Bristol returns cancer drug XL184 to Exelixis

* Bristol to pay $17 million to end collaboration

* Exelixis moving forward with pivotal brain cancer trial

LOS ANGELES, June 20 (Reuters) - Bristol-Myers Squibb Co BMY.N will pay another $17 million to end its development collaboration for Exelixis Inc's EXEL.O experimental cancer drug XL184.

Exelixis said on Sunday it will continue to develop the drug, which is being studied as a treatment for thyroid cancer, glioblastoma and other solid tumors.

“We have the resources to take this forward for some time,” Exelixis Chief Executive George Scangos told Reuters, noting that the company may seek another partnership.

Under a deal signed in late 2008, Bristol-Myers had paid Exelixis $240 million for the rights to XL184 and another drug, called XL281 -- a $195 million upfront cash payment, plus additional license payments of $45 million in 2009.

Bristol’s decision to return the drug to Exelixis “really does reflect a need for both companies to prioritize their portfolios,” Scangos said. “We were unable to reach an agreement with BMS on what the appropriate clinical program would be.”

He said Exelixis plans to move forward later this year with a Phase 3 trial of the drug in patients with recurrent glioblastoma, the most common and deadly form of brain cancer.

The company first announced plans for the pivotal trial earlier this month, disappointing some investors who had speculated that the developers might be able to use results from an ongoing mid-stage trial for a regulatory filing.

Results from a Phase 3 trial of XL184 in patients with medullary thyroid cancer are expected in the first half of next year.

Scangos said Exelixis also expects to report at a November medical meeting in Berlin early-stage data on XL184 in patients with five other types of solid tumors.

XL184 is an oral drug designed to block the vascular endothelial growth factor, the same target as drugs like Roche Holding AG's ROG.VX Avastin, as well as MET and RET, two other drivers of tumor formation,

Scangos said Exelixis, which recently entered into two debt financing deals for a combined $160 million -- $80 million of which will be used to extend the maturity of an existing obligation -- will update investors on the company’s cash position when second-quarter results are reported.

The CEO said the “incremental cost” for the XL184 program is less than $20 million this year. (Editing by Marguerita Choy)