Washington Editor

A public stock sale is raising about $50.4 million for Exelixis Inc.

The South San Francisco-based company agreed to sell 6.5 million common shares at $7.75 apiece, which represents a 5.5 percent discount to the previous trading day's $8.20 closing bid. On Wednesday, the stock (NASDAQ:EXEL) lost 45 cents to close at $7.75.

Company representatives could not comment on the transaction due to quiet period restrictions.

The fresh capital will pad the company's balance sheet, which included $147.5 million in cash, cash equivalents and short-term investments on June 30. There were about 76.4 million shares outstanding as of that date, and for the previous three months, its net loss totaled $9.7 million.

But the decision to access public markets marks a departure, of sorts, from recent transactions that have brought other money into Exelixis. Over the past couple of months, the company has secured more than $150 million in funding through various other vehicles - a loan, milestone payments and partnerships. It obtained a third-party financing vehicle to provide up to $80 million for work on three Phase I products, signed partnerships worth $16 million and $25 million, and received $35 million in milestone payments. (See BioWorld Today, May 10, 2005; June 6, 2005; and June 14, 2005.)

More recently, Exelixis unveiled clinical development plans for a trio of its most advanced internally generated development compounds. Before the end of the year, the company intends to begin Phase II programs for XL999 and XL647, a pair of cancer compounds in late Phase I trials. Both will be tested in multiple tumor types. Also, a product labeled XL784 is nearing Phase II for diabetic nephropathy after completing a single-dose Phase I study and additional toxicology and formulation development.

Those three compounds are the subject of the $80 million special purpose funding vehicle supplied by Symphony Capital Partners LP in New York.

That company is forming an outfit called Symphony Evolution Inc. to funnel $40 million to Exelixis, which will have an option for an additional $20 million to $40 million within one year of closing. Symphony Evolution will hold rights to intellectual property relating to XL999, XL647 and XL784, and over the next four years, Exelixis can opt to reacquire them by purchasing Symphony Evolution's equity, depending on whether Phase II trials yield positive results.

Exelixis expects findings on the cancer products to be available next year, while the diabetic nephropathy study will take 15 to 18 months to complete.

The offering, which was made pursuant to an effective shelf registration statement dated Aug. 7, 2001, is expected to close on Aug. 19. Goldman, Sachs & Co., of New York, is acting as underwriter.