Click here for an updated version of this story.
NEW YORK, Oct. 28 - GlaxoSmithKline today said it will acquire a stake in Exelixis and collaborate with the company to develop drugs for a variety of diseases.
Glaxo will make an upfront payment of $30 million to Exelixis and acquire 2 million newly issued shares of the company's stock at $7 apiece--nearly twice what the stock is worth today. Exelixis also has the option to sell Glaxo additional shares at a specified time in the future, the firms said.
During the first six years of their agreement, Glaxo will provide Exelixis with at least $90 million in funding as well as milestone payments based on the number of small-molecule compounds that reach certain development stages, the companies said.
Based on continued successful development of the compounds--which would cover vascular biology, inflammatory diseases, and oncology--Exelixis stands to pocket between $220 million and $350 million from the deal, the companies said. Glaxo will make available a loan facility to Exelixis of up to $85 million.
In two years Glaxo and Exelixis may elect to expand the alliance, which means that Exelixis' milestone payments could double in size, and the development funding and loan facility would also be increased.
"Having made the critical strategic decision three years ago to build Exelixis from a genomics platform company into a mature drug discovery and development company, this collaboration is a landmark achievement for our company," Exelixis CEO George Scangos said in a statement.