In the November 2005 issue of Motley Fool Rule Breakers, I recommended a small biotech company called Exelixis
Charly Travers: Today we have the pleasure of interviewing the management team from Exelixis, one of our Motley Fool Rule Breakers biotechnology recommendations and a company I'm really excited about. We have with us CEO George Scangos, CFO Frank Karba, and VP of Drug Discovery Mike Morrissey. To kick this off, George, can you tell us: What is Exelixis?
George Scangos: Sure. Exelixis is a biotech company now focused on the development of novel drugs for the treatment of cancer. We started out a number of years ago. We were founded in '95 as a genetics/genomics company working on model organisms.
In this time we built up a great deal of expertise in biology, understanding biochemical pathways and networks that are involved in the control of cell proliferation and differentiation. Over the years we have maintained that expertise, and we have layered on top of it a world-class drug discovery capability, as evidenced by the productivity of that group. Three INDs [investigational new drugs] last year, three INDs this year, and at least three INDs next year, and I think the exciting thing now is that with the publication of the data, or at least some of the data from the phase 1 trials, people now have their own way to evaluate the quality of those compounds.
The numbers you can't argue with. We have filed those INDs and the only thing people have had up until now to assess the quality is our word that these are good-quality compounds, and now that some of the data are public, people can see for themselves and I think that is what has resulted in some of the recent excitement about Exelixis.
We are a company now that I think can compete head-to-head, not only with all the other biotech companies but with the major pharma companies in terms of the quantity and quality of the compounds that we are moving forward, and we are still small enough and agile enough to be able to move those compounds forward quite rapidly.
So we are aiming to take our place among the major companies treating cancer.
Charly Travers: There are literally hundreds of biotech companies, both private and public, that are working on developing cancer drugs. It is a very popular area. Could you focus down on, say, one or two competitive advantages you have over everybody else? Also, why should investors be interested in your company?
George Scangos: Sure. I can start from the end. The proof is in the pudding. We have filed three INDs a year for the past several years. There are not hundreds of biotech companies who have done that -- in fact, you may not find any other biotech company that has done that. I think if you go to Genentech
In terms of quality of the compounds, how well characterized are they before they move into development? [There's a] huge difference between biotech companies. What one company moves into the clinic, another company would consider premature or inadequate in several respects. The compounds that we have moved forward meet a very stringent set of criteria that we think will eliminate a lot of the causes of clinical failure before they even get to the clinics, and what we move forward is of very high quality and we are starting to see that now with the data.
Execution. We have consistently met or exceeded every goal we have set for ourselves, certainly all the publicly stated goals or the goals that we have had with all of our collaborators, so I would say it is productivity, it's execution, and all of that doesn't come around by magic.
It comes around as a result of the people that we have. We are making the corporate commitment to work with critical mass and work aggressively. We can hire a level of people that is hard to attract to most biotech companies, not just in the senior management but throughout the organization, and so we have a track record, we have productivity, we have execution, we have great people, and the result of that is we probably have a pipeline now that is maybe the best pipeline in the history of biotech for a pre-commercial company.
I don't know of any other. I don't want to make that as a flat statement, but certainly I don't know of any other companies in a pre-commercial stage who have a pipeline of the quantity and the quality that we have at a pre-commercial stage, and [I don't know] very [many] biotechs at any stage who have a pipeline of this quality. And we have been moving forward extremely rapidly -- and that is why we think we are a very attractive company.
Charly Travers: OK, great. Let's talk about your drug XL880 a little bit. One thing I found interesting is that you have described the drug as having 10- to 100-fold more potency than Pfizer's
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Motley Fool Rule Breakers biotech analystCharly Traversowns shares of Exelixis. If you look at hisprofileyou can see that he thinks the greatest phrase ever uttered in the history of television is "more cowbell." Oh, and you can also see all the stocks he owns. Pfizer is a Motley Fool Inside Value recommendation, GlaxoSmithKline is a Motley Fool Income Investor recommendation, and Millennium is a Rule Breakers pick. The Fool's disclosure policy ishere.