Exelixis

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

Mechanism of Action Collaboration

In September 1999, Exelixis and Bristol-Myers Squibb (BMS) initiated a research collaboration utilizing Exelixis' expertise in model systems genetics to identify novel, validated targets for new drugs. As part of the collaboration, BMS and Exelixis share certain core technologies and lead optimization responsibilities. BMS transferred to Exelixis combinatorial chemistry hardware and software, along with related intellectual property rights. In return, Exelixis granted BMS a limited sublicense to use Exelixis' proprietary worm (C. elegans) and fly (D. melanogaster) technology. This alliance provided Exelixis with significant combinatorial chemistry assets that today play a significant role in Exelixis' rapid and rigorous drug candidate screening process.

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. Each company has exclusive worldwide rights to half of the validated targets arising from the collaboration. As part of the collaboration, Exelixis received an exclusive worldwide license to develop and commercialize a selected analogue of the BMS anticancer compound, Rebeccamycin, now XL119 (becatecarin). XL119 is in Phase III clinical trials and was out-licensed to Helsinn Healthcare S.A. for further development and commercialization. In December 2003, Exelixis announced the extension and expansion of its oncology research collaboration with BMS to increase the total number and degree of validation of cancer targets that Exelixis will deliver to BMS.

Cardiovascular Disease Collaboration

In December 2005, Exelixis and BMS entered into a collaboration agreement to discover, develop and commercialize novel therapies targeted against the Liver X Receptor (LXR), a nuclear hormone receptor implicated in a variety of cardiovascular and metabolic disorders. Under the terms of the collaboration, the companies will jointly identify drug candidates that are ready for Investigational New Drug Application-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 will receive approximately $10 million per year in R&D funding for an initial period of two years. 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.

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 pre-clinical development of small molecule drug candidates directed against targets selected by Exelixis and BMS. From a pool of pre-clinical compounds, BMS will have the right to select up to three investigational new drug (INDs) candidates against three different targets. Following selection of a compound, BMS will lead all global development and commercialization activities, although Exelixis has the right to co-develop and co-commercialize the programs in the United States.

Under the terms of the agreement, BMS will pay to Exelixis an upfront payment of $60 million in cash. Exelixis will also receive $20 million for each of up to three different drug candidates selected by BMS at IND. The companies plan to share development costs, commercial profits and co-promotion responsibilities equally in the United States. Exelixis will also receive royalties on product sales outside of the United States. For each program selected by BMS, Exelixis may opt out of the co-development or co-promotion in the United States, in which case Exelixis would receive milestones and royalties in lieu of a U.S. profit share.

GlaxoSmithKline

In October 2002, Exelixis and GlaxoSmithKline (GSK) announced the formation of 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 criteria in early Phase II clinical testing, and GSK will have the exclusive right to select a small subset 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 and five earlier stage programs) while GSK retains exclusivity rights to 32 specified targets. GSK has the right to select from these 12 programs up to three compounds at proof-of-concept (completion of Phase IIa clinical development). Exelixis retains rights to all collaboration compounds not selected by GSK and may work on any collaboration targets with the exception of the 32 targets subject to GSK's exclusivity. Under the amended agreement, GSK may pay selection milestones up to approximately $275 million for three compounds, additional development-related milestones and substantial royalties on product sales. Exelixis has retained certain co-promotion rights for these compounds in North America. Under the amended agreement, GSK will also provide research funding of $47.5 million over the remaining term of the collaboration.

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Genentech

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.

Co-Development Agreement

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. Inappropriate activation of the MEK/ERK pathway promotes cell growth in the absence of exogenous growth factors. It’s a common point of convergence for a variety of cancer-related signaling pathways and, as such, it has a lot of potential in treating numerous types of cancer.

Under the terms of the agreement, Exelixis will receive 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 I and if Genentech exercises its option to further develop XL518, Exelixis will receive an additional payment and Genentech will be responsible for further development, including all further development costs. Exelixis has the option to co-promote in the United States along with Genentech. Exelixis has a substantial share in the marketing and commercialization costs, as well as 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 which may be commercialized outside the United States.

Helsinn Healthcare S.A.

In June of 2005, Exelixis established a license agreement for the further development and commercialization of XL119 (becatecarin) with Helsinn Healthcare S.A. Exelixis has granted to Helsinn a world-wide, royalty-bearing license to XL119, and has retained rights to reacquire commercial rights to XL119 for North America. Under the terms of the license agreement, Exelixis received an upfront payment of $4 million and will receive up to $21 million in milestones and royalties on sales in the rest of the world. Helsinn will assume the cost of the Phase III program for XL119.

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 up to $80 million of committed funding for clinical development of XL647, XL999 and XL784. Under the terms of the agreement, Symphony Capital, formed Symphony Evolution, Inc. (SEI), which was initially capitalized with $40 million and holds an option to call an additional $20 million to $40 million within one year of closing.

Symphony, through SEI, will provide funding to Exelixis, which, in collaboration with SEI, will continue 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 certain conditions, Exelixis has the option to purchase at a premium price the rights for any one of the three compounds separately, while retaining the option to subsequently purchase the equity of SEI and reacquire rights to the remaining compounds. Under the collaboration with GSK, GSK may continue to select at proof-of-concept for further development one or more of the programs licensed to SEI, in which case Exelixis would have to repurchase the selected program or programs through the exercise of the purchase option or program option. As part of its collaboration with Exelixis, GSK has previously agreed to increase the selection milestone payments for compounds that it selects and that are funded through Symphony. If Exelixis chooses not to exercise the purchase option, SEI will retain the rights to the compounds.

Wyeth

In December 2005, Exelixis signed a license agreement with Wyeth Pharmaceuticals, a division of Wyeth, related to compounds targeting the farnesoid X receptor (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 disorderssss.

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 will be responsible for all further preclinical and clinical development, regulatory, manufacturing and commercialization activities for the compounds.

Bayer CropScience

Agrinomics LLC was formed in 1999 as an equally owned joint venture between Exelixis Plant Sciences and Bayer CropScience to focus on research, development and commercialization of products in the field of agricultural functional genomics. Bayer CropScience provided high-throughput screening, robotics, microarray and bioinformatics technologies. Exelixis Plant Sciences contributed its ACTTAG technology, a collection of seeds generated using the activation tagging technique, and expertise in molecular and cell biology. In May 2004, Exelixis purchased from Bayer CropScience its 50% interest in Agrinomics in exchange for releasing Bayer CropScience from all future obligations under the joint venture agreement. In addition, Exelixis entered into a combinatorial chemistry agreement with Bayer CropScience, and Bayer CropScience and its affiliates entered into a number of license and technology agreements with Agrinomics. The agreements are directed to the use of the assets developed or used under the collaborative research agreement.