Firm in-licenses two anticancer agents from Exelixis that were given up by GSK earlier this year.

Bristol-Myers Squibb (BMS) agreed to pay Exelixis an upfront cash payment of $195 million for the development and commercialization rights covering two cancer drugs. Exelixis will receive an additional $45 million in 2009 as license fees.

In October, GlaxoSmithKline (GSK) terminated its relationship with Exelixis, thus forgoing rights to these two molecules. The deal with Exelixis gave GSK the option to chose two candidates, but the firm decided to stick with just one.

Now, BMS has decided to pick up what GSK left behind. Besides the $240 million payment, Exelixis could earn another $615 million in milestones payments, which could go up to a total of $910 million under certain circumstances.

While GSK’s decision to cancel the partnership pushed Exelixis’ shares down 11%, BMS’ interest has given the firm a 20% boost. The company is nonetheless trading around $4 a share, close to its all time low of $2.40.

Under this global collaboration, BMS gains rights to XL184 currently in Phase III development for medullary thyroid cancer and Phase I XL281 being tested in patients with advanced solid tumor malignancies.

BMS and Exelixis will codevelop XL184, sharing worldwide development costs. Exelixis anticipates that it will conduct a significant portion of clinical development activities through 2010. If the firm opts out of the codevelopment for XL184, it will 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.

If Exelixis continues to develop XL184, it will have the right to copromote the product in the U.S., with commercial profits being shared. BMS will also pay sales-performance milestones of up to $150 million and double-digit royalties on sales outside the U.S.

With regard to XL281, BMS will receive an exclusive, worldwide license to develop and commercialize the compound. It 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.

This marks the third partnership between BMS and Exelixis, exemplifying big pharma’s interest in biotech innovations to fuel their pipelines. The firms first inked a deal in December 2005 related to cardiovascular and metabolic diseases, which was then extended in September 2007.  The companies also entered an oncology collaboration in December 2006. Both agreements were for the discovery and development of new molecules.

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