Media release from GlobalData

LONDON, UK (GlobalData), 14 August 2012  - On August 2, 2012, Exelixis, Inc. (EXEL) announced its second quarter financial results ending June 30, 2012. The company posted a 75.6% decrease in total revenue, from $32.2m in the second quarter of 2011 to $7.8m in Q2 2012. GlobalData ascribes this decrease to the transfer of all development activities regarding XL147 and XL765 to Sanofi in April 2011, and the termination of some of the company's collaborations with Sanofi and Bristol Myers-Squibb at the end of 2011. The company stopped the recognition of deferred revenue from these collaborations in Q2 2012 and consequently, revenue from licensing activities reduced by 82.2%, from $22.5m in Q2 2011 to $4.0m in Q2 2012. Exelixis currently has no marketed products and is therefore solely dependent on royalties and milestone payments from its collaboration agreements. GlobalData expects an increase in the company's revenue after alternative revenue sources such as drug sales are created.

The company's net loss increased by 42.5% year-on-year, from $21.0m in Q2 2011 to $36.5m in Q2 2012. GlobalData attributes this loss to a decrease in its revenues as earlier discussed. Exelixis' operating expenses decreased by 19.3%, from $50.2m in Q2 2011 to $40.5m in for the second quarter of 2012. GlobalData believes this reduction is due to the 24% decrease in the company's R&D year-on-year, from $42.9m in Q2 2011 to $32.6m in Q2 2012. This is primarily due to lower clinical expenses associated with the gradual wind down of EXAM, the company's Phase III pivotal study for cabozantinib (XL184), its lead developmental product for patients with medullary thyroid cancer (MTC).

The company's SG&A expenses decreased by 22.7% year-on-year, from $8.8m in Q2 2011 to $6.8 million in Q2 2012. This was primarily as a result of a reduction in facility and personnel costs. Apart from previous restructuring efforts in 2010 and March 2011, Exelixis implemented another round of restructuring in May of this year which resulted in 20 employees being laid off. Consequently, a restructuring charge of $1.2m was incurred by the company in Q2 2012. There has been an aggregate reduction in headcount of 422 employees between the first quarter of 2010 and the second quarter of this year. GlobalData believes these restructuring activities are intended to enable the company to focus its proprietary resources and efforts on the development and commercialization of cabozantinib.

On July 30, Exelixis announced the FDA's acceptance of its filing of a New Drug Application (NDA) for cabozantinib as a treatment for patients with progressive, unresectable, locally advanced, or metastatic MTC. The FDA also granted priority review (a status given to a pharmaceutical product that, if approved, would meet an unmet medical need for a serious and life-threatening condition) designation to the NDA for cabozantinib and set the Prescription Drug User Fee Act (PDUFA) action date at November 29, 2012 with the Oncologic Drugs Advisory Committee tentatively scheduled to meet on November 9 to discuss the NDA. The therapeutic role of cabozantinib is currently being investigated across several tumor types including breast, thyroid, prostate, renal, and melanoma, because it is a potent inhibitor of vascular endothelial growth factor receptor - 2 (VEGFR2) and two proto-oncogenes, MET and RET. Based on the level of clinical activity observed to date with cabozantinib, it is thought to have the ability to provide a broad spectrum of uses to the oncology landscape. GlobalData believes that cabozantinib holds the potential to serve as a significant revenue source for Exelixis in the short term based on the forecast that the thyroid cancer therapeutics market should show steep growth until 2017. However, the company lacks sufficient molecules in late stage development to guarantee revenue in the long term as its other compounds are still in preclinical and Phase I. Consequently, the company's financial situation could worsen if cabozantinib fails clinical trials for other indications currently being investigated.