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): February 17, 2004
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 February 17, 2004, Exelixis, Inc. issued a press release announcing financial
results for the quarter and year ended December 31, 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, restructuring charges 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 restructuring charges, non-cash charges and gain on insurance settlement,
which, in management's view, are not necessarily reflective of, or directly
attributable to, operations. Exelixis provides certain cash burn information in
the press release, which Exelixis' management believes is useful to illustrate
the company's use of cash, cash equivalents, short-term investments and
restricted cash during the period for operating activities and other recurring
items directly related to operations, such as capital expenditures. These
non-GAAP measures 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: February 17, 2004
Exelixis, Inc.
/s/ Frank Karbe
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Frank Karbe
Chief Financial Officer
(Principal Financial and Accounting Officer)
EXELIXIS ANNOUNCES FOURTH QUARTER AND
YEAR-END 2003 FINANCIAL RESULTS
SOUTH SAN FRANCISCO, Calif. - February 17, 2004 - Exelixis, Inc. (Nasdaq: EXEL)
today reported financial results for the quarter and year ended December 31,
2003.
For the quarter ended December 31, 2003, the company reported a net loss of
approximately $23.3 million, or $0.33 per share, under generally accepted
accounting principles (GAAP), compared to a net loss of $20.9 million, or $0.36
per share, for the quarter ended December 31, 2002. Excluding restructuring
expense and non-cash charges for stock compensation and amortization of
intangibles, the company reported a non-GAAP net loss of approximately $22.6
million, or $0.32 per share, for the quarter ended December 31, 2003. For the
quarter ended December 31, 2002, the comparable non-GAAP net loss was
approximately $19.8 million, or $0.34 per share. A reconciliation of GAAP net
loss to non-GAAP net loss is set forth at the end of this press release.
For the year ended December 31, 2003, the company reported a GAAP net loss of
approximately $94.8 million, or $1.45 per share, compared to a net loss of $86.1
million, or $1.52 per share, for the year ended December 31, 2002. Excluding
restructuring expense, gain from insurance settlement, loss from discontinued
operations and non-cash charges for stock compensation and amortization of
intangibles, the company reported a non-GAAP net loss of approximately $93.0
million, or $1.42 per share, for the year ended December 31, 2003. For the year
ended December 31, 2002, the comparable non-GAAP net loss was approximately
$81.0 million, or $1.43 per share. A reconciliation of GAAP net loss to non-GAAP
net loss is set forth at the end of this press release.
Our cash burn for 2003 was $86.4 million. Cash burn is the sum of the net cash
used in operating activities; plus purchases of property and equipment, net of
proceeds from bank obligations; plus principal payments on capital lease
obligations, notes payable and bank obligations as derived from our consolidated
statements of cash flows prepared in accordance with GAAP. A calculation of cash
burn is set forth at the end of this press release. At December 31, 2003, cash,
cash equivalents, short-term investments and restricted cash totaled
approximately $241.9 million, compared to $222.0 million at December 31, 2002.
For the quarter and year ended December 31, 2003, total revenues were
approximately $13.8 million and $51.5 million, respectively, compared to $12.5
million and $44.3 million, respectively, for the same periods of 2002. The
increases in 2003 compared to 2002 were driven primarily by revenue from our
corporate collaboration with SmithKlineBeecham Corporation (GlaxoSmithKline) and
from compound deliveries under our chemistry collaborations with Cytokinetics,
Elan Pharmaceuticals, Merck, Scios and Schering Plough Research Institute,
partially offset by the successful conclusion of our collaboration with Protein
Design Labs in May 2003.
Research and development expenses for the quarter and year ended December 31,
2003 were $32.6 million and $127.6 million, respectively, compared to $27.7
million and $112.0 million, respectively, for the equivalent periods of 2002.
The increases in 2003 from the 2002 levels were driven primarily by the
expansion of our drug discovery and development operations and activities
associated with advancing our clinical and pre-clinical development programs.
General and administrative expenses for the quarter and year ended December 31,
2003 were $4.2 million and $18.6 million, respectively, compared to $4.8 million
and $18.8 million, respectively, for the comparable periods in 2002.
"Exelixis delivered a strong performance in 2003 by achieving our clinical and
strategic goals and maintaining a high level of fiscal responsibility and
operational efficiency," said George A. Scangos, Ph.D., president and chief
executive officer. "Throughout our organization, we believe that we are
operating at high levels of efficiency, innovation and quality. In 2003, our
research and development efforts were highly productive, resulting in the
advancement of multiple compounds toward the clinic. We anticipate that we will
be able to file at least two investigational new drug (IND) applications per
year beginning in 2004. We are generating an expanding pipeline of what we
believe are innovative and exciting compounds that have the potential to be
important new therapeutics in cancer and other serious diseases. We anticipate
that 2004 will be an important and highly productive year for our company as we
progress toward our goals of delivering new medicines to patients in need and of
building a sustainable biotechnology company."
Exelixis' 2003 accomplishments include the following:
- Phase 2 clinical trials of XL119 were concluded successfully, and the
company is on track to initiate a Phase 3 clinical trial of XL119 as a
potential treatment for bile duct tumors in the second quarter of
2004.
- The Phase 1 trial of XL784 was successfully conducted. The compound
was administered orally to healthy volunteers and was shown to be free
of side effects and to have an attractive pharmacokinetic profile. The
compound showed good activity in preclinical models of renal and
cardiac disease, providing a basis for the company to pursue
development of XL784 as a potential treatment for renal and
cardiovascular failure.
- Exelixis advanced multiple proprietary compounds towards the clinic.
Exelixis is on track to file an IND application for XL647 in the first
quarter of 2004 and to file an IND application for XL999 in the second
quarter of 2004. The company anticipates filing an IND application for
XL844 in early 2005, and has several additional preclinical programs
slated for IND applications in 2005 and beyond.
- Exelixis extended and expanded its oncology collaboration with
Bristol-Myers Squibb, extended its herbicide collaboration with Dow
AgroSciences and achieved its collaboration goals with Bayer,
GlaxoSmithKline and all of its other strategic partners.
- Exelixis delivered a strong financial performance and exceeded its
year-end cash balance goal by ending the year with approximately $242
million in cash, cash equivalents, short-term investments and
restricted cash.
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
product in-licensing, equity offerings or business combinations that may be
closed or entered into after December 31, 2003.
With respect to financial expectations for 2004 as compared to 2003, we
anticipate that revenues will increase in the range of 15 to 25% and that
operating expenses, excluding non-cash and restructuring charges, will increase
in the range of 23 to 28%. The increase in operating expenses is primarily
related to the on-going expansion of our development and drug discovery
operations as we advance and expand our clinical and preclinical research
programs. The company's cash, cash equivalents, short-term investments and
restricted cash balance at the end of 2004 is expected to exceed $175 million,
including estimated proceeds of $30 million in 2004 from our loan facility with
GlaxoSmithKline.
With respect to financial expectations for the first quarter of 2004, we expect
our revenues to decrease by approximately 15 to 20% due to timing of shipments
under our chemistry collaborations, and our operating expenses, excluding
non-cash and restructuring charges, to increase by 10 to 15% from fourth quarter
2003 levels.
Exelixis' management will discuss the company's fourth quarter and year-end 2003
financial results and outlook during a conference call beginning at 5:00 p.m.
U.S. EDT today, Tuesday, February 17, 2004. To participate in the conference
call, log onto www.exelixis.com and click on the webcast link under the heading
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"Investor 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."
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' development pipeline includes: XL119, which
is anticipated to enter a Phase 3 clinical trial as a potential treatment for
bile duct tumors; XL784, an anticancer compound that has completed a Phase 1
clinical trial; XL647, XL999 and XL844, anticancer compounds that are potential
IND candidates; and multiple compounds in preclinical development. Exelixis has
established broad corporate alliances with major pharmaceutical and
biotechnology companies, including GlaxoSmithKline and Bristol-Myers Squibb
Company. After completion of Phase 2a clinical trials, GlaxoSmithKline has the
right to elect to develop a certain number of the cancer compounds identified in
this release, other than XL119, thus potentially triggering milestone payments
and royalties from GlaxoSmithKline and co-promotion by Exelixis. 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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This press release contains forward-looking statements, including without
limitation statements related to our Phase 3 registration trial of XL119, the
prospects for XL784, potential INDs for XL647, XL999 and XL844, potential
additional INDs and the matters discussed in the "Outlook" section. Words such
as "goal", "believes," "anticipates," "plans," "expects," "will," "slated" 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 these risks and uncertainties,
which include, without limitation, risk related to: 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 potential
failure of clinical testing of Exelixis' product candidates to demonstrate
safety and efficacy; the ability of Exelixis to file IND applications at the
referenced times; the ability of Exelixis to conduct the Phase 3 clinical trial
of XL119 sufficient to achieve FDA approval, or to initiate the planned Phase 3
clinical trial in the second quarter of 2004; the ability of Exelixis to
successfully advance and develop additional preclinical compounds including
XL647, XL999, XL844 and others. These and other risk factors are discussed under
"Risk Factors" and elsewhere in Exelixis' Quarterly Report on Form 10-Q for the
quarter ended September 30, 2003 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.
-see attached financials tables-
EXELIXIS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended December 31, Year Ended December 31,
-------------------------------- --------------------------------
2003 2002 2003 2002
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(Unaudited) (Unaudited) (3)
Revenues:
Contract and government grants $ 10,638 $ 9,713 $ 39,027 $ 34,981
License 3,128 2,741 12,513 9,341
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Total revenues 13,766 12,454 51,540 44,322
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Operating expenses:
Research and development (1) 32,568 27,724 127,622 112,014
General and administrative (2) 4,222 4,796 18,586 18,758
Restructuring charge 319 708 925 708
Amortization of intangibles 167 167 666 666
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Total operating expenses 37,276 33,395 147,799 132,146
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Loss from operations (23,510) (20,941) (96,259) (87,824)
Other income (expense):
Interest income 902 1,187 4,266 5,916
Interest expense (983) (795) (3,722) (2,885)
Other income (expense), net (145) 32 596 259
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Total other income (expense) (226) 424 1,140 3,290
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Loss from continuing operations before income taxes (23,736) (20,517) (95,119) (84,534)
Provision (benefit) for income taxes (457) 345 (345) 345
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Loss from continuing operations (23,279) (20,862) (94,774) (84,879)
Loss from operations of discontinued segment - - - (1,251)
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Net loss $ (23,279) $ (20,862) $ (94,774) $ (86,130)
=============== =============== =============== ===============
Loss per share from continuing operations $ (0.33) $ (0.36) $ (1.45) $ (1.50)
Loss per share from discontinued operations - - - (0.02)
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Net loss per share, basic and diluted $ (0.33) $ (0.36) $ (1.45) $ (1.52)
=============== =============== =============== ===============
Shares used in computing basic and
diluted net loss per share 71,152 58,170 65,387 56,615
=============== =============== =============== ===============
(1) Includes stock compensation expense of $248 and $210 in the three-months ended December 31, 2003 and 2002,
respectively, and $712 and $1,559 for the years ended December 31, 2003 and 2002, respectively.
(2) Includes a reversal of previously recorded stock compensation expense of $80 and $60 in the three-months ended
December 31, 2003 and 2002, respectively, and stock compensation expense of $200 and $897 for the years ended December 31,
2003 and 2002, respectively.
(3) Derived from the audited consolidated financial statements.
EXELIXIS, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS (1)
(in thousands, except per share amounts)
(unaudited)
Three Months Ended December 31, Year Ended December 31,
---------------------------------- ----------------------------------
2003 2002 2003 2002
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GAAP net loss $ (23,279) $ (20,862) $ (94,774) $ (86,130)
Add back:
Loss from operations of discontinued segment - - - 1,251
Non-cash charges for amortization of intangibles 167 167 666 666
Non-cash charges for stock compensation expense 168 150 912 2,456
Restructuring charge 319 708 925 708
Less:
Gain from insurance settlement
included in other income - - (773) -
---------------- ---------------- ---------------- ----------------
Non-GAAP net loss $ (22,625) $ (19,837) $ (93,044) $ (81,049)
================ ================ ================ ================
Non-GAAP net loss per share, basic and diluted $ (0.32) $ (0.34) $ (1.42) $ (1.43)
================ ================ ================ ================
Shares used in computing basic and diluted
Non-GAAP net loss per share 71,152 58,170 65,387 56,615
================ ================ ================ ================
(1) These non-GAAP amounts are intended to illustrate the company's results from
operations excluding discontinued operations, gain from insurance settlement,
restructuring charges 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 restructuring expenses, gain from insurance settlement and 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)
December 31, December 31,
2003 2002 (2)
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(unaudited)
Cash, cash equivalents, short-term investments,
including restricted cash of $4.8 million in 2003 $ 241,930 $ 221,987
Working capital 189,968 173,153
Total assets 357,794 339,113
Stockholders' equity 161,482 175,920
(2) Derived from the audited consolidated financial statements
Exelixis, Inc.
CALCULATION OF CASH BURN (1)
Year Ended December 31, 2003
(in thousands)
(unaudited)
Net cash used in operating activities $ (79,237)
Purchases of property and equipment (14,248)
Proceeds from bank obligations 17,038
Principal payments on capital lease obligations (6,841)
Principal payments on notes payable and bank obligations (3,099)
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Total cash burn $ (86,387)
==========
(1) Cash burn amounts are intended to illustrate the Company's use of cash,
cash equivalents, short-term investments and restricted cash during the period
for operating activities and other recurring items directly related to
operations, such as capital expenditures. Cash burn is the sum of the net cash
used in operating activities; plus purchases of property and equipment, net of
proceeds from bank obligations; plus principal payments on capital lease
obligations, notes payable and bank obligations, as derived from our
consolidated statements of cash flows prepared in accordance with generally
accepted accounting principles.
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