Restructuring results in reduction of Exelixis’ workforce by 40% and increases financial strength

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.

“The restructuring reflects our commitment to the strategic goals that we presented at our R&D Day in December 2009. We are focused on the aggressive development of our most advanced clinical compounds XL184, XL147 and XL765. Along with our investigators and partners, we remain enthusiastic about their potential as new anti-cancer agents and have retained the development expertise and capabilities to advance these compounds expeditiously. Additionally, we have scaled our fully integrated drug discovery and preclinical development organization to deliver one new IND per year. Our priority is to see ourselves through to the anticipated filing of our first NDA for XL184 in the second half of 2011,” said George A. Scangos, president and CEO of Exelixis, Inc. “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.”

In addition to XL184, XL147 and XL765, Exelixis will continue development of XL888, an orally available small molecule inhibitor of HSP90 currently in phase 1, XL139 and XL413, compounds co-developed with BMS, as well as its preclinical program focused on PI3K delta.