================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
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): MARCH 20, 2002
EXELIXIS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-30235 04-3257395
- ------------------------------ -------------- -------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
170 Harbor Way
P.O. Box 511
South San Francisco, CA 94083
(Address of principal executive offices, including zip code)
(650) 837-7000
(Registrant's telephone number, including area code)
================================================================================
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(i) Exhibits
Exhibit 99.1 Press release entitled "Exelixis Announces Fourth Quarter and Year
End Financial Results", dated March 20, 2002.
ITEM 9. REGULATION FD DISCLOSURE
On March 20, 2002, Exelixis, Inc. (the "Company") issued a press release
announcing fourth quarter and year end financial results. A copy of such press
release is furnished pursuant to Item 9 as Exhibit 99.1 hereto and is
incorporated by reference herein.
- -------------------------------------------------------------------------------
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: March 20, 2002
Exelixis, Inc.
/s/ Glen Y. Sato
-----------------------------------------------
Glen Y. Sato
Chief Financial Officer, Vice President,
Legal Affairs and Secretary
(Principal Financial and Accounting Officer)
================================================================================
EXHIBIT 99.1
Contact: Glen Y. Sato
Chief Financial Officer
Exelixis, Inc.
(650) 837-7565
gsato@exelixis.com
------------------
EXELIXIS ANNOUNCES FOURTH QUARTER
AND YEAR END FINANCIAL RESULTS
SOUTH SAN FRANCISCO, Calif. - March 20, 2002 - Exelixis, Inc. (Nasdaq: EXEL)
today reported financial results for the quarter and year ended December 31,
2001.
For the quarter ended December 31, 2001, the company reported a pro forma net
loss of approximately $12.7 million, or $0.26 per share, excluding non-cash
charges for stock compensation expense, impairment of goodwill, acquired
in-process research and development and amortization of goodwill and
intangibles. For the fourth quarter of 2000, the pro forma net loss was
approximately $7.7 million, or $0.18 per share, excluding non-cash charges.
Including non-cash charges, the company reported a net loss of $18.3 million, or
$0.38 per share, for the quarter ended December 31, 2001, compared to a net loss
of $48.1 million, or $1.13 per share, in the fourth quarter of 2000.
For the year ended December 31, 2001, the company reported a pro forma net loss
of approximately $49.4 million, or $1.06 per share, excluding non-cash charges
for stock compensation expense, impairment of goodwill, acquired in-process
research and development and amortization of goodwill and intangibles. For the
year 2000, pro forma net loss was $22.9 million, or $0.61 per share. Including
non-cash charges, the company reported a net loss of $71.2 million, or $1.53 per
share, for the year ended December 31, 2001, compared to a net loss of $75.3
million, or $2.43 per share, in 2000.
At December 31, 2001, cash and investments totaled approximately $227.7 million,
compared to $112.6 million at December 31, 2000. The company received
approximately $109.6 million in cash and investments from the acquisition of
Genomica Corporation. Cash burn for the year was approximately $41.5 million.
For the quarter ended December 31, 2001, total revenues were approximately $12.8
million, compared to $7.1 million for the same period of 2000. Total revenues
for the year ended December 31, 2001 were approximately $41.0 million, compared
to $24.8 million for 2000. The increase in revenues was primarily driven by
corporate collaborations established in 2001 with Protein Design Labs and
Bristol-Myers Squibb, additional revenue under the Pharmacia arrangement that
reached completion in February 2002 as previously announced and increased
research funding under existing corporate collaborations. In addition, the 2001
periods include revenues from Agrinomics resulting from the December 2000
acquisition of Agritope, Inc.
Research and development expenses for the fourth quarter of 2001 were $21.8
million, excluding stock compensation expense of $1.1 million, compared to $13.3
million, excluding stock compensation expense of $1.1 million, for the
equivalent period of 2000. Research and development expenses for 2001 were $77.7
million, excluding stock compensation expense of $5.0 million, compared to $42.3
million, excluding stock compensation expense of $9.4 million, for 2000. The
increase in both periods was driven primarily by increased staffing and
expansion of facilities to expand core research programs, support new
collaborative agreements and expand our drug discovery operations, as well as
the ongoing expenses associated with our acquisitions.
General and administrative expenses for the fourth quarter of 2001 totaled
approximately $4.1 million, excluding stock compensation expense of $0.4
million, compared to $3.3 million, excluding stock compensation expense of $0.9
million, for the fourth quarter of 2000. General and administrative expenses for
2001 totaled approximately $16.8 million, excluding stock compensation expense
of $2.4 million, compared to $11.1 million, excluding stock compensation expense
of $4.6 million, for 2000. The increase in both periods was driven primarily by
costs associated with recruitment, facilities expansion and growth in our
research and development operations as well as the ongoing expenses associated
with acquisitions.
"We believe that the fourth quarter of 2001 marked the culmination of a highly
productive year in which we significantly strengthened our company. We built
critical mass in drug discovery, established important new corporate
partnerships as well as met milestones in existing collaborations, executed
strategic acquisitions, strengthened our balance sheet, added depth and breadth
to our management team and advanced our evolution into an integrated drug
discovery and development company," said George A. Scangos, president and chief
executive officer of Exelixis, Inc. "Today, we are focusing our resources on the
assets in our development pipeline. We are continuing IND-enabling studies on
lead compounds emerging from our own research programs that we anticipate will
provide the basis for filing additional INDs based on our proprietary platform.
At the same time, we are continuing to pursue other strategic initiatives that
will help to move us toward the goal of bringing important new medicines to
patients in need."
In response to recent guidance issued by the Securities and Exchange Commission,
we have included on the attached financial tables our actual results for the
quarters and years ended December 31, 2001 and December 31, 2000 prepared in
accordance with generally accepted accounting principles. These results include
all non-cash charges such as amortization of deferred stock compensation as well
as charges from our acquisitions of Genomica Corporation, Artemis
Pharmaceuticals GmbH and Agritope, Inc., including amortization of purchased
intangibles, charges for acquired in-process technology and impairment of
goodwill.
Full-Year Highlights
- ---------------------
- - A major achievement in 2001 was the establishment of a broad new research
collaboration with Bristol-Myers Squibb to discover a new generation of cancer
drugs, which provided for alternate selection of promising targets identified in
Exelixis' target validation program, as well as a royalty-free license to a
Phase II cancer compound, DEAE rebeccamycin. The in-licensing of DEAE
rebeccamycin, which has completed Phase I trials and is in ongoing NCI-sponsored
Phase II trials, effectively catalyzed the establishment of the company's
clinical development capabilities.
- - Exelixis also established a collaboration with Protein Design Labs
designed to discover and develop humanized antibodies for the diagnosis,
prevention and treatment of cancer. The alliance combines Exelixis' model
organism genetics technology and PDL's humanized antibody technology,
manufacturing and clinical development expertise with the goal of developing new
antibody drug candidates. During 2001, Exelixis delivered several targets to PDL
as anticipated, demonstrating the productivity and quality of Exelixis' target
identification and validation programs. Under the agreement, Exelixis retains
the right to co-fund development of antibodies resulting from the collaboration.
- - Exelixis' internal combinatorial chemistry and high-throughput screening
programs matured quickly and broadly in 2001, providing the technological base
for establishing new collaborations. In this context, the company also
established four chemistry collaborations to jointly design custom
high-throughput screening compound libraries. The collaborators are Elan
Pharmaceuticals, Scios, Cytokinetics and Schering-Plough Research Institute, and
each pays Exelixis a technology access fee plus a per-compound fee. In each
arrangement, each company retains rights to use the compounds in its own unique
drug discovery programs and in collaborative efforts with third parties.
Exelixis has built a compound library approaching two million compounds and is
synthesizing more than 40,000 new compounds per week. The company conducted more
than 20 high-throughput screens in 2001, an achievement that is comparable to
screening efforts in a specific therapeutic area for larger pharmaceutical
companies.
- - Exelixis made significant progress in its internal drug discovery
programs, building a pipeline of research and pre-clinical candidates that
represent diverse and potentially novel compounds directed against important
cancer targets. The company is currently evaluating several lead compounds in
IND-enabling preclinical studies. The company remains confident that its goal
of filing two INDs per year beginning in 2003 is achievable.
- - Consistent with Exelixis' strategy of acquisition of products and
technology, Exelixis acquired Artemis Pharmaceuticals GmbH, thus solidifying its
ownership of and access to a broad complement of advanced vertebrate model
genetic systems technology (mice and zebra fish) and formalizing the existing
close business and scientific collaboration with this innovative company.
- - Exelixis acquired Genomica Corporation, a publicly-traded bioinformatics
company, in a stock-for-stock transaction for which Exelixis issued
approximately 6.9 million shares of Exelixis common stock at a price of $15.89
per share. The transaction enabled Exelixis to add approximately $110 million in
cash, cash equivalents and investments to its balance sheet. The company will
selectively use the Genomica software for its internal programs and intends to
locate a third-party software company to undertake the third-party software
business.
- - Exelixis continued its successful agricultural collaborations with Bayer,
Aventis CropSciences and Dow AgroSciences, garnering milestone payments.
Exelixis' agrichemicals strategy continues to be an important revenue
diversification and risk reduction strategy for the company as a complement to
its pharmaceutical research and development capabilities.
- - Exelixis continued to strategically expand its pharmaceutical development
infrastructure as well as its senior management team through the hiring of
seasoned professionals with extensive biotechnology and pharmaceutical
experience. In July 2001, Exelixis named Jeffrey R. Latts, M.D., senior vice
president and chief medical officer, to establish and build the company's
clinical development team for its pipeline of proprietary compounds. In the
first quarter of 2002, Dr. Latts added several experienced regulatory, oncology
and development professionals to his team, including Kimberly Manhard, vice
president, regulatory affairs. Earlier in 2002, Exelixis named Jane Green as
vice president, corporate communications, to extend the company's outreach to
investors and other key stakeholders, and Robert M. Myers as executive vice
president, pharmaceuticals, to advance the company's evolution into a
pharmaceutical company.
Outlook for 2002
- ------------------
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 December 31, 2001.
With respect to financial expectations for 2002, assuming the closing of three
new collaborations during the year, Exelixis anticipates that revenues will
increase in the range of 20 to 25% from 2001, and that operating expenses,
excluding non-cash charges, will increase in the range of 40 to 50%. For 2002,
our anticipated cash burn is expected to be in the range of $68 to 73 million,
including approximately $18 to 20 million in capital expenditures worldwide.
The increase in cash burn is expected to be principally related to investments
in drug discovery, including clinical development and manufacturing as well as
support of a worldwide research infrastructure. The company's cash balance at
the end of 2002 is expected to exceed $154 million.
Stock compensation expense for the year is anticipated to total approximately
$6.2 million.
With respect to financial expectations for the first quarter of 2002 compared to
fourth quarter 2001, we expect our revenues to decline slightly due to the
February 2002 completion of the Pharmacia arrangement as previously announced,
and our operating expenses, excluding non-cash charges, to increase by 15 to 20%
levels.
For reference, "cash burn" is the sum of the net cash used in operating
activities; plus purchases of property and equipment, net of proceeds from
sale-leaseback of equipment; plus principal payments on capital lease
obligations and notes payable, as derived from our Consolidated Statements of
Cash Flows.
Exelixis, Inc. (Nasdaq: EXEL) is a leading genomics-based drug discovery company
focused on product development through its expertise in comparative genomics and
model system genetics. These technologies provide a rapid, efficient and cost
effective way to move from DNA sequence data to knowledge about the function of
genes and the proteins they encode. The company's technology is broadly
applicable to all life sciences industries, including pharmaceutical,
diagnostic, agricultural biotechnology and animal health. Exelixis has
partnerships with Aventis CropScience, Bayer, Bristol-Myers Squibb, Elan
Pharmaceuticals, Protein Design Labs, Schering-Plough Research Institute, Scios,
Dow AgroSciences and Cytokinetics, Inc. and is building its internal development
program in the area of oncology. For more information, please visit the
company's web site at www.exelixis.com.
----------------
This press release contains forward-looking statements, including without
limitation the matters discussed in the "Outlook" section. 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 its
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; the ability to successfully identify and
develop compounds against proprietary cancer targets; the amount and timing of
investments in manufacturing and clinical development of DEAE rebeccamycin
currently in Phase II clinical studies that was acquired in July 2001; and the
timing of the filing for and investment in our initial proprietary small
molecule IND. 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, 2001 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.
###
EXELIXIS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended December 31, Years Ended December 31,
------------------------------- ------------------------
2001 2000 2001 2000
-------------- -------------- ---------- ----------
(unaudited)
Revenues:
Contract and government grants $ 9,869 $ 6,078 $ 33,518 $ 20,983
License 2,924 996 7,488 3,776
-------------- -------------- ---------- ----------
Total revenues 12,793 7,074 41,006 24,759
-------------- -------------- ---------- ----------
Operating expenses:
Research and development 21,797 13,297 77,696 42,252
Selling, general and administrative 4,129 3,316 16,806 11,089
Impairment of goodwill 2,689 - 2,689 -
Amortization of goodwill and intangibles 1,419 260 5,092 260
Acquired in-process research and development - 38,117 6,673 38,117
Stock compensation expense 1,507 1,963 7,364 14,022
-------------- -------------- ---------- ----------
Total operating expenses 31,541 56,953 116,320 105,740
-------------- -------------- ---------- ----------
Loss from operations (18,748) (49,877) (75,314) (80,981)
Other income (expense):
Interest and other income 1,205 1,917 6,314 6,248
Interest expense (726) (191) (2,186) (679)
-------------- -------------- ---------- ----------
Total other income 479 1,726 4,128 5,569
-------------- -------------- ---------- ----------
Minority interest in subsidiary net loss - 101 - 101
-------------- -------------- ---------- ----------
Net loss $(18,269) $(48,052) $(71,186) $(75,311)
============== ============== =========== ==========
Basic and diluted net loss per share $ (0.38) $ (1.13) $ (1.53) $ (2.43)
============== ============== =========== ==========
Shares used in computing basic and diluted
net loss per share 48,394 42,417 46,485 31,031
============== ============== =========== ==========
==================================================================================================================
Pro Forma Net Loss and Earnings per Share Excluding Non-Cash Items (1)
Net loss excluding non-cash charges for
stock compensation, amortization of goodwill and
intangibles, impairment of goodwill and acquired
in-process research and development $(12,654) $ (7,712) $(49,368) $(22,912)
============== ============== =========== ==========
Pro forma basic and diluted net loss per share
excluding non-cash charges $ (0.26) $ (0.18) $ (1.06) $ (0.61)
============== ============== =========== ==========
Shares used in computing pro forma basic
and diluted net loss per share excluding
non-cash charges 48,394 42,417 46,485 37,630
============== ============== =========== ==========
(1) These pro forma amounts are intended to illustrate the Company's operating results excluding non-cash charges,
including (a) amortization of deferred stock compensation and (b) amortization of purchased intangibles, charges
for acquired in-process technology and impairment of goodwill related to our acquisitions of Genomica Corporation,
Artemis Pharmaceuticals GmbH and Agritope, Inc. These measures are not in accordance with, or an alternative for,
generally accepted accounting principles and may be different from pro forma measures used by other companies. In
addition, shares used in computing pro forma basic and diluted net loss per share include convertible stock
outstanding during 2000 using the if-converted method from the original date of issuance until the date such
shares were converted to common shares in the company's initial public offering.
EXELIXIS, INC.
CONSOLIDATED BALANCE SHEET DATA (2)
(in thousands)
December 31,
------------------
2001 2000
-------- --------
Cash, cash equivalents & short-term investments $227,700 $112,552
Working capital 194,243 95,519
Total assets 346,614 204,914
Stockholders' equity 237,220 162,734
(2)Derived from the audited consolidated financial statements