(By Mayur Pahilajani - iStockAnalyst Writer) New York, NY - Bristol-Myers Squibb Company (NYSE: BMY) has agreed to ink a deal with biotechnology company Exelixis Inc. (NASDAQ: EXEL) to jointly develop two experimental cancer drugs.
Under the terms of the collaboration, Bristol-Myers Squibb agreed to pay Exelixis an upfront cash payment of $195 million for the development and commercialization rights to both programs, the companies said in a joint statement released Friday.
The collaboration is likely to enhance the Bristol-Myers Squibb's product range. The partnership is also a sign of some stability in the sector as other industries are marred by the current financial crisis and eroding liquidity in the global markets.
The pharmaceutical companies are tapping into biotechnology sector as the firms want to introduce new products, boosting their revenues and earnings as the economy enters another weak year.
Industry trade group BIO told The Wall Street Journal -- first to report about the agreement between the two companies -- that 180, or 45 percent, of the 370 publicly traded biotechnology companies have less than one year of cash reserves on hand. The rest of the companies have little or no revenue to survive.
Bristol-Myers Squibb will also make additional license payments of $45 million to Exelixis in 2009, the statement said.
The collaboration covers two novel molecules for cancer with their associated development programs: a drug at its late stage human testing for medullary thyroid cancer known as XL184 and second one is in Phase I development for the treatment of patients with advanced solid tumor malignancies called XL281.
“XL184 and XL281 represent significant new opportunities to inhibit the progression of many different tumor types," Bristol-Myers research chief Dr. Elliott Sigal said in the statement.
He added, "This agreement represents the next pearl in our on-going String of Pearls initiative, designed to accelerate our company’s strategy to transform into a BioPharma leader by blending external scientific innovation with our own internal research and development expertise."
Under the agreement, Exelixis will have the option to co-promote XL184 in the United States, the companies said. The companies will share worldwide development costs and commercial profits on XL184 in the United States. Exelixis will be eligible to receive sales performance milestones of up to $150 million and double-digit royalties on sales outside the United States.
Bristol-Myers Squibb will receive an exclusive worldwide license to develop and commercialize XL281 and will be responsible for funding all future development. Exelixis is eligible for development and regulatory milestones of up to $315 million, sales performance milestones of up to $150 million and double-digit royalties on worldwide sales of XL281. the companies said.
Shares of South San Francisco, California-based Exelixis jumped by 77 cents or 20.64 percent to $4.50 in pre-market session on early Friday, following its closing down by 7 cents or 1.84 percent at $3.73 on Thursday. The stock of Princeton, New Jersey-based Bristol-Myers Squibb were trading down by 60 cents or 2.80 percent at $20.85 in pre-market trading on Firday, after closing higher by 14 cents or 0.66 percent to $21.45 yesterday.
Source: http://newsroom.bms.com/article_display.cfm?article_id=5420
