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Exelixis, Inc. (EXEL)

Q4 2010 Earnings Conference Call

February 22, 2011, 5:00 pm ET


Charles Butler – VP, Corporate Communications and IR

Mike Morrissey – President and CEO

Frank Karbe – CFO and EVP


Ted Tenthoff – Piper Jaffray

Eric Schmidt – Cowen and Company

Matt [ph] – JPMorgan

David Miller – Biotech Stock Research



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» Exelixis, Inc. Q4 2009 Earnings Call Transcript

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Good day, ladies and gentlemen, and welcome to the Q4 2010 Exelixis earnings conference call. My name is Keith, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator instructions)

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

Charles Butler

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

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

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

As a reminder, we’re reporting our financial results on a GAAP basis today, and as usual the complete press release with our results can be accessed through our website at I will note that during today’s presentation, we will discuss adjusted operating expense, which is a non-GAAP financial measure. A reconciliation of the difference between this non-GAAP financial measure and the most directly comparable financial measure calculated and presented in accordance with GAAP is included in today’s presentation materials.

With that, I will turn the call over to Mike Morrissey.

Mike Morrissey

Thank you Charles, and thanks to everyone for joining us on the call today. In December, I outlined our new corporate strategy focused on three simple objectives by which we would take Exelixis forward. First, we would focus exclusively on cabozantinib, which I will refer to as cabo going forward today, with the goal of maximizing its clinical and commercial value.

Second, we would expedite the development of cabo in a variety of cancer indications, with the clear initial focus on prostate cancer. Third, we would aggressively manage and improve our P&L. These efforts were geared towards building shareholder value and improving the treatment and outcomes of patients with cancer. I’m pleased to say today that we have made substantial progress in each of these three corporate objectives.

Let us first turn to our strategy to maximize the value of cabo. Our decision to make this compound the focus of our efforts is based on a robust and growing body of data that support its near and long-term potential. Expect to file an NDA for cabo for the treatment of medullary thyroid cancer, or MTC, in the second half

of 2011. Beyond MTC, we believe that cabo represents a potential franchise opportunity that could be used as a foundation for a variety of treatment regimens across diverse tumor indications.

To date we have observed objective responses in 12 of 13 tumor types, including recent responses in small-cell lung cancer, gastric cancer, and differentiated thyroid cancer from the RDT and other cabo trials. The productivity of cabo in both metastatic soft tissue and bone lesions represents the hallmark of the clinical activity with cabo seen to date. Resolution of metastatic bone lesions by bone scan have been documented in patients with prostate cancer, melanoma, breast, renal and thyroid cancers, and is often accompanied by rapid resolution of severe bone pain.

While our emerging data sets in CRPC highlighted last Thursday at ASCO GU is very encouraging. Cabo is more than just a potential prostate cancer drug, and it is more than a potential prostate cancer bone drug. The breadth of clinical indications that could be served by cabo include potentially large market opportunities. Cabo may address currently underserved populations of prostate cancer, breast cancer, and small cell lung cancer, renal carcinoma, hepatoma, and melanoma among others.

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

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