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Jun 3, 2010

Exelixis to Raise $160M in Financing Deals with Silicon Valley Bank and Deerfield Management

  • Exelixis entered into two separate financing transactions with Silicon Valley Bank and Deerfield Management for an aggregate of $160 million in capital. The company expects to use the proceeds to repay the remaining obligations under its loan from GlaxoSmithKline and for development of its lead anticancer agent, XL184.

    In March Exelixis reported that it would be nixing approximately 40% of its staff, or 270 employees, to focus on its three most advanced cancer drug candidates: XL184, XL147, and XL765. “Our priority is to see ourselves through to the anticipated filing of our first NDA for XL184 in the second half of 2011,” George A. Scangos, president and CEO, said at the time of the restructuring.

    The transaction with Silicon Valley Bank is an extension of the company’s existing credit facility with the bank and provides for a new seven-year term loan in the amount of $80 million. The principal amount outstanding under the term loan will accrue interest at 1% per annum, payable monthly.

    The arrangement with Deerfield provides Exelixis with gross proceeds of an additional $80 million through the issuance of senior secured notes maturing in five years at a maximum principal amount of $124 million. The notes bear interest payments in the annual amount of $6 million, payable quarterly. Payments to Deerfield can be made in cash or in stock at Exelixis’ discretion and subject to certain limitations. “In aggregate, these transactions provide Exelixis with a significant amount of funding at an attractive cost of capital,” notes Frank Karbe, Exelixis’ evp and CFO.

    XL184 is a dual MET and VEGFR2 inhibitor and is currently being investigated in multiple indications. The molecule is in a global Phase III trial for medullary thyroid cancer, a broad development program in glioblastoma that includes Phase I trials and a Phase II trial in over 150 patients. Exelixis also plans to initiate a Phase III trial in second-line glioblastoma by the end of the year.

    In December 2008, Exelixis entered into a worldwide co-development collaboration with Bristol-Myers Squibb (BMS) for the development and commercialization of XL184 as well as XL281. The latter is a small molecule inhibitor of RAF kinase and is currently in Phase I for the treatment of patients with advanced solid tumors.

    BMS paid $195 million up front and agreed to additional license fee payments of $45 million. The companies are sharing worldwide development costs and will share commercial profits on XL184 in the U.S. Exelixis will be eligible to receive sales performance milestones of up to $150 million and double-digit royalties on sales outside the U.S. While Exelixis will conduct a significant portion of clinical development activities through this year, it may opt out of the co-development of XL184. If so, Exelixis would instead be eligible to receive development and regulatory milestones of up to $295 million, double-digit royalties on XL184 product sales worldwide, and sales performance milestones.

    Bristol-Myers Squibb will receive an exclusive, worldwide license to develop and commercialize XL281 and will be responsible for funding all future development. Exelixis is eligible for development and regulatory milestones of up to $315 million, sales performance milestones of up to $150 million, and double-digit royalties on worldwide sales of XL281.

    XL147 and XL765, the two other compounds identified by Exelixis as key to its growth earlier this year, are being developed with sanofi-aventis. The former is in Phase II development as a treatment for non-small-cell lung cancer (NSCLC). XL765 is in Phase II trials in NSCLC, glioblastoma, and solid tumors.


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