Exelixis highlights from Q2

Q2 2014 Highlights and Recent Events
• Reported positive top-line results from coBRIM, the phase 3 pivotal trial evaluating cobimetinib, a specific MEK inhibitor discovered by Exelixis, in combination with vemurafenib in previously untreated patients with unresectable locally advanced or metastatic melanoma harboring a BRAFV600 mutation. On July 11, 2014, Exelixis collaborator Genentech, a member of the Roche Group, informed the company that coBRIM met its primary endpoint, delivering a statistically significant increase in progression-free survival for the combination of cobimetinib plus vemurafenib versus vemurafenib alone. Adverse events were consistent with those observed in a previous study of the combination. Roche announced last week on their second quarter 2014 earnings conference call that the coBRIM data are planned for presentation at the European Society for Medical Oncology 2014 Congress taking place in Madrid, Spain, September 26 - 30, 2014. They have also stated that they plan to initiate regulatory filings before year end.
• Cabozantinib and cobimetinib were the subject of a total of ten presentations at the 2014 Annual Meeting of the American Society of Clinical Oncology, which was held May 30 to June 3, 2014 in Chicago, Illinois. Cabozantinib presentations included data from trials sponsored by Exelixis, independent investigators, and the National Cancer Institutes Cancer Therapy Evaluation Program. Cobimetinib was the subject of one oral presentation highlighting positive data from BRIM7, the phase 1b clinical trial conducted by Roche and Genentech which evaluated the combination of cobimetinib and vemurafenib in patients with locally advanced/unresectable or metastatic melanoma carrying a BRAFV600 mutation.
• Announced final positive results from BRIM7 at the European Association of Dermato-Oncology Congress, which was held May 7-10, 2014 in Vilnius, Lithuania.
• Net product revenue from COMETRIQ®(cabozantinib) sales was $6.6 million for the second quarter of 2014.

The Exelixis team made substantial clinical and commercial progress during the second quarter of 2014, driving the company forward for an impactful year, said Michael M. Morrissey, Ph.D., president and chief executive officer of the company. The positive top-line results from the coBRIM pivotal trial, which we and our partner Genentech reported shortly after the quarter ended, are an important advance for the melanoma community, and they serve as further validation of Exelixis ability to discover and develop therapies with the potential to improve the treatment of cancer patients.

Dr. Morrissey continued, As we enter the second half of 2014, Exelixis is focused on delivering top-line results for three additional pivotal trials of cabozantinib: COMET-1 and COMET-2 in patients with metastatic castration-resistant prostate cancer and the overall survival results from EXAM in patients with progressive, metastatic medullary thyroid cancer. We also anticipate completing enrollment in a fourth pivotal trial of cabozantinib, METEOR, in metastatic renal cell cancer, which has seen strong support from the oncology community in advance of an anticipated read-out in 2015.

Second Quarter 2014 Financial Results

Net revenues for the quarter ended June 30, 2014 were $6.6 million, consisting entirely of product revenue related to the sale of COMETRIQ, compared to $11.9 million for the comparable period in 2013, which consisted of $4.0 million of product revenue related to the sale of COMETRIQ and $7.8 million of license and contract revenue. The increase in product revenue reflects the continued ramp up in sales of COMETRIQ following its commercial launch in the United States in January 2013. The decrease in contract and license revenue reflects the company having fully recognized all revenues from its collaboration agreements with Bristol-Myers Squibb Company in 2013.

Research and development expenses for the quarter ended June 30, 2014 were $51.0 million, compared to $49.1 million for the comparable period in 2013. The increase was primarily due to higher personnel related expenses and consulting costs in support of the companys five phase 3 pivotal trials for cabozantinib. Clinical trial costs decreased by $1.6 million predominantly due to a $6.5 million comparator drug purchase for METEOR during the second quarter of 2013 which was offset in part by increases in other clinical trial costs for METEOR and COMET-2.

Selling, general and administrative expenses for the quarter ended June 30, 2014 were $16.5 million, compared to $13.2 million for the comparable period in 2013. Approximately two-thirds of the increase reflects increased personnel expenses, as compared to the comparable period in 2013, the majority of which is connected with the expansion of the companys U.S. sales force. The remaining increases related predominantly to stock-based compensation expenses and marketing expenses, including an increase in expenses for cobimetinib under the companys collaboration agreement with Roche and Genentech.

Other income (expense), net for the quarter ended June 30, 2014 was a net expense of ($11.7) million compared to ($10.9) million for the comparable period in 2013. Included in interest expense for the quarter ended June 30, 2014 was $7.3 million of non-cash expense related to the accretion of the discounts on both the 4.25% Convertible Senior Subordinated Notes due 2019 and the companys financing arrangement with Deerfield, as compared to $6.5 million for the comparable period in 2013.

Net loss for the quarter ended June 30, 2014 was ($73.4) million, or ($0.38) per share, basic, compared to ($62.2) million, or ($0.34) per share, basic, for the comparable period in 2013. The increased net loss was primarily due to a decrease in license and contract revenues, which was partially offset by an increase in product revenues, and increases in research and development expenses and selling, general and administrative expenses.

Cash and cash equivalents, short- and long-term investments and short- and long-term restricted cash and investments totaled $352.0 million at June 30, 2014, compared to $415.9 million at December 31, 2013.

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