Exelixis and GlaxoSmithKline Agree to Successfully Conclude Six-Year Discovery and Development Collaboration

Saturday, June 28, 2008 General News
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SOUTH SAN FRANCISCO, Calif., June 27 Exelixis,Inc. (Nasdaq: EXEL) announced today that the company and GlaxoSmithKline, Inc.(NYSE: GSK) will bring their six-year collaboration to a successful conclusionon October 27, 2008, as scheduled. Under the terms of the collaboration, GSKhas the right to select up to two of the compounds in the collaboration forfurther development and commercialization. GSK previously selected XL880 andwill be able to choose one additional compound from among XL184, XL281, XL228,XL820, and XL844. Exelixis will have the right to develop and commercializecompounds not selected by GSK, either alone or in collaboration with partners.As a result of the conclusion of the collaboration, Exelixis' exclusivityobligations will be limited to the compounds selected by GSK. Exelixis willhave the right to perform additional discovery, development, andcommercialization efforts against any collaboration target or compound thatdoes not infringe upon the intellectual property associated with compoundsselected by GSK for further development and commercialization.

"This collaboration represents a successful alliance that has trulybenefited both companies. With the selection of GSK089 (formerly XL880) andpotentially one other compound, GSK has been able to strengthen its oncologypipeline. I am enthusiastic about the compounds remaining in thecollaboration, and continue to be impressed by Exelixis' quality of scienceand productivity," said Paolo Poletti, MD, senior vice president of theOncology Medicines Development Center at GSK.

"The GSK collaboration was critical to the development of Exelixis' world-class discovery group and our rapidly expanding clinical development group.Today, we have a pipeline of 11 compounds in clinical development, includingXL184, which begins a phase 3 trial this summer," said George A. Scangos,president and chief executive officer of Exelixis. "This collaboration hasbeen successful in that both companies have been able to share in the outputof our discovery and development efforts and will be able to take forwardmultiple promising compounds with significant commercial potential inoncology. With the successful completion of the collaboration, we will haveclarity regarding the exclusivity obligations under the GSK collaboration andownership of the compounds in our pipeline."

To date, Exelixis has received approximately $235 million from GSK, whichincludes $150 million in upfront, milestone, and R&D support payments, and $85million through a loan facility. Additionally, if GSK selects a secondcompound for further development, Exelixis will be entitled to receive anadditional milestone payment of either $55 million or $27.5 million. Themilestone will be due after the selected compound achieves proof-of-conceptand will be creditable by GSK against amounts outstanding under the loanfacility. Exelixis is eligible for development milestones and royalties oncompounds selected for development and commercialization by GSK, which includeXL880 and potentially one additional compound if GSK exercises its seconddevelopment election. Exelixis will pay GSK a low, single-digit royalty oncertain "Refused Candidates" that GSK elected not to choose with itsdevelopment election which Exelixis thereafter successfully commercializes.

Background on Exelixis-GSK Collaboration

In October 2002, Exelixis and GSK established a broad alliance todiscover, develop, and commercialize novel therapeutics in the areas ofvascular biology, inflammatory disease, and oncology. Under the agreement,Exelixis was required to deliver to GSK a number of small molecule compoundsthat met agreed-upon proof-of-concept criteria, and GSK had the option toselect up to two of these compounds for further development, and worldwidecommercialization.

In January 2005, the GSK agreement was amended to focus on 12 specificprograms: XL647, XL999,

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