Mike Morrissey had plenty of headaches when he took over as CEO of South San Francisco-based Exelixis (NASDAQ: EXEL).
Two weeks before he took the job, Bristol-Myers Squibb (NYSE: BMY) dropped a bomb by saying it was walking away from its 50 percent ownership stake in Exelixis‘ most important cancer drug candidate. CEO George Scangos had just resigned to take the CEO post at Weston, MA-based Biogen Idec (NASDAQ: BIIB). Employees were still a bit rattled by the layoffs of 270 colleagues—about 40 percent of the staff— announced three months earlier. The stock fell from $4.58 before the Bristol deal unraveled to as low as $2.86 at one point in August.
“There were a few months that were really challenging, and really shook us to the core,” Morrissey says.
Exelixis generated at least a little bit more confidence last week when it struck a new partnership with Bristol for a couple of early-stage drug candidates for diabetes and inflammatory disorders. But an even bigger test will come next month. The company is gathering data from a clinical trial of XL184, its most advanced treatment in development for cancer, the same drug that Bristol-Myers decided to bail out on.
Plenty of people, inside and outside the company, have been asking why an experienced group like Bristol would give up on a drug like XL184 if it was really hot stuff. It wasn’t really enough for Morrissey or any other senior manager to say he still believed in the product. So Exelixis is now getting ready to do the only thing it can to counter perceptions that there must be something wrong with the drug. The company is gearing up to present hard data from more patients, followed up over a longer period of time, at a scientific medical meeting where it hopes to make a splash with an influential audience. The key presentation will be at the EORTC-NCI-AACR conference in Berlin, Germany.
More than 300 patients had enrolled in this study when I met with Morrissey at his office in late September, as the company was gathering data for its next big medical meeting. He was clearly trying to build up expectations that this drug is going to make a comeback in November.
“We were in the penalty box for a while, and we have to work our way out of it,” Morrissey says.
Morrissey, a Harvard-trained chemist, has been one of the central players at Exelixis during its rise over the past decade as one of the more prolific drug discovery engines in biotech. The company hasn’t developed an FDA approved drug on its own, but it has assembled a blue-chip roster of partners in Genentech, Pfizer, GlaxoSmithKline, Bristol-Myers, Sanofi-Aventis, Boehinger Ingelheim, and Daiichi-Sankyo. The six clinical-stage drug candidates in its pipeline today are aimed at specifically blocking many of the hot molecular targets in cancer research today—MET, VEGFR2, the PI3 Kinase pathway, hedgehog, and heat shock protein 90.
Once upon a time, Wall Street may have given biotech companies top-dollar valuations when they could ink big-money partnerships around exciting science. But the past two years of economic anxiety have put an end to that kind of high-flying optimism. Exelixis decided to consolidate its resources … Next Page »