By Randall Osborne

West Coast Editor

Investors may be talking about a new ¿millennium¿ in more ways than one, with the whopper deal made by Exelixis Inc. with Bristol-Myers Squibb, a $200 million collaboration focused on tumor suppression pathways.

Under the terms of the deal, South San Francisco-based Exelixis will identify and validate molecular targets that kill cancer cells, and Bristol-Myers, of Princeton, N.J., will take up the validation work in humans.

BMS will pay $5 million up front, will buy 600,600 shares of Exelixis stock at $33.30 per share, and will pay $3 million per year for at least three years, with ¿multiple near-term milestones which add significantly to the financial terms of the relationship,¿ said George Scangos, president and CEO of Exelixis.

¿We will fill our target pipeline at the same time, since we¿re only giving BMS half the targets,¿ he added, during a conference call. ¿The targets go into a draft pool, and we select alternatively from the draft pool.¿

In an arrangement similar to those made by biotechnology and pharmaceutical powerhouse Millennium Pharmaceuticals Inc., of Cambridge, Mass., Exelixis will be ¿unimpeded in our ability to take our own targets forward ¿ in fact, our ability to do that is substantially enhanced, because we have expertise from BMS,¿ Scangos said. ¿And, we have a jump on our pipeline.¿

Exelixis gets an exclusive worldwide license to develop and commercialize a selected analogue of the Bristol-Myers anticancer compound, Rebeccamycin, which is in Phase I and Phase II trials by the National Cancer Institute. Bristol-Myers will help with Exelixis¿ further research on the drug.

Each firm has rights of first negotiation for cancer drugs resulting from targets validated in the deal that the companies opt to license out.

Analyst James Reddoch of Banc of America Securities in New York called the deal ¿the kind of Millennium-like partnership that should put Exelixis squarely on the map of biotech investors.¿

Reddoch told BioWorld Today the ¿burn-neutralizing, near-term revenue¿ for Exelixis, plus plenty of research and development activity, puts the company ¿on the same trajectory¿ as Millennium, which has been a company many would like to emulate.

¿[Exelixis] is carving out stuff for themselves,¿ he said. ¿They have 18 screens going on in cancer right now, and they¿re building more.¿

The $20 million stock investment is ¿at a 100 percent premium to where the stock is trading right now,¿ he noted, and getting the cancer compound from BMS will help.

¿Having a clinical compound allows you start thinking as if you¿re a clinical company,¿ he said. ¿It¿s a different mindset, a good exercise to go through, and they¿re a cancer-focused company. Although they don¿t even have a clinical development person on staff, there should be one there in the next few weeks,¿ Reddoch added.

Among Exelixis¿ genomics partners are Bayer AG, of Leverkusen, Germany; Pharmacia Corp., of Peapack, N.J.; Dow AgroSciences, of Indianapolis; and Protein Design Labs Inc., of Fremont, Calif., to which Exelixis recently delivered several antibody targets as part of their collaboration begun this spring. (See BioWorld Today, July 12, 2001, and May 24, 2001.)

Internal efforts continue, too. From more than 20 proprietary validated targets, Exelixis already has identified four leads, and Reddoch said he expects two drugs per year to enter the clinic starting in the second half of 2002.

With a pipeline and collaborators, Exelixis needs to ¿do a better job [than Millennium] of guiding the Street on when to expect drugs in the clinic,¿ he said.

Exelixis¿ stock (NASDAQ:EXEL) closed Wednesday at $18.57, up $1.88, or 11 percent.

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