GlaxoSmithKline

In October 2002, Exelixis and GlaxoSmithKline (GSK) established a broad alliance to discover, develop and commercialize novel therapeutics in the areas of vascular biology, inflammatory disease and oncology. Under the agreement, Exelixis will deliver to GSK a number of small molecule compounds that have met agreed upon proof-of-concept criteria, and GSK will have the option to select up to three of these compounds for further development and worldwide commercialization and manufacturing.

In January of 2005, the GSK agreement was amended so that Exelixis will continue to work on 12 programs (XL647, XL999, XL784, XL880, XL820, XL844, XL184, XL281, XL418, XL228 and two earlier stage programs). GSK has the right to select from these 12 programs up to three compounds at proof-of-concept. Exelixis retains rights to all collaboration compounds not selected by GSK and may work on any collaboration targets with the exception of 32 targets subject to GSK's exclusivity. Under the amended agreement, GSK may pay selection milestones, additional development-related milestones and substantial royalties on product sales. The amount of selection milestones will depend on the number of compounds selected, the timing of the selection of the compounds and, for those submissions made after the end of the original development term in October 2008, whether GSK extended the development term. Exelixis has retained certain co-promotion rights for these compounds in North America.

In July 2007, GSK declined to exercise its option to license XL647 for further development and commercialization. As a result, Exelixis retains the right to develop and commercialize XL647 either independently or in collaboration with third parties, subject to payment to GSK of a 3% royalty on sales of any products incorporating the compound. The company intends to move forward aggressively with the full development of this promising compound in patients with non-small cell lung cancer and potentially other indications as well.

In August 2007, GSK requested to initiate its review of XL880 before the compound reached proof-of-concept in phase 2 trials. Exelixis agreed to this request and submitted the data report to GSK in September 2007. In December 2007 GSK exercised its development option for XL880. Transfer of the development program for XL880 (GSK089) was completed in March 2008.

Following completion of the phase 2 trial of XL784 in patients with proteinuria associated with diabetic nephropathy, Exelixis submitted a data report to GSK in October 2007. Although the phase 2 trial did not meet its primary endpoint of reducing proteinuria compared with placebo in patients with proteinuria associated with diabetic nephropathy, Exelixis is continuing to analyze the data to assess whether further evaluation of the compound is warranted. In January 2008, GSK declined to exercise its option to license XL784 for further development and commercialization. As a result of GSK's decision, Exelixis has the right to develop and commercialize XL784 either independently or in collaboration with third parties, subject to payment to GSK of a 3% royalty on sales of any products incorporating the compound.

In June 2008, Exelixis and GSK agreed to successfully conclude their six-year discovery and development collaboration on October 27, 2008, as scheduled. Under the terms of the collaboration, GSK has the right to select up to two of the compounds in the collaboration for further development and commercialization. GSK previously selected XL880 and will be able to choose one additional compound from among XL184, XL281, XL228, XL820, and XL844. Exelixis will have the right to develop and commercialize compounds not selected by GSK, either alone or in collaboration with partners. As a result of the conclusion of the collaboration, Exelixis’ exclusivity obligations will be limited to the compounds selected by GSK. Exelixis will have the right to perform additional discovery, development, and commercialization efforts against any collaboration target or compound that does not infringe upon the intellectual property associated with compounds selected by GSK for further development and commercialization

In December 2007 Exelixis discontinued the development programs for XL999 and XL418. Exelixis is actively pursuing clinical development of XL184, XL820, XL844, XL281 and XL228.