With less than three weeks left in the year, Exelixis
The company had guided to have at least $200 million in the bank at the end of 2008, so it needed to make at least one more licensing deal for its plethora of unpartnered drugs. No problem; today it picked up $195 million in cash in a deal with Bristol-Myers Squibb
The deal doesn't come as a big surprise to me. Management tipped its hand a few weeks ago when it agreed to spend some of its cash to co-develop a drug with Bristol-Myers as part of an established partnership.
The new deal with Bristol-Myers involves Exelixis' phase 3 thyroid cancer drug XL184 -- the same drug that GlaxoSmithKline
Bristol-Myers also gets phase 1 cancer drug XL281 as part of the deal. The pharma giant will take over development of the drug and Exelixis could get milestone payments of up to $465 million as the drug progresses through the clinic and becomes a commercial success. Exelixis is also entitled to double-digit royalties on worldwide sales of XL281.
This deal puts the Motley Fool Rule Breakers pick in pretty good shape. Between the cash it received this year, the $45 million it'll get next year as part of this deal, and potential milestone payments from partners Glaxo, Wyeth
More Foolishness on drugmakers' need for cash:
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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. GlaxoSmithKline is a Motley Fool Income Investor selection. The Fool owns shares of Exelixis. The Fool's disclosure policy likes its marshmallows lightly toasted.