Bristol-Myers Squibb Company

Cancer Alliance

In July 2001, Exelixis established a broad collaboration and licensing agreement with Bristol-Myers Squibb (BMS) to create a new generation of potential cancer drugs that selectively target cells that harbor defects in tumor suppressor gene pathways. Exelixis identifies and validates molecular targets in model systems, and BMS further validates these targets in human models. In December 2003, the collaboration was extended until January 2007, at which time BMS elected to continue the collaboration until July 2009. Each company has the option to obtain exclusive worldwide rights to equal numbers of validated targets arising from the collaboration. BMS has provided upfront payments and annual research funding. Exelixis is entitled to receive milestone payments on certain cancer targets that progress through specified stages of validation. Exelixis is also entitled to receive milestone payments in the event of successful clinical and regulatory events, and royalties on commercialized products.

Cardiovascular Disease Collaboration

In December 2005, Exelixis and BMS entered into a collaboration agreement to discover, develop and commercialize novel therapies targeted against LXR, a nuclear hormone receptor implicated in a variety of cardiovascular and metabolic disorders. Under the terms of the collaboration, which became effective in January 2006, the companies will jointly identify drug candidates that are ready for IND-enabling studies. BMS will undertake further preclinical development and will be responsible for clinical development, regulatory, manufacturing and sales/marketing activities for such compounds. Exelixis received an up-front payment of $17.5 million and approximately $10 million per year in R&D funding for an initial period of two years. In September 2007, the collaboration was extended at BMS’ request until January 2009. In connection with this extension, BMS will pay additional research funding of $7.5 million. Exelixis also may receive development and regulatory milestones totaling $140 million per product for up to two products from the collaboration, as well as sales milestones and royalties on sales of products commercialized under the collaboration. In December 2007, Exelixis received $5.0 million for achieving a development milestone.

Oncology Drug Development Collaboration

In December 2006, Exelixis and BMS entered into a worldwide collaboration to discover, develop and commercialize novel targeted therapies for the treatment of cancer. Under the collaboration, Exelixis will identify and conduct preclinical development of small molecule drug candidates directed against targets selected by Exelixis and BMS. From a pool of preclinical compounds, BMS will have the right to select up to three IND candidates from six future Exelixis compounds. Following selection of a compound, BMS will lead all global development and commercialization activities, although Exelixis has the right to opt-in to co-develop and co-commercialize the programs in the United States.

Under the terms of the agreement, BMS paid an upfront payment of $60 million in cash. Exelixis will also receive $20 million for each of up to the three different drug candidates selected by BMS at IND. If Exelixis opts-in, the companies will share equally profits and co-promotion responsibilities equally in the United States, and Exelixis will be responsible for 35% of worldwide development costs, with the remaining 65% being paid by BMS. Exelixis will also receive royalties on product sales outside of the United States. If Exelixis does not opt-in with respect to a selected compound, it will be entitled to receive milestones and royalties in lieu of a U.S. profit share.

In January 2008, BMS exercised its option to develop and commercialize Exelixis' compound XL139, which triggered a milestone payment of $20 million to Exelixis. In addition, Exelixis has exercised its option under the collaboration agreement to co-develop and co-commercialize XL139 in the United States.

XL184 and XL281 Global Collaboration

In December 2008 Bristol-Myers Squibb Company and Exelixis announced a global collaboration covering two novel molecules for cancer with their associated development programs: Exelixis' XL184, a small molecule inhibitor of MET, VEGFR2 and RET, which is currently in Phase III development for medullary thyroid cancer; and Exelixis' XL281, a small molecule inhibitor of RAF kinase, which is currently in Phase I development for the treatment of patients with advanced solid tumor malignancies. Under the terms of the collaboration, Bristol-Myers Squibb agreed to pay Exelixis an upfront cash payment of $195 million for the development and commercialization rights to both programs and to make additional license payments of $45 million in 2009.

The companies have agreed to co-develop XL184. Exelixis will have the option to co-promote XL184 in the United States. The companies will share worldwide development costs and commercial profits on XL184 in the United States. Exelixis will be eligible to receive sales performance milestones of up to $150 million and double-digit royalties on sales outside the United States. The clinical development of XL184 will be directed by a joint committee. It is anticipated that Exelixis will conduct a significant portion of clinical development activities through 2010. Exelixis may opt out of the co-development of XL184, in which case Exelixis would instead be eligible to receive development and regulatory milestones of up to $295 million, double-digit royalties on XL184 product sales worldwide, and sales performance milestones.

Bristol-Myers Squibb will receive an exclusive worldwide license to develop and commercialize XL281 and will be responsible for funding all future development. Exelixis is eligible for development and regulatory milestones of up to $315 million, sales performance milestones of up to $150 million and double-digit royalties on worldwide sales of XL281.