Strategic Alliances
We are committed to retaining significant equity in the value of the company's pipeline and product candidates. Our strategy is to leverage the strength of our extensive data and the broad potential of our development compounds to establish strategic alliances that provide access to complementary technology and expertise and create near-term revenue, while reducing our risk of product failure and retaining long-term rights to those compounds that succeed. These alliances provide significant support for our internal development programs and open the door to additional product opportunities.
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Bristol-Myers Squibb Company
Cancer Alliance
In July 2001, Exelixis established a broad collaboration and licensing agreement with Bristol-Myers Squibb (BMS) to create a new generation of potential cancer drugs that selectively target cells that harbor defects in tumor suppressor gene pathways. Exelixis identifies and validates molecular targets in model systems, and BMS further validates these targets in human models. In December 2003, the collaboration was extended until January 2007, at which time BMS elected to continue the collaboration until July 2009. Each company has the option to obtain exclusive worldwide rights to equal numbers of validated targets arising from the collaboration. BMS has provided upfront payments and annual research funding. Exelixis is entitled to receive milestone payments on certain cancer targets that progress through specified stages of validation. Exelixis is also entitled to receive milestone payments in the event of successful clinical and regulatory events, and royalties on commercialized products.
Cardiovascular Disease Collaboration
In December 2005, Exelixis and BMS entered into a collaboration agreement to discover, develop and commercialize novel therapies targeted against LXR, a nuclear hormone receptor implicated in a variety of cardiovascular and metabolic disorders. Under the terms of the collaboration, which became effective in January 2006, the companies will jointly identify drug candidates that are ready for IND-enabling studies. BMS will undertake further preclinical development and will be responsible for clinical development, regulatory, manufacturing and sales/marketing activities for such compounds. Exelixis received an up-front payment of $17.5 million and approximately $10 million per year in R&D funding for an initial period of two years. In September 2007, the collaboration was extended at BMS’ request until January 2009. In connection with this extension, BMS will pay additional research funding of $7.5 million. Exelixis also may receive development and regulatory milestones totaling $140 million per product for up to two products from the collaboration, as well as sales milestones and royalties on sales of products commercialized under the collaboration. In December 2007, Exelixis received $5.0 million for achieving a development milestone.
Oncology Drug Development Collaboration
In December 2006, Exelixis and BMS entered into a worldwide collaboration to discover, develop and commercialize novel targeted therapies for the treatment of cancer. Under the collaboration, Exelixis will identify and conduct preclinical development of small molecule drug candidates directed against targets selected by Exelixis and BMS. From a pool of preclinical compounds, BMS will have the right to select up to three IND candidates from six future Exelixis compounds. Following selection of a compound, BMS will lead all global development and commercialization activities, although Exelixis has the right to opt-in to co-develop and co-commercialize the programs in the United States.
Under the terms of the agreement, BMS paid an upfront payment of $60 million in cash. Exelixis will also receive $20 million for each of up to the three different drug candidates selected by BMS at IND. If Exelixis opts-in, the companies will share equally profits and co-promotion responsibilities equally in the United States, and Exelixis will be responsible for 35% of worldwide development costs, with the remaining 65% being paid by BMS. Exelixis will also receive royalties on product sales outside of the United States. If Exelixis does not opt-in with respect to a selected compound, it will be entitled to receive milestones and royalties in lieu of a U.S. profit share.
In January 2008, BMS exercised its option to develop and commercialize Exelixis' compound XL139, which triggered a milestone payment of $20 million to Exelixis. In addition, Exelixis has exercised its option under the collaboration agreement to co-develop and co-commercialize XL139 in the United States.
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GlaxoSmithKline
In October 2002, Exelixis and GlaxoSmithKline (GSK) established a broad alliance to discover, develop and commercialize novel therapeutics in the areas of vascular biology, inflammatory disease and oncology. Under the agreement, Exelixis will deliver to GSK a number of small molecule compounds that have met agreed upon proof-of-concept criteria, and GSK will have the option to select up to three of these compounds for further development and worldwide commercialization and manufacturing.
In January of 2005, the GSK agreement was amended so that Exelixis will continue to work on 12 programs (XL647, XL999, XL784, XL880, XL820, XL844, XL184, XL281, XL418, XL228 and two earlier stage programs). GSK has the right to select from these 12 programs up to three compounds at proof-of-concept. Exelixis retains rights to all collaboration compounds not selected by GSK and may work on any collaboration targets with the exception of 32 targets subject to GSK's exclusivity. Under the amended agreement, GSK may pay selection milestones, additional development-related milestones and substantial royalties on product sales. The amount of selection milestones will depend on the number of compounds selected, the timing of the selection of the compounds and, for those submissions made after the end of the original development term in October 2008, whether GSK extended the development term. Exelixis has retained certain co-promotion rights for these compounds in North America.
In July 2007, GSK declined to exercise its option to license XL647 for further development and commercialization. As a result, Exelixis retains the right to develop and commercialize XL647 either independently or in collaboration with third parties, subject to payment to GSK of a 3% royalty on sales of any products incorporating the compound. The company intends to move forward aggressively with the full development of this promising compound in patients with non-small cell lung cancer and potentially other indications as well.
In August 2007, GSK requested to initiate its review of XL880 before the compound reached proof-of-concept in phase 2 trials. Exelixis agreed to this request and submitted the data report to GSK in September 2007. In December 2007 GSK exercised its development option for XL880. Transfer of the development program for XL880 (GSK089) was completed in March 2008.
Following completion of the phase 2 trial of XL784 in patients with proteinuria associated with diabetic nephropathy, Exelixis submitted a data report to GSK in October 2007. Although the phase 2 trial did not meet its primary endpoint of reducing proteinuria compared with placebo in patients with proteinuria associated with diabetic nephropathy, Exelixis is continuing to analyze the data to assess whether further evaluation of the compound is warranted. In January 2008, GSK declined to exercise its option to license XL784 for further development and commercialization. As a result of GSK's decision, Exelixis has the right to develop and commercialize XL784 either independently or in collaboration with third parties, subject to payment to GSK of a 3% royalty on sales of any products incorporating the compound.
In June 2008, Exelixis and GSK agreed to successfully conclude their six-year discovery and development collaboration on October 27, 2008, as scheduled. Under the terms of the collaboration, GSK has the right to select up to two of the compounds in the collaboration for further development and commercialization. GSK previously selected XL880 and will be able to choose one additional compound from among XL184, XL281, XL228, XL820, and XL844. Exelixis will have the right to develop and commercialize compounds not selected by GSK, either alone or in collaboration with partners. As a result of the conclusion of the collaboration, Exelixis’ exclusivity obligations will be limited to the compounds selected by GSK. Exelixis will have the right to perform additional discovery, development, and commercialization efforts against any collaboration target or compound that does not infringe upon the intellectual property associated with compounds selected by GSK for further development and commercialization
In December 2007 Exelixis discontinued the development programs for XL999 and XL418. Exelixis is actively pursuing clinical development of XL184, XL820, XL844, XL281 and XL228.
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Genentech
Cancer Collaboration
In June of 2005, Exelixis entered into a partnership with Genentech for the discovery and development of therapeutics to target cancer, inflammatory diseases, and tissue growth and repair. Under the collaboration, Genentech will primarily focus on generating antibodies to proteins provided by Exelixis, and the companies will jointly assess their utility in a variety of cancer, inflammation and tissue repair models. Under the terms of the collaboration, Genentech will pay Exelixis an upfront payment and provide R&D funding over three years, totaling $16 million. For therapeutics developed in cancer, Exelixis will receive milestone and royalty payments. Exelixis maintains an option to share a portion of the costs and profits associated with the development, manufacturing and commercialization of products in either the tissue growth and repair field or the inflammation field.
MEK Collaboration
In January 2007, Exelixis announced an agreement with Genentech focused on the development of XL518, a small-molecule inhibitor of MEK. MEK, also known as mitogen activated protein kinase (MAPK), is a key component of the RAS/RAF/MEK/ERK pathway, which is frequently activated in human tumors.
Exelixis received upfront and milestone payments totaling $40 million upon signing of the agreement and with the submission of the IND for XL518 to the FDA. Exelixis is responsible for developing XL518 or other MEK inhibitors through the end of phase 1 and if Genentech exercises its option to further develop XL518, Genentech will be responsible for further development, including all further development costs. Exelixis initiated a phase 1 clinical trial of XL518 in the first quarter of 2007, and enrollment is ongoing. In March 2008, Genentech exercised its option to further develop and commercialize XL518. Selection of the compound and opt-in by Genentech triggered a $3.0 million payment to Exelixis. Another $7.0 million is due when a phase 2 program is initiated by Genentech. Exelixis has the option to co-promote in the United States and will be entitled to receive an initial equal share in profits in the United States, which will decrease as sales increase. Exelixis will receive royalties on any sales of the product that may be commercialized outside the United States. Exelixis will continue to be responsible for the phase 1 clinical trial until the point that a maximum tolerated dose (MTD) is determined. After MTD is achieved, Genentech will be responsible for completing the phase 1 clinical trial and subsequent clinical development.
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Symphony Capital Partners, L.P.
In June of 2005, Exelixis entered into a transaction with Symphony Capital Partners, L.P. and its investors to provide funding for clinical development of XL647, XL999 and XL784. This agreement was amended in December 2006. Under the terms of the agreement, Symphony Capital formed Symphony Evolution, Inc. (SEI), which has provided $80.0 million to fund the clinical development of XL647, XL999 and XL784. Exelixis, in collaboration with SEI, has primary responsibility to conduct the clinical trials for the three compounds. Exelixis has granted a license to the intellectual property for the three compounds to SEI, but retains the exclusive right, through a purchase option, to acquire SEI's equity. Under the terms of the amended agreement, Exelixis cannot repurchase a single product candidate without also repurchasing the other two product candidates by acquiring all of SEI’s equity. If Exelixis chooses not to exercise the purchase option, SEI will retain the rights to the compounds. The phase 2 clinical program for XL647 is ongoing, and in July 2007 GSK declined to exercise its development option for XL647. In December 2007, Exelixis discontinued the development of XL999, and, in January 2008, GSK declined to exercise its option to further develop and commercialize XL784.
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Wyeth
In December 2005, Exelixis entered into a license agreement with Wyeth Pharmaceuticals, a division of Wyeth, related to compounds targeting FXR, a nuclear hormone receptor implicated in a variety of metabolic and liver disorders. The license agreement covers several small-molecule compounds that have been shown in preclinical studies to modulate the activity of FXR. Exelixis gained rights to FXR through the acquisition of X-Ceptor Therapeutics, Inc. in October 2004. Exelixis has developed a series of potent, selective synthetic FXR ligands that lower triglycerides and improve the cholesterol profile in animal models of dyslipidemia and atherosclerosis. These compounds are also highly effective in blocking disease progression in animal models of liver disorders.
Under the terms of the agreement, Exelixis received a $10 million upfront payment and will receive up to an additional $147.5 million in development and commercialization milestone payments, as well as royalties on the sale of products commercialized under the collaboration. Wyeth is responsible for all further preclinical and clinical development, regulatory, manufacturing and commercialization activities for the compounds. In November 2006 Exelixis received a $4.5 million payment from Wyeth for achievement of a development milestone, and in 2007 Wyeth paid $2.5 million for achievement of a second development milestone.
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Daiichi-Sankyo
In March 2006, Exelixis and Daiichi Sankyo Company Limited entered into a collaboration agreement to discover, develop and commercialize novel therapies targeted against the mineralocorticoid receptor (MR), a nuclear hormone receptor (NHR) implicated in a variety of cardiovascular and metabolic diseases.
Under the terms of the agreement, Exelixis received a $20 million upfront payment upon signing of the agreement and is entitled to receive research funding, development, regulatory and commercialization milestone payments as well as double-digit royalties on the sale of any products commercialized under the collaboration. In June 2007, the initial research term of the collaboration was extended by mutual agreement until December 2007. After the end of the joint research term, Sankyo is responsible for all further preclinical and clinical development, regulatory, manufacturing and commercialization activities for the compounds.
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