GSK Exercises Exelixis Option

GlaxoSmithKline has exercised its option to exclusively license XL880 from Exelixis for further development and commercialization. XL880 is a small molecule compound currently being evaluated in Phase II trials in patients with papillary renal cell carcinoma (PRC), gastric cancer and head and neck cancer. Under the terms of the collaboration between Exelixis and GSK initiated in October 2002 and amended in January 2005, GSK’s selection of XL880 entitles Exelixis to a selection milestone of $35 million and additional payments upon the attainment of specific development and commercialization milestones. The $35 million milestone will be applied to repayment of an advance that GSK paid to Exelixis in 2005. Exelixis is also entitled to receive double-digit royalties on product sales if the compound is approved for marketing and commercialized. Exelixis will have certain co-promotion rights to XL880 in North America.

George A. Scangos, Ph.D., president and chief executive officer of Exelixis, remarked, “We believe that XL880 has substantial potential as a first- and best-in-class therapy, and GSK and Exelixis look forward to the completion of the ongoing XL880 Phase II trials and evaluation of pivotal trial options. We believe that GSK’s selection of XL880 validates our strategy of building a franchise in the area of MET inhibition to exploit the potential of this promising target.”

The collaboration between Exelixis and GSK, which is managed by GSK’s Center of Excellence for External Drug Discovery (CEEDD), covers seven compounds and their back-up and follow-up compounds currently in the Exelixis development pipeline. Under the terms of the collaboration, Exelixis submits the covered compounds to GSK as they achieve clinical proof-of-concept, which is a pre-determined measure of efficacy, generally based on Phase II trial data, and GSK has the option to select two compounds, and potentially a third compound, for further clinical development and commercialization. However, in the case of XL880, GSK requested in August 2007 to review the compound’s data prior to achievement of proof-of-concept. Exelixis agreed to the request and submitted the XL880 data package to GSK in September 2007.