XL092, can we have any sort of clarity on it in terms - I know it's in - in the next - in this year that you're saying, maybe you have a first look at that - any time soon get a little more clarity on when we'll see that?
Yes. Why don't we - thanks for the question. Why don't we have Peter address that. Peter Lamb, you want to go ahead.
Yes. Sure. So for XL092 and actually for a number of more advanced preclinical programs, we're definitely intending to present data on those in the second half of 2020, as we've kind of guided we have the opportunity to file up to three INDs this year based on what's going on pre-clinically right now.
As of now, that opportunity is still left, so we look forward to getting some information out on a number of those programs and 092 in the second half as I said. I haven't quite finalized yet exactly where or what meetings or exactly what the content will be, so stay tuned and we'll update as those details get locked down.
Your next question comes from the line of Yaron Werber with Cowen.
I have a couple of questions. Maybe, actually let's start - I think that 092 is actually critical to the way we kind of look at the business over the long term. And so, maybe just a couple of questions, one, have you started the combination cohorts yet that were going to follow the monotherapy data. And then as you think about what you need to established to move to Phase 3, is it possible to start a pivotal next year. And then I have a question about cabo.
Gisela, go ahead, why don't you answer that...
Sure. Thank you, Mike. So regarding your question, where we at on the 092 evaluation, we are in the dose escalation phase still on similar agents that are preparing for the evaluation with checkpoint inhibitor combination and that we expect to occur in the next few months and there are opportunities to expand cohort, a little bit like we've done in the COSMIC-021 study, enrolling larger numbers of patients in certain indications and if we like what we see there, we could potentially move forward relatively quickly from such observations, but it all will be data dependent.
Okay. And maybe Gisela, for ASCO in COSMIC-021, the data in lung cancer in second line, can you give us a sense of how many patients in combination with the cancer should we see, I recall there was expanded up to 80 patients. And then, how do you look at what's the right bar to move to pivotal on both OR and let's say durability of response.
Yes. Like we said in prior calls, we want to see sufficient follow up in the cohorts and so that's what we've been aiming for all our presentations and continue to do so. We'll have the first look at that at ASCO for the lung cancer cohort and checkpoint inhibitor pre-treated patients, excuse me, and certainly look forward to that first evaluation and as you said, we've already begun to expand that cohort for this, so I won't get into specific patient numbers, we'll see that shortly at ASCO.
And regarding your question on the bar, there's certainly data out there on single agent approaches in the setting or combination approaches and while we're not going to speculate on numbers at this point, I think we certainly look forward to presenting the data at ASCO and showing you the results at that point in time.
Okay. And - but you're thinking that if we look at the combination of docetaxel and ramu, that's kind of response rate in the 20s is the right bogey. You're not thinking that docetaxel single agent response rate of let's say 16 or 6 to 16 of the bogey.
Yes. As I said, there are multiple data points out there and certainly in the literature and you mentioned a couple and so, I'll leave it right there.
Okay. Chris, maybe just a quick question, just to make sure we heard you and it's my last question, the inventories increased to 2.9 weeks from 2.6 weeks and it remained within the normal range, I missed exactly the comments on the growth that you mentioned in inventories. Thank you.
Yes. Yaron, it's Chris. So it - so the inventory did increase by about 500 units, which increased our weeks on hand from Q4, which was 2.6 weeks to 2.9 weeks as we ended Q1.
Your next question comes from the line of Andy Hsieh with William Blair.
Thanks for taking my questions and I hope everyone at Exelixis is well, staying safe and healthy. Want to congratulate the team for the positive competitive 9ER results. So we alluded to that, I think both the physician and investment communities are trying to craft comparison and totally understand patient and overall survival. But curious about your thoughts on progression-free survival in the context of a head-to-head comparison perhaps that's a clear and maybe that's confounded efficacy metric, curious about your thoughts there.
Yes. Thanks Andy. Gisela, why don't you start there and then maybe P.J. can provide some color commentary too.
Absolutely. So first of all, we're really pleased of course that the study met all three efficacy endpoints and showed such strong and consistent results. Regarding PFS, it's the primary endpoint evaluated by independent radiology review, but it is unconfounded of course by subsequent therapies, because of the nature of how it is measured and I think it certainly showed very strong results, but so did the other endpoints.
With that, I'll hand it on to P.J.
Yes. Hi Andy, and I hope you're doing well too. Based on the market research, we've done in 9ER, first of all, we're extremely excited by the results, the top line results we have out there look forward to presenting it. It's really the totality of the data we've seen historically is in terms of the efficacy is all important to do, depending on the patient, etc.
So we're pleased to have all these endpoints be positive and with the strength they have and importantly too, I think in this as we've mentioned the tolerability profile is important as well. We hear that from physicians and are pleased with, with that as well from 9ER and that's certainly important to be able to get the patients on therapy and appropriately manage them and keep them on therapy for a long time, which is why we're excited about the results. It should be very important for the patients themselves and then really for the cabo business, as we look to increase market share in the first-line setting and ultimately the duration there as well.
Okay, great. Thanks for that additional insight. So at AACR, we saw the detailed results from the investor to pick and trial, so things for we're providing considered preclinical rationale of the potential synergy between cabo and nivo is that, I'm just wondering about any additional thoughts you put the cohort 6 in context given what has transpired at AACR.
Yes. I think what was certainly interesting is, for us and our cohort 6 data is that we saw a strong response rate - per the design of the trial was the 32% objective response rate in a situation where neither cabozantinib nor atezolizumab resulted to high response rates by themselves, in fact there are hardly any responses observed can published in this setting.
So that I think signals to us a cooperative activity and certainly against the basis and on the biological front to cabozantinib results in a more immune permissive environment in April in the checkpoint inhibitor activity. So I think that, I think the data that we can speak to ambassador was a negative study and didn't show any improvement over enzalutamide alone and the combination.
And that in the large study and so that's a definitive answer I guess for this particular setting and that combination. But I think we need to look at each combination and the biological rationale, they're off independently.
And two quick ones, just an interesting observation, I think if you look at the KEYNOTE-426 study, it's a Merck sponsored trial, JAVELIN Renal 101 that's a Pfizer sponsored trial. So the data for both trials was not included in the - in wider label. So I'm just wondering if you can educate us on kind of the labeling process on the regulatory side, given the fact that Bristol is kind of driving the process and also in terms of the bench trial, thanks for the additional information in the 10-K, April 2022 starting, just want to make sure that if this goes all the way to be a fuel process during that time is the patent still enforceable.
Okay. Gisela, why don't you go ahead and take the regulatory question first and then I'll come back to the last question.
Sure. So regarding the inclusion of data in the label for a specific compound that is of course the decision of each company to amend the label. And as we stated in the past, we are working collaboratively with BMO to work expeditiously towards a regulatory filing and we would anticipate that, of course, to be lead by BMS, who was the sponsor for the study of CheckMate-9ER, but we would also anticipate a more or less parallel trialing to the cabozantinib label, so it's ultimately a decision of the sponsor really.
Got it. Thank you.
Andy, it's Mike. And in your last question, obviously all the patents in the orange book are enforceable.
And your next question comes from the line of Peter Lawson with Barclays.
On the 9ER data, congratulations, but then on top of that, are you seeing any off-label use by physicians after the - after hearing about the top line data, if you've seen an uptick and I've got a follow-up after that.
Yes. Hi Peter, it's P.J. First and foremost, we obviously don't promote any off-label data and I will say, it's very early in the data, not having been presented, I think generally - in general terms, what would we expect any of that, at this point, I mean I think we're pleased by what I mentioned in my prepared remarks, in terms of Q1 is really to strength the business in terms of being stable and first-line RCC new patient market share from the monotherapy perspective and then certainly very pleased with growth in our second line new patient share now reaching 45%, so very pleased with that momentum in the current business as well as the excitement in preparing for 9ER.
Thank you. And then I guess kind of a follow around COVID, you've seen any increased cabo use amid social distance and any way of breaking that out and do you think you are seeing that benefit, does that stay.
Yes, Peter. Thanks for the question. Yes. We haven't seen any incremental use from that perspective, certainly occurred at the shutdown at the end of Q1. I'm just really pleased our team is doing everything they can to support our customers to treat the patients who were on CABOMETYX and I think they're doing that appropriately with a lot of digital tactics in place generally, we're doing more of those and been able to convert a lot of our in-person meetings, communication speaker programs to virtual either telephone over online meetings, which is great, doing that compliantly, like I said, I think the strength we're seeing in the business is really related to the increase in second-line market share.
Great. Thank you so much. Thanks for taking the questions.
And your next question comes from the line of Michael Schmidt with Guggenheim.
Thanks for taking my questions and congrats on the quarter and the CheckMate data as well from me. Maybe just a follow-up for P.J., what market share does in light of KEYTRUDA combination now have in the front-line RCC setting and how do you think about potentially overcoming any kind of potential by physicians to us which over either from that or from, if you move over to cabo, Opdivo pending approval of that label.
Yes. Hi, Michael. Thanks for the question. So what I mentioned in the prepared remarks and what we've said previously is that the ICI combinations have really stabilized and that's going back to the end of last year in terms of their market share, new patient market share in the first-line, somewhere around the 75% range, altogether and I think approximately you could think of the pembro-axi, nivo-ipi is approximately each having half of that. So I think, we look forward at the 9ER launch, we're certainly really excited and the data will be very important. So we're pleased that we have good data and look forward to presenting that.
The other thing I think about is our team has a lot of experience now in this market in RCC. We've now been approved in RCC for just over 4 years and have a stable team in place in that time with a lot of depth of knowledge in relationships frankly in the marketplace.
So I think that's - that's a great thing. And then as you look at the two drugs, we're talking about here, as we said previously CABOMETYX, Opdivo really, really the first and only monotherapy to show overall survival benefit in RCC, which certainly gave us optimism in terms of the trial results. So we're really excited to work with that and build on that as we move forward for the launch.
Great. Thanks. And then just on cost may go to one, I know that you and Roche have committed to a Phase 3 trial for some time now and non-small cell lung cancer and I was just wondering if there is still an opportunity to maybe consider an accelerated approval pathway indication like you have done in prostate cancer or if this is - if this is certainly to go into a fully-fledged randomized Phase 3 trial at this point.
This is Gisela. I think obviously we want to see the data at ASCO. And as you know, we have expanded at the cohort to a total of 80 patients to be enrolled in the COSMIC-021 study and any such considerations would be entirely data driven and that said, we are moving forward towards the - towards our collaborators on the program, class these as three Phase 3 studies in lung cancer, prostate cancer, and also RCC cancer and also RCC and look forward to starting those studies in the next few months.
And then maybe just one more Gisela on - with regards to the cohort 6 prostate cancer, arm of the study. How should we think about potentially updating that cohort down the road at a medical conference before potential filing should the data want that in prostate.
Sure. I think right now, it's a little bit too early to say the consistency, we'll want to see sufficient follow up also for the expanded cohorts, but it would anticipate, certainly presenting the data once mature and whether or not that coincides or comes before any regulatory steps if warranted by the data that really remains to be seen, it's a little bit hard to tell right now.
Your next question comes from the line of Jason Gerberry with Bank of America.
A couple for me too, so first in renal cancer, one of the things that we're hearing from physicians is that use of Opdivo Yervoy is coming under pressure because patients who might get this, they are in a higher risk age demographic, the Yervoy related immune toxicities are a concern. So I'm wondering about how you see that as a potential opportunities, the CheckMate-9ER opportunities eventually rolled out into the market, because the obvious beneficiaries will be TKI mono or an IO TKI combination. So first, I guess, I'll just leave that there to get your - guys thoughts on that question.
Yes. Hi Jason, it's P.J. I think with regards to the data we've seen in the market thus far in terms of market data sort of commercial data, we haven't seen, as I kind of mentioned previously, a big impact to COVID one way or the other. We're pleased that the cabo business is strong and that our TKI monotherapy frontline market share is stable.
And in particular, growing in the second line is more patients, just really in the kinetics over time are progressing off of immune checkpoint inhibitor therapies and we're capturing the vast majority of those in the second line and would anticipate that strength to continue, but as far as speculating with regards to COVID so many months out with regards to our launch, I wouldn't really want to do that, I think what's really going to be important is the data and we're really pleased to be able to have the opportunity to bring that to customers.
So you don't - it sounds like you don't see much of an impact to the Opdivo Yervoy combo in renal. My other question was just on lung, I realized you guys aren't going to say much about patient enrollment strategy, but from what we see from other companies in the space, it looks like they're requiring patients some at least to have been on IO for at least four months, presumably to select for patients who have acquired IO resistance. So just curious to get your thoughts on whether you think that's a prudent enrichment strategy going into this post-IO setting and in doing so, does that materially reduce the addressable market size. Thanks.
Gisela, you want to take that one.
Sure. Yes, I guess the question you're asking is one of acquired resistance versus a priori resistance and there is of course some debate around the prognostic value in allowing in patients, who have had a minimum of four months or longer of prior checkpoint inhibitor treatment suggests that that might be acquired resistant population and that population might proceed to a little bit better than those who progress right to a checkpoint inhibitor therapy.
So I think of course we're still learning about this field day-by-day and I'm not sure that the enrichment strategy would go towards, if you will work patient population, if you require a longer prior treatment durations on checkpoint inhibitors.
And if I could just squeeze one follow-up. And just following CheckMate-9ER, not to go back and forth here, but I did. Are you more optimistic about the IO cabo triplet in development after CheckMate-9ER in terms of either your ability to move the needle from an efficacy perspective or just a safety that you're seeing with the cabo 40 milligram starting dose and how your compositions are better at learning how to dose modify. Thanks.
Yes. I think we're very excited about the triplet most certainly and have been and the results of CheckMate-9ER perhaps if there anything further reinforces that because the opportunity to achieve even more with a drug strategy and what has been seen in the early Phase 1b studies done at the NCI have been certainly encouraging. Regarding the tolerability, I think certainly physicians over the time now, the checkpoint inhibitors has been available alongside TKIs has gotten accustomed to treating patients with these combinations and - are well versed in modifying a dose, holding the checkpoint inhibitor and then going in with steroids if required, so there is a lot of learning that has occurred there as well, which certainly bodes well for the COSMIC-313 study as well.
Yes. Jason, I would also add just one thing to think about in the context of 313. Remember, both in terms of the CheckMate-214 data as well as how we're framing and how we got the protocol for 313, ipi is given in four consecutive cycles and then it's essentially the doublet cabo-nivo versus standalone nivo as well.
So in this - in his clausey maintenance phase, we kind of like that that dynamic too based upon the 9ER data and potential read-throughs there so. So there's many different ways to win in terms of not only a more powerful triplet potentially in the early part of that dosing, but also then in terms of a long maintenance phase potentially having cabo-nivo there available, which we think is encouraging based upon a 9ER data.
And your next question comes from the line of Silvan Tuerkcan with Oppenheimer.
My first question is how would you view the second line cabo monotherapy use evolve once cabo-nivo is launched in frontline is - and basically is cabo second line OS benefit here key for it to continue being the preferred choice of TKI post failure. And secondly, could you tell us a little bit more about your adjuvant therapy efforts and renal cell carcinoma is there path forward and what will be the timing here.
Yes. Hi Silvan, thanks for the question. This is P.J. I'll talk about the second line dynamic and then perhaps pass it to Gisela to comment on adjuvant. But basically, I think what we've been talking about a while with the second line dynamic in the growth we're now seeing in terms of new patient share of 45% that's really taken years to sort of play out with those patient kinetics, in terms of, if you think about the timing and approval of pem-axi and nivo would be over a year. So those patients, many of them are already on therapy right on a ICI combo therapy and are going to continue to flow second line for years to come.
With regards to 9ER, obviously pending regulatory timelines, we'll have the opportunity to get approved in the first-line setting and then grow market share and duration there, but I really think at the same time and you asked an astute question is the second-line market could continue to grow because of the patient dynamics for some time. So in a sense, could certainly be a possibility where we're growing in the first-line and the second line in RCC, a combination in monotherapy respectively, which really reinforces the cabo position with all of our studies and data in RCC and being the TKI of choice, both now and moving forward for many years to come.
This is Mike. We've talked about this vision, where based upon the totality of the data, we'd like to be able to see every patient who has renal cancer be able to benefit from cabo at some point in their journey from first line to the second line to third line and I think the way P.J. framed it and certainly the powerful data we have with 9ER and the body of data we have in the second line really makes that a possibility for us to meet that vision head on. So - so we have a lot of work to do, yes, but certainly that's the direction that we're working towards as we go forward.
And then just on the - if you have any plans for adjuvant therapy and what the timing there would be.
Gisela, you want to address that please.
Sure. Yes. At the current time, we don't have an adjuvant trial ongoing for cabozantinib in RCC, we have in the context of new adjuvant approaches as we're looking at and are going forward eventually and certainly we are interested in this space, but it is a long-term proposition of course, and so there may be some opportunity at some point 092 to play in that space as well. So stay tuned I would say.
Your next question comes from the line of Kennen MacKay with RBC Capital Markets.
Obviously, there is something special to combos combinations with immune checkpoints maybe additive, if not perhaps synergistic benefit there as was tossed around ASCO GU back in what feels like a former life when in-person meetings were happening. I'd love to get your current thoughts around this, is this additive or really sort of potentially synergistic, especially as we think about prostate cancer, where atezolizumab on its own didn't see really any responses to speak of, and have since been discontinued as a monotherapy. And then two quick follow-ups on lung cancer as well.
Yes. Thanks for the question. We banter about the S-word synergy all the time, maybe - maybe Peter could speak to that briefly at a high level. Peter, you want to.
Yes. I mean I think what I'll do is essentially just reiterate why we're excited from a scientific rationale point of view about cabozantinib combinations with checkpoint inhibitors and why this has been leading to the clinical data that we're starting to see, I mean obviously comes down to the cabozantinib target profile and the impact that it has on the tumor microenvironment, if you look at MET, AXL, VEGFR, they play important roles in regulation of a variety of immune cell subsets and that includes activation of CD8 positive T cells and we also have some data showing activation of NK cells as well as innovation and variety of immunosuppressive cells like Tregs and MDSCs, which we've seen at least peripherally in a number of clinical trials and certainly pre-clinically.
So I think it's that totality of that profile, where we have impacts directly on the tumor and we have impacts on both the adaptive and innate immune system that's really feeding into the clinical data that's emerging and strikingly in the 9ER data.
And then maybe the follow-ups on lung cancer, obviously saw the COSMIC-021 lung title at ASCO. Again, just hoping to maybe understand a little bit what you see as sort of the clinical bar for these patients or similar patients, where they could get standard of care chemotherapy.
And then similarly, I'm hoping to understand a little bit how you are thinking about the patient population of contact 01, is that sort of going to be the same as this expansion of COSMIC-021 or may be considering a different sub population of the non-small cell lung cancer space.
Sure. Well, as we discussed a little bit earlier on there, a number of benchmarks out there that you mentioned chemotherapy or chemotherapy plus ramucirumab or other combinations and in general, I think the, the benchmark is sort of in the same work off of between 10% and 20% or somewhere in that for the response rate and it's not particularly long list response, but I think now, of course, you can look at all of these data points yourselves and make up your mind there.
Regarding the patient population that we're looking at in 021, we will require for patients who receive checkpoint inhibitor prior the lone or in combination or subsequent to chemotherapy and in broad-brush strokes, it will be a similar patient population in the context 02, specifics will certainly appear on clinic trials when ready. And so I won't and still this under here and let that be rolled out when the time comes.
Your next question comes from the line of Stephen Willey with Stifel.
Thanks for taking the questions and I hopped on a little, so my apologies if I'm repeating anything here, but just with respect to contact 02, the Phase 3 and prostate, can you maybe just talk about when we might get a little bit of insight into what trial design looks like there and I think you were asked an ambassador question previously and just curious as to how you're thinking about the selection of a control arm at this point, presumably you could opt for a novel hormonal like ends that hasn't been used previously probably have salvage chemo as an option as well.
Just wondering if you can just kind of walk us through a little bit how you're thinking about control arm selection and then specifically if there is anything within that ends the control arm that kind of peaks your interest with respect to perhaps selecting it.
Yes. So, this is Gisela. In terms of the signal that we're building on of course it's what has been seen and ASCO with strong response rate for the cohort 6 of 32% generally consistent effect on PSA responses and good durability of response. So that's what we're building on in this patient population, as we're thinking at the Phase 3 trial and there is variety as you've mentioned of opportunities, possibilities, and control - regarding control arms certainly novel NHT is amongst them, and it is the choice that many prostate cancer patients value because it would potentially allow them deferral of chemotherapeutic opportunities or options.
So that's certainly a consideration that we are taking in to account, when - when the study will rollout, and I think they're working on it hard and anticipating on moving forward, rolling forward and being able to speak about it in more detail over the summer.
Okay. That makes sense. And I guess I agree with your insinuation that would probably make for easier enrollment. And then maybe just one quick one for P.J. Any change just in general prescribing patterns, I guess specifically with respect to maybe the number of patients who are getting a script filled greater than 30 days or has that remained relatively stable.
Yes. I think as we mentioned before, we're seeing strength in the business, particularly in terms of the second line new patient share growth, but generally other metrics remaining relatively consistent with what we've seen, we're certainly pleased with the team there doing everything they can sort of normally, and now in terms of helping patients and our customers with Exelixis Access Services. So we're continuing to see patients get drug sufficiently and certainly gratified by that.
Your next question comes from the line of George Farmer with BMO Capital Markets.
I hope everyone is well over there. I'd like to ask about this backlog, we had talked about at the end of the last year with patients that seem to be being on frontline therapy longer and that may have been contributed to CABOMETYX sales weakness. Are you - do you think we're through that. And then if so, why not revise guidance given the relatively strong quarter that you just had and then I have a follow-up.
Hi George, this is P.J. I think we have talked about that trend right in terms of second line patients for CABOMETYX being coming after an ICI combination in the first line, and we saw that sort of stabilize in terms of those kinetics in the latter part of last year and we really have now seen growth in terms of the number of ICI pre-treated patients coming into the second line now, where CABOMETYX really captures the majority of those patients, where we have the, really the only overall survival benefit as a monotherapy TKI in that setting.
And we would anticipate that trend given the timing of those sort of patient flow kinetics continuing frankly and I think we're just sort of starting to see the beginning of that in terms of the strength in the second line.
And George, it's Chris. So on the guidance question, so it is still pretty - it's early in the year, as P.J. talked about, we had strong second-line demand and that continues to grow and we also had the inventory build in the quarter that, if you backed that out, that could - that would reduce the annualized number. And so overall, I'd say we're squarely in the middle of the guidance range and that guidance also doesn't include 9ER so - and there is a lot of moving pieces, particularly around the COVID-19 pandemic. So we're comfortable with where we are right now.
And then regarding Contact 03, this is your Phase 3 trial with Roche in RCC looking at atezo with cabo, I noticed on clinicaltrials.gov that the comparator is cabo alone, given how this whole field is evolving and it's getting kind of crowded certainly in the frontline setting, do you think cabo is the right comparator in this trial and is this trial going to be sufficient for regulatory approval.
Yes. I think what it signals really is that cabozantinib is a standard of care and the second and let alone setting and the treatment paradigm of RCC and I think that's what the study is building on, as our leading atezolizumab addition on the backbone of cabozantinib. So yes, I do think it's a appropriate comparative absolutely and the study is being designed - has been designed and is being sponsored by Roche and certainly with registrational intent.
Your next question comes from the line of Paul Choi with Goldman Sachs.
My first question is on COSMIC-312 and just given the robustness of the data you saw earlier with of CheckMate 040, can you maybe just remind us that if there is an interim built into the trial - interim look built in this year and it's not something that we could possibly see in the back half of the year, ahead of the primary completion or is the plan to see the trial all the way through to the final result. And then I have a follow-up question on lung.
Regarding COSMIC-312, this is an event-driven analysis strategy that underlies the design of the study and there is an interim analysis for survival at the same time as the primary analysis for progression-free survival build in that would require a first and then further analysis for overall survival - that would occur unless the study rejects the hypothesis as one of the earlier ones. So in terms of the timing, it really is entirely dependent on events and we're monitoring events and we'll certainly be prepared when the event count is getting closer.
Thank you for that. And then on the topic of lung, you and your partner Bristol have had a trial listed and clinical trials like of CheckMate 79X for a while, which involves a triple combination of nivolumab, ipilimumab, and cabozantinib and can you maybe just comment on whether the plan is still to kick the trial off this year and then if the triple combination, there proves to have some response, how would you potentially frame that against your ongoing plans for the Contact 01 trial, the Phase 3 trial that you're planning in the second-line lung indication. Thank you very much for taking our questions.
Sure. Regarding the study 79X, this is a trial sponsored by BMS. And the expectation is that study is kicking off as we speak. And as you said, we've done clinicaltrials.gov is listed there. And regarding the second question, everything is data dependent, but certainly we are moving forward towards initiation and that is in both stand sort of Contact 02 and we'll see the first look at the cohort 7 from the COSMIC-021 study at ASCO. So everything is marching forward sort of in parallel at this point.
And your final question comes from the line of Jeff Hung with Morgan Stanley.
Thanks for taking the questions and congrats on the 9ER. Can you talk about your commercial field teams experiences with virtual touch points and if there have been any changes that they've observed with healthcare professionals on metrics such as frequency of interactions and has this improved in recent weeks, I appreciate anything anecdotal you can share. And then I have a follow-up.
This is P.J. I guess what I'd say about that is, we're certainly pleased with the efforts of the team in supporting the healthcare providers and the patients appropriately compliantly. With regards to what we've seen, we have a pretty experienced team and we feel we have a good sort of yield or conversion from in-person touch points to virtual ones.
And I think a lot of that is because of the experience of the team and the fact that this team has been in place for more than four years, even seen some secondary research albeit small ends, where we've converted more of a person, calls to virtual the most, I should say in the RCC market but - it's early - it's really, it's a local by local basis and things are obviously dynamic is we're seeing and we're planning on doing everything we can do appropriately to support our customers and our patients while maintaining obviously vigilance on the health of our employees and all of them as well.
And then with substantial safety stock inventories for commercial drug substance and drug products that are sufficient to means supply for a long period of time. Can you talk about what kinds of levers you have and what kinds of manufacturing modifications, you can make if COVID continues for longer than expected. Thanks.
Yes. Hi, it's Mike. Yes, look, we have a very deep robust supply chain for cabozantinib with various stockpiles of intermediate stored at various regions - at various positions and regions in the process. So we have literally years of stock in hand, ready to go. So we have really got that covered and heads off to the CMC and supply team here for really investing in not only the primary supplier, but we have a whole second - secondary supplier supply chain that's now coming online for both drug product and drug substance as well to further augment the growing number of indications that we expect in the coming years, but also to further reinforce that supply chain. So long stability of both API and drug product as well, in both the tablets and capsule format. So we've got that covered pretty well. Thanks for the question.
At this time, there are no further questions. And so, I will turn the call back over to your host today, Ms. Susan Hubbard. Ms Hubbard.
Great. Thank you, Anita and thank you all very much for joining us today. We really appreciate your participation on the call and are standing by to answer any questions that were left unanswered during today's call. Thanks again. Be safe.
Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and you have a wonderful day. You may now all disconnect.