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): August 6, 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 12. Results of Operations and Financial Condition.
On August 6, 2003, Exelixis, Inc. issued a press release announcing financial
results for the quarter ended June 30, 2003. A copy of such press release is
furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
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.
Use of Non-GAAP Financial Information
Exelixis provides certain net loss information in the press release to
illustrate the company's results from operations excluding discontinued
operations, gain on insurance settlement 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 and gain on
insurance settlement, 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.
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: August 6, 2003
Exelixis, Inc.
/s/ Kristine M. Ball
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Kristine M. Ball
Interim Chief Financial Officer
(Principal Financial and Accounting Officer)
EXHIBIT 99.1
News Release
Contact: Jane M. Green, Ph.D.
Vice President, Corporate Communications
Exelixis, Inc.
(650) 837-7579
jmgreen@exelixis.com
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EXELIXIS ANNOUNCES SECOND QUARTER
2003 FINANCIAL RESULTS
SOUTH SAN FRANCISCO, Calif. - August 6, 2003 - Exelixis, Inc. (Nasdaq: EXEL)
today reported financial results for the quarter ended June 30, 2003.
For the quarter ended June 30, 2003, the company reported a net loss of
approximately $23.4 million, or $0.39 per share, under generally accepted
accounting principles (GAAP), compared to a net loss of $23.9 million, or $0.43
per share, for the quarter ended June 30, 2002. Excluding discontinued
operations, non-cash charges for stock compensation, amortization of intangibles
and gain on insurance settlement, the company reported a non-GAAP net loss of
approximately $23.9 million, or $0.40 per share for the quarter ended June 30,
2003. For the quarter ended June 30, 2002, the comparable non-GAAP net loss was
approximately $22.1 million, or $0.39 per share. A reconciliation of GAAP net
loss to non-GAAP net loss is set forth at the end of this press release.
At June 30, 2003, cash, cash equivalents, short-term investments and restricted
cash totaled approximately $237.9 million compared to $222.0 million at December
31, 2002. The cash balance as of June 30, 2003 includes $66.4 million of net
proceeds from the Company's follow-on public offering completed June 25, 2003.
For the quarter ended June 30, 2003, total revenues were approximately $13.0
million, compared to $9.9 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).
Research and development expenses for the quarter ended June 30, 2003 were $32.5
million, including stock compensation expense of $0.2 million, compared to $29.3
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: initiating the
Phase 1 safety trial for XL784; advancing a new series of development
candidates, including XL647 and XL999, into preclinical testing in anticipation
of filing additional IND applications; manufacturing those compounds to support
preclinical studies; and expanding our development capabilities to support an
expanding clinical pipeline.
General and administrative expenses for the quarter ended June 30, 2003 were
$4.7 million, including a net reversal of previously recorded stock compensation
expense of approximately $27,000 due to employee terminations, compared to $4.9
million, including stock compensation of $0.3 million, for the equivalent period
of 2002.
"We delivered a strong company performance in the second quarter by meeting our
revenue expectations and managing our expenses while continuing to advance our
clinical programs. Overall this quarter, we believe that we made solid progress
toward meeting our clinical, strategic and financial objectives for the year,
and realizing our long-term goal of building a sustainable pharmaceutical
business," said George A. Scangos, Ph.D., president and chief executive officer.
Continued Dr. Scangos: "In terms of clinical progress, we initiated the Phase 1
safety trial for XL784 on schedule, and advanced our discussions with the FDA
concerning design of the Phase 3 trial for XL119. We anticipate finalizing the
development plan for XL119 in the fall, following which we will undertake
activities leading toward initiation of the registration trial. We also advanced
two promising anticancer compounds, XL647 and XL999, into preclinical
development and, assuming acceptable toxicology results, anticipate filing INDs
for these compounds."
Added Dr. Scangos: "A highlight of the quarter was our follow-on public offering
resulting in a strengthening of our balance sheet with an additional $75
million, including proceeds from our underwriters' exercise of the
over-allotment in July 2003. With these additional resources, we plan to
continue to advance key preclinical programs, expand our pipeline of clinical
compounds, advance our proprietary programs and, at the same time, meet
obligations to our corporate partners. We are appreciative of the additional
support we received in the offering from existing and new investors. We are
committed to managing our financial performance as conscientiously as we execute
on our clinical and strategic goals. We will continue to carefully review our
expenses with the goal of focusing investment in programs that directly advance
our business goals. We believe that cost-containment is an ongoing
responsibility and we intend to operate with equal emphasis on productivity,
high quality performance and fiscal responsibility."
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, other business combinations or organizational changes
that may be transacted after June 30, 2003.
With respect to financial expectations for the third quarter of 2003 compared to
the second quarter, we expect our revenues to remain relatively flat, largely
due to an increase in compound deliveries under our combinatorial chemistry
collaborations offset by the impact of the conclusion of our collaboration with
Protein Design Labs, Inc. in May 2003. We expect our operating expenses,
excluding non-cash charges, to increase by 5% or less as we expand efforts on
preclinical and clinical programs, offset by aggressive cost control measures.
With continued emphasis on cost containment we are confident that we can meet
our expense guidance for the year. With respect to cash burn for the year, we
believe that our goals to establish one or two new collaborations in 2003 are
achievable and, combined with our cost-containment initiatives, should enable us
to meet our cash burn guidance for the year. The timing for completing any
potential collaborations, and the recording of revenue ratably from them, will,
however, have an impact on our ability to meet our revenue targets 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
SmithKlineBeecham Corporation and Bristol-Myers Squibb Company. The company has
also established agricultural research collaborations with Bayer CropScience,
Dow AgroSciences and Renessen LLC. Other partners include Merck & Co., Inc.,
Schering-Plough Research Institute, Inc., Cytokinetics, Inc., Elan
Pharmaceuticals, Inc. and Scios Inc. 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 second quarter 2003 financial
results and outlook during a conference call beginning at 5:00 p.m. U.S. EDT
today, Wednesday, August 6, 2003. To participate in the conference call, log
onto www.exelixis.com and click on the webcast link under the heading "Investor
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Info" to access the live call. A copy of Exelixis' press releases, including
this release, can be found on the company's website at www.exelixis.com under
the heading "Press Room."
This press release contains forward-looking statements, including without
limitation the matters discussed in the "Outlook" section. Words such as
"believes," "anticipates," "plans," "expects," "will" and similar expressions
are intended to identify forward-looking statements. 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)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
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2003 2002 2003 2002
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Revenues:
Contract and government grants $ 9,877 $ 7,910 $ 19,079 $ 16,819
License 3,128 1,987 6,256 4,620
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Total revenues 13,005 9,897 25,335 21,439
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Operating expenses:
Research and development (1) 32,453 29,256 62,756 55,445
Selling, general and administrative (2) 4,701 4,890 9,869 9,567
Amortization of intangibles 167 167 333 333
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Total operating expenses 37,321 34,313 72,958 65,345
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Loss from operations (24,316) (24,416) (47,623) (43,906)
Other income (expense):
Interest income 1,042 1,916 2,268 4,020
Interest expense (914) (680) (1,832) (1,366)
Other income (expense), net 838 113 874 179
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Total other income (expense) 966 1,349 1,310 2,833
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Loss from continuing operations before income taxes (23,350) (23,067) (46,313) (41,073)
Provision for income taxes 92 - 187 -
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Loss from continuing operations (23,442) (23,067) (46,500) (41,073)
Loss from operations of discontinued segment - (837) - (1,251)
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Net loss $ (23,442) $ (23,904) $ (46,500) $(42,324)
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Loss per share from continuing operations $ (0.39) $ (0.41) $ (0.78) $ (0.73)
Loss per share from discontinued operations - (0.02) - (0.03)
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Net loss per share, basic and diluted $ (0.39) $ (0.43) $ (0.78) $ (0.76)
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Shares used in computing basic and
diluted loss per share amounts 60,141 56,152 59,701 55,903
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(1) Includes stock compensation expense of $160 and $503 in the quarters ended June 30, 2003 and 2002,
respectively, and $358 and $985 in the six-month periods ended June 30, 2003 and 2002, respectively.
(2) Includes stock compensation expense (net reversal) of ($27) and $316 in the quarters ended June 30, 2003
and 2002, respectively, and $219 and $652 in the six-month periods ended June 30, 2003 and 2002, respectively.
EXELIXIS, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS (1)
(in thousands, except per share amounts)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
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2003 2002 2003 2002
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GAAP net loss $ (23,442) $ (23,904) $ (46,500) $ (42,324)
Add:
Loss from operations of discontinued segment - 837 - 1,251
Non-cash charges for amortization of intangibles 167 167 333 333
Non-cash charges for stock compensation expense 133 819 577 1,637
Gain from insurance settlement
included in other income (773) - (773) -
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Non-GAAP net loss $ (23,915) $ (22,081) $ (46,363) $ (39,103)
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Non-GAAP net loss per share, basic and diluted $ (0.40) $ (0.39) $ (0.78) $ (0.70)
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Shares used in computing basic and diluted
Non-GAAP net loss per share 60,141 56,152 59,701 55,903
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(1) These non-GAAP amounts are intended to illustrate the company's results from
operations excluding discontinued operations, gain from insurance settlement 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)
June 30, December 31,
2003 2002 (2)
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(unaudited)
Cash, cash equivalents, short-term investments and restricted cash 237,934 221,987
Working capital 184,345 173,153
Total assets 359,230 339,113
Stockholders' equity 200,464 175,920
(2) Derived from the audited consolidated financial statements
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