With cancer compounds entering the clinic sooner than expected, Exelixis Inc. has received $35 million in milestone payments from partner GlaxoSmithKline plc - money the firm needs to fund ongoing development.
The companies originally signed the agreement in October 2002 to develop an undisclosed number of therapeutics in indications such as cancer and renal disease, using Exelixis compounds. At that time, terms included $134 million in guaranteed funding with the potential for more to Exelixis. (See BioWorld Today, Oct. 30, 2002.)
The agreement was amended in January "to quantify the number of programs" at 12, and to update the financial arrangements, said Charles Butler, spokesman for South San Francisco-based Exelixis.
Totaling $30 million, the first milestone stemmed from the investigational new drug application submissions for XL880, filed in December, and XL820 and XL844, both filed last month. The additional $5 million payment was achieved through Exelixis' progress in early stage programs.
"It was a result of tremendous productivity," Butler told BioWorld Today. The compounds "advanced faster than originally had been anticipated, and questions arose as to how to fund the advancing development."
London-based GSK decided to move up a milestone payment.
"That [GSK] is willing to risk those funds says a lot about its belief in these compounds," Butler added.
Exelixis has four compounds in Phase I studies (XL647, XL999, XL784 and XL880), two about to begin Phase I (XL820 and XL844) and expects to file an IND for a seventh compound, XL184, by the end of the quarter.
Most of the company's compounds are aimed at oncology targets and designed to inhibit proteins involved in tumor proliferation and angiogenesis, though each compound inhibits a different spectrum of receptor tyrosine kinases. XL784 so far is the only exception. That drug is a small-molecule inhibitor of the ADAM-10 metalloprotease enzyme in development for renal disease.
Once those compounds complete Phase IIa proof-of-concept trials, GSK will have the right to select two of them - three, if the agreement is extended - to develop and commercialize. Exelixis would receive milestone payments and potential royalties. And the nine or 10 other compounds developed through Phase IIa would remain the exclusive property of Exelixis.
If GSK opts for three compounds, proof-of-concept milestones could total up to $275 million for Exelixis, with the potential for development-related milestones, though the $35 million accelerated payment would be reduced from later totals.
GSK also agreed to commit about $80 million in research and development funding over the course of the collaboration.
In addition to its work with GSK, Exelixis continues other product development work, including the ongoing Phase III studies of XL119 (becatecarin) in patients with bile duct tumors. The company announced a net loss of $27 million, or 36 cents per share, for the first quarter. As of March 31, Exelixis had $139.1 million in cash, cash equivalents and short-term investments.
Shares of Exelixis (NASDAQ:EXEL) rose 13 cents Monday to close at $7.58.
In other financing news:
• AspenBio Inc., of Castle Rock, Colo., closed $3.1 million under a private placement of unregistered securities. For each $1 million invested, the purchaser received 1.1 million common shares and 1.1 million warrants to purchase the same number of shares exercisable for five years at $1.35 apiece. AspenBio said the purpose of the private placement is to raise funds for working capital, new product development and general corporate purposes.