Exelixis Gets a Compound Back

Includes: BMY, EXEL
by: Derek Lowe

Exelixis (NASDAQ:EXEL) has long been a bit of a puzzle to outside observers. The company has developed a number of clinical candidates in oncology (many of them kinase inhibitors, I believe). In fact, for a while there, they seemed to have developed more clinical candidates than a company that size should have been able to manage. It was a bit alarming to employees of larger companies in the area.

And figuring out what the structures of these things were wasn't so easy, either. I once had the unenviable assignment of trying to break down a stack of their patent applications to see if I could find the lead structure for one of their compounds, and after a week or so I had to concede. None of my usual tricks worked - untangling and charting out the synthetic pathways from the experimental section to see the common threads, looking for sudden upticks in the amounts of intermediates or final compounds being prepared, looking to see if some compounds had been more completely characterized than others, and so on. No, these folks had done a fine job of sweeping up after themselves, and over the years I've run into other people who came to the same conclusion.

The company has had a long relationship with Bristol-Myers Squibb (NYSE:BMY). There have been many twists and turns, but in 2008 the companies agreed to develop a compound called XL-139. (You won't quite be able to figure it out from that Exelixis page, but that announcement also marked the end of one of the broader agreements that the two companies had signed). Later that year came an announcement (also on that link above) about two more kinase inhibitors, XL-184 and XL-281, whose status hadn't been resolved earlier.

Now comes word that XL-184 has been returned to Exelixis. The press release, as press releases will, makes it seem as if the problem was that the compound was just too darn good:

"Given the recent progress of BMS' wholly-owned oncology pipeline and positive data generated by XL184, Exelixis and BMS were not able to align on the scope, breadth and pace of the ongoing clinical development of XL184."

They say that they're pleased to have the chance to develop the compound outside the meddling influence of BMS (well, not quite in those words naturally). But I'll bet they're not pleased to have to do it without BMS cash. Having the drug sent back makes you think that the larger company put it in the category of "Nothing we can't live without", although it's true that XL-184 is surely worth more to Exelixis. (Development of the other compound, XL-281, is apparently continuing.)

My guess is that kinase inhibitors of this sort just look a lot less attractive than they did a few years ago. Several of them have made it to market, and while they can be profitable, the field is getting crowded. Mind you, they're all different from each other, but sorting out what works in the clinic is a long process. None of them seem (so far) to do anything dramatic against the most common tumor types. (Here's a recent article on just that problem.) What Exelixis will make of XL-184 remains a mystery, probably to them just as much as to anyone else.