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On Comeback Trail, Exelixis Reels In $200M Deal For Cancer Drug

Xconomy San Francisco — 

Cancer drug developer Exelixis continued its comeback, announcing Monday a deal with Ipsen that will pay the South San Francisco, CA-based biotech $200 million upfront.

Ipsen, of Paris, will receive rights to the Exelixis drug cabozantinib (Cometriq) around the world except in the U.S., Canada, and Japan. Ipsen will also pay Exelixis $60 million if cabozantinib is approved by European regulators for advanced renal cell carcinoma, a type of kidney cancer, and $50 million if approved in Europe for advanced hepatocellular carcinoma, or liver cancer.

In after-hours trading, Exelixis (NASDAQ: EXEL) shares are up 12 percent to $4.09.

The high-profile failure of cabozantinib in a big prostate cancer trial in 2014 sent Exelixis reeling. It laid off 160 people, or 70 percent of the company, and retrenched around cabozantinib in liver and kidney cancers. In recent months, positive late stage data in kidney cancer led Exelixis to file for regulatory approval in the U.S. and Europe, with decisions due this summer. Exelixis has also hired staff in anticipation of a commercial launch.

Exelixis has also gotten a boost from another drug, cobimetinib (Cotellic). The company originally developed cobimetinib, but the drug is now in the hands of Roche, thanks to a partnership Exelixis signed several years ago with Genentech, which Roche now fully owns. Roche gained approval of cobimetinib in the U.S. and Europe last November to sell the drug in combination with another one of its products, vemurafinib (Zelboraf), for a certain type of advanced melanoma, an aggressive, deadly skin cancer.

Roche and Exelixis will share profits 50-50 in the U.S., but once sales go past $200 million in a year, the split ratchets down to 70-30. At the start of each new year, the split resets to 50-50. Roche is paying Exelixis a few percentage points of its European sales.

Cabozantinib is already approved as a treatment for medullary thyroid cancer, but revenues have been minimal, with less than $10 million booked in the fourth quarter of 2015. In its year-end financial report released today, Exelixis estimated 2016 operating expenses to come in between $240 million and $270 million.

In addition to the $200 million immediate payout and the $110 million in potential regulatory milestones, Ipsen could pay Exelixis up to $545 million in commercial milestones plus royalties up to 26 percent of Ipsen’s sales.

Handshake photo courtesy of jeanbaptisteparis via a Creative Commons license.