Exelixis announced that Bristol-Myers Squibb (NYSE:BMY) has exercised its option to develop and commercialize Exelixis’ investigational new drug (IND) candidate XL413, a selective inhibitor of Cdc7.
XL413 is a small molecule inhibitor of the serine-threonine kinase Cdc7. The function of Cdc7 is required for DNA replication to proceed, and its activity is often unregulated in cancer cells. Studies suggest that Cdc7 plays a role in regulation of cell cycle checkpoint control and protects tumor cells from apoptotic cell death during replication stress.
Under the terms of the collaboration agreement between the two companies, which became effective in January 2007, the selection of XL413 by Bristol-Myers Squibb entitles Exelixis to a milestone payment of $20 million. In addition, Exelixis has exercised its option under the collaboration agreement to co-develop and co-commercialize XL413 in the United States. Following the transfer of the XL413 development program, which is expected to occur promptly, Bristol-Myers Squibb will lead all global activities. The parties will co-develop and co-commercialize XL413 in the United States and share those profits 50/50. Exelixis will be entitled to receive double-digit royalties on product sales outside of the United States.
XL413 is the second compound selected by Bristol-Myers Squibb in this collaboration. Previously, in January 2008, Bristol-Myers Squibb exercised its option to select XL139 (in phase 1 trials), an inhibitor of the hedgehog signaling pathway, for further development and commercialization.
This is a pretty innovative and so far, very lucrative deal for both Exelixis and BMS. When the original deal was signed (2001), Elexixis got $60M upfront and was responsible for all development up to IND, at which time, BMS could opt in and pay Exelixis another $20M per program. Even if you’re short on math skills, the $120M upfront for three preclinical programs would be a hard number not to calculate. BMS clearly values both the targets and Exelixis’ platform (by the way, so do Wyeth, Daiichi-Sankyo, GlaxoSmithKline and Genentech).
If you had to press me for a company poised to be a household name someday… the strange amalgam of Excel and Elixir(s) would be on the short list, even with $124M in debt on the balance sheet.