Exelixis Inc. says its partner Genentech has agreed to fund development of a cancer treatment candidate called XL518.
Genentech will pay Exelixis $3 million and will handle the costs of developing the drug after Exelixis determines the maximum tolerable dose. Genentech will also sell the drug if testing is successful and it reaches the market.
Shares of Exelixis rose 46 cents, or 8.4 percent, to close at $5.95.
XL518 is in early clinical testing, which determines the safety and side effects of a drug candidate. When Genentech starts midstage testing, it will pay an additional $7 million. Exelixis is also entitled to share in the drug's profits if it goes on sale.
The drug is designed to stop production of MEK, a substance that promotes tumor growth.
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