Exelixis, Inc. (Nasdaq:EXEL) today announced a restructuring as a consequence of its continued strategy to focus resources on the development of its key late-stage compounds. As its first priority, the company will aggressively advance XL184, XL147 and XL765, each of which is the subject of a large clinical development program. Additionally, Exelixis retains a fully integrated R&D organization, and will continue to advance new compounds into development, although the number will be reduced for the foreseeable future. Exelixis has retained the ability to meet all of its obligations to existing partners. Further, as a result of its retained R&D capabilities and its numerous unpartnered clinical and preclinical compounds, the company expects that its ongoing and future business development discussions will be unaffected.
“We are convinced that the restructuring is the right step for the company and positions us well to move into the future. However, it is extremely difficult to release many people who have contributed substantially to the company over the years and who are our friends and colleagues.”
The restructuring announced today results in a reduction of Exelixis’ workforce by approximately 40%, or 270 employees. This restructuring increases the company’s financial strength and positions the company for longer-term sustainable growth. As a result of the restructuring, the company estimates that its cumulative cash expenditures through 2011 will by reduced by approximately $90 million after payment of restructuring costs. The savings are primarily related to reductions in compensation and benefits, laboratory supplies and clinical trial costs. The company expects to record a restructuring charge of approximately $15 million in the first quarter of 2010, which may increase later in the year, depending on potential facility-related charges and other write downs that have not yet been finalized.