Exelixis first-quarter revenues increase to $42.2 million

Exelixis, Inc. (Nasdaq:EXEL) today reported financial results for the first quarter ended March 31, 2010.

Revenues for the quarter ended March 31, 2010 were $42.2 million, compared to $25.3 million for the comparable period in 2009. The increase is primarily due to revenue from our XL147, XL765 and discovery PI3K collaborations with sanofi-aventis, as well as increased revenue from our collaboration with Genentech on XL518 relating to a $7.0 million milestone payment in the quarter. These increases are partially offset by a reduction in revenues related to our 2007 cancer collaboration with Bristol-Myers Squibb Company and the completion of revenue recognition under our LXR collaboration, also with Bristol-Myers Squibb Company.

Research and development expenses for the quarter ended March 31, 2010 were $64.8 million compared to $55.3 million for the comparable period in 2009. The increase from 2009 to 2010 primarily reflects the increase in development expenses for XL184 and XL147, offset by a decrease in personnel costs relating primarily to our restructuring activities.

General and administrative expenses were $8.8 million for the quarter ended March 31, 2010 and in line when compared to $8.5 million for the comparable period in 2009.

Collaboration cost-sharing expenses for the quarter ended March 31, 2010 were $0 compared to ($1.8) million for the comparable period in 2009. These amounts reflect the net impact of reimbursement due to Exelixis under the agreement with Bristol-Myers Squibb Company for XL281, offset by expenses incurred by Bristol-Myers Squibb Company on XL184. For 2010, we expect to end the year in a net receivable position that will be recognized as revenue and therefore the Q1 2010 payable of $2.1 million is reflected as a revenue line item. In 2009, however, we ended the year in a net payable position and therefore reflected the net amounts as collaboration cost sharing, an operating expense line item.

Restructuring expenses for the quarter were $16.1 million, of which approximately $12.2 million related to one-time termination benefits to employees, and the remainder was for various asset impairment and facility non-cash charges. We expect to incur additional restructuring charges, as described in our Form 8-K filed with the Securities and Exchange Commission on May 5, 2010.

Other income (expense) for the quarter ended March 31, 2010 was $4.2 million compared to ($1.6) million for the comparable period in 2009. The difference is primarily related to an additional $4.5 million gain associated with a payment received in 2010 in connection with our 2007 divestiture of our Plant Trait Business to Agrigenetics, Inc. The difference is also related to decreased interest expense due to a lower principal balance under our loan with GlaxoSmithKline and the termination of the Deerfield credit facility in November 2009.

Net loss attributable to Exelixis, Inc. for the quarter ended March 31, 2010 was $43.2 million, or $0.40 per share, compared to $36.2 million, or $0.34 per share, for the comparable period in 2009. The increase in net loss attributable to Exelixis, Inc. from 2009 to 2010 was primarily due to the restructuring charge described above.

Cash and cash equivalents, marketable securities, long-term investments and restricted cash and investments totaled $168.5 million at March 31, 2010, compared to $221.0 million at December 31, 2009.

Q1 2010 Highlights and Recent Developments:

• Implemented a strategic restructuring of our operations to reduce unfunded operating expenses while maintaining a balanced R&D organization with a world-class discovery and preclinical development platform.
• Focused our pipeline investments on our late-stage compounds, XL184, XL147 and XL765, and on select earlier-stage opportunities.
• Commenced a phase 1b/2 trial for XL147 in breast cancer and a phase 2 trial for XL147 in endometrial cancer.
• Announced the acceptance of 12 abstracts at the 2010 American Society of Clinical Oncology Annual Meeting, to be held in June 2010.

"We're very encouraged by the data emerging from our late-stage clinical compounds, XL184, XL147 and XL765. They each have demonstrated important signs of clinical activity and are currently in broad development programs in indications where we think they can have the greatest impact for patients and maximize their commercial potential. We look forward to presenting a substantive body of data on these compounds at ASCO in June," said George A. Scangos, Ph.D., president and chief executive officer of Exelixis. "Additionally, the combination of a reduced expense base going forward, the prospect of increased revenues from our partners, and the anticipated conclusion of one or more business development transactions this year puts us in a solid financial position. Again, we are looking forward to the 12 presentations on Exelixis compounds at ASCO, which we hope will clarify, among other things, the potential of XL184 in medullary thyroid cancer, glioblastoma, and several additional tumor types."