UPDATE 1-Exelixis licenses two drug programs to Bristol

Mon Oct 11, 2010 12:50pm EDT

* Bristol to pay $60 million upfront for two deals

* Exelixis exits development of XL-139

* Bristol waives rights to third cancer candidate

* Exelixis shares rise 3.3 percent (Adds CEO comment, share price)

By Deena Beasley

LOS ANGELES, Oct 11 (Reuters) - Exelixis Inc (EXEL.O) has licensed two more experimental drug programs to Bristol-Myers Squibb Co (BMY.N) for $60 million upfront, and potential milestone payments of up to $505 million, sending shares of the biotech company up more than 3 percent.

The deals -- for programs in diabetes and inflammation -- bring to five the number of collaborations between the companies, Exelixis Chief Executive Michael Morrissey told Reuters in a telephone interview.

Bristol-Myers in June dropped out of a partnership to develop the smaller company's experimental cancer drug XL184.

As part of the latest deal, the companies said they made "minor amendments" to their XL281 and liver X receptor agreements.

In addition, Exelixis has opted to drop out of further co-development of experimental cancer drug XL139 and will receive an accelerated milestone payment.

Under the latest deal, Bristol-Myers will be responsible for research, development, manufacturing and commercialization of a small-molecule drug program that targets TGR5, a bile acid receptor, with potential for treatment for diabetes.

Under the other part of the deal, the companies will collaborate on ROR antagonist programs -- with potential in inflammatory disorders -- up to a preclinical transition point after which Bristol-Myers would have sole responsibility for further work and potential commercialization.

Exelixis said it is granting rights to the ROR program in exchange for Bristol-Myers waiving rights to receive a third investigational new drug candidate under the companies' 2006 oncology development agreement.

Morrissey, who became CEO at Exelixis in July, said the $60 million upfront payment was included in the company's previous estimate for cash holdings of $250 million at the end of 2010.

The CEO said the company expects to report initial results from a pivotal trial of XL184 in patients with thyroid cancer in the first half of next year.

In November, at a meeting of the European Organisation for Research and Treatment of Cancer, Exelixis will present full results from a mid-stage trial of the drug in several different types of tumors.

Exelixis' shares were up 14 cents at $4.37 on Nasdaq. (Reporting by Deena Beasley. Editing by Carol Bishopric and Robert MacMillan)