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Exelixis Says Glaxo Deal Raises Profile for Role of Genomics in Drug Discovery

SAN FRANCISCO, Oct. 29 - The GlaxoSmithKline alliance with Exelixis announced Monday validates the use of genomics in drug discovery and could lead to similar deals, said Exelixis Chief Scientific Officer Geoffrey Duyk.


While Duyk said the two companies will learn from each other's different approaches--Glaxo might offer validation models to test drug candidate compounds developed by Exelixis, for example--he said no technology transfers would take place.


"There are obligations on both sides to keep proprietary" certain technologies, including data and technologies that are part of alliances each company has with other organizations, said Duyk. However, he did not discount the possibility that Glaxo would be open to similar deals with other companies.


"We're always in discussion with companies," he said. "The hardest thing is to have a first relationship."


By providing "external validation" for Exelixis' genomics-oriented approach to drug discovery, Glaxo smoothed the way for other deals, said Duyk.


"In this market, this deal is significant," he said. "It's a reaffirmation of the output of the human-genome project. A company like ourselves was founded on using data from the human genome project and linking it to drug discovery. GlaxoSmithKline is leveraging that knowledge."


As part of the deal announced Monday, GlaxoSmithKline made an upfront payment of $30 million and acquired two million newly issued shares of Exelixis stock at $7 apiece. The stock purchase gives Glaxo an approximately 3.5 percent stake in the company, said an Exelixis spokesperson. It does not give Glaxo a seat on the board.


Additional payments will be made to Exelixis during the first six years of the alliance, according to the companies, including at least $90 million in funding, and milestone payments linked to the number of small-molecule compounds delivered to Glaxo and the speed at which they are delivered, said Duyk. These payments could range from $250 million to $350 million. Additionally, Glaxo will make available a loan facility to Exelixis of up to $85 million.

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