UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 7, 2003
EXELIXIS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-30235 04-3257395
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(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Incorporation) Identification No.)
170 Harbor Way
P.O. Box 511
South San Francisco, California 94083
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(Address of principal executive offices, and including zip code)
(650) 837-7000
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(Registrant's telephone number, including area code)
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Item 9. Regulation FD Disclosure
The information in this section is being furnished to, but not filed with, the
Securities and Exchange Commission solely under Item 12 of Form 8-K, "Results of
Operations and Financial Condition," pursuant to interim procedures promulgated
by the Commission in Release No. 33-8216 issued March 27, 2003.
On May 7, 2003, Exelixis, Inc. issued a press release announcing financial
results for the quarter ended March 31, 2003. A copy of such press release is
furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
Exelixis provides certain net loss information in the press release to
illustrate the company's results from operations excluding discontinued
operations and certain non-cash charges, including (a) stock-based compensation
expense and (b) amortization of purchased intangibles related to business
combinations. Exelixis' management believes that the presentation of these
non-GAAP results is a useful measure of the company's results from continuing
operations, excluding the non-cash charges, which, in management's view, are not
necessarily reflective of, or directly attributable to, operations. These
non-GAAP results are not in accordance with, or an alternative for, generally
accepted accounting principles and may be different from non-GAAP measures used
by other companies.
The information in this report, including the exhibit hereto, shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liabilities of that section or
Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The
information contained herein and in the accompanying exhibit shall not be
incorporated by reference into any filing with the U.S. Securities and Exchange
Commission made by Exelixis, whether made before or after the date hereof,
regardless of any general incorporation language in such filing.
The information furnished in this report, including the exhibit hereto, shall
not be deemed to constitute an admission that such information or exhibit is
required to be furnished by Regulation FD or that the information or exhibit in
this report contains material information that is not otherwise publicly
available.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 7, 2003
Exelixis, Inc.
/s/ Glen Y. Sato
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Glen Y. Sato
Senior Vice President, Chief Financial Officer and
General Counsel
(Principal Financial and Accounting Officer)
Index to Exhibits
99.1 Press release entitled "Exelixis Announces First Quarter 2003 Financial
Results," dated May 7, 2003.
EXHIBIT 99.1
News Release
Contact: Glen Y. Sato
Chief Financial Officer
Exelixis, Inc.
(650) 837-7565
gsato@exelixis.com
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EXELIXIS ANNOUNCES FIRST QUARTER
2003 FINANCIAL RESULTS
SOUTH SAN FRANCISCO, Calif. - May 7, 2003 - Exelixis, Inc. (Nasdaq: EXEL) today
reported financial results for the quarter ended March 31, 2003.
For the quarter ended March 31, 2003, the company reported a net loss of
approximately $23.1 million, or $0.39 per share, under generally accepted
accounting principles (GAAP), compared to a net loss of $18.4 million, or $0.33
per share, for the quarter ended March 31, 2002. For the quarter ended March 31,
2003, the company reported a non-GAAP net loss of approximately $22.4 million,
or $0.38 per share, excluding discontinued operations and non-cash charges for
stock compensation and amortization of intangibles. For the quarter ended March
31, 2002, the comparable non-GAAP net loss was approximately $17.0 million, or
$0.31 per share. A reconciliation of GAAP net loss to non-GAAP net loss is set
forth at the end of this press release.
At March 31, 2003, cash, cash equivalents, short-term investments and restricted
cash totaled approximately $203.9 million compared to $222.0 million at December
31, 2002.
For the quarter ended March 31, 2003, total revenues were approximately $12.3
million, compared to $11.5 million for the same period of 2002. The increase
from 2002 to 2003 was driven primarily by revenue from our October 2002
corporate collaboration with SmithKlineBeecham Corporation (GlaxoSmithKline)
partially offset by the reduction in revenue from the conclusion of our
Pharmacia relationship in February 2002.
Research and development expenses for the quarter ended March 31, 2003 were
$30.3 million, including stock compensation expense of $0.2 million, compared to
$26.2 million, including stock compensation $0.5 million, for the equivalent
period of 2002. The increase in the quarter from the 2002 levels was driven
primarily by an increase in personnel costs and activities related to advancing
our clinical and preclinical development programs. These activities included:
completing regulatory toxicology testing of XL784 and successfully filing the
IND application at the end of the quarter; advancing a new series of development
candidates and back-up compounds into preclinical testing in anticipation of
filing additional IND applications; manufacturing of those compounds to support
preclinical studies; building additional infrastructure in clinical development
to support an expanding clinical pipeline; and completion of the manufacturing
of XL119, our rebeccamycin analogue, to support initiation of registration
trials later in 2003.
General and administrative expenses for the quarter ended March 31, 2003 were
$5.2 million, including stock compensation expense of $0.2 million, compared to
$4.7 million, including stock compensation of $0.3 million, for the equivalent
period of 2002.
"We delivered a strong and productive quarter with respect to our financial and
research and development goals," said George A. Scangos, PhD., president and
chief executive officer. "The highlight of the quarter was the successful filing
of our company's first IND application for a proprietary compound, XL784. We
believe that this was an important step in our maturation and evolution into a
product-focused company. We believe that XL784 will be the first of many
promising compounds to emerge from our gene-to-drug discovery platform that
advance into the clinic, enabling us to fuel our pipeline growth and fulfill our
obligations to our partners as well as our internal development goals. We
currently have an active IND application, and we plan to initiate Phase 1
first-in-man studies in healthy volunteers in the second quarter of 2003."
Continued Dr. Scangos: "During the quarter, we also made significant progress in
planning the registration program for XL119, our rebeccamycin analogue, as a
potential treatment for hepatobiliary tumors. We remain on track to initiate
registration trials later this year, pending conclusion of discussions with the
FDA concerning trial design. We believe we continued to perform well in all
other operational areas of the company, and all of our corporate alliances are
also on track. In short, we believe we are making good progress toward meeting
our development, strategic and financial management goals for the year."
Outlook
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The following statements are based on current expectations. These statements are
forward-looking, and actual results may differ materially. Except as expressly
set forth below, these statements do not include the potential impact of any
mergers, acquisitions or other business combinations that may be closed or
entered into after March 31, 2003.
With respect to financial expectations for the second quarter of 2003 compared
to the first quarter, we expect our revenues to increase in the range of 3 to
8%. We expect our operating expenses, excluding non-cash charges, to increase by
6 to 11% as we continue to focus our efforts on preclinical and clinical
activities including: initiating Phase 1 safety trials for XL784; advancing
development candidates through preclinical testing with the goal of filing
additional INDs; advancing XL119, our rebeccamycin analogue, into registration
trials; and as we continue to support our existing collaborations.
The split-out of our German subsidiary, Artemis Pharmaceuticals GmbH, continues
to progress and we expect to complete a transaction in the second quarter.
Approximately $1.0 million of expenses originally expected to be incurred in the
first quarter of 2003 related to the split-out of Artemis activities, is
expected to be incurred in the second quarter due to the timing of efforts to
finalize the split-out. In addition to these activities, we will continue to
review our worldwide operating expenses throughout the remainder of the year
considering both our research and development goals and meeting our cash burn
objectives for the year.
Exelixis, Inc. (Nasdaq: EXEL) is a leading genomics-based drug discovery company
dedicated to the discovery and development of novel therapeutics. The company is
leveraging its fully integrated gene-to-drug platform to fuel the growth of its
proprietary drug pipeline. Exelixis has established broad corporate alliances
with major pharmaceutical and biotechnology companies, including
GlaxoSmithKline, Bristol-Myers Squibb, and Protein Design Labs. The company has
also established agricultural research collaborations with Bayer CropScience,
Dow Agrosciences and Renessen. Other partners include Merck, Schering-Plough
Research Institute, Cytokinetics, Elan and Scios. For more information, please
visit the company's web site at www.exelixis.com.
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Exelixis' management will discuss the company's first quarter 2003 financial
results and outlook during a conference call beginning at 5:00 p.m. U.S. EDT
today, Wednesday, May 7, 2003. To participate in the conference call, log onto
www.exelixis.com/ir and click on the webcast link to access the live call. A
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copy of Exelixis' press releases, including this release, can be found on the
company's website at www.exelixis.com under the heading "News".
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This press release contains forward-looking statements, including without
limitation the matters discussed in the "Recent Developments" and "Outlook"
sections. These forward-looking statements are based upon Exelixis' current
expectations. Forward-looking statements involve risks and uncertainties.
Exelixis' actual results and the timing of events could differ materially from
those anticipated in such forward-looking statements as a result of many
factors, including Exelixis' ability to enter into new collaborations, continue
existing collaborations, and receive milestones and royalties derived from
future products developed from its research efforts under collaborative
agreements; the rate of growth, if any, in license and contract revenues; the
timing and level of expenses associated with the growth of proprietary programs
and the GlaxoSmithKline collaboration; the ability to successfully identify and
develop compounds against proprietary targets and advance compounds against
those targets into clinical development; the amount and timing of investments in
manufacturing and clinical development of its rebeccamycin analogue, XL119,
currently in Phase 2 clinical studies; the timing of entry , if ever, of XL 119
into a registration clinical program; and the timing of entry of patients into
Phase 1 clinical studies and the commercial potential for its initial
proprietary small molecule compound, XL784. These and other risk factors are
discussed under "Risk Factors" and elsewhere in Exelixis' Annual Report on Form
10-K for the year ended December 31, 2002 and other SEC reports. Exelixis
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained herein to
reflect any change in its expectations with regard thereto or any change in
events, conditions or circumstances on which any such statements are based.
Exelixis and the Exelixis logo are registered U.S. trademarks.
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EXELIXIS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended March 31,
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2003 2002
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(unaudited)
Revenues:
Contract and government grants $ 9,202 $ 8,909
License 3,128 2,633
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Total revenues 12,330 11,542
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Operating expenses:
Research and development (a) 30,303 26,190
General and administrative (b) 5,168 4,676
Amortization of intangibles 166 166
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Total operating expenses 35,637 31,032
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Loss from operations (23,307) (19,490)
Other income (expense):
Interest income and other, net 1,261 2,187
Interest expense (917) (704)
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Total other income 344 1,483
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Loss from continuing operations before income taxes (22,963) (18,007)
Provision for income taxes (95) -
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Loss from continuing operations (23,058) (18,007)
Loss from operations of discontinued segment - Genomica Corporation - (414)
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Net loss $ (23,058) $(18,421)
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Loss per share from continuing operations $ (0.39) $ (0.32)
Loss per share from discontinued operations - (0.01)
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Net loss per share, basic and diluted $ (0.39) $ (0.33)
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Shares used in computing basic and diluted net loss per share 59,261 55,654
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(a) Includes stock compensation expense of $198,000 and $482,000 for the three
months ended March 31, 2003 and 2002, respectively.
(b) Includes stock compensation expense of $246,000 and $336,000 for the three
months ended March 31, 2003 and 2002, respectively.
EXELIXIS, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS (1)
(in thousands, except per share amounts)
Three Months Ended March 31,
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2003 2002
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(unaudited)
GAAP net loss $ (23,058) $ (18,421)
Add:
Loss from operations of discontinued segment Genomica corporation - 414
Non-cash charges for amortization of intangibles 166 166
Non-cash charges for stock compensation expense 444 818
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Non-GAAP net loss $ (22,448) $ (17,023)
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Non-GAAP net loss per share, basic and diluted $ (0.38) $ (0.31)
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Shares used in computing basic and diluted
Non-GAAP net loss per share 59,261 55,654
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(1) These non-GAAP amounts are intended to illustrate the company's results from
operations excluding discontinued operations and certain non-cash charges,
including (a) stock-based compensation expense and (b) amortization of purchased
intangibles related to business combinations. Management of the company believes
the non-GAAP results are a useful measure of the company's results from
continuing operations, excluding the non-cash charges, which, in management's
view, are not necessarily reflective of or directly attributable to operations.
These non-GAAP results are not in accordance with, or an alternative for,
generally accepted accounting principles and may be different from non-GAAP
measures used by other companies.
EXELIXIS, INC.
CONSOLIDATED BALANCE SHEET DATA
(in thousands)
March 31, December 31,
2003 2002 (2)
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(unaudited)
Cash, cash equivalents, short-term investments $ 203,870 $ 221,987
and restricted cash
Working capital 148,042 173,153
Total assets 320,829 339,113
Stockholders' equity 155,536 175,920
(2) Derived from the audited consolidated financial statements
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