Market Overview

Exelixis Announces Second Quarter 2018 Financial Results and Provides Corporate Update

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- Total Revenues of $186.1 million, Net Income of $87.5 million,
Diluted EPS of $0.28 -

- Cabozantinib Franchise Net Product Revenues of $145.8 million -

- Ipsen Royalty Rate Increased to 22 Percent upon Reaching $150.0
million in Cumulative Net Sales -

- Conference Call and Webcast Today at 5:00 P.M. Eastern Daylight
Time -

Exelixis, Inc. (NASDAQ:EXEL) today reported financial results for the
second quarter of 2018 and provided an update on progress toward
fulfilling its key corporate objectives, as well as commercial and
clinical development milestones.

"The second quarter of 2018 was highlighted by the strong
commercial performance of CABOMETYX® (cabozantinib) in advanced renal
cell carcinoma and continued regulatory progress for cabozantinib across
multiple indications," said Michael M. Morrissey, Ph.D., President and
Chief Executive Officer of Exelixis. "We are pleased with our partner
Ipsen's progress as it launches CABOMETYX in the first-line setting
following their recent label expansion in the European Union and the
achievement of key commercial sales milestones. In advanced
hepatocellular carcinoma, acceptance of our supplemental New Drug
Application by the U.S. Food and Drug Administration brought us a step
closer to offering CABOMETYX as a treatment to another patient
population in need of new options."

Dr. Morrissey continued: "Our strong financial performance in the second
quarter was driven primarily by an increase in U.S. sales of CABOMETYX,
as well as a milestone recognized from our collaborative partnerships,
leading to net income of $87.5 million or $0.28 per share on a fully
diluted basis. The progress we made in the second quarter put us in
position for continued momentum across the business in the second half
of 2018."

Second Quarter 2018 Financial Results

Total revenues for the quarter ended June 30, 2018 were $186.1
million, compared to $99.0 million for the comparable period in 2017.

Total revenues include net product revenues of $145.8 million for the
quarter ended June 30, 2018, compared to $88.0 million for the
comparable period in 2017, representing a 66 percent increase
year-over-year. The increase in net product revenues reflects the
continued growth of CABOMETYX for the treatment of advanced renal cell
carcinoma (RCC).

Total revenues also include collaboration revenues of $40.3 million for
the quarter ended June 30, 2018 compared to $11.0 million for the
comparable period in 2017. The increase in collaboration revenues was
primarily the result of a $25.0 million commercial milestone from Ipsen
Pharma SAS (Ipsen) that we earned in the second quarter of 2018 upon
Ipsen's achievement of $100.0 million of net sales cumulatively over
four consecutive quarters. Royalties from Ipsen on their ex-U.S. sales
of cabozantinib and, to a lesser extent, royalties from Genentech on
their ex-U.S. sales of COTELLIC® (cobimetinib), also increased in the
second quarter of 2018, contributing $6.9 million in collaboration
revenues compared to $1.6 million for the comparable period in 2017.
These increases were partially offset by a decrease of $3.1 million in
the recognition of deferred revenue due to our adoption of Accounting
Standards Update No. 2014-09 Revenue from Contracts with Customers
(Accounting Standards Codification Topic 606)
on January 1, 2018.
For more information on our adoption of the new revenue standard, see
"Note 1. Organization and Summary of Significant Accounting Policies -
Recently Adopted Accounting Pronouncements - Revenue" contained in Part
I, Item 1 of Exelixis' Quarterly Report on Form 10-Q expected to be
filed with the Securities and Exchange Commission (SEC) on August 1,
2018.

Research and development expenses for the quarter ended June 30,
2018 were $42.5 million, compared to $28.2 million for the comparable
period in 2017. The increase in research and development expenses was
primarily related to increases in personnel expenses and license costs.
The increase in personnel expenses was primarily due to increases in
headcount to support our development and discovery efforts. The increase
in license costs was primarily a result of the collaboration and license
agreement we entered into with Invenra, Inc. (Invenra) in May 2018.

Selling, general and administrative expenses for the quarter
ended June 30, 2018 were $51.9 million, compared to $40.7 million for
the comparable period in 2017. The increase in selling, general and
administrative expenses was primarily related to increases in consulting
and outside services and personnel expenses. The increase in consulting
and outside services was primarily due to an increase in marketing
activities. The increase in personnel expenses was primarily due to
increases in general and administrative headcount to support the
company's commercial and research and development organizations.

Net income for the quarter ended June 30, 2018 was $87.5 million,
or $0.29 per share, basic and $0.28 per share, diluted, compared to a
$17.7 million, or $0.06 per share, basic and diluted, for the comparable
period in 2017. The increase in net income was primarily the result of
increases in net product revenues and collaboration revenues, which was
partially offset by the increases in research and development and
selling, general and administrative expenses.

Cash and cash equivalents, short- and long-term investments and
short- and long-term restricted cash and investments
totaled $595.9
million at June 30, 2018, as compared to $457.2 million at December 31,
2017.

2018 Financial Guidance

The company is maintaining its guidance that total costs and operating
expenses for the full year will be between $430 million and $460
million. This guidance includes approximately $50 million of non-cash
costs and expenses related primarily to stock-based compensation expense.

Cabozantinib Highlights

Strong Growth in Cabozantinib Franchise Net Revenues. Net product
revenues generated by the cabozantinib franchise were $145.8 million
during the second quarter of 2018, an increase of 66 percent
year-over-year. During the second quarter of 2018, CABOMETYX generated
$141.1 million in net product revenues and COMETRIQ® (cabozantinib)
capsules for the treatment of patients with progressive, metastatic
medullary thyroid cancer generated an additional $4.7 million in net
product revenues.

Cabozantinib Royalty Rate Increased to 22 Percent of Net Sales by
Ipsen.
During the second quarter of 2018, Ipsen reached $150.0
million in cumulative net sales of cabozantinib, which resulted in an
increase in royalty revenues earned by Exelixis to 22 percent of net
sales by Ipsen. Previously we had been entitled to receive a tiered
royalty of 2 percent to 12 percent. Moving forward, we are now entitled
to receive a tiered royalty of 22 percent to 26 percent of annual net
sales.

European Commission (EC) Approves CABOMETYX for Previously Untreated
Intermediate- or Poor-Risk Advanced RCC.
In May, Exelixis announced
its partner Ipsen received approval from the EC for CABOMETYX 20 mg, 40
mg and 60 mg for an expanded indication that includes the first-line
treatment of adults with intermediate- or poor-risk advanced RCC in the
European Union (EU). Under the terms of the Collaboration Agreement with
Ipsen, Exelixis is entitled to receive a milestone payment of $50
million for the EC approval, of which approximately $46 million was
recognized as collaboration revenue in the first quarter of 2018.

U.S. Food and Drug Administration (FDA) Accepts Supplemental New Drug
Application (sNDA) for CABOMETYX in Previously Treated Advanced
Hepatocellular Carcinoma (HCC).
In May, Exelixis announced that the
FDA accepted for filing the company's sNDA for CABOMETYX tablets as a
treatment for patients with previously treated advanced HCC. The FDA
completed its filing review, determining that the application was
sufficiently complete to permit a substantive review and assigning a
Prescription Drug User Fee Act (PDUFA) action date of January 14, 2019.

Second Expansion to Clinical Research Protocol for Phase 1b
COSMIC-021 Trial.
In June, Exelixis announced a planned amendment to
the protocol for COSMIC-021, the phase 1b trial of cabozantinib in
combination with atezolizumab (TECENTRIQ®), an anti-PDL1 antibody
discovered and developed by Genentech, in patients with locally advanced
or metastatic solid tumors, to add 10 new expansion cohorts to the
trial. There are now a total of 18 cohorts in the expansion stage of the
study, for which the primary goal remains to determine the objective
response rate in each cohort.

Cabozantinib Data at the American Society of Clinical Oncology (ASCO)
2018 Annual Meeting.
In June, data from clinical trials of
cabozantinib were featured in 15 presentations at the ASCO Annual
Meeting in Chicago. Presentations included sub-group analyses of the
CELESTIAL phase 3 pivotal trial in advanced HCC comparing outcomes by
duration of sorafenib treatment in patients whose only prior treatment
was sorafenib, as well as outcomes based on age. The findings showed
that cabozantinib improved overall survival (OS) and progression-free
survival compared with placebo irrespective of duration of prior
sorafenib treatment or age category.

CELESTIAL Phase 3 Pivotal Trial Results Published in The New
England Journal of Medicine (NEJM)
.
In July, Exelixis announced
that NEJM published positive results from the CELESTIAL phase 3
pivotal trial of cabozantinib in patients with previously treated
advanced HCC. As previously announced and presented, the data
demonstrate that cabozantinib provided a statistically significant and
clinically meaningful improvement in OS versus placebo.

Cobimetinib Highlights

Update on IMblaze370 Phase 3 Trial of Atezolizumab and Cobimetinib in
Patients with Heavily Pretreated Locally Advanced or Metastatic
Colorectal Cancer (CRC).
In May, Exelixis' collaborator Genentech
informed the company that IMblaze370, the phase 3 pivotal trial
evaluating cobimetinib in combination with atezolizumab in patients with
heavily pretreated locally advanced or metastatic CRC, did not meet its
primary endpoint. Genentech continues to pursue the cobimetinib
development program with two additional ongoing phase 3 pivotal trials
(IMspire150 and IMspire170) of combination regimens containing
cobimetinib, and is also conducting a series of early-stage clinical
trials investigating the combination of cobimetinib and atezolizumab in
multiple tumor settings.

Corporate Highlights

Appointment of Dr. Maria Freire to Exelixis' Board of Directors. In
April, Exelixis announced the appointment of biomedical research
executive Maria C. Freire, Ph.D., to the company's Board of Directors.
Dr. Freire currently serves as President and Executive Director and as a
member of the board of directors of the Foundation for the National
Institutes of Health, an independent 501(c)(3) charitable organization
established by Congress to support the National Institutes of Health by
raising private funds for biomedical research and fostering partnerships
and alliances around the world.

Collaboration with Invenra to Discover and Develop Novel Biologics to
Treat Cancer.
In May, Exelixis announced it had entered into a
collaboration with Invenra, a Madison, Wisconsin-based biotechnology
firm focused on developing next-generation biologics, to discover and
develop multispecific antibodies for the treatment of cancer. Under the
collaboration agreement, Invenra is responsible for antibody lead
discovery and generation, while Exelixis will lead Investigational New
Drug enabling studies, manufacturing, clinical development and future
regulatory and commercialization activities. The collaboration agreement
also provides that Exelixis will receive an exclusive, worldwide license
to one preclinical asset, and that Exelixis and Invenra intend to pursue
up to six additional discovery projects during the term of the
collaboration, which in total are directed to three discovery programs.

Move of Company Headquarters to Alameda. As of June 11, Exelixis
officially moved its headquarters from South San Francisco to Alameda,
California. The new facilities include state-of-the-art labs and
additional office space, providing a strong foundation for Exelixis'
long-term vision and growth.

Inclusion on Standard & Poor's (S&P) MidCap 400 Index. In
June, Exelixis announced it had been added to the S&P MidCap 400
classified under S&P's Global Industry Classification Standard
Biotechnology Sub-Industry index, effective prior to the open of trading
on July 2. The index, which is distinct from the large-cap S&P 500®,
measures the performance of profitable mid-sized companies, reflecting
the distinctive risk and return characteristics of this market segment.

Basis of Presentation

Exelixis has adopted a 52- or 53-week fiscal year that generally ends on
the Friday closest to December 31st. For convenience,
references in this press release as of and for the fiscal periods ended
June 29, 2018, June 30, 2017 and December 29, 2017, are indicated as
being as of and for the periods ended June 30, 2018, June 30, 2017 and
December 31, 2017, respectively.

Conference Call and Webcast

Exelixis management will discuss the company's financial results for the
second quarter of 2018 and provide a general business update during a
conference call beginning at 5:00 p.m. EDT / 2:00 p.m. PDT today,
Wednesday, August 1, 2018.

To access the webcast link, log onto www.exelixis.com
and proceed to the News & Events / Event Calendar page under the
Investors & Media heading. Please connect to the company's website at
least 15 minutes prior to the conference call to ensure adequate time
for any software download that may be required to listen to the webcast.
Alternatively, please call 855-793-2457 (domestic) or 631-485-4921
(international) and provide the conference call passcode 5668207 to join
by phone.

A telephone replay will be available until 8:30 p.m. EDT on August 3,
2018. Access numbers for the telephone replay are: 855-859-2056
(domestic) and 404-537-3406 (international); the passcode is 5668207. A
webcast replay will also be archived on www.exelixis.com
for one year.

About Exelixis

Founded in 1994, Exelixis, Inc. (NASDAQ:EXEL) is a commercially
successful, oncology-focused biotechnology company that strives to
accelerate the discovery, development and commercialization of new
medicines for difficult-to-treat cancers. Following early work in model
genetic systems, we established a broad drug discovery and development
platform that has served as the foundation for our continued efforts to
bring new cancer therapies to patients in need. We discovered our three
commercially available products, CABOMETYX® (cabozantinib), COMETRIQ®
(cabozantinib) and COTELLIC® (cobimetinib), and have entered into
partnerships with leading pharmaceutical companies to bring these
important medicines to patients worldwide. Supported by revenues from
our marketed products and collaborations, we are committed to prudently
reinvesting in our business to maximize the potential of our pipeline.
We are supplementing our existing therapeutic assets with targeted
business development activities and internal drug discovery - all to
deliver the next generation of Exelixis medicines and help patients
recover stronger and live longer. In July 2018, Exelixis was added to
the Standard & Poor's (S&P) MidCap 400 index, which measures the
performance of profitable mid-sized companies. For more information
about Exelixis, please visit www.exelixis.com,
follow @ExelixisInc
on Twitter or like Exelixis.Inc
on Facebook.

Forward-Looking Statements

This press release contains forward-looking statements, including,
without limitation, statements related to: the impact of the FDA's
acceptance of Exelixis' sNDA for CABOMETYX as a treatment option for
patients with previously treated HCC; Exelixis' belief that the progress
the company made in the second quarter of 2018 puts it in a position for
continued momentum across the business in the second half of 2018;
Exelixis' guidance for 2018 total costs and operating expenses,
including non-cash costs and expenses; Exelixis' plans to conduct future
clinical studies, including the planned expansion to the COSMIC-021
trial, for which the goal remains to determine the objective response
rate in each of the 18 cohorts; Exelixis' planned discovery activities
under the collaboration with Invenra; Exelixis' belief that the
company's new headquarters in Alameda will provide a strong foundation
for Exelixis' long-term vision and growth; Exelixis' plans to reinvest
in its business to maximize the potential of the company's pipeline,
including through targeted business development activities and internal
drug discovery; and Exelixis' mission to deliver the next generation
of Exelixis medicines and help patients recover stronger and live
longer. Words such as "continued," "expected," "guidance," "will,"
"planned," "goal," "focused," "future," "intend," "vision," "committed,"
"potential," "mission," or other similar expressions identify
forward-looking statements, but the absence of these words does not
necessarily mean that a statement is not forward-looking. In addition,
any statements that refer to expectations, projections or other
characterizations of future events or circumstances are forward-looking
statements. These forward-looking statements are based upon Exelixis'
current plans, assumptions, beliefs, expectations, estimates and
projections. Forward-looking statements involve risks and uncertainties.
Actual results and the timing of events could differ materially from
those anticipated in the forward-looking statements as a result of these
risks and uncertainties, which include, without limitation: the degree
of market acceptance of CABOMETYX, COMETRIQ and COTELLIC and the
availability of sufficient coverage and adequate reimbursement for these
products; risks and uncertainties related to regulatory review and
approval processes and Exelixis' compliance with applicable legal and
regulatory requirements; risks related to the potential failure of
cabozantinib and cobimetinib, both alone and in combination with other
therapies, to demonstrate safety and efficacy in clinical testing;
Exelixis' dependence on its relationships with its collaboration
partners, including the level of their investment in the resources
necessary to successfully commercialize partnered compounds in the
territories where they are approved; Exelixis' ability and the ability
of its collaborators to conduct clinical trials of cabozantinib and
cobimetinib, both alone and in combination with other therapies,
sufficient to achieve a positive completion; the level of costs
associated with Exelixis' commercialization, research and development,
in-licensing or acquisition of product candidates, and other activities;
Exelixis' dependence on third-party vendors for the development,
manufacture and supply of its products; Exelixis' ability to protect its
intellectual property rights; market competition, including the
potential for competitors to obtain approval for generic versions of
Exelixis' marketed products; changes in economic and business
conditions, and other factors discussed under the caption "Risk Factors"
in Exelixis' Quarterly Report on Form 10-Q filed with the SEC on May 2,
2018, and in Exelixis' future filings with the SEC, including, without
limitation, Exelixis' Quarterly Report on Form 10-Q expected to be filed
with the SEC on August 1, 2018. The forward-looking statements made in
this press release speak only as of the date of this press
release. Exelixis expressly disclaims any duty, obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in
Exelixis' expectations with regard thereto or any change in events,
conditions or circumstances on which any such statements are based.

Exelixis, the Exelixis logo, CABOMETYX, COMETRIQ and COTELLIC are
registered U.S. trademarks.

TECENTRIQ (atezolizumab) is a registered trademark of Genentech, Inc.
(a member of the Roche Group).

     
EXELIXIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 
Three Months Ended June 30, Six Months Ended June 30,
2018     2017 2018     2017
Revenues:
Net product revenues $ 145,836 $ 88,004 $ 280,108 $ 156,881
Collaboration revenues 40,272   11,004   119,719   23,014  
Total revenues 186,108   99,008   399,827   179,895  
Operating expenses:
Cost of goods sold 5,997 3,014 11,636 6,217
Research and development 42,488 28,214 80,245 51,424
Selling, general and administrative 51,853   40,667   105,869   74,955  
Total operating expenses 100,338   71,895   197,750   132,596  
Income from operations 85,770   27,113   202,077   47,299  
Other income (expense), net:
Interest income 2,697 1,251 4,592 2,364
Interest expense (4,259 ) (8,679 )
Other, net (72 ) (5,868 ) 97   (5,913 )
Total other income (expense), net 2,625   (8,876 ) 4,689   (12,228 )
Income before income taxes 88,395 18,237 206,766 35,071
Provision for income taxes 901   581   3,415   715  
Net income $ 87,494   $ 17,656   $ 203,351   $ 34,356  
Net income per share, basic $ 0.29 $ 0.06 $ 0.68 $ 0.12
Net income per share, diluted $ 0.28 $ 0.06 $ 0.65 $ 0.11
Shares used in computing net income per share, basic 297,336 293,188 296,874 292,029
Shares used in computing net income per share, diluted 312,241 311,219 313,024 310,759
 
     
EXELIXIS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA

(in thousands)

(unaudited)

 
June 30,
2018

December 31,
2017 (1)

Cash and investments (2) $ 595,923 $ 457,176
Working capital $ 586,342 $ 369,704
Total assets $ 911,158 $ 655,294
Total stockholders' equity $ 774,968 $ 284,961

_______________________________________

(1)   Derived from the audited consolidated financial statements.
(2) Cash and investments include cash and cash equivalents, short- and
long-term investments and short- and long-term restricted cash and
investments. Short- and long-term restricted cash and investments
totaled $1.6 million as of June 30, 2018 and $5.2 million as of
December 31, 2017.

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