Good day ladies and gentlemen, and welcome to the Exelixis' First Quarter 2016 Financial Results Conference Call. My name is Rhonda, and I will be your operator for today. As a reminder, this call is being recorded for replay purposes. I would now like to introduce your host for today conference Ms. Susan Hubbard, Investor Relations. Please proceed, ma'am.

Thank you, Rhonda, and thank you all for joining us for the Exelixis' first quarter 2016 financial results conference call. Joining me on today's call are Mike Morrissey, our President and CEO; Gisela Schwab, our Chief Medical Officer; P.J. Haley, our Vice President of Commercial; and Chris Senner, our Chief Financial Officer who will together review our corporate, development, commercial and financial progress for the quarter ended April 1, 2016, as well as recent key development and corporate events. Peter Lamb, our Chief Scientific Officer is also with us and will participate in the question-and-answer session of this call. As a reminder, we are reporting our financial results on a GAAP basis only and as usual the complete press release with our results can be accessed through our website at exelixis.com. 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 clinical, regulatory, commercial, financial and strategic matters. Actual events or results could, of course, differ materially. We refer you to the documents Exelixis' files 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, risk and uncertainties related to the commercial planning, product commercial success and market competition, uncertainties related to the availability of data at the reference times, risk and uncertainties related to the regulatory review and approval processes, risk associated with conducting clinical trials and compliance with applicable regulatory requirements, risk and uncertainties associated with the Exelixis dependence on its collaboration partners and ability to maintain its rights under existing collaborations and risk regarding Exelixis' financial outlook and the sufficiency of the Company's capital and other resources over time. With that, I will turn the call over to Mike.

All right. Thank you, Susan, and thanks to everyone for joining us on the call today. I’ll provide a brief overview of the key events from the last few months and then turn the call over to Gisela, P.J., and Chris who will give more details on our development activities, initial feedback on the CABOMETYX launch, and our Q1 financials respectively. Obviously it's been a very busy and highly productive time for the company. I think it's safe to say that we have reached a critical inflection point in the company's history and we are ready to take things to the next level as we move forward into the second quarter and beyond. Key events from the first quarter and April includes first, a partnership with Ipsen for the ex-U.S., ex-Canada and ex-Japan rights for cabozantinib in which we gained an experienced and enthusiastic partner and a $200 million upfront payment. Second, the build-out of our commercial group in the medical affairs team allowing us to be launch ready by April 1. Third, the acceptance of 18 abstracts featuring Exelixis discovered compounds for presentation in ASCO. And fourth and finally the FDA approval for CABOMETYX in advanced RCC on April 25 with the concomitant release of the METEOR overall survival data in the USPI. We are delighted to be able to provide CABOMETYX the brand name for cabozantinib tablets to patients with advanced RCC and their physicians, now that we have secured FDA approval. We are very pleased with the CABOMETYX label, which includes robust overall survival data, completing a trifecta of benefit in all three key efficacy endpoints. Overall survival, progression free survival and objective response rates, as Gisela will discuss shortly. With that foundation in place, our last 9 months have been a period of very intense growth…

Thank you, Mike. I will begin my update with a brief overview of our very recent [indiscernible] approval for CABOMETYX for the treatment of patients with advanced RCC who have received prior anti-angiogenic therapy. I will also cover the current status of our ongoing development program with cabozantinib and then focus on the upcoming presentations at ASCO in early June, 2016. CABOMETYX was approved by the FDA on April 25 of 2016 for the treatment of patients with advanced RCC who have received prior anti-angiogenic therapy. Starting dose is 60 milligrams daily. As Mike said earlier, we are very pleased with the label and believe it will allow physicians and patients with advanced RCC to consider CABOMETYX in the context of other therapies. The approval of CABOMETYX is based on data from METEOR, the randomized open label global Phase 3 pivotal trial comparing cabozantinib and everolimus in 658 patients with advanced RCC who had previously received at least one prior VEGFR-TKI. Patients could have received other prior therapies including cytokines and antibodies targeting VEGF, the P one receptor or its ligand, PDL1. There was no upper limit on the number of prior therapies. The USPI which can be found at www.cabometyx.com covers all three efficacy endpoints showing statistically significant and clinically meaningful improvement for CABOMETYX compared with everolimus in the METEOR trial. The primary endpoint of PFS assessed among on the first 375 patients randomized showed a highly significant improvement in median PFS for cabozantinib with 7.4 months compared to everolimus with 3.8 months with an HR of 0.58 and a P value of less than 0.0001. The secondary endpoint of objective response rate and overall survival were both assessed among the ITT population that is all 658 patients involved. Both objective response rate and overall survival showed highly significant…

Thank you Gisela. As you know, we are just beyond a week out from the approval of CABOMETYX in RCC. And while very early, with the successful first week of launch, our conviction continues to be reinforced that CABOMETYX will achieve rapid uptick in the marketplace. We are very pleased that the first prescription of CABOMETYX was filled on April 28, a mere three days after approval. CABOMETYX is now fully accessible in our distribution channel, which is actively processing and filling new prescriptions that have come in over the last week. Before providing more detail on the CABOMETYX launch, I'll spend a few minutes discussing our cabozantinib experience in RCC in order to set expectations for COMETRIQ moving forward now that CABOMETYX has been approved for advanced RCC. To reiterate what we said on the approval call last week, Exelixis only promotes cabozantinib for its labeled indication which until April 25 was progressive metastatic medullary thyroid cancer. However as you know, physicians in the United States have the independent discretion to prescribe medicines outside their labeling. Going forward, given that the FDA approved label for CABOMETYX states that COMETRIQ and CABOMETYX are not interchangeable. We believe the vast majority of new RCC patients will be treated with CABOMETYX. As you will hear from Chris, we had strong demand for RCC in Q1 without any promotion. This helps us understand a great deal about the RCC market. MTC demand was flat in the first quarter as it has been for the last three quarter. We have observed utilization of cabozantinib for the treatment of RCC for many years now. Today more than 300 healthcare providers have prescribed cabozantinib for the treatment of their late line RCC patients. Following the simultaneous presentation of the METEOR results at the ECC/ESMO meeting in…

Thank you P.J. Net revenues for the quarter ended March 31, 2016 were $15.4 million compared to $9.4 million for the comparable period in 2015. As a reminder, in the first quarter of 2015 we changed our revenue recognition from sell through to selling and included approximately $2.6 million of deferred revenue in the first quarter of 2015 results. Net revenues for the first quarter of 2016 consisted of $9.1 million of net product revenue related to the sale of COMETRIQ. $5 million of contract revenues for a milestone earned for Merck related to their worldwide license of our PI3K-Delta program and $1.2 million of license revenues as a result of the amortization of the $200 million upfront payment we received from Epson under our collaboration and license agreement. First quarter 2016 COMETRIQ net product revenue declined by approximately $800,000 or 8% when compared to fourth quarter 2015 net product revenue. As I mentioned on the fourth quarter earnings call, wholesaler inventory increase by approximately 160 cartons from the third quarter 2015 levels. In the first quarter of 2016, the wholesaler reduced their inventory by approximately 160 cartons which was the primary driver in our net product revenue decline. This wholesaler inventory reduction was partially offset by an increase in demand. I like to take a moment to give you a bit more insight into the increase in demand during the first quarter. We experienced an overall 33% or an approximate two 200 carton increase in U.S. demand for COMETRIQ as compared to the fourth quarter of 2015 which was primarily driven by demand by an increase in prescriptions filled by patients with our advanced RCC. In the first quarter 2016, there were approximately 400 cartons shipped to U.S. RCC patients, meanwhile carton demand for U.S. thyroid patients remained relatively…

All right thanks Chris. The first quarter of 2016 along with April have been extremely productive and have witnessed the achievement of major milestones that have already begun to dramatically shape our future. The approval of CABOMETYX and advanced RCC represents substantial progress in our vision to build a broad cabozantinib franchise that addresses unmet medical needs in commercially meaningful markets. With the resources we have in hand, we are in a strong position to execute on the next key drivers of our business specifically first, the continued launch of CABOMETYX and advanced RCC in the U.S. This includes fully leveraging the opportunity that ASCO 2016 provides and further reaching the oncology treatment community at this critical stage. Second, support of our partner Epson has been there for the EU approval of cabozantinib and advanced RCC. And third accruing patients into the CELESTIAL trial in HCC to reach our target for data in 2017. We are making very significant strides in our efforts to bring new therapies to people with cancer who we individually and collectively aim to serve. And I am personally very excited about what 2016 to look like going forward from today. Before we close I want to again thank everyone in Exelixis for their individual and combined efforts in helping us reach the important milestones that we discussed today. I'm especially pleased to welcome all of our new employees and I look forward to working with them and the rest of the team as we together take our company, our culture and our business to the next level. So thank you for your time this afternoon and your interest in Exelixis. And we're now happy to open the call for questions.

[Operator Instructions] And our first question comes from the line of Eric Schmidt from Cowen & Company. Your line is now open.

Thanks and congrats on all the recent progress. Maybe for P.J. it sounds like you have a fair bit of insight based on a soft label experience for COMETRIQ and RCC. Do you know things like the compliance rates, the line of therapy that the drug is typically being prescribed and what type of physician prescribers are utilizing the therapy?

Yes, thanks for the question. I’ll first say just we're very pleased with the launch, the date and the label which is very differentiated in terms of our trifecta of efficacy improvements in overall survival, progression free survival and objective response rate, what we're hearing generally in the field although it’s very early days is that this is being really well received by physicians. So as far as some of the metrics go, what we have seen in the cohort of patients and I emphasize that it's an early look right into things is that since ECC/ESMO as I mentioned the dose being used is 95% at 60 milligrams and we've seen a compliance rate in that same cohort again which is preliminary of about 90%, so we're getting a good sense of that data and how it's playing out in the commercial settings, we’re very confident in that. And as I mentioned earlier the momentum we're seeing is certainly encouraging with regards to a six-fold increase in new prescribers, in new patients in the post ECC/ESMO setting relative to that similar setting or that similar time period, excuse me, before ECC/ESMO - which is also very encouraging. We're also happy that our distribution channel is up and running and filling prescriptions and what's been sort of gratifying is that we've seen and heard many stories already about physicians wanting to fill the drug and our team working together to make that happen in some cases collectively across sales and market access within 24 to 48 hours. It was just fantastic, we've had our first commercial co-pay assistance script billed which is great news and our team just continues to fight for every patient, every script every day.

So the average duration of therapy that you quoted of around 7.6 months that was also observed in METEOR, is that the average duration for all off label COMETRIQ patients or is that specifically for the second line population?

Yes, so I'll say that’s specific to RCC, generally speaking, and what we've seen in our commercial experience, but we're not really breaking that out by line of therapy.

Can you say whether you've seen predominately second or third or a mix of the two lines? A – P.J. Haley: Well, I guess what I say generally, kind of referred to this in the prepared remarks, is our historic use prior to our approval last week. We believe and hear anecdotally that it's primarily in later lines of therapy, right, so the third and fourth line and beyond. So that's what we…

That's encouraging that you're still in those later lines and you're not sacrificing anything in duration. Maybe just one last quick one for either P.J. or Chris. Just on the MTC sales for COMETRIQ. Would you expect to see that decline substantially in the next few quarters and to what extent if you can help us? A – Chris Senner: This is Chris, Eric. So the way we’re looking at it, so we gave you all the metrics that are around the RCC demand that's going on, so we did see a 200 unit or 200 carton increase in demand from the fourth quarter to the first quarter. We saw approximately 400 units prescribed in the first quarter for RCC patients. And the way we’re looking at is as P.J. mentioned and I mentioned that the thyroid demand has remained relatively flat for the last several quarters or going back to even the first quarter of last year. And then we feel that you have all the numbers there to come up with what the COMETRIQ demand is outside of RCC. Just one other thing too is, we did this in order to give everybody insight into the demand that's happening with COMETRIQ and we don't feel there's an obligation going forward that we're going to update this information. But we just want to make sure everybody have a good understanding of what the market dynamics are for COMETRIQ.

Thank you very much.

And our next question comes from the line of Stephen Willey from Stifel. Your line is now open.

Yes, thank you for taking the question, I appreciate all the commentary around the pre-launch utilization. Just wondering if you guys are anticipating there would be a meaningful stocking benefit embedded into the Q2 number just given the recent shipment to wholesalers. And then also along those same lines, if there's anything on the revenue recognition front that we should be aware of during the early staging and launch.

Steve, it's Mike, you are breaking up a little bit. There's some pretty serious background noise there so I think Chris can probably try to answer both of those, Chris could you get those questions?

Steve, I think what your question was will there be significant stocking and also was there revenue recognition. So two things, so to answer both of those things, we don't expect a large stocking to happen in the trade. It's not - it's going to be through primarily through specialty pharmacy, so we don't see that there'll be a large stocking in those. We have product at our distributor and it can be out to the trade both the specialty pharmacies and specialty distributors pretty quickly. So we don't expect a large stocking now. On the revenue recognition, we are still working through some of that with our auditors and we will be able to update you more obviously in the next quarter call when we start recognizing revenue but we are working through that with our auditors at this point in time.

Okay, thank you. And sorry for the background noise. And then just one last question with respect to cabozantinib and whether or not you can just provide any color around what the profit share or perhaps gain would look like in 1Q. Thanks.

Steve, this is Chris again. So the actual - there was a loss in the quarter $7.3 million. There was some current period cost in there, which was approximately $4 million and then there's some catch-up from prior periods that we accrued for, that - we were charged by Genentech in the quarter. So overall again $7.3 million in the quarter loss that we ran through our SG&A line or…

Okay. And maybe just a follow-up [indiscernible], just wondering as you helped to co-promote this drug, where you're seeing the most amount of traction, just with respect to adoption. There was obviously another BRAF/MEK combo that's already in the marketplace, and we hear from physicians that some of the [hierarchy] [ph] issues are kind of unmanageable, and they're looking for another treatment option in that regard. But just wondering if what you're seeing initially, and I kind of understand it’s early days, but if you're seeing a lot of utilization as a result of some of the tolerability issues or if you are actually seeing [indiscernible] front-line regimen of sorts. Thanks.

Yes, thanks for the question, I'll emphasize for the COTELLIC launch also relatively early days. And as we've talked about historically and certainly the VRAF positive metastatic melanoma market is very competitive with multiple PD-1 immunotherapies available, Ipilimumab and as you mentioned the competitor combination from Novartis. So what we've seen is solid uptake, it's a little early to really tell what type of patients we're getting as it's only really been a few months, but pyrexia has certainly been an issue to an extent for the competitor. But as we're out kind of talking about the data and educating physicians, I'd say we're making progress although it is steady and as we've kind of talked about it so relatively small and competitive marketplace.

Operator, why don't we go ahead and take the next question.

[Operator Instructions] And our next question comes from the line of Michael Schmidt from Leerink Partners. Your line is now open.

Thanks for taking my questions and congrats on the launch as well. Maybe a brief follow up on COBI, I guess looking at your guidance for the year do you assume a loss for COBI for the full year.

Yes, Michael, it's Chris. We are assuming a loss for COBI for the full year. It's included in our total SG&A guidance or total guidance and it's included in the SG&A line for this year.

Okay, thanks. And then just to clarify how much - how many vials I guess or patient supply is in a carton of Cabo?

Yes, a carton is the unit for COMETRIQ and a carton is – CABOMETYX, sorry, CABOMETYX is a bottle and that's a 30 day supply, thirty tablets in a bottle for any given dosage strength.

Okay. And for COMETRIQ, how much is one carton.

A carton of COMETRIQ again 28 day supply in that case.

I see, so one month. And then another question more specifically you have a lot ongoing with CTEP that's why I even get a sponsored study. Once to get your sense of how high the hurdle is now to potentially run some company sponsored trials as data emerge from those studies.

Well I think the, CTEP IND program stands a total of - as mentioned earlier around of 45 ongoing of client studies and these are the most part Phase 2 studies, are their single arm studies or combination studies or randomized Phase 2 studies and also Phase 1b studies. So I think these studies provide a very nice portfolio to help us prioritize indications and perform initial signal searching in additional indications and can provide the basis for future late stage development.

Yes, Michael its Mike, maybe I can provide little bit more color. I think the gate here for us moving from what we have in the CTEP portfolio in the company sponsored, larger randomize Phase 2 or potentially pivotal trials that gave the definite obviously good data, the right analysis around competition, the commercial opportunity. So the full picture on what that investment might look like and entail including whatever upside could result from that. So we've got a full team in place now between developments, regulatory, commercial and finance to be able to put together, I think very strong business case based upon kind of our generic expertise of the company, so we'll be doing the full analysis on any opportunity going forward with the bigger picture in mind, right. So, and that's where we're at right now, I think we're very excited about that and ready to start doing that now that we've got some of these very important milestones behind us.

All right, great. Thank you very much.

And at this time there are no further questions. I would now like to turn the call back to Ms. Susan Hubbard for any further remarks.

Thank you, Rhonda and thank you all for joining us today. We welcome your follow-up calls with any additional questions you may have.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a wonderful day.