On February 17, 2022 Exelixis, Inc. (Nasdaq: EXEL) reported financial results for the fourth quarter and full year 2021 and provided an update on progress toward achieving key corporate objectives, as well as commercial, clinical and pipeline development milestones (Press release, Exelixis, FEB 17, 2022, View Source [SID1234608246]).
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"The Exelixis team made significant progress across our entire business in the fourth quarter and throughout 2021"
"The Exelixis team made significant progress across our entire business in the fourth quarter and throughout 2021," said Michael M. Morrissey, Ph.D., President and Chief Executive Officer, Exelixis. "With strong performance from CABOMETYX in the fourth quarter, the cabozantinib franchise achieved two significant commercial milestones in 2021 with Exelixis full year U.S. net product revenues exceeding $1 billion and global net product revenues generated by Exelixis and its partners of more than $1.5 billion. These major milestones reflect the importance of our flagship product not only as a treatment for multiple serious cancers, but as the foundation for our company’s growth, enabling the buildout of our clinical pipeline and fueling our ambition to become a global, multiproduct oncology company."
Dr. Morrissey continued: "In late 2021 and early 2022, we achieved multiple key pipeline and discovery milestones, including expanding the phase 1b clinical program for XL092, advancing the phase 1 development of XB002 and XL102, in-licensing and progressing XL114 toward the clinic, and expanding our portfolio through new business development agreements. Collectively, our four clinical compounds and more than 10 discovery programs represent an exciting, diverse portfolio of therapeutic candidates with the potential to improve outcomes for patients with cancer. I’m grateful to the Exelixis team for their continued focus, commitment and hard work as we advance our mission to help cancer patients recover stronger and live longer."
Fourth Quarter and Full Year 2021 Financial Results
Total revenues for the quarter and year ended December 31, 2021 were $451.1 million and $1,435.0 million, respectively, compared to $270.1 million and $987.5 million for the comparable periods in 2020.
Total revenues for the quarter and year ended December 31, 2021 included net product revenues of $302.7 million and $1,077.3 million, respectively, compared to $200.4 million and $741.6 million for the comparable periods in 2020. The increases in net product revenues were primarily related to increases in sales volume driven by the strong uptake for the combination therapy of CABOMETYX (cabozantinib) and OPDIVO (nivolumab) following approval by the U.S. Food and Drug Administration (FDA) in January 2021.
Collaboration revenues, composed of license revenues and collaboration services revenues, were $148.5 million and $357.7 million for the quarter and year ended December 31, 2021, respectively, compared to $69.7 million and $246.0 million for the comparable periods in 2020. The increases in collaboration revenues were primarily related to increases in the recognition of milestone-related revenues, increases in development cost reimbursements earned, and higher royalty revenues for the sales of cabozantinib outside of the U.S. generated by Exelixis’ collaboration partners, Ipsen Pharma SAS (Ipsen) and Takeda Pharmaceutical Company Limited (Takeda).
Research and development expenses for the quarter and year ended December 31, 2021 were $222.3 million and $693.7 million, respectively, compared to $154.3 million and $547.9 million for the comparable periods in 2020. The increases in research and development expenses were primarily related to increases in license and other collaboration costs, personnel expenses and stock-based compensation expense, which were partially offset by decreases in clinical trial costs.
Selling, general and administrative expenses for the quarter and year ended December 31, 2021 were $99.3 million and $401.7 million, respectively, compared to $82.4 million and $293.4 million for the comparable periods in 2020. The increases in selling, general and administrative expenses were primarily related to increases in personnel expenses, marketing costs, legal costs, corporate giving and stock-based compensation expense.
Provision for (benefit from) income taxes for the quarter and year ended December 31, 2021 was $22.9 million and $63.1 million, respectively, compared to $(0.3) million and $19.1 million for the comparable periods in 2020, primarily due to an increase in pre-tax income.
GAAP net income for the quarter ended December 31, 2021 was $95.2 million, or $0.30 per share, basic and $0.29 per share, diluted, compared to GAAP net income of $28.4 million, or $0.09 per share, basic and diluted, for the comparable period in 2020. GAAP net income for the year ended December 31, 2021 was $231.1 million, or $0.73 per share, basic and $0.72 per share, diluted, compared to GAAP net income of $111.8 million, or $0.36 per share, basic and $0.35 per share, diluted, for the comparable period in 2020.
Non-GAAP net income for the quarter ended December 31, 2021 was $113.3 million, or $0.36 per share, basic and $0.35 per share, diluted, compared to non-GAAP net income of $43.3 million, or $0.14 per share, basic and diluted, for the comparable period in 2020. Non-GAAP net income for the year ended December 31, 2021 was $324.2 million, or $1.03 per share, basic and $1.01 per share, diluted, compared to non-GAAP net income of $193.3 million, or $0.63 per share, basic and $0.61 per share, diluted, for the comparable period in 2020. Non-GAAP net income excludes stock-based compensation, adjusted for the related income tax effect.
Cash, cash equivalents, restricted cash equivalents and investments were $1.9 billion at December 31, 2021, compared to $1.5 billion at December 31, 2020.
Non-GAAP Financial Measures
To supplement Exelixis’ financial results presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), Exelixis presents non-GAAP net income (and the related per share measures), which excludes from GAAP net income (and the related per share measures) stock-based compensation expense, adjusted for the related income tax effect for all periods presented.
Exelixis believes that the presentation of these non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors. In particular, Exelixis believes that these non-GAAP financial measures, when considered together with its financial information prepared in accordance with GAAP, can enhance investors’ and analysts’ ability to meaningfully compare Exelixis’ results from period to period, and to identify operating trends in Exelixis’ business. Exelixis has excluded stock-based compensation expense, adjusted for the related income tax effect, because it is a non-cash item that may vary significantly from period to period as a result of changes not directly or immediately related to the operational performance for the periods presented. Exelixis also regularly uses these non-GAAP financial measures internally to understand, manage and evaluate its business and to make operating decisions.
These non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Exelixis encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP financial information and the reconciliation between these presentations, to more fully understand Exelixis’ business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.
2022 Financial Guidance
Exelixis is providing the following financial guidance for fiscal year 2022:
Total revenues
$1.525 billion – $1.625 billion
Net product revenues
$1.325 billion – $1.425 billion
Cost of goods sold
5% – 6% of net product revenues
Research and development expenses (1)
$725 million – $775 million
Selling, general and administrative expenses (2)
$400 million – $450 million
Effective tax rate
20% – 22%
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(1) Includes $45 million of non-cash stock-based compensation expense.
(2) Includes $50 million of non-cash stock-based compensation expense.
Cabozantinib Highlights
Cabozantinib Franchise Net Product Revenues and Royalties. Net product revenues generated by the cabozantinib franchise in the U.S. were $302.7 million during the fourth quarter of 2021, with net product revenues of $295.1 million from CABOMETYX and $7.6 million from COMETRIQ (cabozantinib). For the year ended December 31, 2021, net product revenues generated by the cabozantinib franchise in the U.S. were $1,077.3 million, with net product revenues of $1,054.1 million from CABOMETYX and $23.2 million from COMETRIQ. In 2021, global cabozantinib franchise net product revenues generated by Exelixis and its partners exceeded $1.5 billion. Based upon cabozantinib-related net product revenues generated by Exelixis’ collaboration partners during the quarter and year ended December 31, 2021, Exelixis earned $29.3 million and $105.1 million, respectively, in royalty revenues.
Achievement of Cabozantinib Sales-Based Milestone from Ipsen. In the fourth quarter of 2021, Exelixis recorded in license revenues a $100.0 million milestone from Ipsen in connection with the achievement of $400.0 million in net sales in its related license territory over four consecutive quarters. Exelixis expects to receive this payment in the first quarter of 2022.
Completion of Enrollment in CONTACT-01 Pivotal Trial of Cabozantinib in Combination with an Immune Checkpoint Inhibitor (ICI) in Previously Treated Metastatic Non-Small Cell Lung Cancer (NSCLC). In November 2021, Exelixis announced that enrollment was completed for CONTACT-01, the global phase 3 pivotal trial evaluating cabozantinib in combination with atezolizumab versus docetaxel in patients with metastatic NSCLC who have been previously treated with an ICI and platinum-containing chemotherapy. CONTACT-01 enrolled 366 patients who were randomized 1:1 to the experimental arm of cabozantinib in combination with atezolizumab and the control arm of docetaxel. The primary endpoint of the trial is overall survival (OS). Secondary endpoints include progression-free survival (PFS), objective response rate (ORR) and duration of response (DOR). CONTACT-01 is sponsored by F. Hoffmann-La Roche Ltd. (Roche) and co-funded by Exelixis. Interim data from the trial are anticipated in the second half of 2022.
Presentation of Detailed Results from Phase 3 COSMIC-312 Pivotal Trial of Cabozantinib in Combination with Atezolizumab in Previously Untreated Advanced Hepatocellular Carcinoma (HCC) at the European Society for Medical Oncology Asia Virtual Oncology Week 2021 (ESMO Asia 2021). In November 2021, Exelixis presented detailed results from the first planned analysis of COSMIC-312, the ongoing phase 3 pivotal trial evaluating cabozantinib in combination with atezolizumab versus sorafenib in patients with previously untreated advanced HCC, at ESMO (Free ESMO Whitepaper) Asia 2021. Exelixis expects the final OS data to be available in early 2022.
Completion of Enrollment in CONTACT-03 Pivotal Trial of Cabozantinib in Combination with Atezolizumab in Previously Treated Metastatic Renal Cell Carcinoma (RCC). In January 2022, Exelixis announced that enrollment was complete for CONTACT-03, the global phase 3 pivotal trial evaluating cabozantinib in combination with atezolizumab versus cabozantinib alone in patients with locally advanced or metastatic clear cell or non-clear cell RCC who progressed during or following treatment with an ICI. CONTACT-03 enrolled 523 patients who were randomized 1:1 to the experimental arm of cabozantinib in combination with atezolizumab and the control arm of cabozantinib alone. The primary endpoints of the trial are PFS per Response Evaluation Criteria in Solid Tumors v. 1.1 as assessed by independent radiology review and OS. Secondary endpoints include PFS, ORR and DOR as assessed by study investigators. CONTACT-03 is sponsored by Roche and co-funded by Exelixis. Interim data from the trial are anticipated in the second half of 2022.
Cabozantinib Data at the 2022 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Gastrointestinal Cancers Symposium (ASCO GI 2022). In January 2022, investigators presented encouraging data from two trials of cabozantinib in combination with ICIs for the treatment of advanced colorectal cancer (CRC). The results reinforce Exelixis’ decision to pursue clinical development of XL092, which pairs a target profile similar to cabozantinib with a potentially significantly improved safety profile, in advanced CRC through the STELLAR-303 global phase 3 pivotal trial expected to initiate in the first half of 2022.
Cabozantinib Data at the 2022 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Genitourinary Cancers Symposium (ASCO GU 2022). Later this week, cabozantinib will be the subject of multiple data presentations at ASCO (Free ASCO Whitepaper) GU 2022, which is being held in a hybrid virtual/in-person format from February 17-19. Notable presentations include two additional data sets from the phase 3 pivotal CheckMate -9ER study providing final OS analysis and organ-specific target lesion assessments with two-year follow-up, and updated health-related quality of life results.
Pipeline Highlights
In-Licensing of Second Anti-Cancer Compound from Aurigene Discovery Technologies Limited (Aurigene) Following FDA Acceptance of Investigational New Drug (IND) Application. In October 2021, Exelixis and Aurigene announced that Exelixis exercised its exclusive option to in-license XL114 (formerly AUR104) under the companies’ July 2019 collaboration, option and license agreement. As a result, Exelixis assumed responsibility for all subsequent clinical development, manufacturing and commercialization of the novel anti-cancer compound that inhibits the CARD11-BCL10-MALT1 (CBM) complex, a key component of signaling downstream of B- and T-cell receptors, which promotes B- and T-cell lymphoma survival and proliferation. Following the FDA’s recent acceptance of Exelixis’ IND, the company plans to initiate a phase 1 trial of XL114 as a monotherapy in patients with non-Hodgkin’s lymphoma (NHL) in the first half of 2022.
Initiation of STELLAR-002 Phase 1b Trial Evaluating XL092 in Combination with Immuno-Oncology (IO) Therapies in Patients with Advanced Solid Tumors. In December 2021, Exelixis announced the initiation of the dose-escalation stage of STELLAR-002, a phase 1b trial evaluating XL092 in combination with IO therapies in advanced solid tumors. The objective of the study is to evaluate the safety, tolerability and efficacy of XL092, Exelixis’ novel next-generation tyrosine kinase inhibitor, in combination with: nivolumab; nivolumab and ipilimumab; and nivolumab and bempegaldesleukin. Exelixis expects to expand the STELLAR-002 study, as well as the ongoing phase 1b STELLAR-001 study, which are evaluating XL092 in combination with several IO therapies, into potential new tumor types, and IO and other targeted therapy combination regimens throughout 2022. Clinical updates are expected in 2022.
Amendment of Option and License Agreement for XB002, an Antibody-Drug Conjugate (ADC) Targeting Tissue Factor (TF). In January 2022, Exelixis and Iconic Therapeutics, Inc. (Iconic) announced amended terms to their May 2019 exclusive option and license agreement for XB002, a next-generation TF-targeting ADC. Under the amended agreement, Exelixis acquired broad rights to use the anti-TF antibody incorporated into XB002 for any application, including conjugated to other payloads, as well as rights within oncology to a number of other anti-TF antibodies developed by Iconic, including for use in ADCs and multispecific biotherapeutics. The single-agent dose escalation cohort for Exelixis’ ongoing phase 1 trial of XB002 continues enrolling, with the study moving into its cohort expansion and combination phase as the next step. Based on early clinical data supportive of a potentially differentiated and best-in-class profile, Exelixis intends to aggressively expand development of XB002, both as a monotherapy and in combination with ICIs and other targeted therapies, across a wide range of tumor types, including indications other than those currently addressed by commercially available TF-targeted therapies. Exelixis expects to provide clinical updates from the ongoing phase 1 study of XB002 in 2022.
Corporate Updates
Exclusive Collaboration and License Agreement with STORM Therapeutics LTD (STORM) to Discover and Develop Inhibitors of Novel RNA Modifying Enzymes. In October 2021, Exelixis and STORM entered into an exclusive collaboration and license agreement under which the companies will discover and advance novel drug leads intended for the treatment of cancer. The collaboration will focus initially on ADAR1, advancing early work by STORM applying its proprietary RNA epigenetic platform, as well as explore an additional undisclosed target.
Appointment of Jacqueline Wright to the Exelixis Board of Directors. In December 2021, Exelixis announced that Jacqueline (Jacky) Wright was appointed to the company’s Board of Directors. The appointment took effect on December 16, 2021. Ms. Wright is an accomplished technology executive with decades of technology experience and is widely recognized for her expertise in digital transformation, both in the public and private sectors. She currently serves as Corporate Vice President & Chief Digital Officer, U.S. Business at Microsoft Corporation.
Appointment of Vicki L. Goodman, M.D., as Executive Vice President, Product Development & Medical Affairs and Chief Medical Officer (CMO). In January 2022, Exelixis announced the appointment of Vicki L. Goodman, M.D., as Executive Vice President, Product Development & Medical Affairs and CMO. Dr. Goodman has more than 20 years of oncology experience as a drug development leader at global biopharmaceutical organizations, regulator and clinician. She joined from Merck & Co., where she served as Vice President, Clinical Research and Therapeutic Area Head, Late Stage Oncology. Dr. Goodman will be based in the Greater Philadelphia area. As part of her role overseeing the company’s product development operations, she will play a leadership role in building a new Exelixis team that will expand the company’s development activities on the East Coast. Exelixis’ East Coast presence will complement the company’s growing West Coast development team and enable the company to lay additional groundwork for potential future growth outside the U.S.
Announcement of Key Priorities and Anticipated Milestones for 2022. In January 2022, Exelixis announced its key priorities and anticipated milestones for 2022, including: multiple pivotal clinical trial readouts for cabozantinib across the COSMIC and CONTACT clinical studies; the launch of the XL092 phase 3 pivotal trial program; the expansion of the ongoing phase 1b STELLAR-001/-002 clinical trials of XL092, with plans to provide clinical updates; accelerated development and expansion of the XB002 clinical program, with plans to provide clinical updates from the ongoing phase 1 study; expansion of the XL102 phase 1 clinical program into the cohort expansion phase, with plans to provide clinical updates; initiation of the phase 1 trial for XL114, an inhibitor of the CBM complex, in patients with NHL; plans to expand development operations to the East Coast under the leadership of Dr. Goodman, the company’s newly hired CMO; and the progression of up to five new development candidates into preclinical development from the company’s more than 10 discovery programs currently advancing through internal and collaborative efforts. Exelixis presented the details of its key priorities and anticipated milestones at the 40th Annual J.P. Morgan Healthcare Conference.
Basis of Presentation
Exelixis has adopted a 52- or 53-week fiscal year policy that ends on the Friday closest to December 31st. For convenience, references in this press release as of and for the fiscal periods ended January 1, 2021 are indicated as being as of and for the periods ended December 31, 2020.
Conference Call and Webcast
Exelixis management will discuss the company’s financial results for the fourth quarter and full year of 2021 and provide a general business update during a conference call beginning at 5:00 p.m. ET / 2:00 p.m. PT today, Thursday, February 17, 2022.
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 8647777 to join by phone.
A telephone replay will be available until 8:00 p.m. ET on Saturday, February 19, 2022. Access numbers for the telephone replay are: 855-859-2056 (domestic) and 404-537-3406 (international); the passcode is 8647777. A webcast replay will also be archived on www.exelixis.com for one year.