Exelixis, Inc. (NASDAQ:EXEL) Q4 2023 Earnings Call Transcript
Exelixis, Inc. (NASDAQ:EXEL) Q4 2023 Earnings Call Transcript February 6, 2024
Exelixis, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, ladies and gentlemen, and welcome to the Exelixis Fourth Quarter and Fiscal Year 2023 Financial Results Conference Call. My name is Tawanda, and I will be your operator for today. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to your host today, Ms. Susan Hubbard, Executive Vice President of Public Affairs and Investor Relations. Please proceed.
Susan Hubbard: Thank you, Tawanda. And thank you all for joining us for the Exelixis fourth quarter and fiscal year 2023 financial results conference call. Joining me on today's call are Mike Morrissey, our President and CEO; and Chris Senner, our Chief Financial Officer, who will review our progress for the fourth quarter and full year 2023 ended December 29th, 2023. PJ Haley, our Executive Vice President of Commercial; Amy Peterson, our Chief Medical Officer, and Dana Aftab, our Chief Scientific Officer are also on the call today and will participate in the question-and-answer portion of the call. 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 in 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 costs associated with discovery, product development, business development and commercialization activities.
And with that, I will turn the call over to Mike.
Mike Morrissey: All right. Thank you, Susan, and thanks to everyone for joining us on the call today. Exelixis had a strong year in 2023 and we're already sprinting into 2024 after a busy January where we provided important updates across literally all components of our business. We're pleased to see continued growth of the cabozantinib franchise in the U.S. and globally in 2023, which provides the foundation for our efforts to advance our drug discovery and development priorities that we outlined at our R&D Day in December. We reviewed important news to jumpstart 2024 at our corporate update in January at the JPM Healthcare Conference. I won't reiterate everything here today but just focus on the top highlights including first, we saw a strong performance of the cabozantinib business in the fourth quarter and full year 2023 with continued growth in demand and revenue.
Cabometyx maintained its status as the leading TKI for RCC in both the first-line IO TKI market and second-line monotherapy segment. Fourth quarter cabo franchise net product revenues grew 14% year-over-year, compared to fourth quarter 2022. Cabo franchise net product revenues grew 16% for full year 2023 compared to full year 2022. Highlighting its role as a worldwide leading TKI global cabozantinib franchise Net product revenues generated by Exelixis and its partners were approximately $600 million and $2.3 billion in the fourth quarter and full year 2023 respectively. Chris will review our 2024 financial guidance in his prepared remarks. Second, final reply brief should be submitted in the next few weeks for the second MSN and the trial that took place in October and we expect a ruling in the first-half of 2024.
Obviously, this is a critical milestone for the company and the cabozantinib franchise. While we will not speak to any specifics today, I'm proud of the work that our team did preparing and presenting this case. Exelixis has and will continue to vigorously protect our intellectual property rights with respect to cabo and our other differentiated molecules that we pursue on behalf of patients with cancer. Third, we made significant progress in advancing the pipeline in 2023 that was highlighted at our R&D Day presentation in December. Our top priority for 2024 is to advance potential new cabo indications for net and metastatic CRPC. The recent Contact 02 presentation at ASCO GU generated a lot of buzz at the meeting that Amy assured to address in the Q&A session shortly.
Zanza development continues to be a key priority for us in terms of both existing and new pivotal trials, and enrolling XB002 expansion cohorts is at a critical stage with a global network of sites now contributing to this effort. And as you heard from Dana in December, our IND pipeline is full for the next few years with exciting new compounds that could address a range of solid tumor indications with potentially differentiating profiles based on extensive preclinical testing. With that, please see our press release issued an hour ago for our fourth quarter and full year 2023 financial results and an extensive list of key corporate milestones achieved in the quarter. I'll now turn the call over to Chris.
Chris Senner: Thanks, Mike. For the fourth quarter 2023, the company reported total revenues of approximately $480 million, which included cabozantinib franchise net product revenues of approximately $429 million. Cabometyx net product revenues were $427.7 million and included approximately $6 million in clinical trials sales. Gross-to-net for the cabozantinib franchise in the fourth quarter 2023 was 28.2%, which was in-line with our expectations. Our Cabometyx trade inventory increased by approximately 1,000 units when compared to the third quarter of 2023 to approximately 2.7 weeks on hand. This increase in inventory was partially related to the timing of holidays at the end of 2023 and the beginning of 2024. Based on what we can see in the trade, some of this inventory has been utilized in the first weeks of 2024.
Additionally, we are estimating that our gross-to-net for the full year 2024 will be approximately 30%, as we've seen in the past gross-to-net tends to be higher in the first quarter of the year primarily due to higher Medicare Part-D and co-pay assistance expenses. Finally, clinical trial sales have historically been choppy between quarters and we expect this to continue in future quarters. Total revenues also included approximately $50.3 million in collaboration revenues which includes approximately $40.7 million of royalties earned from our partners, Ipsen and Takeda on their sales of cabozantinib. Our total operating expenses for the fourth quarter 2023 were approximately $398 million compared to $490 million in the third quarter of 2023.
R&D expense was the primary driver of the decline in total operating expenses, which was primarily related to lower licensing expenses. Provision for income taxes for the fourth quarter 2023 were approximately $17.5 million compared to a provision for income taxes of approximately $4.8 million for the third quarter of 2023. The company reported GAAP net income of approximately $85.5 million or $0.28 per share basic and $0.27 per share diluted for the fourth quarter 2023. The company also reported a non-GAAP net income of approximately $104.2 million or $0.34 per share basic and $0.33 per share diluted. Non-GAAP net income excludes the impact of approximately $19 million of stock-based compensation expense, net of the related income tax effect.
Cash and investments for the year ended December 31st, 2023 was approximately $1.7 billion. During the fourth quarter, we completed the $550 million share repurchase program we announced in March 2023. Since the commencement of this share repurchase program, we have repurchased approximately $26.2 million shares at an average price of $20.97. This level of cash and investments, supported by our ongoing cash-flow from operations provides Exelixis with the flexibility to invest in internal R&D activities, to pursue external business development opportunities to expand our pipeline, and allows us to return capital to our shareholders through the $450 million share repurchase program we announced in January 2024. When combining the 2023 and 2024 share repurchase programs, we will return $1 billion to our shareholders by the end of 2024.
And finally, turning to our financial guidance for the full year 2024. We announced our 2024 financial guidance at the JPMorgan Conference in January, and the detail is on Slide 14 of our earnings presentation. And with that, I'll turn the call-back over to Mike.
Mike Morrissey: All right. Thanks, Chris. I'll wrap-up here by thanking the entire Exelixis team for their individual and collective efforts to support our range of discovery, development and commercial activities. We had a great year in 2023 and 2024 is shaping up to be an inflection point for the business, our science and the patients we hope to serve at an ever-expanding basis. I want everyone to know that our team is highly motivated every single day to excel on our mission to help cancer patients recover stronger and live longer. 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.
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