-- Genentech withdraws counterclaim --
-- Exelixis relieved of $18.7 million of disputed costs --
-- Genentech’s unilateral action does not otherwise resolve the
dispute --
SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--Jan. 9, 2017--
Exelixis, Inc. (Nasdaq:EXEL) announced today that Genentech, Inc. has
withdrawn its counterclaim against Exelixis in the ongoing JAMS
arbitration concerning alleged breaches of the parties’ collaboration
agreement. Genentech had asserted a counterclaim for breach of contract,
which sought monetary damages and interest related to cost allocations
under the collaboration agreement. When notifying the arbitral panel,
and Exelixis, of this unilateral action, Genentech further stated that
it is changing the manner in which it allocates promotional expenses of
the COTELLIC® (cobimetinib) plus Zelboraf®
(vemurafenib) combination therapy.
As a result of Genentech’s decision to change its cost allocation
approach, Exelixis is relieved of $18.7 million of disputed costs
previously charged by Genentech. Exelixis has invoiced Genentech an
additional $7.1 million with interest for expenses that Exelixis paid
previously.
Genentech’s revised allocation applies retrospectively and prospectively
and will substantially reduce Exelixis’ exposure to costs associated
with promotion of the COTELLIC + Zelboraf combination in the United
States. Exelixis and Genentech have shared promotional costs since
commercial activities were initiated in early 2013. As detailed in
previous regulatory filings, Exelixis charged its Profit and Loss
Statement approximately $38 million for promotional costs through the
third quarter of 2016. With the new approach that Genentech has adopted
unilaterally, Exelixis’ liability for promotional costs will be reduced
to approximately $15 million for the same period.
Other significant issues remain in dispute between the parties.
Genentech’s action does not address the claims in Exelixis’ Demand for
Arbitration related to Genentech’s clinical development, pricing and
promotional costs for COTELLIC in the United States, nor does it fully
resolve claims over revenue allocation. And, Genentech has not confirmed
how it intends to allocate promotional costs incurred with respect to
the collaboration’s promotion of other combination therapies that
include cobimetinib for other indications that are in development and
may be approved. Exelixis will continue to press its position before the
arbitral panel to obtain a just resolution of these claims and the
clarity it requires.
About the Dispute
On June 3, 2016, Exelixis filed a Demand for Arbitration before JAMS in
San Francisco, California asserting claims against Genentech related to
its clinical development, pricing and promotion of COTELLIC, and cost
and revenue allocations in connection with COTELLIC’s promotion in the
United States. The arbitration demand asserts that Genentech has
breached the parties’ contract by, amongst other breaches, failing to
meet its diligence and good faith obligations. The demand seeks various
forms of declaratory, monetary, and equitable relief, including without
limitation that the cost and revenue allocations for COTELLIC be shared
equitably consistent with the collaboration agreement’s terms, along
with attorneys’ fees and costs of the arbitration. Genentech had
asserted a counterclaim for breach of contract, which sought monetary
damages and interest related to the cost allocations under the
collaboration agreement.
About Exelixis
Exelixis, Inc. (Nasdaq: EXEL) is a biopharmaceutical company committed
to the discovery, development and promotion of new medicines with the
potential to improve care and outcomes for people with cancer. Since its
founding in 1994, three medicines discovered at Exelixis have progressed
through clinical development to receive regulatory approval. Currently,
Exelixis is focused on advancing cabozantinib, an inhibitor of multiple
tyrosine kinases including MET, AXL and VEGF receptors, which has shown
clinical anti-tumor activity in more than 20 forms of cancer and is the
subject of a broad clinical development program. Two separate
formulations of cabozantinib have received regulatory approval to treat
certain forms of kidney and thyroid cancer and are marketed for those
purposes as CABOMETYX™ tablets (U.S. and EU) and COMETRIQ®
capsules (U.S. and EU), respectively. Another Exelixis-discovered
compound, COTELLIC® (cobimetinib), a selective inhibitor of
MEK, has been approved in major territories including the United States
and European Union, and is being evaluated for further potential
indications by Roche and Genentech (a member of the Roche Group) under a
collaboration with Exelixis. For more information on Exelixis, please
visit www.exelixis.com
or follow @ExelixisInc on Twitter.
Forward-Looking Statements
This press release contains forward-looking statements, including,
without limitation, statements related to: Exelixis’ position that
Genentech’s revised allocation approach will substantially reduce
Exelixis’ exposure to costs associated with promotion of the COTELLIC +
Zelboraf combination in the United States; Exelixis’ plan to continue to
press its position before the arbitral panel to obtain a just resolution
of the issues remaining in dispute with Genentech; Exelixis’ commitment
to the discovery, development and promotion of new medicines with the
potential to improve care and outcomes for people with cancer; Exelixis’
focus on advancing cabozantinib; and the continued development of
cobimetinib. Words such as “will,” “may,” “committed,” “focused,”
“potential,” or other similar expressions identify forward-looking
statements, but the absence of these words does not necessarily mean
that a statement is not forward-looking. In addition, any statements
that refer to expectations, projections or other characterizations of
future events or circumstances are forward-looking statements. These
forward-looking statements are based upon Exelixis’ current plans,
assumptions, beliefs, expectations, estimates and projections.
Forward-looking statements involve risks and uncertainties. Actual
results and the timing of events could differ materially from those
anticipated in the forward-looking statements as a result of these risks
and uncertainties, which include, without limitation: that
Genentech/Roche may not account for promotional expenses in accordance
with Exelixis’ expectations; Exelixis’ dependence on its relationship
with Genentech/Roche with respect to cobimetinib and ability to maintain
its rights under the collaboration; risks related to the potential
failure of cabozantinib to demonstrate safety and efficacy in clinical
testing; market competition; changes in economic and business
conditions; and other factors discussed under the caption “Risk Factors”
in Exelixis’ quarterly report on Form 10-Q filed with the Securities and
Exchange Commission (SEC) on November 3, 2016, and in Exelixis’ future
filings with the SEC. The forward-looking statements made in this press
release speak only as of the date of this press
release. Exelixis expressly disclaims any duty, obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in
Exelixis’ expectations with regard thereto or any change in events,
conditions or circumstances on which any such statements are based.
Exelixis, the Exelixis logo, COMETRIQ and COTELLIC are registered
U.S. trademarks, and CABOMETYX is a U.S. trademark.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170109005547/en/
Source: Exelixis, Inc.
Exelixis, Inc.
Susan Hubbard, 650-837-8194
EVP, Public Affairs
and Investor Relations
shubbard@exelixis.com
or
For
Exelixis, Inc.
Hal Mackins, 415-994-0040
hal@torchcomllc.com