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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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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 5, 2004
EXELIXIS, INC.
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(Exact name of registrant as specified in its 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 5, 2004, Exelixis, Inc. issued a press release announcing financial
results for the quarter ended June 30, 2004. 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 historical net loss and future operating expense
information in the press release to illustrate the company's results from
operations excluding restructuring charges, acquired in-process research and
development 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 operations,
excluding the restructuring charges, acquired in-process research and
development 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.
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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: August 5, 2004
Exelixis, Inc.
/s/ Frank Karbe
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Frank Karbe
Senior Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
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E X E L I X I S
For Immediate Release
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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 2004 FINANCIAL RESULTS
SOUTH SAN FRANCISCO, Calif. - August 5, 2004 - Exelixis, Inc. (Nasdaq: EXEL)
today reported financial results for the quarter ended June 30, 2004.
Second Quarter 2004 Financial Results
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Net loss, under generally accepted accounting principles (GAAP), was
approximately $29.3 million, or $0.41 per share, compared to a GAAP net loss of
$23.4 million, or $0.39 per share, for the second quarter 2003. Non-GAAP net
loss, excluding restructuring expense, acquired in-process research and
development and non-cash charges for stock compensation and amortization of
intangibles, was approximately $27.0 million, or $0.37 per share, compared to
approximately $23.9 million, or $0.40 per share, for the second quarter of 2003.
A reconciliation of GAAP net loss to non-GAAP net loss is set forth at the end
of this press release.
Cash, cash equivalents, short-term investments and restricted cash totaled
approximately $170.3 million, compared to $207.0 million at March 31, 2004 and
$241.9 million at December 31, 2003.
Revenues were approximately $12.6 million, compared to $13.0 million for the
same period of 2003. The decrease from 2003 to 2004 was primarily a result of
the successful conclusion of our collaboration with Protein Design Labs in May
2003, partially offset by milestone revenue earned under our Bristol-Myers
Squibb collaboration, following the completion of another draft pick of novel
cancer targets during the second quarter of 2004.
Research and development expenses were approximately $34.4 million, compared to
$32.5 million for the equivalent period of 2003. The increase in 2004 from the
2003 level was driven primarily by increased expenses associated with advancing
the company's clinical and pre-clinical development programs.
General and administrative expenses remained constant at approximately $4.7
million for the quarters ended June 30, 2004 and 2003.
Restructuring expenses totaled approximately $1.7 million and was comprised of
involuntary termination benefits. The restructuring charge resulted from the
company's second quarter restructuring and consolidation of its research and
discovery organizations designed to optimize its ability to generate and advance
new drug candidates through clinical development. Most of the headcount
reductions took place in the company's research organization and resulted in a
reduction in force of 62 positions or approximately 11% of the company's
personnel. The restructuring is expected to result in cost savings of at least
$5 million in 2004 (excluding the restructuring charge) and annual cost savings
of at least $10 million in 2005 and beyond.
Second Quarter 2004 Business Highlights
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- XL119: Exelixis initiated a multinational Phase 3 clinical trial in
patients with bile duct tumors.
- XL784: We continue to explore the potential of this compound in renal
disease, with the goal of pursuing that indication in the clinic in
early 2005.
- XL647: We initiated the Phase 1 trial for this novel, orally available
anticancer compound that targets multiple receptor tyrosine kinases
(RTKs) implicated in tumor proliferation and vascularization
(angiogenesis).
- XL999: We filed an investigational new drug application (IND) at the
end of June, our second IND for this year. XL999 is another
proprietary, novel anticancer compound that targets multiple RTKs.
- XL880, XL820 and XL844: All three compounds continue to advance
towards IND applications in the first half of 2005. We also advanced
XL184 as a potential IND candidate for the second half of 2005.
- Restructuring: On June 30 we implemented a restructuring and
consolidation of our research and discovery organizations, designed to
optimize our ability to generate multiple, new INDs per year and
rapidly advance these new drug candidates through clinical
development.
"Exelixis delivered a strong performance this quarter. We met our clinical and
financial goals, and we fortified the company's ability to maintain a robust
discovery and development program and meet its long-term goal of building a
sustainable pharmaceutical business. We believe that our pipeline represents a
remarkable achievement in terms of quality, productivity and value creation. We
are executing aggressively on our goal of generating a large and diverse
portfolio of anti-cancer compounds that have substantial therapeutic and
commercial potential. We are proud of our productivity as well as our fiscal
integrity and believe we have set the stage for creating long-term value for our
company. I believe 2004 is going to be an important year in our evolution," said
George A. Scangos, president and chief executive officer.
Outlook
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With respect to financial expectations for the third quarter of 2004 as compared
to the second quarter, we anticipate that revenues will decrease in the range of
4% to 9% and that operating expenses, excluding restructuring charges, acquired
in-process research and development and non-cash charges, will increase in the
range of 4% to 9%.
As a result of our second quarter 2004 restructuring, we are revising our 2004
financial guidance for both operating expenses and cash and investments balance.
For the year ending December 31, 2004 as compared to 2003, we anticipate that
operating expenses, excluding restructuring charges, acquired in-process
research and development and non-cash charges, will increase in the range of 10%
to 15%. The company's cash, cash equivalents, short-term investments and
restricted cash balance at the end of 2004 is expected to exceed $180 million,
including estimated proceeds of $30 million in 2004 from our loan facility with
GlaxoSmithKline.
The above guidance does not reflect the potential impact of any product
in-licensing, equity offering or business combination that may be closed or
entered into after June 30, 2004.
Conference Call and Webcast
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Exelixis' management will discuss the company's second quarter 2004 financial
results and outlook as well as other developments in the company's business
during a conference call beginning at 5:00 p.m. U.S. EDT today, Thursday, August
5, 2004. To participate in the conference call, log onto www.exelixis.com and
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click on the webcast link under the heading "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."
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About Exelixis
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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
(becatecarin), for which a Phase 3 clinical trial has been initiated in patients
with bile duct tumors; XL784, which has completed a Phase 1 clinical trial;
XL647, which is currently in a Phase 1 clinical trial; XL999, for which an IND
application has been filed; XL880, XL820, XL844 and XL184 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 (GSK) and
Bristol-Myers Squibb Company. Pursuant to a product development and
commercialization agreement between Exelixis and GSK, GSK has the option, after
completion of Phase 2a clinical trials, to elect to develop a certain number of
the cancer compounds in Exelixis' product pipeline, which may include the cancer
compounds identified in this press release (other than the company's cancer
compound XL119), thus potentially triggering milestone payments and royalties
from GSK and co-promotion rights 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 ability to enter into new collaborations,
continue existing collaborations and receive milestones and royalties derived
from future products developed from 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 GSK collaboration; the rate of growth, if any, in license and contract
revenues; our estimated future balances of cash, cash equivalents, short-term
investments and restricted cash; the potential failure of Exelixis' product
candidates to demonstrate safety and efficacy in clinical testing; the ability
of Exelixis to file IND applications and initiate clinical trials at the
referenced times; the ability of Exelixis to conduct the Phase 3 clinical trial
of XL119 sufficient to achieve FDA approval; the ability of Exelixis to
successfully advance and develop additional compounds including XL784, XL647,
XL999, XL880, XL820, XL844 and XL184; the matters discussed in the "Outlook"
section and others. These and other risk factors are discussed under "Risk
Factors" and elsewhere in our quarterly report on Form 10-Q for the quarter
ended June 30, 2004 and other filings with the Securities and Exchange
Commission. The company 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 the company's 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. Spectrum
Selective Kinase Inhibitor is a trademark of Exelixis, Inc.
-see attached financials tables-
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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2004 2003 2004 2003
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Revenues:
Contracts $ 9,431 $ 9,877 $ 18,195 $ 19,079
License 3,128 3,128 6,256 6,256
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Total revenues 12,559 13,005 24,451 25,335
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Operating expenses:
Research and development 34,416 32,453 68,640 62,756
General and administrative 4,702 4,701 10,278 9,869
Restructuring charges 1,738 - 2,275 -
Acquired in-process research and development 395 - 395 -
Amortization of intangibles 167 167 333 333
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Total operating expenses 41,418 37,321 81,921 72,958
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Loss from operations (28,859) (24,316) (57,470) (47,623)
Other income (expense):
Interest income 782 1,042 1,698 2,268
Interest expense (1,221) (914) (2,454) (1,832)
Other income (expense), net 7 838 92 874
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Total other income (expense) (432) 966 (664) 1,310
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Loss from continuing operations before income taxes (29,291) (23,350) (58,134) (46,313)
Provision for income taxes - (92) - (187)
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Net loss $ (29,291) $ (23,442) $ (58,134) $ (46,500)
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Net loss per share, basic and diluted $ (0.41) $ (0.39) $ (0.81) $ (0.78)
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Shares used in computing basic and
diluted loss per share 72,011 60,141 71,762 59,701
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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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2004 2003 2004 2003
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GAAP net loss $ (29,291) $ (23,442) $ (58,134) $ (46,500)
Add:
Restructuring charges 1,738 - 2,275 -
Acquired in-process research and development 395 - 395 -
Non-cash charges for amortization of intangibles 167 167 333 333
Non-cash charges for stock compensation expense 41 133 74 577
Gain from insurance settlement
included in other income - (773) - (773)
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Non-GAAP net loss $ (26,950) $ (23,915) $ (55,057) $ (46,363)
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Non-GAAP net loss per share, basic and diluted $ (0.37) $ (0.40) $ (0.77) $ (0.78)
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Shares used in computing basic and diluted
Non-GAAP net loss per share 72,011 60,141 71,762 59,701
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(1) These non-GAAP amounts are intended to illustrate the company's results from
operations excluding acquired in-process research and development, restructuring
charges, 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,
2004 2003 (2)
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(unaudited)
Cash, cash equivalents, short-term investments, including restricted
cash of $7.6 million ($4.8 million in 2003) $ 170,281 $ 241,930
Working capital 129,674 189,968
Total assets 287,193 357,794
Stockholders' equity 107,116 161,482
(2) Derived from the audited consolidated financial statements
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