When Exelixis Inc. and Bristol-Myers Squibb Co. signed their oncology collaboration in the summer of 2001, it was valued at up to $200 million for Exelixis and set up a symbiotic partnership that was worthy of admiration. But the science of biotechnology has changed since then, and the companies saw an opportunity to do more.
Exelixis, of South San Francisco, and New York-based BMS signed an extension to that deal, upping the number of targets, asking for more validation per target, increasing the total funding and possibly stretching the collaboration to mid-2009. (See BioWorld Today, July 19, 2001.)
"I'll tell you what I like about this deal," said George Scangos, president and CEO of Exelixis. "Our success is built on getting targets into the clinic and ultimately to the market. [In the agreement], we get to work with BMS, we get to have access to their expertise and it really utilizes the best of BMS and Exelixis. It has worked amazingly well, and we are excited about being able to continue that."
The original deal was set to expire in 2004 but now will carry on through December 2006, with BMS having the right to continue it through July 2009. Exelixis will get guaranteed funding of $25 million that includes an up-front payment, and potential milestones that, if reached, could push the total value of the extension to more than $100 million. There also are undisclosed royalties on product sales.
The $100 million-plus value is based on a "reasonable number of successes," Scangos said.
"That's not wildly optimistic success - wildly optimistic success would give a much bigger potential than that," he told BioWorld Today.
One of the differences between now and 2001, Scangos said, is the progress that the science had made, and that progress is reflected in the deal. Acknowledging that there are "more targets around than people know what to do with," Scangos said that many of the targets that bobbed to the surface in the genomics flood did not lead to the ability to modulate a desired protein. The hurdle for targets today has been set higher.
"Technology is changing," he said. "You can do a lot more work these days to look at the impact of modulation of protein activity in vivo. It's possible these days, and it wasn't a few years ago, to take a gene and knock it out in an established tumor in any way you feel is appropriate to answer the question you are trying to ask. That technology didn't exist three years ago when we signed the initial agreement."
Scangos said there are a specific number of targets the companies are aiming for, although they aren't disclosing it. There was a number in the first deal, too - a number that Exelixis exceeded - and with Exelixis getting rights to half the targets produced, the more the merrier.
As in the earlier agreement, the companies will continue to alternate choosing targets. A committee of BMS and Exelixis scientists meet, go over the compounds and then choose.
"It's a draft pick," Scangos said. "They pick one, we pick one." The original first pick went to BMS, and the companies have been relaying choices back and forth ever since.
Exelixis received rights to XL119, a rebeccamycin analogue, from BMS as part of the original deal in 2001. The product has been in Phase II studies with the National Cancer Institute, but Exelixis said Wednesday that it had filed an investigational new drug application to begin a Phase III trial in bile duct tumors. It's mainly a formality to shift the product into the control of Exelixis for Phase III.
"The IND was held by the [National Cancer Institute]," Scangos said. "Once the IND is approved, we'll be free to initiate the trial on our own." He added that the drug supply is lined up and Exelixis is finalizing details with a contract research organization that will conduct the trial. The company reached an agreement with the FDA through the special protocol assessment process on the design of the trial, which will seek to show at least a two-month increase in survival times over the control arm of 5-FU, Scangos said, and enrollment is planned to be "several hundred patients." The trial is planned to begin in the second quarter of 2004.
The company also is developing XL784, a cancer compound that began a Phase I study in healthy volunteers in June. Exelixis has several compounds in preclinical development, too.
The company has not made any financial projections for 2004, but Scangos said he is "pretty comfortable with our financial position" going into the new year. For the three months ended Sept. 30, the company posted a net loss of about $25 million; for the first nine months of the year, it lost $71.5 million. The company said it expected to have cash and cash equivalents of more than $205 million at the end of 2003.
The collaboration extension will help that bottom line, of course, but perhaps more important are the years ahead working with BMS. Like many biotech companies with big pharma partners, Exelixis touts the agreement as an honest, equal partnership, but in this case, it's true, Scangos said.
"Several people from both companies who have attended these collaboration meetings, they walk out and they say, We couldn't tell who works for which company,'" he said.
Exelixis stock (NASDAQ:EXEL) rose 23 cents Thursday to close at $6.67.