Exelixis, Inc. (EXEL) Q1 2022 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Exelixis Q1 2022 Financial Results Conference Call. [Operator Instructions] Please be advised that conference is being recorded. I would now like to hand the conference over to your speaker, Ms. Susan Hubbard, Executive Vice President of Public Affairs and Investor Relations. Please go ahead.

Thank you, Shari, and thank you all for joining us for the Exelixis first quarter 2022 financial results conference call. Joining me on today's call are Mike Morrissey, our President and CEO; Chris Senner, our Chief Financial Officer; P.J. Haley, our Executive Vice President of Commercial; Vicki Goodman, our Chief Medical Officer; and Peter Lamb, our Chief Scientific Officer, who will together review our progress for the first quarter 2022 ended March 31, 2022. During the call today, we will refer to financial measures not calculated according to generally accepted accounting principles. Please refer to today's press release, which is posted on our website for an explanation of our reasons for using such non-GAAP measures as well as tables deriving these measures from our GAAP results. 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 discovery, product development, regulatory, commercial, financial and strategic matters. Actual events or results could, of course, differ materially. We refer you to the documents we file 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, risks and uncertainties related to product commercial success, market competition, regulatory review and approval processes, conducting clinical trials, compliance with applicable regulatory requirements, our dependence on collaboration partners and the level of cost associated with discovery, product development, business development and commercialization activities. And with that, I'll now turn the call over to Mike.

All right. Thank you, Susan, and thanks to everyone for joining us on the call today. Exelixis had a strong first quarter 2022 across all components of our business. We continue to grow the Cabozantinib franchise and advance a diversified pipeline of clinical and discovery programs while focusing on important upcoming milestones, including top line results for ongoing pivotal trials, ASCO preparation and the Cabo, ANDA trial starting on May 16. We'll keep our prepared remarks short today so we can address your important questions. Key highlights from Q1 include first, the Cabozantinib business continues to grow and generate the funds to advance our portfolio of next-generation therapies for oncology. CABOMETYX maintained its status as the leading TKI for RCC. The Cabo franchise grew 37% year-over-year compared to first quarter 2021, marking its sixth consecutive quarter of growth. Second, our emerging bicoastal development team is focused on expanding potential cabo indications, numerous expected top line results for important COSMIC and CONTACT pivotal trials and advancing our growing pipeline of clinical compounds, including XL092, XB002, XL102, and XL114 including the upcoming initiation of the pivotal trial program for XL092. Third and finally, our drug discovery network of internal and collaborative efforts along with extensive business development activities across both small molecule and biologic platforms continues to advance at a rapid pace with the selection of up to five new development candidates expected in 2022. So with that, please see our press release issued an hour ago for our first quarter financial results and an extensive list of key corporate milestones achieved in the quarter. I'll now turn the call over to Chris.

Thanks, Mike. For the first quarter of 2022, the company reported total revenues of approximately $356 million, which included Cabozantinib franchise net product revenues of $310.3 million. Cabometyx net product revenues were $302.8 million, which included approximately $9 million in clinical trial sales. Gross to net for the Cabozantinib franchise in the first quarter 2022 was 30.8%, which is significantly higher than the gross to net of 24.5% we experienced in Q4 2021. This increase in gross to net deductions in the first quarter 2022 translates to an approximate $28 million impact when compared to the fourth quarter of 2021. This increase in gross net was primarily driven by higher 340B utilization, higher Medicare Part D and higher co-pay assistance, primarily associated with patients in high-deductible medical insurance plans. Historically, we have experienced higher Medicare Part D and co-pay assistance expenses in the first quarter of the year due to many Part D patients moving through the donor hole and commercial patients satisfying their deductibles during the start of the year. Our 340B utilization in the first quarter was at historically high level. Our trade inventory weeks on hand remained relatively flat when compared to the fourth quarter of 2021. The total revenues also included approximately $46 million in collaboration revenues earned primarily from Ipsen, Takeda and Genentech. Our total operating expenses for the first quarter of 2022 were approximately $273 million compared to $334 million in the fourth quarter of 2021. R&D expense was the primary driver of the decrease in total operating expenses which was primarily related to lower licensing expenses. Provision for income taxes for the first quarter of 2022 was approximately $17 million compared to approximately $23 million in the fourth quarter of 2021. The company reported GAAP net income of approximately $69 million or $0.21 per share on a fully diluted basis for the first quarter 2022 and -- the company also reported non-GAAP net income of approximately $84 million or $0.26 per share on a fully diluted basis. Non-GAAP net income excludes the impact of approximately $15 million of stock-based compensation expense net of the related income tax effect. Cash and investments for the quarter ended March 31, 2022, was approximately $2 billion. And finally, we are reiterating our full year 2022 financial guidance, which is detailed on Slide 13 of our earnings presentation. And with that, I'll turn the call over to P.J.

Thank you, Chris. The first quarter of 2022 was a strong quarter for the Cabozantinib franchise as we built on the significant momentum of 2021 and the milestone of surpassing $1 billion of U.S. net product revenue. The team continues to execute at a high level, which has resulted in CABOMETYX continuing to be the number one prescribed TKI in RCC. Furthermore, CABOMETYX total prescriptions or TRx have now grown for six consecutive quarters. Demand growth is being driven primarily by the long duration of therapy for patients on CABOMETYX in combination with nivolumab in the first-line say. Prescription trends remained strong in Q1 2022. Year-over-year, TRx growth in Q1 2022 was 37% relative to Q1 2021. Given the clinical data from the CheckMate 9ER study, we anticipate these first-line combination patients to receive therapy for approximately 1.5 years on average, thus driving a significantly longer treatment duration for CABOMETYX. We are encouraged by the fact that in our data, we see a near doubling of the amount of new patient starts at the 40-milligram dose in Q1 2022 since the CheckMate 9ER launch in January 2021. This is further indication that the combination uptake in the first-line setting is robust. Turning to the TKI market basket of CABOMETYX, INLYTA, SUTENT, VOTRIENT and Lenvima. CABOMETYX TRx market share has increased every quarter since Q1 2021 and the share in Q1 2022 was 36%. As we have discussed previously, the first-line RCC market is very competitive, and we are pleased with the performance of CABOMETYX in combination with nivolumab in this setting. Furthermore, we're still not seeing any significant competitive impact on our market share. Uptake in the first line is broad across clinical risk groups and practice settings and prescriber experience to date has been very positive. We believe that all of this taken together with the momentum in the business positions CABOMETYX for continued growth throughout 2022. Turning to other settings. We are pleased that the CABOMETYX second-line RCC business remained strong and was stable in Q1, while growth continued in the first line setting. In HCC, our business was stable in Q1, and CABOMETYX continues to be the most prescribed TKI in second-line setting for patients treated with immunotherapy containing regimens in the first line. With regards to second-line DTC, we are pleased with the launch. And in Q1, we continue to see strength in new patient starts and demand in this indication. Looking beyond the six current U.S. indications for cabozantinib, we are planning for numerous life cycle expansion opportunities as they begin to have top line data readouts in 2022. We look forward to having the opportunity, pending data and approval to bring CABOMETYX to many more patients in need of additional treatment options. Our team remains highly focused and motivated to compete every day to bring the benefit of CABOMETYX to all eligible patients as we continue to build the franchise and serve patients. And with that, I'll turn the call over to Vicki.

Thank you, P.J. Good afternoon. Today, I will cover our progress towards our organizational expansion to the East Coast, Exelixis East, as well as progress on our pipeline and highlights of cabozantinib data to be presented at the upcoming ASCO meeting in June. As we announced early this year, we are developing a presence in Greater Philadelphia as we seek to access talent on both coasts to support our expanding development organization. We have made progress since the last quarterly update, including signing a lease for intermediate term space in King of Prussia, Pennsylvania which we expect to occupy by July of this year and which can hold approximately 140 office-based employees. We have also identified a potential long-term build-to-suit site of approximately 200,000 square feet in close proximity to our intermediate term space in King of Prussia and we have begun hiring to open roles within the development organization in King of Prussia, supported by an ongoing recruitment campaign to raise awareness of our presence in the Philadelphia area. I'm excited by the opportunity to create a bicoastal presence across two biotechnology hubs, operating as one team focused on the singular mission of developing medicines to improve the lives of patients with cancer. Turning now to an update on our pipeline, beginning with our cabozantinib registrational trials. We remain on track for three Phase III readouts this year. For COSMIC-313, evaluating cabozantinib in combination with nivolumab and ipilimumab in intermediate and poor risk renal cell carcinoma, we expect to release top line results in July. An interim readout for the primary endpoint of overall survival for CONTACT-01 and readout of the progression-free survival endpoint for CONTACT-03 in combination with atezolizumab in PD-1 experienced non-small cell lung cancer and renal cell carcinoma, respectively, are expected in the second half of 2022. We CONTACT-02, our Phase III study in combination with atezolizumab in metastatic castrate-resistant prostate cancer is expected to complete enrollment this year. We continue to make progress on our pipeline molecules. XL092, our next-generation MET, AXL, MER and VEGFR tyrosine kinase inhibitor is being explored in combination with several checkpoint inhibitors and IO combinations and is progressing towards registrational studies. We recently initiated dosing on a nivolumab-based immuno-oncology combination study in genitourinary malignancies and we are amending that protocol to remove the triplet combination of BEMPEG with XL092 and nivolumab and replace it with an alternative triplet combination. We also continue to explore additional potential combination approaches with novel agents and have made progress with several partners to bring novel combinations into the clinic. Our first planned Phase III for XL092, STELLAR-303 and third-line non-MSI high colorectal cancer will be initiated in the second quarter of this year. As a reminder, data supporting this study comes from two studies of cabozantinib in colorectal cancer which were presented at ASCO-GI in January and demonstrated promising activity in comparison to historical controls of regorafenib, the current standard of care. XB002, our first antibody drug conjugate, which targets tissue factor without interfering with the coagulation pathway in preclinical models continues in dose escalation. Thus far, it has been well tolerated with no bleeding events observed. We are now also initiating dose finding for combinations beginning with an XB002 dose level, which has cleared safety evaluation in the monotherapy cohort. A Phase I study of XL102, our oral CDK7 inhibitor, is expected to move into both single agent and combination expansion cohorts after completion of ongoing dose escalation and determination of a Phase II dose. Finally, the XL114 Phase I trial is now open for enrollment. We expect to provide Phase I clinical updates for XL092, XB002 and XL102 in the second half of this year. Finally, we are pleased that five cabozantinib abstracts have been accepted for oral presentations at the upcoming ASCO meeting, and I'd like to highlight three of these. These include two presentations based on COSMIC-021, our multitumor signal finding study, the first in three distinct populations of bladder cancer patients and the other from two cohorts of non-small cell lung cancer patients previously treated with immune checkpoint inhibitors and platinum-based chemotherapy, who received either cabozantinib plus atezolizumab or cabozantinib alone. Additionally, an investigator-sponsored Phase II study evaluating the addition of cabozantinib to pembrolizumab in PD-L1 positive squamous cell carcinoma of the head and neck will be presented. And with that, I'll turn it over to Peter.

Thank you, Vicki. I am pleased to provide a quick overview of the excellence of preclinical pipeline. We have a broadening pipeline derived from both internal and collaboration efforts with over 10 programs in progress, giving us the possibility of advancing up to five compounds into preclinical development in 2022. As you can see in the pipeline slide, the preclinical pipeline is a balanced mix of small molecules and biotherapeutics, which is reflective of how we see the clinical pipeline evolving in the future. We're continuing to accelerate the expansion of our pipeline, both through internal growth and through business development activities. Last year, our internal small molecule discovery group occupied new laboratories on our Alameda campus, and we have further embarked on expansion of our lab space in Alameda to accommodate future growth. In addition, we've located the site in Pennsylvania for an East Coast laboratory expansion, which will allow us to tap into the locally available talent pool and will complement our newly opened development offices in the same area. We also have significant ongoing efforts on the business development front aimed at providing us access to novel targets, capabilities and technologies that will complement and accelerate our ongoing biotherapeutics and small molecule strategies. In addition, we're assessing late preclinical and early clinical assets with the aim of identifying multiple opportunities to invest in. We're looking broadly at both small molecule and biotherapeutics opportunities that have the potential to address significant solid tumor populations where we have conviction in the science and visibility into a development strategy. We look forward to providing additional updates on these BD discussions as they come to force. I'll now turn the call back over to Mike.

All right. Thanks, Peter. As you heard on the call today, the EXEL team has executed across all components of our business in Q1 with significant progress across our pipeline clinical development and commercial activities. We're excited about the potential of multiple growth drivers ahead of us, to move the business forward and most importantly, put Exelixis in a position to help many more cancer patients. I'll close here by thanking the Exelixis team for their individual and collective efforts to support our many drug discovery development and commercial activities. We have the vision, determination and resources to become a multiproduct enterprise and expand our reach to serve cancer patients across the globe. We look forward to updating you on our progress in the future. Thank you for your continued support and interest in Exelixis. And we're happy to now open the call for questions.

[Operator Instructions] Our first question will come from Asthika Goonewardene with Truist. Please go ahead.

Check on the gross to net a little bit here for Q1, it's a little higher than what I was used to at cabo. Just wanted to check if it was anything unusual about this quarter? And if this is the right seasonal inflection to assume going forward for future first quarters. And then I have a follow-up for Vicki, please.

It's Chris. So I guess -- starting off. I mean, as P.J. talked about, we had strong growth, and we've had growth over the last six quarters. So that's an important element to this. There was the seasonality aspects of it around Medicare Part D. where you have patients going through the donut hole and also the co-pay assistance for commercial patients in those patients going through their deductibles and usually in the beginning part of the year. And then on top of that, the 340B was at a higher level or as I said, the highest level we've seen. And we've seen that segment of our gross to net growth over the last several years, and I think it's growing from an industry perspective also. So those are the three primary drivers of what we saw in gross-to-net in Q1.

Okay. So would it be right to kind of assume the similar kind of rate for Q1 2023 as well?

Yes. I wouldn't project that out for next year. But those seasonality items are -- those items that we've mentioned that are shave a seasonality effect, we'll be there next year too just based on what we've seen over the last several years

Got it. Okay. And then, Vicki, I think I heard you say that there will be data for 092 in the second half -- can you give us any sort of details on which studies will be presented and what we are -- what were we looking from the data

Yes. So it will be the first in humans for 092. So that's STELLAR-001 and what you can expect to see is data from expansion cohorts this year.

Our next question will come from Michael Schmidt with Guggenheim. Please go ahead.

Obviously, there's a lot of focus on the ANDA trial next week with MSN, as you mentioned. But -- there's obviously also a second set of patents that have been asserted with a trial that's been scheduled for next year. Mike, without speculating on the outcome of the near-term trial, how should investors think about the relationship between those two sets of patents? And how should we think about read through from a potential ruling in this first trial with respect to the second next year? And then I had a follow-up.

Yes, Michael, thanks for the question. Yes, look, I think we've been pretty careful to not get ahead of ourselves in the context of this whole topic. So I'm certainly not going to do that today. You're correct. We've been very, I think, an appropriately aggressive in protecting our IP. That's what we do here relative to making the investments in the discovery and development and broad development of cabo and compounds in the future. So it's not -- it shouldn't be surprising that the IP estate is growing over time. But in terms of the actual details and the nuances there, I just don't want to get into that right now for all the obvious reasons. So great question. Stay tuned for what happens next week, and we'll go from there.

All right. Great. And then a question on the ASCO presentation from COSMIC-021 in lung cancer, in particular, I guess, will this be just a longer follow-up from the data that we've seen before? Or will there be additional patients that have been treated in the study? And could you remind us how the lung cancer patient characteristics from 021 compared with those in the Phase III CONTACT-01 study.

Yes, sure. So the data that are going to be presented are from two cohorts, as I mentioned, of COSMIC-021 Cohort 7 and Cohort 20. And so one is cabozantinib in combination with atezolizumab and the other is cabozantinib alone. The patients have previously been treated with immune checkpoint inhibitors as well as platinum-based chemotherapy. And so the population is similar to contact 01 and we'll be presenting roughly two years of follow-up for these patients presenting response, other efficacy outcomes as well as safety data for those patients.

Our next question will come from Andy Hsieh with William Blair. Please go ahead.

Congratulations on the very robust quarter-over-quarter growth. So I just want to follow up on Michael's question actually the last one. So I think I don't want to put words in his mouth. I think he was -- he's asking whether we're going to see the 80 patients? I remember that Cohort 7 actually expanded from 30 patients to 50 patients. So I'm also curious whether we're going to see the totality of data from the entirety of that cohort. And I have a question for P.J. In terms of Slide 18, one of the interesting dynamic that we observe from the five quarters that you illustrated is that if you add up the market share of LENVIMA and INLYTA, they actually stayed pretty constant. So is it fair to say that the LENVIMA introduction kind of took away shares exclusively from Inlyta.

So why don't we start with the P.J. question first, and then I'll loop back and just give a quick kind of high-level summary on ASCO.

Great. Yes. Thanks, Andy. With regards to the market share, as I mentioned, we're certainly pleased with the progress. As you pointed out, we've been growing and as one does look at the prescription data for INLYTA and pembro, that does seem to be relatively speaking, a zero-sum game. They both have the pembrolizumab backbone. So I think it's not entirely surprising that one is cannibalizing the other. The other point I would make with regards to the lenvatinib data is that these data do include other tumor types. And if you look at a different data source from brand impact, it would point out, for example, that approximately 40% of the lenvatinib data or prescriptions or usage, I should say, is from endometrial. So that's another sort of piece of context there as that indication launched approximately a year ago. So I think the -- to sum it up, I think you're right. What we see generally across data sources is -- as I mentioned, we're not seeing impact on our share. We're seeing strength both in share and demand growth. We're very pleased with that and it does seem to be that the competitors are sort of potentially cannibalizing each other.

That's great. Thanks, P.J. Andy, in terms of ASCO, again, I don't want to get into the weeds on the abstract before it's published. I think you can expect a pretty fulsome update.

Got it. Okay. So one more scientific question if you don't mind. So if you look at the oncofetal protein 54, it's been no case target for a while, pretty popular as a vaccine as vaccine target back in the day. So recently, there's been one business development activity going on. So I'm just curious if there's any sort of paper study that catalyze a recent interest. Obviously, you guys are FP&A XB010 going forward. So any sort of pitfalls or learnings that you wish to kind of incorporate as you fantastic going forward.

Thank you, Peter, take that one?

Yes. Thanks for the question, Andy. Yes, you are obviously correct. I mean 5T4 is a target of interest for various biotherapeutic and vaccine approaches, as you indicate for some time, so it's an own public domain target. I think -- and that's for good reason, I think its expression pattern is compelling, where it's overexpressed in a variety of solid tumors at pretty decent levels and has minimal expression in most normal titers. So obviously, that still stands. I think for us, it really falls into the category of targets that I sort of spoke to before, which are good targets, which I think would really benefit from the kind of next generation of coaches to -- as that we're taking. So in a way, it falls into the same bucket as XB002 so our aim here is to develop a NextGen ADC. As we discussed, we have antibodies from Invenra, which we've characterized extensively, transferred to our partners at Catalent and using their very contemporary site-specific conjugation technology to make a well-constructed ADC with a highly defined DAR that has, at this point, compelling preclinical efficacy and safety data. So yes, we're excited to be using XB010 forward. As you say, we're not alone in finding this to be a good target and a variety of approaches. So we'll see how each one plays out.

Our next question will come from Yaron Werber with Cowen. Please go ahead.

Great. I have a couple of questions. Maybe the first one, Mike, the CONTACT-03 data that the Cabotecentriq rewired versus cabo and second-line RCC interim data, second half, do you expect we'll have more it's a PFS OS endpoint. Do you expect to have more PFS data? Or do we have a little bit OS? And also, can you put it in context for us just a little bit, you're already dominating second line commercially, what does CONTACT-03 mean for you? And then I have a quick follow-up.

Yes. I'll let Vicki opine on the first part of your question. Second part of your question, commercially, obviously, any good data we can generate in any line that raises the bar for standard of care, we want to pursue, and we have pursued with first-line with the Triplet 313 and second line with CONTACT-03. So we're in the business of improving outcomes for patients. And that's just a matter of getting the data in the appropriate trial with the appropriate population. So I think, again, if that looks good, we can potentially move the needle even further for those patients. Vicki, why don't pin on the first part of the question?

Sure. So for CONTACT-03, right, it is a primary readout for the progression-free survival endpoint. And obviously, PFS matures at an earlier time than overall survival. So it will -- it's expected to be primarily a readout of PFS at this point.

Okay. Great. And then secondly, and I apologize if I'm reading too much into it. But CONTACT-03 is obviously called out fairly prominently in the press release under the cabo highlights. CONTACT-01, which also has data on the second half is not discussed quite as much. Maybe just give us a little bit of a sense or COSMIC-313 for that matter. Just give us maybe a little bit of a sense kind of how did you think about what you include in the press release?

Yes, Yaron, it's Mike. Yes, I think you're probably over interpreting that. So I wouldn't read into that in any shape manner or form. They're all important trials for us. We're pushing those all really hard if successful, they could all move the needle. So stay tuned for data.

Our next question will come from Jay Olson with Oppenheimer. Please go ahead.

Can you comment on how you expect the HCC competitive landscape to evolve over time? And maybe some of the key learnings from COSMIC-312 in first-line HCC that you plan to apply to your next study? And also maybe if you could comment on the unmet needs in first-line HCC with the potential for VEGF regimens on the horizon.

Yes. Jay, this is P.J. I'll just maybe briefly comment. Certainly, HCC was for a long time an area of significant unmet for patients really across all lines. There's been a rapid sort of evolution of the field with doublets in the first line and many therapies in the second line. As I mentioned with regards to CABOMETYX in our current second-line indication, we're very pleased with the business there. And we're the leading TKI at this point in patients who were received in immunotherapy or CheckMate containing regimen in the first line. So, we're pleased with that and certainly looking to build upon that. And I think beyond that, while there has been a lot of great developments for patients in HCC, there are certainly much more that can be done for them. And we're certainly excited at a high level to continue to do that. particularly as we look forward to XL092 and other programs.

Okay. Great. And maybe if I could sneak in one more. You have a very strong cash position and increasingly broad clinical and preclinical portfolio. How are you prioritizing the various development options you have in front of you?

Yes, Jay, it’s Mike, I would say we are very, very focused on generating data, using that data to help us understand where we can differentiate and how that can then again raise the bar for patients from the standpoint of standard of care. So, we have a very strong conduit between development and commercial and discovery that helps us take data and move that and move compounds forward aggressively based upon that data. Once we have conviction as we generate conviction, where we can take that in terms of novel combinations across multiple different indications. So -- but you're right, we're in a very good position, especially in today's somewhat tenuous market on a macro level to be able to have the cash flows that we've got and the -- certainly the balance sheet that we've got to be able to make those investments both internally as well as considering external options. So, we're all about building the team, building the portfolio, driving top line growth, helping more patients.

Our next question will come from Akash Tewari with Jefferies. Please go ahead.

A few if I may. I just want to get the gross net point again. It looks like you had a 5% jump sequentially in Q1 '21 as well. But we are seeing gross to net kind of go from the 23% range to now over 30%. Could we see long-term gross to net levels approach something at a kind of 35% to 40% run rate, that would be very helpful. On the IP case, are there any circumstances where you would agree to a settlement of around 2028 or 2029 with MSN. And then finally, do you have any additional color on what the average duration on drug that you've seen with cabo and first-line RCC in the real-world setting? Is it tracking roughly to what we've seen in your clinical trial?

Yes. Akash, this is Mike. I'll attempt to answer all three in rapid succession on the gross to net issue certainly don't want to speculate what's going to happen in the future. The numbers that we saw Q1 versus Q4, that's the data. So take it for what it's worth. I think this is a trend if you've been tracking other biotech and/or pharma earnings calls over the last few weeks, you'll see this is not that -- actually, this is a very general trend across oral oncolytics. So we're not overly surprised to see that others are being impacted as we were in Q1 versus Q4. So that's the data. But what happens in the future, I'm not going to speculate or predict it's just not proper here or anywhere. In terms of IP, like I said with Michael's question, I don't want to get into the details there. So, thanks for the question, but I really can't answer that. And then finally on duration. It's been a year plus relative to the launch of 9ER. So, it's still early in the context of duration of treatment commercially versus what we've seen in terms of PFS and duration of treatment in 9ER. So as time goes on, we'll be able to get a better picture of that by using a variety of different methods, and we'll be happy to report that when that's more mature.

Our next question will come from Do Kim with Piper Sandler. Please go ahead.

This is on [indiscernible] for Do. Just a couple. First is pipeline related for XL114. Given that there's going to be some competitor data with J&J's small number in the second half, I'm curious to understand how you -- your guys' thoughts around molecule differentiation, given that if I'm not mistaken, you have a covalent inhibitor versus their allosteric inhibitor. In addition to that, what type of plans do you have in terms of potentially combining your MALT1 inhibitor with like venetoclax or BTK. I did not see that in the clinical trials that go post. So that's my first question.

Okay. Peter, want to take a shot at that one?

Yes, absolutely. Yes, kind of obviously looking forward to seeing what the J&J data show. I just would point out that the J&J compound is a direct inhibitor of the MALT1 paracaspase activity that binds directly to the protein. XL114 actually has a different mechanism of action. It is not bind directly to MALT1. It does, however, inhibit activation of the MALT1 complex. So mechanistically, it's somewhat differentiated from the J&J approach. Speaking more broadly about the potential for the compound. Certainly, it has potential in a variety of B and T cell lymphoma, particularly obviously, one area of interest is in patients who've failed on BTK inhibitors. Since the point of action for XL114 is downstream of BTK. There's always -- there's also some data that MALT1 activation, an inhibition of it, they also have a role in combination with immune CheckMate inhibitors. That's something that we're exploring preclinically right now. So, we'll see how those data play out. But maybe I'll just leave it there. I can say that 14 is has a differentiated mechanism of action. So ultimately, how the clinical data compare will obviously be a great interest.

Thanks Peter.

Appreciate the color. Just last two questions. One quick one. If you can talk about any type of impact COVID may have had on cabo sales this past quarter. despite the obvious increased demand strength that we're seeing? And lastly, with the COSMIC-313 data expected in July, if you can briefly just discuss how you guys are envisioning physicians utilizing it in practice and how it might have a higher standard given the potential saving profile that might be borne out. Just some color on that will also be up for us.

Great. P.J., go ahead.

Yes. Thanks for the question, Ike. With regards to the COVID impact, I would say, broadly, we're kind of largely beyond a significant impact of business. As you pointed out, with demand growth, not only for CABOMETYX, but also the TKI market itself grew 7% quarter-over-quarter. So I think largely, that's in the rearview mirror. But I will say there's certainly still limited access in many accounts, and that's varied across the country versus community or academia, et cetera. And we view that as -- we're excited about the opportunities these accounts are starting to open up, so we can have just a greater chance to share our data with them and hopefully continue to drive CABOMETYX and nivolumab for appropriate patients. With regards to 313 and the triplet at a very high level, I think we're certainly excited to see the data. I know -- the KOLs broadly are certainly excited to see the readout there as well because it is the first triplet in the space. So I think that in and of itself is great. It is looking at comparing to nivolumab and IPI in the port intermediate risk groups. And I just point out that nivo/ipi has a, if you look across data sources has a 20% to 25% market share. In the first-line setting, so I think that could potentially be some low-hanging fruit given positive data and approval, et cetera, that, that might be a good opportunity for the addition of cabo in that setting. Also, I think one possibility there is they do have, I think, about 20%, if I'm recalling correctly, primary progression rate in the 214 trial. So given the totality of the data with Cabo, we think that's certainly an opportunity to improve upon that as well. So I think it's going to be Important to really look at the totality of the data in this data readout, whether it's all the radiographic data, obviously, the primary endpoint of PFS as well as what we see in survival at that point as well the safety. So I think it will be really exciting to see and sort of dive into the data. So we're looking forward to that.

Your next question will come from Peter Lawson with Barclays. Please go ahead.

Question for Michael or P.J., just on the gross to net, kind of if there's anything you can point to what drove the gross to net, if there's one element or multiple drivers and then any kind of guidance you can provide around the gross to net going forward?

Thanks, Peter. Yes. So again, we won't comment on gross to net going forward in terms of future years. Chris can provide some updates again at a high level on what you said previously about what drove the gross to net.

Thanks, Mike. So Peter, I mean, what we talked about earlier was there's a seasonality effect of Medicare Part D patients going through the donor hole. Those on co-pay assistance, the commercial patients using our co-pay systems programs and they go through their deductibles at the beginning of the calendar year is another driver. And those have happened in prior years also. This year, we saw a higher 340B utilization in Q1 when we compare it to the second half of last year was relatively flat. And then for this year, I think we're looking right now at a 29% gross to net percentage. And obviously, that's an estimate right now and that can change based on different utilization patterns of 340B or co-pay assistance or Medicare or Medicaid and so on. So -- but that's our current estimate as we're thinking about it.

That's captured in the guidance. And then, I guess, kind of a follow-up question really about demand trend. What was that left during the quarter? Was that in any we last year that we should be thinking of it.

You broke up there. Could you say that again slowly, please?

Yes. So around the demand trends and month by month, was there anything different there from last quarter?

Peter, it's P.J. I would just say we continue to see -- as I mentioned, six quarters of growth and strength in the demand trends. So I think nothing out of the ordinary in terms of what we see generally speaking. It's just -- we're pleased it's being driven by, as I mentioned in my prepared remarks, primarily longer duration of therapy on the first-line patients benefiting from the combination of CABOMETYX and nivolumab.

I know a number of companies mentioned General and February being weak. Did you see that sort of trend?

As I mentioned, I think overall, we're just seeing steady progression of the business and strength

Maybe you can reiterate Peter, what the TRx growth was for the quarter?

Yes, thanks. Happy to, Mike. The TRx growth Q-over-Q was 11%, which is, as I mentioned, also for the market. That growth was 7%. So we also grew above the market. And like I said, no significant differences between months. We've just seen steady growth. as I mentioned, with really being driven by the combination patients.

Thanks P.J.

[Operator Instructions] Our next question comes from Chris Shibutani with Goldman Sachs. Please go ahead.

Just making sure that I understand. With COSMIC-313, to 10-Q has the timing from July, I think this is a slight revision versus the first half of 2022 if any color in terms of what caused the readout to shift the time line there? The second would be on STELLAR-002, the study involving XL092. I believe there were some treatment arms, including BEMPEG can you just maybe provide any additional insight into any recent updates given the Nektar's BEMPEG program.

Vicki, go ahead.

Yes. So I'll cover 313 first. Just to be clear on that, we've reached the number of events that we need for our primary analysis of PFS. Data cleaning in advance of the top line results is ongoing. And based on our assessment of where that stands currently, we now expect to deliver it into July. So you're correct, that time line has moved a little bit. But a pretty clear picture of when that data will be now coming in. With respect to 092, I want to make sure I understood your question correctly. STELLAR-002 had three arms, a combination with nivolumab, a combination with nivo and ipi and then a combination of nivo and BEMPEG, all with 092 in genitourinary tumors. And as I mentioned in my prepared remarks, we are removing the BEMPEG arm following the recent Phase III readouts for that molecule and the discontinuation of the program. We are looking at what I believe to be a promising replacement with another triplet and stay tuned for further details on that.

And I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Ms. Susan Hubbard for any closing remarks.

Yes. Thank you, Shari, and thank you all for joining us today. We certainly welcome your follow-up questions on anything we do also would like to answer. So please feel free to give either myself or put on a call.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.