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Exelixis Restructures

Biotech: Cancer drug firm shifts resources to development and cuts 40% of jobs

by Rick Mullin
March 15, 2010 | A version of this story appeared in Volume 88, Issue 11

Credit: Exelixis
Discovery researchers will bear the brunt of cuts at Exelixis.
Credit: Exelixis
Discovery researchers will bear the brunt of cuts at Exelixis.

Exelixis, a chemistry-focused drug discovery and development firm, is restructuring to focus resources on developing its three late-stage anticancer compounds, XL184, XL147, and XL765.

Harsh even by biotech industry standards, the move will result in the elimination of 270 jobs, roughly 40% of Exelixis’ workforce. Most of the layoffs will be in discovery research. The firm, based in South San Francisco, says the cuts will help it reduce cumulative cash expenditures through 2011 by $90 million after a restructuring charge of $15 million in the first quarter of 2010.

Exelixis says it will also continue to develop other anticancer compounds, including XL888, a small-molecule inhibitor of Hsp90 and currently in Phase I clinical trials, and XL139 and XL413, compounds the firm is developing with Bristol-Myers Squibb. Exelixis is also developing its late-stage compound XL184 with BMS.

“Our priority is to see ourselves through to the anticipated filing of our first New Drug Application for XL184 in the second half of 2011,” CEO George A. Scagnos says.

Exelixis was criticized last year for its high-stakes partnership approach to drug development after partner GlaxoSmithKline chose to take only one of the compounds they were developing together at the end of a six-year collaboration (C&EN, Feb. 23, 2009, page 31). Exelixis had hoped GSK would also take XL184.

Edward A. Tenthoff, a stock analyst with Piper Jaffray, says Exelixis put off shifting resources to development longer than many of its peers, partly due to its success as a cancer drug discovery firm.

“Exelixis has been incredibly prolific and, frankly, cutting-edge over the last five-plus years in terms of new and emerging products,” Tenthoff says. He has high praise for XL880, the dual VEGF and Met protein inhibitor that GSK signed on for in 2008; XL184, a Met inhibitor; and a phosphoinositide-3 kinase inhibitor that Exelixis will continue to develop in a partnership formed last year with Sanofi-Aventis.

“The company has now partnered the majority of its assets,” Tenthoff says. Eventually, companies like Exelixis “need to grow up” and pursue development of promising compounds, he says.


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