Press Release
Press Release
Exelixis Files Definitive Proxy Statement and Mails Letter to Shareholders
Urges Shareholders to Vote "FOR" All of Exelixis’ 11 Recommended Director Nominees on the GOLD Proxy Card
In conjunction with the definitive proxy filing,
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Executing a clear strategy to drive improved outcomes for patients, leading to long-term value creation:
Exelixis today is a commercially successful oncology company, with its flagship medicine CABOMETYX® (cabozantinib) now a leading therapy for three different forms of cancer and generating nearly$2 billion global net product revenue in the last year alone. The Company’s share price has increased over 300% since 2016 when CABOMETYX® received its firstU.S. approval.
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Underpinned by a disciplined approach to capital allocation: Exelixis’ capital plan strategically balances R&D spend with returning capital to shareholders. The Company’s capital efficient and highly-focused R&D strategy significantly offsets the inherent risk of oncology drug development. As a result of decades of experience in drug discovery and development, cost-sharing partnerships and selective, strategic investments,
Exelixis has spent significantly less in R&D expense in the last five years as compared to other commercial-scale, oncology-focused biotech companies, which have had to resort to raising dilutive funds. The Company’s recently announced$550 million share repurchase program, which is expected to be completed this year, is an exceedingly rare action for a biotech company of Exelixis’ size and stage and a testament to its commitment to delivering meaningful shareholder returns.
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Overseen by a highly qualified Board of Directors committed to refreshment: The Exelixis Board includes some of the industry’s best scientific, financial and commercial minds, who have a deep understanding of the biopharmaceutical industry. At the Annual Meeting, two of Exelixis’ long-tenured directors will not stand for re-election and the Board is recommending the election of
Tomas Heyman andBob Oliver , two new independent directors who were originally nominated byFarallon Capital Management, L.L.C. (“Farallon”) along with fellowExelixis shareholderCaligan Partners (together the “Activist Group"). The Board is actively identifying, evaluating and interviewing candidates with relevant skills and expertise and has committed to replace two directors, one in each of the next two years, with two new independent directors. Following the Annual Meeting, four of 11 Board members will have been elected in the last five years.
- Open to all shareholder input: Exelixis’ long history of engaging with Farallon demonstrates the Board’s willingness to engage with all shareholders. The Company has met with Farallon over 50 times since 2018, and most recently has embraced its proposals that the Board believed were in the best interests of all the Company’s shareholders.
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Working to avoid an unnecessary proxy contest despite Farallon’s highly unreasonable demands and insistence on an underqualified candidate: Despite the Board’s good faith efforts to reach a near-final settlement agreement, Farallon launched an unnecessary proxy contest, with unprecedented demands that would create dangerous liabilities for the Company, while jeopardizing the Company’s progress to deliver long-term value creation. The Activist Group’s candidate,
David Johnson , does not understand the Company’s business, lacks key qualifications and would not be additive to the Exelixis Board.
Exelixis’ definitive proxy materials can be found on the Company’s website at https://ir.exelixis.com.
The full text of the letter being mailed to shareholders follows:
Dear Fellow Shareholder,
Your Exelixis Board of Directors and management team have been executing a clear and successful strategy to discover, develop and commercialize the next generation of anti-cancer medicines, while creating sustainable shareholder value. Our flagship medicine, cabozantinib, is now a leading cancer therapy sold in 68 countries worldwide – generating nearly
At the upcoming Annual Meeting of Stockholders (the “Annual Meeting”), you will have a critical decision to make regarding the future of your investment in
- Exelixis’ strategy is driving improved outcomes for patients, leading to long-term value for shareholders.
- Exelixis’ success is underpinned by a disciplined capital plan that strikes the right balance between strategic R&D investment and returning capital to shareholders.
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Exelixis’ Board is exceptionally qualified, with some of the industry’s best scientific, financial and commercial minds and specialized expertise in disciplines that are priority areas for the business. The Board is committed to ongoing refreshment and, as a first step, has nominated two of the Activist Group’s nominees –
Tomas Heyman andRobert Oliver – to replace two of our existing directors at the 2023 Annual Meeting and has committed to replace two directors, one in each of the next two years, with two new independent directors.
- Exelixis’ track record of shareholder engagement proves we are open to shareholder input, and we have acted upon it.
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Exelixis has a long history of constructive engagement with Farallon and embraced the vast majority of its proposals in a good faith effort to reach a settlement – this proxy contest is unnecessary and risks jeopardizing Exelixis’ mission, the progress we have made and our long-term shareholder value trajectory.
EXELIXIS’ NOMINEES REFLECT A THOUGHTFUL REFRESHMENT PROCESS AND ARE WELL-EQUIPPED TO HELP DRIVE GREATER VALUE FOR ALL SHAREHOLDERS, WHILE AVOIDING AN UNNECESSARY PROXY CONTEST. THE ACTIVIST GROUP HAS A DIFFERENT AGENDA.
In addition to Exelixis’ 11 recommended director nominees, you will see one other nominee listed on the proxy card –
Despite our good faith efforts, Farallon abruptly abandoned settlement discussions. Still, we continue to believe that Messrs. Heyman and Oliver would be strong directors and, therefore, are recommending them for election in line with our Board’s commitment to acting in our shareholders’ best interests. As we look to add these two new directors at the Annual Meeting, we have announced that two incumbent directors –
In direct opposition to Exelixis’ attempts to seek compromise, the
It is imperative that the Company stay on the right course by executing on our commercial and R&D strategy with a balanced capital plan. This is why we strongly urge you to vote “FOR” Exelixis’ 11 recommended director nominees on the enclosed GOLD universal proxy card:
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EXECUTING A CLEAR STRATEGY, DELIVERING PROGRESS ACROSS THE PORTFOLIO AND GENERATING STRONG FINANCIAL RESULTS
We have grown
- Is a leading therapy for three different forms of cancer and a standard of care in renal cell carcinoma (RCC);
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Has delivered strong product revenue growth of 89% since 2020, generating nearly
$2 billion in global net product revenues in the last year alone; and - Clearly demonstrates the ability of our integrated discovery and development platform to advance meaningful therapies for patients.
Exelixis’ robust innovation and discovery pipeline is fueling our strong momentum as we move through 2023. We are focused on:
- Advancing our wholly-owned assets: zanzalintinib, a next-generation tyrosine kinase inhibitor currently in phase 3 development that builds on our extensive experience with cabozantinib, and XB002, a next-generation, differentiated tissue factor targeting antibody-drug conjugate, expected to reach full development by year-end 2023;
- Building a sustainable and differentiated biotherapeutics and small molecule pipeline focused on key oncology pathways in solid tumors through targeted investment in internal discovery programs; and
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Leveraging business development collaborations to complement in-house discovery, with a disciplined approach to identifying opportunities that enhance the
Exelixis pipeline, including two value-creating option deals that require limited capital and provide access to promising clinical-stage assets.
The
PURSUING STRATEGIC R&D INVESTMENTS WHILE RETURNING
Underpinning the execution of our strategy is a disciplined capital plan that strikes the right balance between strategic R&D investment and returning capital to shareholders. Since 2015, we have demonstrated financial discipline relying exclusively on net revenues to invest in growing our business without the need for dilutive financings. When we effectively invest in innovation, the pipeline and our platforms, we maximize our opportunities to achieve meaningful clinical success and maximize long-term value creation. In fact, the Company has incurred significantly less in R&D expense in the last five years as compared to other commercial-scale, oncology-focused biotech companies with similar net product revenues, some of which have had to resort to the capital markets to raise dilutive funds1.
Our capital-efficient and rigorous R&D strategy significantly offsets the inherent risk of oncology drug development, which has a historically high failure rate:
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Collaboration: We have leveraged global oncology partners, including
Bristol Myers Squibb , Roche, Ipsen and Takeda, to advance a broad phase 3 development strategy for CABOMETYX while sharing the majority of costs, totaling over$450 million or approximately 60% of development costs since 2017. This approach has resulted in significant label extensions and an approximate doubling of revenues for cabozantinib since 2020. Furthermore, we have supplemented our in-house research efforts with capital-efficient business development, including by leveraging option structures and backend-loaded economics, as evidenced by XB002 and XL102, which we in-licensed in 2020, and pay-for-success option deals with Cybrexa Therapeutics and Sairopa.
- Success-Driven: The majority of our R&D spend is focused on our two wholly-owned lead investigational therapeutics, zanzalintinib and XB002. These product candidates are based on clinical proof of concept from cabozantinib and Tivdak®, respectively, which significantly diminishes their risk to our portfolio. Having focused our strategy in solid tumors, we will be able to leverage the successful commercial infrastructure we have built for CABOMETYX to commercialize next-generation zanzalintinib and XB002, resulting in an efficient multi-product salesforce.
- Rigorous: Our development portfolio beyond cabozantinib is also strategically focused, and we are currently sponsoring only six clinical trials to generate proof-of-concept data efficiently, as well as pursuing indications where we see clear opportunities both clinically and commercially.
- Disciplined: We have always deployed a disciplined capital allocation plan that ensures we make the right investments at the right time without burning hard-earned capital and adding undue risk to the Company. Our strong balance sheet allows us to opportunistically deploy capital to high-yield assets.
Supported by a balance sheet with approximately
YOUR BOARD IS HIGHLY QUALIFIED, ENGAGED AND FOCUSED ON CONTINUED REFRESHMENT
The Exelixis Board includes some of the industry’s best scientific, financial and commercial minds. Our Board members have a deep understanding of the biotech industry with highly-specialized expertise in R&D, commercial operations, licensing partnerships and strategic and financial planning – priority areas for our company. Collectively, our diverse Board has experience at many of the leading medical institutions, including
We are refreshing our Board, and are confident that, if elected, the nominees that we support in the upcoming election, including Messrs. Heyman and Oliver who were originally nominated by the
The Board is actively identifying, evaluating and interviewing additional highly qualified candidates with relevant experience as part of the Board’s continued refreshment program. We have also committed to replace two directors, one in each of the next two years, with two new independent directors.
We believe
In contrast, the Activist Group’s candidate,
- No significant operational scientific or biotech expertise, including overseeing biotech R&D and product pipeline management
- No relevant experience in oncology R&D or commercialization
- No clear ability to properly opine on the technical merits of the Company’s ongoing discovery and R&D programs
- No scientific training
- No experience managing clinical trials or established relationships with clinical investigators
- No Board experience at biotech companies focused on oncology
- No experience in any executive leadership positions at life science companies
EXELIXIS HAS A LONG HISTORY OF ENGAGING WITH FARALLON AND HAS EMBRACED MANY OF ITS GROUP’S PROPOSALS – THIS CONTEST IS UNNECESSARY
Since 2018, we have discussed at length with Farallon the Company’s strategic plan, R&D plans and results, recent data presentations, competitive developments, our shareholder return framework and corporate governance.
Rather, Farallon has continually demanded that
Our track record of shareholder engagement proves that we are open to our shareholders’ input, resulting in:
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Authorization of a significant return of capital to shareholders in the form of a
$550 million share repurchase plan; and -
Recommendation of two of the Activist Group’s nominees for election, alongside the announcement that two incumbent
Exelixis directors will retire as part of our ongoing Board refreshment program.
As our most recent actions illustrate, the Exelixis Board is committed to acting in the best interests of shareholders and does not want to engage in an unnecessary proxy contest. We have embraced the vast majority of Farallon and the Activist Group’s requests:
- Immediately interviewed all five candidates Farallon initially proposed, conducting at least thirteen separate interviews;
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Proposed that Dr.
Thomas Roberts Jr ., a Partner at Farallon, himself join the Board, which Farallon declined; - Agreed to appoint, and subsequently nominated, two of the Activist Group’s nominees to serve on the Board;
- Agreed to form a Capital Allocation Committee and to appoint two of the Activist Group’s nominees to serve on this committee;
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Agreed to appoint one of the Activist Group’s nominees to the
Nominating and Corporate Governance Committee and one to theResearch and Development Committee ; - Agreed to consider in good faith hosting an R&D and strategy day for investors;
- Agreed to invite Farallon to present to the full Board;
- Agreed that the Chairman of the Board would not trade the Company’s securities for a period of 24 months in a show of good faith; and
- Agreed to share confidential and non-public, proprietary information pertaining to Exelixis’ R&D strategy through a customary limited-duration non-disclosure agreement.
Unfortunately, beyond this extensive list of requests – and after we reached a near-final settlement agreement in
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Open-ended access to any information regarding
Exelixis – including full access to all Board and Committee books and all other Company information relating to R&D and capital allocation matters – without providing the Company reasonable control over the information to be disclosed; -
A requirement that if desired (and with only two business days’ notice), the Company’s Chief Executive Officer would meet with Farallon on a weekly basis – every week of the year through
October 1, 2023 – to discuss the Company’s non-public information related to R&D policies and practices. At Farallon’s option, certain other Company executives could have been substituted for the Chief Executive Officer at these meetings; -
The ability to share, without restriction, competitively sensitive information regarding Exelixis’ R&D processes, including all of its clinical studies and results, following a two-year period, which would be competitively damaging to
Exelixis ; and -
A requirement that the Company publicize all material non‐public information shared with Farallon prior to
January 1, 2024 .
In light of these facts, shareholders should ask themselves: if Farallon is committed to an amicable resolution and value creation, why did they abandon our discussions and good faith settlement attempts to launch a proxy fight that risks jeopardizing the Company’s progress at the expense of all shareholders?
Do not be misled by the Activist Group’s recasting of their interactions with the Company. The Board remains committed to acting in the best interests of all shareholders, not just one.
Exelixis’ proposed Board slate is uniquely equipped to guide the Company’s strategy with the expertise necessary to successfully advance Exelixis’ vision and drive enhanced shareholder value. We urge you to vote “FOR” the 11 director nominees recommended by the Company on the GOLD universal proxy card.
Thank you for your support.
Sincerely,
The Exelixis Board of Directors
YOUR VOTE IS IMPORTANT—PLEASE USE THE GOLD PROXY CARD TODAY! |
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Simply follow the easy instructions on the enclosed GOLD proxy card to vote by internet or by signing, dating and returning the GOLD proxy card in the postage-paid envelope provided. If you received this letter by email, you may also vote by pressing the “VOTE NOW” button in the accompanying email. |
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Please do not vote using any white proxy card you may receive from Farallon. |
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If you have questions about how to vote your shares, please call the firm assisting us with the solicitation of proxies, |
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1 (877) 750-0666 (toll-free from the |
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+1 (412) 232-3651 (from other locations) |
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If you hold your shares in more than one account, you will receive separate notifications. Please be sure to vote ALL your accounts using the GOLD proxy card relating to each account. |
About
Exelixis Forward-Looking Statements
This document contains forward-looking statements. Any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements and 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 the factors affecting
Important Stockholder Information
The Company, its Directors and certain of its executive officers may be deemed to be participants in connection with the solicitation of proxies from the Company’s shareholders in connection with the matters to be considered at the 2023 Annual Meeting. Information regarding the ownership of the Company’s Directors and executive officers in the definitive proxy statement for its 2023 Annual Meeting, filed with the
1 Peers include: BeiGene, Incyte and Seagen.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230501005641/en/
Investor Contacts
Chief Financial Officer
650-837-7240
csenner@exelixis.com
EVP, Public Affairs & Investor Relations
650-837-8194
shubbard@exelixis.com
Media Contacts
212-355-4449
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