Genentech

Cancer Collaboration

In June of 2005, Exelixis entered into a partnership with Genentech for the discovery and development of therapeutics to target cancer, inflammatory diseases, and tissue growth and repair. Under the collaboration, Genentech will primarily focus on generating antibodies to proteins provided by Exelixis, and the companies will jointly assess their utility in a variety of cancer, inflammation and tissue repair models. Under the terms of the collaboration, Genentech will pay Exelixis an upfront payment and provide R&D funding over three years, totaling $16 million. For therapeutics developed in cancer, Exelixis will receive milestone and royalty payments. Exelixis maintains an option to share a portion of the costs and profits associated with the development, manufacturing and commercialization of products in either the tissue growth and repair field or the inflammation field.

MEK Collaboration

In January 2007, Exelixis announced an agreement with Genentech focused on the development of XL518, a small-molecule inhibitor of MEK. MEK, also known as mitogen activated protein kinase (MAPK), is a key component of the RAS/RAF/MEK/ERK pathway, which is frequently activated in human tumors.

Exelixis received upfront and milestone payments totaling $40 million upon signing of the agreement and with the submission of the IND for XL518 to the FDA. Exelixis is responsible for developing XL518 or other MEK inhibitors through the end of phase 1 and if Genentech exercises its option to further develop XL518, Genentech will be responsible for further development, including all further development costs. Exelixis initiated a phase 1 clinical trial of XL518 in the first quarter of 2007, and enrollment is ongoing. In March 2008, Genentech exercised its option to further develop and commercialize XL518. Selection of the compound and opt-in by Genentech triggered a $3.0 million payment to Exelixis. Another $7.0 million is due when a phase 2 program is initiated by Genentech. Exelixis has the option to co-promote in the United States and will be entitled to receive an initial equal share in profits in the United States, which will decrease as sales increase. Exelixis will receive royalties on any sales of the product that may be commercialized outside the United States. Exelixis will continue to be responsible for the phase 1 clinical trial until the point that a maximum tolerated dose (MTD) is determined. After MTD is achieved, Genentech will be responsible for completing the phase 1 clinical trial and subsequent clinical development.