Exelixis Cashes In on Discovery
Exelixis has long used business development as a strategic tool, both to acquire key capacities that have helped it build an extensive early-stage product pipeline and to creatively fund that upstream activity. Now, the biotech is beginning to convert some of that early pipeline into the cash and clinical expertise it will need to fund and run in-house product development.
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An extraordinary series of high-value IND-stage deals could help to solve what has always been the intractable problem for biotechs: how to fund late-stage product development and simultaneously re-fill the early-stage pipeline. Still, it will be the rare biotech that can pull off this strategy--which requires INDs in the hottest areas of pharmaceutical development.
Productivity in biotech is a better problem to have than its opposite-but paying the higher-than-expected development costs makes it still a problem. Thanks to a variety of new project financing sources, and a particularly clever approach to amending its alliance with GlaxoSmithKline, Exelixis is fact trying to turn research productivity into a source of non-dilutive capital.
This genomics-based company has used business development as a strategic tool, swapping for key capacities that have helped it quickly leap forward. As the company demonstrated the merits of its model-organism platform, it began asking partners not for the most money they would give--but for assets that would help it forward integrate. One deal that started small expanded into a life-changing technology swap: from BMS, Exelixis got combinatorial chemistry capacity that it can now use to make compounds against its own targets. It also got a Phase II drug candidate for cancer, and rights to half of the molecules it makes for BMS, and Exelixis has used its new chemistry capacity to sign other barter-driven deals. Rapid evolution has risks: unless Exelixis accesses other fairly mature drug candidates, there will be a gap between launch of its first product and other compounds that haven't been tried yet in humans.