Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Exelixis and Glaxo Begin Their Goodbyes

Not all relationships last for eternity. Last week, Exelixis (Nasdaq: EXEL  ) and GlaxoSmithKline announced that they will be winding down part of their mutually beneficial six-year collaboration, with an end date set for October.

Exelixis and Glaxo have been partners since 2002 in developing targeted drugs relating to small-molecule oncology and inflammatory disease. As part of this long-standing partnership, Exelixis used its specialized drug discovery and other preclinical-stage development skills to sniff out drug candidates to bring into human clinical trials. After that, Glaxo got to cherry-pick up to three compounds and take over development, after initial phase 2 proof-of-concept efficacy testing was concluded.

Glaxo can still pick and develop one more compound from the remaining basket of five that are still part of the partnership agreement. Its first opportunity will come with potential thyroid-cancer treatment XL184 in the fall.

The relationship between the drugmakers won't completely end, though. The two will continue to share their custody rights to the Exelixis oncology compound XL880, which Glaxo has already chosen to continue developing, and potentially to one future drug that Glaxo may choose.

Exelixis has similar discovery and development partnership deals in place with drugmakers such as Bristol-Myers Squibb (NYSE: BMY  ) and Genentech (NYSE: DNA  ) . Other drug-discovery specialists, including fellow Rule Breakers pick Array BioPharma (Nasdaq: ARRY  ) and Pharmacopeia (Nasdaq: PCOP  ) , also have been able to make similar deals, because sometimes it can be easier for a large drugmaker to outsource its discovery-stage drug-development work to companies like these.

Had Glaxo chosen to extend its Exelixis collaboration past the end date, it would have been able to cherry-pick a potential third compound from Exelixis, and the latter would have presumably received another dollop of cash for its early stage drug-development work. That's the downside to last week's announcement, although it means that Exelixis retains the rights to develop another drug -- assuming it has the cash to do so.

Exelixis and Array are active picks of our Rule Breakers newsletter service. You can check out all of our other recommendations as well as get access to our message boards and exclusive content with a 30-day free trial.

GlaxoSmithKline is an active Income Investor pick.

 Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has an A-plus disclosure policy.

Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 676755, ~/Articles/ArticleHandler.aspx, 10/22/2016 12:11:01 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 14 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
EXEL $11.56 Down -0.18 -1.53%
Exelixis CAPS Rating: ****
ARRY $6.42 Down -0.16 -2.43%
Array BioPharma CAPS Rating: **
BMY $50.02 Down -0.34 -0.68%
Bristol-Myers Squi… CAPS Rating: ****
DNA $94.97 Down +0.00 +0.00%
Genentech CAPS Rating: ****
PCOP $1.74 Down +0.00 +0.00%