Exelixis Announces Transaction to Fund Clinical Development for XL647, XL999 and XL784

Exelixis Plans Broad-based Phase II Programs in Second-Half of 2005

Jun 13, 2005, 01:00 ET from Exelixis, Inc.

    SOUTH SAN FRANCISCO, Calif., June 13 /PRNewswire-FirstCall/ -- Exelixis,
 Inc. (Nasdaq:   EXEL) announced that it has entered into a transaction with
 Symphony Capital Partners, L.P. and its investors to provide up to $80 million
 of funding for the further clinical development of XL647, XL999 and XL784.
 Under the terms of the agreement, Symphony Capital, a private equity fund
 focused on biopharmaceutical development, has formed Symphony Evolution, Inc.,
 which will be initially capitalized with $40 million and holds an option to
 call an additional $20 million to $40 million within one year of closing.
     Symphony Capital investors, through Symphony Evolution, will provide
 funding to Exelixis, which, in collaboration with Symphony Evolution, 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
 Symphony Evolution, but retains the exclusive right, through a purchase
 option, to acquire Symphony Evolution's equity.  If Exelixis chooses not to
 exercise the purchase option, Symphony Evolution will retain the rights to the
 compounds.  As part of its collaboration with Exelixis, GlaxoSmithKline plc
 (GSK) has previously agreed to increase the selection milestone payments for
 compounds that are funded through Symphony Evolution.
     "This transaction provides up to $80 million to fund the clinical
 development of these very promising compounds on favorable economic terms
 without significant dilution to our current shareholders," said George A.
 Scangos, Ph.D., president and chief executive officer of Exelixis.  "We have
 retained exclusive rights to the compounds, obtained attractive funding to
 enable aggressive, thoughtful clinical development, and have off-loaded the
 financial risk of compound failure.  We are very enthusiastic about these
 compounds, and we are pleased that the collaboration with Symphony Evolution
 will enable us to explore their utility in a variety of indications.  Although
 these terms are attractive on their own, the increased selection milestones to
 which GSK has agreed further reduces the cost of capital if GSK elects any of
 these compounds."
     Dr. Scangos continued, "We have been remarkably productive over the past
 few years, and are on track to have eight compounds in clinical trials by the
 end of the year.  We believe that conducting extensive Phase II trials is an
 important aspect of avoiding late-stage product failures.  Obviously more
 extensive programs require significant financial investment, and this
 transaction is one example of how we intend to finance these programs while
 minimizing dilution to our investors."
     Phase I trials are currently ongoing for XL647 and XL999, and XL784 is
 expected to re-enter clinical development later this year.  The clinical
 development funds to be provided by Symphony Evolution will be used to conduct
 broad Phase II clinical programs for XL647 and XL999 in multiple tumor types
 and patient populations to determine the broadest possible potential for each
 compound.  For XL784, the funds will be used to conduct comprehensive trials
 in diabetic nephropathy.
     Summary Terms of the Transaction
     Of the $80 million in committed funds, $40 million was drawn upon closing,
 and an additional $20 million to $40 million will be drawn within one year of
 closing.  Exelixis has licensed the intellectual property for XL647, XL999 and
 XL784 to Symphony Evolution.  Exelixis will issue to Symphony Evolution's
 investors five-year warrants to purchase up to 1.5 million shares of Exelixis
 common stock at $8.90 per share.  The actual number of underlying shares will
 be determined by the total amount of capital actually drawn by Symphony
 Evolution.  In exchange, Exelixis has received an exclusive purchase option
 from Symphony Evolution's investors allowing Exelixis to reacquire the
 intellectual property by purchasing all of Symphony Evolution's equity.  This
 option is exercisable by Exelixis at any time beginning June 2006 and ending
 June 2009, and the purchase price is calculated by applying a compounded
 annual rate of return of 25% to the funded capital, subject to an early
 exercise premium if the option is exercised before December 2007.  Exelixis'
 decision to exercise the option is entirely discretionary and whether Exelixis
 exercises it may depend on the outcome of clinical trials and other
 considerations.  The option exercise price may be paid in cash or a
 combination of cash and up to 33% of the purchase price in Exelixis common
 stock, at Exelixis' sole discretion.  Exelixis also has the option, under
 certain conditions, 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 Symphony Evolution and reacquire rights to the
 remaining compounds.  Exelixis intends to consolidate the financial results of
 Symphony Evolution into its financial statements.
     Symphony Evolution
     Symphony Evolution is required by the agreements to use the cash raised
 through this transaction exclusively for activities relating to the clinical
 development of XL784, XL647 and XL999.  Exelixis has one of five seats on
 Symphony Evolution's Board of Directors.  This seat will be filled initially
 by George A. Scangos, Ph.D., president and chief executive officer of
 Exelixis.  Symphony Capital has two seats on the Board.  The remaining two
 Board members are mutually agreed to by both parties.  GSK has an observer
 seat on Symphony Evolution's Board of Directors.
     Symphony Evolution has retained RRD International, LLC to serve as the
 management of Symphony Evolution, and will collaborate with Exelixis to
 conduct the clinical trials.
     GSK Collaboration
     XL647, XL999 and XL784 are part of Exelixis' collaboration with GSK.  As
 part of an amendment to the collaboration, announced in January 2005, Exelixis
 was granted the ability to develop XL647, XL999 and XL784 by making use of
 third-party financing vehicles, such as Symphony Evolution. GSK retains the
 option to elect these compounds for further development after
 proof-of-concept, in which case such compounds will be subject to a premium on
 proof-of-concept milestone payments.
     Conference Call and Webcast
     Exelixis' management will discuss this clinical development financing
 transaction and other business developments during a conference call beginning
 at 5:30 a.m. PDT / 8:30 a.m. EDT today, Monday, June 13, 2005.  To listen to
 the discussion, please visit the Webcast section under Investor Information on
 the Exelixis website at http://www.exelixis.com or
     About Exelixis
     Exelixis, Inc. is a leading genomics-based drug discovery company
 dedicated to the discovery and development of novel therapeutics across
 various disease areas. The company is leveraging its fully integrated
 gene-to-drug platform to fuel the growth of its proprietary drug pipeline.
 Exelixis' development pipeline covers cancer and metabolism and is comprised
 of the following compounds: XL119 (becatecarin), for which a multinational
 Phase III clinical trial has been initiated in patients with bile duct tumors;
 XL784, initially an anticancer compound, which completed a Phase I clinical
 trial and is being developed as a treatment for renal disease XL647, XL999 and
 XL880, anticancer compounds currently in Phase I clinical trials; XL820 and
 XL844 for which IND applications have been filed; and XL184, a potential IND
 candidate for the treatment of cancer; and multiple compounds in preclinical
 development for diseases including cancer and various metabolic and
 cardiovascular disorders. Exelixis has established broad corporate alliances
 with major pharmaceutical and biotechnology companies including
 GlaxoSmithKline (GSK) and Bristol-Myers Squibb Company. Pursuant to a product
 development and commercialization agreement between Exelixis and GSK, GSK has
 the option, after completion of Phase IIa clinical trials, to elect to develop
 a certain number of compounds in Exelixis' product pipeline, which may include
 the compounds identified in this press release (other than XL119), thus
 potentially triggering milestone payments and royalties from GSK and
 co-promotion rights by Exelixis. For more information, please visit the
 company's web site at http://www.exelixis.com.
     This press release contains forward-looking statements, including without
 limitation statements regarding clinical development plans for XL784, XL647
 and XL999, potential shareholder dilution, future funding and operations of
 Symphony Evolution and the therapeutic and commercial potential of XL119,
 XL784, XL647, XL880, XL999, XL820, XL844 and XL184, other compounds in the
 Exelixis preclinical pipeline and its program in metabolic diseases. Words
 such as "believes," "anticipates," "plans," "expects," "intends," "will,"
 "slated," "goal" and similar expressions are intended to identify
 forward-looking statements. These forward-looking statements are based upon
 Exelixis' current expectations. Forward-looking statements involve risks and
 uncertainties. Exelixis' actual results and the timing of events could differ
 materially from those anticipated in such forward-looking statements as a
 result of these risks and uncertainties, which include, without limitation,
 the ability of the company to successfully conduct the clinical trials for
 XL119, XL647, XL999, XL880, XL820 and XL844; the ability of the company to
 advance additional preclinical compounds into clinical development; the
 uncertainty of the FDA approval process; and the therapeutic and commercial
 value of the company's compounds. These and other risk factors are discussed
 under "Risk Factors" and elsewhere in our quarterly report on Form 10-Q for
 the quarter ended March 31, 2005 and other filings with the Securities and
 Exchange Commission. Exelixis expressly disclaims any obligation or
 undertaking to release publicly any updates or revisions to any
 forward-looking statements contained herein to reflect any change in the
 company's expectations with regard thereto or any change in events, conditions
 or circumstances on which any such statements are based.
     Exelixis and the Exelixis logo are registered U.S. trademarks.

SOURCE Exelixis, Inc.