Exelixis Inc. selected Ipsen SA as its traveling partner outside the U.S., Canada and Japan in an exclusive licensing deal to commercialize and develop lead oncology drug cabozantinib (cabo) in all indications. In return, Exelixis, of South San Francisco, is set to receive $200 million up front and is eligible for regulatory milestones, including $60 million upon the approval of cabo in Europe to treat advanced renal cell carcinoma (RCC) and $50 million upon the filing and approval of cabo in Europe to treat advanced hepatocellular carcinoma (HCC).

The agreement included additional regulatory milestones for other potential indications and up to $545 million in potential commercial milestones. Exelixis also is eligible for tiered royalties that start at 2 percent for the first $50 million in net cabo sales by Ipsen in its territories and escalate after the initial period to a tiered royalty of 22 percent to 26 percent on annual net sales.

The deal also will give Ipsen a transfer of rights outside the U.S. from existing partner Swedish Orphan Biovitrum AB for the capsule formulation of cabo, branded Cometriq, to treat adults with progressive, unresectable, locally advanced or metastatic medullary thyroid cancer (MTC). Exelixis retained exclusive commercial rights to cabo in the U.S. – where the drug also is approved as Cometriq to treat MTC – as well as in Canada and in Japan, where the company plans to continue partnering discussions.

Exelixis and Ipsen agreed to collaborate on cabo's development for current and potential future indications.

"They're an ideal partner for us across a number of components," Mike Morrissey, president and CEO of Exelixis, told BioWorld Today. For starters, Exelixis was seeking to ally with a company that "valued the asset" appropriately, saw the opportunity to grow the cabo franchise and was prepared "to meet our expectations around deal economics," he said. "They checked that box off."

Exelixis also liked Ipsen's "very experienced, deep bench in oncology" globally and wasn't put off by the pharma's smaller footprint in the U.S., where Exelixis was intent on commercializing cabo on its own. In fact, the U.S. opportunity "was a stumbling block for a lot of global pharma players, who always want all or a piece of the U.S.," Morrissey said. "That didn't make sense for us economically or strategically."

'WE'VE BEEN TALKING FOR A LONG TIME'

The deal pads the cash coffers for Exelixis as the company plans for the launch of a new formulation of cabo, in tablet form, to treat RCC. Cabo has FDA breakthrough therapy designation in the indication and a June 22 PDUFA date. During a call with analysts to disclose year-end financials, Morrissey said Exelixis is on track to launch in the U.S. by April 1 in the event the company gets an early green light from the FDA.

In January, the EMA granted an accelerated assessment for the marketing authorization application in RCC. In Paris-based Ipsen, Exelixis gains a partner with a significant focus in genitourinary oncology, including a 150-person European sales force targeting 5,000 oncologists and 6,000 urologists.

"We've been talking for a long time," Morrissey said of Ipsen. "Certainly, things got moving after we had good top-line data back in July. As we re-energized the ex-U.S. outreach, talking to a lot of people, [Ipsen] was part of the mix and this agreement evolved."

The 658-patient phase III METEOR trial soundly met its primary endpoint, showing a statistically significant improvement in progression-free survival (PFS) with cabo over Afinitor (everolimus, Novartis AG) in RCC patients whose disease progressed after treatment with a vascular endothelial growth factor (VEGF) receptor tyrosine kinase inhibitor. Cabo inhibits the activity of tyrosine kinases, including VEGF receptors, MET, AXL and RET. (See BioWorld Today, July 21, 2015.)

The pre-planned interim analysis showed a trend in OS that favored cabo (HR=0.67, 95 percent CI 0.51-0.89, p=0.005) but did not reach statistical significance, so Exelixis undertook a second interim analysis after consulting with regulatory authorities. Data from the second look, reported last month, showed a highly statistically significant and clinically meaningful increase in OS for cabo compared to Afinitor, providing what Morrissey said at the time was "the missing piece of the puzzle in terms of the full cabo second-line RCC story." (See BioWorld Today, Feb. 2, 2016.)

HCC is the subject of CELESTIAL, an Exelixis-sponsored phase III pivotal trial that is expected to report top-line findings next year. Additional earlier-stage studies are under way through the company's collaboration with the National Cancer Institute's Cancer Therapy Evaluation Program and its ongoing Investigator-Sponsored Trial program, which, in combination, are planning or overseeing more than 45 studies in advanced RCC, bladder cancer, colorectal cancer, non-small-cell lung cancer and endometrial cancer.

The momentum for cabo and size of the Ipsen deal represented a welcome turnaround for Exelixis, which was forced to retrench in 2014 following the agent's failure in a pivotal phase III trial in prostate cancer. (See BioWorld Today, March 27, 2014, and Sept. 3, 2014.)

But Morrissey is looking forward, not back.

"We wanted to make sure that patients, globally, got access to the drug, where appropriate," he said. "That's Ipsen's job, outside the U.S., while we focus on the U.S. With this deal now done, our main mission is to launch very successfully in the U.S."

Exelixis reported fourth quarter and 2015 financial results following Monday's market close. Fourth quarter net revenues – almost entirely from net sales of Cometriq – were $9.9 million compared to $7.4 million for the same period in 2014. For the full year, net revenues were $37.2 million, compared to $25.1 million the previous year.

R&D expenses for the year were $96.4 million, compared to $189.1 million for 2014, and $23.5 million for the fourth quarter compared to $39.7 million for the same period in 2014.

The company's net loss for the fourth quarter was $43.6 million, or 19 cents per share, basic, compared to $58 million, or 30 cents per share, basic, for the comparable period in 2014. Net loss for the year was $169.7 million, or 81 cents per share, basic, compared to $268.5 million, or $1.38 per share, basic, for 2014.

Exelixis reported cash and equivalents, short- and long-term investments and short- and long-term restricted cash and investments of $253.3 million as of Dec. 31, including $145.6 million raised through an equity offering in the third quarter, compared to $242.8 million at Dec. 31, 2014.

With Ipsen as a partner, Leerink Partners LLC analyst Michael Schmidt pronounced Exelixis "well positioned" to execute on an estimated $750 million RCC opportunity across the U.S. and Europe.

"We think the deal terms are favorable and remove a financing overhang on the stock," he wrote in an earnings report, predicting that FDA approval of cabo in metastatic RCC "could come ahead of the PDUFA date." He added, "We continue to believe that investors underestimate the near-term market opportunity for Cabo."

For Ipsen, the deal was less attractive, according to Jefferies Group LLC analyst Peter Welford. "Ipsen needs new products and we see some synergies for cabo but the deal terms seem onerous," he wrote in a flash note.

The cabo deal also came amid turmoil in Ipsen's C-suite, where deputy CEO Christel Bories departed suddenly last month over reported disagreements about the company's business strategy. At the time, the French specialty pharma said it was separating the roles of chairman and CEO, now held by Marc de Garidel, who will become nonexecutive chairman when a new CEO is named. A global search is under way.

On Tuesday, shares of Exelixis (NASDAQ:EXEL) closed at $3.83, for a gain of 19 cents, while Ipsen (PARIS:IPN) closed at €48.75 (US$53), down €4.27.