Exelixis Announces Fourth Quarter and Full Year 2018 Financial Results and Provides Corporate Update

– Total Revenue of $228.6 million for the Fourth Quarter of 2018,
$853.8 million for the Full Year 2018 –

– Cabozantinib Franchise Net Product Revenue of $176.2 million for
the Fourth Quarter of 2018, $619.3 million for the Full Year 2018 –

– GAAP Diluted EPS of $1.15 for the Fourth Quarter of 2018, $2.21
for the Full Year 2018 –

– Non-GAAP Diluted EPS of $0.37 for the Fourth Quarter of 2018,
$1.43 for the Full Year 2018 –

– Conference Call and Webcast Today at 5:00 P.M. Eastern Standard
Time –

ALAMEDA, Calif.–(BUSINESS WIRE)–Exelixis, Inc. (Nasdaq: EXEL) today reported financial results for the
fourth quarter and full year 2018 and provided an update on progress
toward fulfilling its key corporate objectives, as well as commercial
and clinical development milestones.

The company reported total revenues of $228.6 million in the fourth
quarter and $853.8 million for the full year 2018. Total revenues
included cabozantinib net product revenues of $176.2 million for the
fourth quarter and $619.3 million for the full year 2018. Total revenues
for the fourth quarter and full year 2018 also included the recognition
of $29.6 million and $164.4 million, respectively, of milestones from
the company’s commercial collaboration partners, Ipsen Pharma SAS
(Ipsen), Takeda Pharmaceutical Company Ltd. and Daiichi Sankyo Company,
Limited (Daiichi Sankyo).

The company reported GAAP net income of $360.1 million, or $1.15 per
diluted share, for the fourth quarter and $690.1 million, or $2.21 per
diluted share, for the full year 2018. The company reported non-GAAP net
income of $116.0 million, or $0.37 per diluted share, for the fourth
quarter and $446.0 million, or $1.43 per diluted share, for full year
2018. Non-GAAP net income includes the current-period income tax
provision of $0.4 million for the fourth quarter and $6.1 million for
the full year 2018, but excludes the non-cash income tax benefit of
$244.1 million recorded during the fourth quarter 2018 related to the
release of substantially all of the valuation allowance associated with
the company’s deferred tax assets as of December 31, 2018.

“Exelixis achieved strong financial performance in 2018, with
solid growth in cabozantinib net product revenue, total revenue, and
importantly, earnings per share and cash on hand,” said Michael M.
Morrissey, Ph.D., President and Chief Executive Officer of Exelixis.
“With cabozantinib now a global and growing oncology franchise, we have
the resources to match our commitment to expand the opportunity for the
medicine with a new wave of pivotal trials, including COSMIC-311 and
COSMIC-312, and numerous additional studies we anticipate will initiate
in 2019. During the past year, we also started to build out our
early-stage pipeline by signing in-licensing agreements with StemSynergy
Therapeutics and Invenra, and advanced our in-house discovery
activities, culminating with today’s announcement of the initiation of
phase 1 clinical evaluation of XL092, the first Exelixis compound to
emerge from our reinitiated drug discovery operations at our new Alameda
headquarters.”

Dr. Morrissey continued: “This momentum has continued as we’ve headed
into 2019. CABOMETYX received its latest FDA approval to treat patients
with hepatocellular cancer who have received prior sorafenib, and our
team is hard at work bringing this important new treatment option to
patients. In addition, MINNEBRO, a Daiichi Sankyo product that was
discovered through a collaboration with Exelixis, was approved in Japan
to treat hypertension, providing us with yet another source of future
milestone and royalty revenue. As Exelixis enters its twenty-fifth year,
I’m proud to say we’ve moved through challenging times to come full
circle: we are back to our research roots, paired now with our proven
development and fully realized commercial engines. Our business — and
commitment to improving the lives of patients with cancer — has never
been stronger.”

Fourth Quarter and Full Year 2018 Financial
Results

Total revenues for the quarter ended December 31, 2018 were
$228.6 million, compared to $120.1 million for the comparable period in
2017. Total revenues for the year ended December 31, 2018 were $853.8
million, compared to $452.5 million for the comparable period in 2017.

Total revenues included net product revenues of $176.2 million and
$619.3 million for the quarter and year ended December 31, 2018,
respectively, compared to $95.7 million and $349.0 million for the
comparable periods in 2017. The increase in net product revenues
reflected the continued growth of CABOMETYX® (cabozantinib) in the U.S.
for the treatment of advanced renal cell carcinoma (RCC).

Total revenues also include collaboration revenues of $52.4 million and
$234.5 million for the quarter and year ended December 31, 2018,
respectively, compared to $24.4 million and $103.5 million for the
comparable periods in 2017. Collaboration revenues for the quarter and
year ended December 31, 2018 included the recognition of milestone
related revenues of $29.6 million and $164.4 million, respectively,
compared to $10.0 million and $57.5 million for the comparable periods
in 2017. Collaboration revenues also included additional license,
research and development, royalty, and product supply revenues that were
recognized from the company’s collaboration agreements, totaling $22.8
million and $70.1 million for the quarter and year ended December 31,
2018, respectively, compared to $14.4 million and $46.0 million for the
comparable periods in 2017.

Research and development expenses for the quarter and year ended
December 31, 2018 were $57.3 million and $182.3 million, respectively,
compared to $32.2 million and $112.2 million for the comparable periods
in 2017. The increase in research and development expenses was primarily
related to increases in clinical trial costs and personnel expenses. The
increase in clinical trial costs was primarily due to costs associated
with: CheckMate 9ER, a phase 3 pivotal trial of cabozantinib plus
nivolumab in patients with previously untreated RCC that is being
conducted with Bristol-Myers Squibb Company; COSMIC-311, a phase 3
pivotal trial of cabozantinib in patients with radioiodine
(RAI)-refractory differentiated thyroid cancer (DTC) who have progressed
after prior VEGFR-targeted therapy; COSMIC-021, a phase 1b dose
escalation study that is evaluating the safety and tolerability of
cabozantinib in combination with Roche’s atezolizumab in patients with
locally advanced or metastatic solid tumors; COSMIC-312, a phase 3
pivotal trial evaluating cabozantinib in combination with atezolizumab
versus sorafenib in previously untreated advanced hepatocellular
carcinoma (HCC); and the preparation for further phase 3 pivotal trials
that are expected to be initiated in the coming months. The increase in
personnel expenses was primarily due to increases in headcount to
support the company’s expanded development and discovery efforts.

Selling, general and administrative expenses for the quarter and
year ended December 31, 2018 were $52.4 million and $206.4 million,
respectively, compared to $46.3 million and $159.4 million for the
comparable periods in 2017. The increase in selling, general and
administrative expenses was primarily related to increases in expenses
for personnel, marketing and stock-based compensation. 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. The increase in marketing
expenses was primarily due to increases in marketing activities in
support of the expanded RCC indication and the anticipated launch in
HCC. The increase in stock-based compensation was primarily due to the
increase in headcount.

Income tax benefit (provision) for the quarter and year ended
December 31, 2018 was $243.7 million and $238.0 million, respectively,
compared to $(0.4) million and $(4.4) million for the comparable periods
in 2017. The change in income taxes was primarily related to the fourth
quarter 2018 release of substantially all of the valuation allowance
against the company’s deferred tax assets. The decision to release the
valuation allowance was made after the company determined that it was
more likely than not that these deferred tax assets would be realized.
Due to the release of the valuation allowance in 2018, starting in 2019,
the company will record income taxes on GAAP income using an estimated
effective tax rate (see “2019 Financial Guidance” below).

GAAP net income for the quarter ended December 31, 2018 was
$360.1 million, or $1.20 per share, basic and $1.15 per share, diluted,
compared to GAAP net income of $38.5 million, or $0.13 per share, basic
and $0.12 per share, diluted, for the comparable period in 2017. Net
income for the year ended December 31, 2018 was $690.1 million, or $2.32
per share, basic and $2.21 per share, diluted, compared to $154.2
million, or $0.52 per share, basic and $0.49 per share, diluted, for the
comparable period in 2017. The increase in net income for the quarter is
primarily related to the income tax benefit associated with the release
of substantially all of the valuation allowance against the deferred tax
assets described above in addition to increases in net product and
collaboration revenues, offset by increases in research and development
and selling, general and administrative expenses. In addition to the
income tax benefit, the increase in net income for the full year 2018
was primarily the result of increases in net product and collaboration
revenues, partially offset by increases in research and development and
selling, general and administrative expenses.

Non-GAAP net income for the quarter and year ended December 31,
2018 was $116.0 million, or $0.39 per share, basic and $0.37 per share,
diluted and $446.0 million or $1.50 per share, basic and $1.43 per
share, diluted, respectively. Non-GAAP net income includes the
current-period income tax provision of $0.4 million for the fourth
quarter and $6.1 million for the full year 2018, but excludes the
non-cash income tax benefit related to the release of substantially all
of the valuation allowance against the company’s deferred tax assets
described above.

Cash and cash equivalents, short- and long-term investments and
short- and long-term restricted cash and investments
totaled $851.6
million at December 31, 2018, compared to $457.2 million at December 31,
2017.

Non-GAAP Financial Measures

The company believes that the presentation of non-GAAP measures is
useful to investors because it excludes a non-cash tax benefit that
resulted from the release of substantially all of the valuation
allowance against the company’s deferred tax assets. Management believes
that presentation of operating results that excludes this item provides
useful supplemental information to investors and facilitates the
analysis of the company’s core operating results and comparison of
operating results across reporting periods. Management also believes
that this supplemental non-GAAP information is useful to investors in
analyzing and assessing the company’s past and future operating
performance.

The company encourages investors to carefully consider its results under
GAAP, as well as its supplemental non-GAAP information and the
reconciliation between these presentations, to more fully understand the
company’s business. Reconciliations between GAAP and non-GAAP results
are presented in the tables of this release.

2019 Financial Guidance

The company is providing the following financial guidance for 2019. Cost
of goods sold are expected to be between 4 percent and 5 percent of net
product revenues. Research and development (R&D) expenses are expected
to be between $285 million and $315 million and includes non-cash
expenses related to stock-based compensation of $20 million. Selling,
general and administrative (SG&A) expenses are expected to be between
$220 million and $240 million and includes non-cash expenses related to
stock-based compensation of $35 million. Guidance for the effective tax
rate in 2019 is between 21 percent and 23 percent.

Cabozantinib Highlights

Strong Growth in Cabozantinib Franchise Net Revenues. Net product
revenues generated by the cabozantinib franchise were $176.2 million
during the quarter ended December 31, 2018, an increase of 84 percent
year-over-year. During the fourth quarter of 2018, CABOMETYX generated
$171.6 million in net product revenues and COMETRIQ® (cabozantinib)
capsules for the treatment of patients with progressive, metastatic
medullary thyroid cancer generated an additional $4.6 million in net
product revenues. Net product revenues for the year ended December 31,
2018 were $619.3 million, an increase of 77 percent year-over-year.

Initiation of COSMIC-311, a Phase 3 Pivotal Trial of Cabozantinib in
Patients with RAI-refractory DTC.
In October, Exelixis announced the
initiation of COSMIC-311, a multicenter, randomized, double-blind,
placebo-controlled phase 3 pivotal trial designed to enroll
approximately 300 patients at approximately 150 sites globally. The
co-primary endpoints of the trial are progression-free survival (PFS)
and objective response rate. The American Cancer Society estimates that
approximately 54,000 new cases of thyroid cancer will be diagnosed in
the United States in 2018.1 DTC accounts for approximately 90
percent of all thyroid cancers.2 Approximately 5 to 15
percent of differentiated thyroid tumors are resistant to RAI treatment.3

Cabozantinib Data at the European Society for Medical Oncology (ESMO)
2018 Congress.
In October, data from clinical trials of cabozantinib
were featured in 13 presentations at the ESMO 2018 Congress in Munich,
Germany. Notable results included further analyses from the CELESTIAL
phase 3 pivotal trial, as well as single-agent and combination data for
cabozantinib in a variety of tumor types and disease settings. One
poster presentation highlighted results from the dose-escalation stage
of the phase 1b COSMIC-021 study of cabozantinib in combination with
atezolizumab in previously-untreated advanced RCC, demonstrating that
this therapy combination was well-tolerated and showed encouraging
anti-tumor activity in advanced RCC. A second poster discussion detailed
the effect of PD-L1 status on clinical outcomes with cabozantinib in
advanced RCC in the CABOSUN and METEOR trials, showing improved outcomes
regardless of PD-L1 expression relative to sunitinib or everolimus, the
respective comparator arms for each trial. Another poster presentation
evaluated the activity of cabozantinib in patients with advanced RCC who
had progressed on immune checkpoint inhibitor (ICI) therapy, finding
that cabozantinib was active in patients previously treated with ICIs,
either alone or in combination with anti-VEGF or other therapies.

CABOMETYX as a Treatment for Advanced RCC Approved in Brazil and
Taiwan.
In October, Ipsen received approvals from both the Agência
Nacional de Vigilância Sanitária in Brazil for CABOMETYX as a treatment
for both previously treated and previously untreated advanced RCC and
from the Taiwan Food and Drug Administration for CABOMETYX as a
treatment for patients with advanced RCC who have received prior
anti-angiogenic therapy.

European Commission (EC) Approves CABOMETYX for the Treatment of HCC
in Patients Previously Treated with Sorafenib.
In November, Ipsen
announced approval by the EC of CABOMETYX as a monotherapy for the
treatment of HCC in adults who have previously been treated with
sorafenib. This approval allows for the marketing of CABOMETYX in this
indication in all 28 member states of the European Union (EU), Norway
and Iceland. Under the terms of the collaboration agreement with Ipsen,
Exelixis received a milestone payment of $40.0 million for this approval
in January 2019. The EC approval is based on results from the CELESTIAL
trial of CABOMETYX in patients with advanced HCC who received prior
sorafenib. In this phase 3 pivotal trial, CABOMETYX demonstrated a
statistically significant and clinically meaningful improvement in
overall survival (OS) versus placebo.

Initiation of COSMIC-312, a Phase 3 Pivotal Trial of Cabozantinib in
Combination with Atezolizumab versus Sorafenib in Patients with
Previously Untreated Advanced HCC.
In December, Exelixis and Ipsen
announced the initiation of COSMIC-312, a multicenter, randomized,
controlled phase 3 pivotal trial that is designed to enroll
approximately 640 patients at up to 200 sites globally. The co-primary
endpoints of the trial are PFS and OS. An exploratory arm will also
evaluate cabozantinib monotherapy in this first-line setting. HCC is the
most common form of liver cancer, making up about three-fourths of the
estimated nearly 42,000 new cases in the U.S. in 2018 and is the
fastest-rising cause of cancer-related death in the U.S.4,5

U.S. Food and Drug Administration (FDA) Approval of CABOMETYX Tablets
for Previously Treated HCC.
In January 2019, Exelixis announced the
FDA approval of CABOMETYX for the treatment of patients with HCC who
have been previously treated with sorafenib. As with the EC’s approval
in the EU, the FDA’s approval of CABOMETYX was based on results from the
CELESTIAL phase 3 pivotal trial of CABOMETYX in patients with advanced
HCC who received prior sorafenib.

Cabozantinib Data at the 2019 American Society for Clinical Oncology
Gastrointestinal Cancers Symposium (ASCO-GI).
In January 2019, data
from clinical trials of cabozantinib were featured in five presentations
at ASCO-GI in San Francisco, including further analyses from the
CELESTIAL phase 3 pivotal trial.

Corporate Highlights

MINNEBRO™ Receives Regulatory Approval for the Treatment of
Hypertension in Japan.
In January 2019, Exelixis’ partner Daiichi
Sankyo announced that MINNEBRO (esaxerenone) tablets had received
approval from the Japanese Ministry of Health, Labour and Welfare as a
treatment for patients with hypertension. MINNEBRO is a compound
identified during the prior research collaboration between Exelixis and
Daiichi Sankyo, which the companies entered into in March 2006, and has
been subsequently developed by Daiichi Sankyo. Per the collaboration
agreement, Exelixis will receive a $20.0 million milestone payment upon
the first commercial sale of MINNEBRO in Japan. Exelixis is eligible for
additional commercialization milestone payments, as well as low
double-digit royalties on sales of MINNEBRO.

Exelixis Files Investigational New Drug Application (IND) and Is
Initiating Phase 1 Development of XL092.
Today Exelixis announced it
has submitted an IND to the FDA for XL092, a next-generation small
molecule tyrosine kinase inhibitor targeting VEGF receptors, MET, and
other kinases implicated in cancer’s growth and spread. Following FDA’s
acceptance of the IND filing, the company plans to initiate a phase 1
dose escalation trial evaluating the pharmacokinetics, safety and
tolerability of XL092 in patients with advanced solid tumors, with the
primary objective of determining a dose for daily oral administration of
XL092 suitable for further evaluation. Assuming positive data from the
initial phase of the trial, the expansion phase is designed to further
explore the selected dose of XL092 in individual tumor cohorts, where
safety, tolerability, and initial clinical activity would be evaluated.
XL092 is the first clinical candidate to emerge from Exelixis’ in-house
laboratories since the company resumed its drug discovery activities.

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
December 28, 2018 and December 29, 2017 are indicated as being as of and
for the periods ended December 31, 2018 and December 31, 2017,
respectively.

Conference Call and Webcast

Exelixis management will discuss the company’s financial results for the
fourth quarter and full year 2018 and provide a general business update
during a conference call beginning at 5:00 p.m. EST / 2:00 p.m. PST
today, Tuesday, February 12, 2019.

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 6681209 to join
by phone.

A telephone replay will be available until 8:00 p.m. EST on February 14,
2019. Access numbers for the telephone replay are: 855-859-2056
(domestic) and 404-537-3406 (international); the passcode is 6681209. 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. Our discovery efforts
have resulted in four approved products, CABOMETYX®
(cabozantinib), COMETRIQ® (cabozantinib), COTELLIC®
(cobimetinib) and MINNEBRO™ (esaxerenone), and we 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. Exelixis is a member of 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: Exelixis’ commitment to
expand the opportunity for cabozantinib with a new wave of pivotal
trials, including COSMIC-311 and COSMIC-312, and numerous additional
studies Exelixis anticipates will initiate in 2019; the potential for
MINNEBRO to provide Exelixis with another source of future milestone and
royalty revenue; the potential that Exelixis will not realize its
deferred tax assets; Exelixis’ guidance for 2019 costs of goods sold,
R&D and SG&A expenses (including non-cash expenses related to
stock-based compensation), and effective tax rate; the anticipated
timing for receipt of a $20.0 million milestone payment from Daiichi
Sankyo upon the first commercial sale of MINNEBRO in Japan; Exelixis’
eligibility for additional commercialization milestone payments, as well
as low double-digit royalties on sales of MINNEBRO; Exelixis’ plans to
initiate a phase 1 dose-escalation trial evaluating the
pharmacokinetics, safety and tolerability of XL092 in patients with
advanced solid tumors, as well as further explorations of XL092 in the
expansion phase should data from the initial phase of the trial prove
positive; and 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.

Contacts

Chris Senner
Chief Financial Officer
Exelixis,
Inc.

650-837-7240
csenner@exelixis.com

Susan
Hubbard

EVP, Public Affairs & Investor Relations
Exelixis,
Inc.

650-837-8194
shubbard@exelixis.com

Read full story here

error: Content is protected !!