Joint Drug Discovery Program Announced

(So. San Francisco, CA, US) and GlaxoSmithKline plc (GSK,London, UK).

The alliance combines Exelixis' gene-to-drug discovery platform and GSK's strengths in development and commercialization by means of a model for sharing risks and potential rewards in a research and development collaboration. Under the terms of the agreement, Exelixis will deliver to GSK an undisclosed number of small-molecule compounds that have met agreed-upon criteria in early Phase II clinical testing.

GSK will have the right to further develop these compounds and will have exclusive, worldwide commercialization and manufacturing rights. Exelixis retains co-promotion rights in North America. GSK will make an upfront payment of US$30 million to Exelixis. GSK will also initially acquire two million newly issued shares of Exelixis common stock at $7 per share, which represents a premium of approximately 100% to the current stock price.

Over the first six years, GSK will provide Exelixis with a minimum of $90 million in development funding. Exelixis will receive clinical and regulatory milestone payments. Based on the continued successful development of these compounds, payments could range from $220 million to $350 million. In addition, GSK will make a loan facility available to Exelixis of up to $85 million. Exelixis will also receive sales-based milestone payments and royalties on product sales.

Two years from the start of the collaboration, GSK and Exelixis may elect to expand the collaboration, and under this option, Exelixis' milestone payments could double in size, and the development funding and the loan facility would also be significantly expanded.
For GlaxoSmithKline, this alliance promises to complement our own accelerating drug-discovery activities by gaining access to the expanding array of capabilities which Exelixis has assembled rapidly in recent years,” said Tadataka Yamada, M.D., chairman, research & development, GSK.




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