Exelixis, Inc. Q1 2010 Earnings Call Transcript

Exelixis, Inc. Q1 2010 Earnings Call Transcript
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Exelixis, Inc. (EXEL)

Q1 2010 Earnings Call Transcript

May 11, 2010 5:00 pm ET

Executives

Charles Butler – VP, IR & Corporate Communications

George Scangos – President and CEO

Frank Karbe – EVP and CFO

Mike Morrissey – President, R&D

Analysts

Karen Jehn [ph] – JPMorgan Chase & Co.

Joel Sendek – Lazard Capital Markets

Ted Tenthoff – Piper Jaffray

Eric Schmidt – Cowen & Company

Presentation

Operator

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Good day, ladies and gentlemen, and welcome to the Q1 2010 Exelixis' earnings conference call. My name is Kyana and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will be conducting a question-and-answer session. (Operator instructions) I would now like to turn the conference over to your host for today, Mr. Charles Butler. You may proceed.

Charles Butler

Thank you.

Thank you for joining us for the Exelixis' first quarter 2010 earnings call. Joining me on today's call are, as usual, George Scangos, Frank Karbe, and Mike Morrissey, who will collectively review our corporate, financial, and development progress for the quarter ended March 31, 2010, and discuss upcoming milestones and our progress towards achieving goals that we outlined during our last earnings call.

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 data to be presented at ASCO, expectations regarding development activities, expectations regarding our 2010 year-end cash balance and future funding, our 2010 goals and financial outlook with respect to revenues, operating expenses, and cost savings and charges related to the restructuring, and the continued development and therapeutic and commercial potential of XL184, XL147, and XL765. 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 risk factors section of our 10-Q for the quarter ended April 2, 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 statements.

With that, I'll turn the call over to George who will start the formal remarks.

George Scangos

Okay. Thanks, Charles, and thanks to all of you for joining us today. On today's call as usual, I'll give an overview of the business and the quarter, and then Frank and Mike will give you updates on the financials and R&D respectively.

At this point, ASCO is less than a month away and we are really focused on getting ready. There will be 12 presentations on Exelixis compounds at ASCO, four on XL184 alone and the amount of data we’re presenting is more substantive than we have previously. So we are looking at ASCO as an important event for us.

We believe that data will reflect the potential of 184 in thyroid cancer, in glioblastoma, and beyond those first indications in some of the major tumor types as well. The abstracts for ASCO will be released next week. We will have the 12 presentations at ASCO itself, and in addition we hold two investor meetings at ASCO.

Consequently, we won't spend a lot of time today discussing our clinical program, but we would release a lot of data in the next month or so. So please stay tuned.

As we described previously, we are focused on the development of our late stage compounds. However, it's important to remember we have retained a world-class drug discovery group with the ability to bring forward a select number of earlier stage compounds. Our discovery group has repeatedly demonstrated its ability to bring forward high-quality compounds, and currently there are 14 Exelixis compounds in clinical development by us and our partners.

It should come as no surprise, then that we're engaged in multiple advanced business development discussions with potential partners who are interested in accessing our discovery capabilities. We are confident that we will successfully conclude some of these discussions during the course of the year.

Additionally, we are in advanced discussions with multiple companies about several of our compounds and we are also confident that one or more of these discussions with result in partnerships this year. So 2010, like 2009 and 2008, looks to be a year in which we will be able to bring in substantial cash through partnering to help support our operations.

In addition to the partnering activity, there are other factors that give us confidence about our financial situation. First, our expense base going forward will be lower due to our recent downsizing. We had projected approximately $90 million in savings in 2010 and 2011, and we are on track to achieve that number. Second, reimbursements from our partners are expected to increase for the remainder of the year. These factors, our ongoing business development activities, our lower expense base and the increase in reimbursement give us confidence in our ability to fund our operations into the future.

The last and most important area I want to discuss is the significant progress we are making in the clinic. Over the last year, we have dramatically expanded the scope of our late stage clinical programs for XL184, XL147 and XL765. Each compound has demonstrated its ability to inhibit some of the most important targets in oncology.

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