Contributing Writer

Shares of Exelixis Inc. dipped Thursday after the South San Francisco-based company suspended enrollment in a Phase II program with XL999 due to cardiovascular adverse events. The suspension is expected to set the program back anywhere from two weeks to three months.

Of the 131 patients enrolled in the program to date, the company reported that 16 experienced serious adverse cardiovascular events. While 12 of these incidents occurred in the 117 patients enrolled through the end of September, four of 14 patients enrolled in October experienced complications, prompting the company to stop enrollment until further data have been analyzed.

Since all but one of the events occurred on the first administration of the drug, patients already enrolled in the trial will continue to receive treatment.

Exelixis (NASDAQ:EXEL) traded down $1.13 Thursday, or 12.1 percent, to close at $8.21.

"We are not discontinuing the trial," President and CEO George Scangos emphasized during a conference call. However, he noted that while the company has seen a low incidence of cardiovascular adverse events throughout the trial, the "most recent events were among the most severe."

Exelixis is not a one-product company, so the effect of suspending enrollment is minimal for now. Brian Lian, analyst with CIBC World Markets Corp., admitted that the news "will pressure the shares" in the near term, but overall he doesn't "think it will have a major impact."

"XL999 is Exelixis' most extensive Phase II program, but it is one of eight compounds they have in the clinic. In the bigger picture, their productivity is pretty hard to match among other biotechs," he said.

The Phase II program includes six clinical trials evaluating XL999 as a single agent in the treatment of colon cancer, ovarian cancer, non-small-cell lung cancer, renal-cell carcinoma, acute myelogenous leukemia and multiple myeloma. XL999 is administered weekly at doses of 2.4 mg/kg to both refractory/relapsed and treatment-na ve patients. The program was initiated in December 2005, and all six trials within the program have started, but the company declined to update the status of enrollment in each trial.

As of now, XL999 is not partnered, but that could change based on a deal Exelixis signed with GlaxoSmithKline plc back in 2002. Worth close to $1 billion in various fees, equity investments, research and development funding, loans and milestone payments, the agreement gives GlaxoSmithKline the right to license several compounds from Exelixis' pipeline following the completion of Phase IIa studies. (See BioWorld Today, Oct. 30, 2002.)

"It looked to most people like XL999 might be the first candidate licensed," Lian said. "It's premature to say it wouldn't be selected now, but it doesn't look good."

This is not the first time XL999 has seen issues with cardiovascular side effects. In a Phase I trial, one patient dosed weekly with 3.2 mg/kg experienced a reversible cardiac dysfunction and subsequently discontinued treatment. According to an analyst report, the incidence of hypertension at the 3.2 mg/kg dose was 35 percent, and at the 6.4 mg/kg dose, one patient experienced fatal heart failure.

Yet the 2.4 mg/kg weekly dose, which also was used in the Phase II program, caused no grade two or greater adverse events. And of the 11 evaluable patients in the Phase I trial, four had stable disease.

"XL999 is a multi-kinase inhibitor, and one of the kinases it inhibits is VEGF, which is known to cause hypertension," said David Garrett, analyst with Fortis Securities LLC, explaining that such multi-targeted kinase inhibitors generally increase the chance of side effects.

Kinases play a role in cancer, inflammation, cardiovascular disease and other ailments. There are an estimated 500 kinases in the human body, making kinase inhibitors an important drug class. Yet the similarity between the kinases can make it difficult to selectively target them without causing side effects due to off-target binding.

Lian agreed that kinase inhibitors designed to target multiple kinases might increase the risk of side effects, but he noted he does not find this "overly problematic" since several multi-kinase inhibitors, such as Gleevec (Novartis Pharmaceuticals Corp.) and Sutent (Pfizer Inc.), have received FDA approval.

Exelixis' pipeline contains two other kinase inhibitors in Phase II trials for cancer, as well as a Phase II inhibitor of ADAM-10 metalloprotease enzyme for proteinuria associated with diabetic kidney disease. The company also is conducting Phase III trials with XL119 (becatecarin), a small-molecule anticancer compound, and has a slew of Phase I and preclinical compounds.

Garrett noted that the XL999 setback does not mean the other kinase inhibitors in Exelixis' pipeline are destined for the same fate and suggested taking "each drug on its own merits."

Exelixis also reported third-quarter earnings late Thursday, citing a net loss of $25.2 million, or 30 cents per share, and beating analyst estimates of a 31 cent per share loss. In the same period last year, the company posted a loss of $22.8 million, or 29 cents per share. Revenues for the third quarter were $23.5 million, compared to $14.4 million for the third quarter of 2005, and lower than analyst estimates of $27.5 million. The company had $154.4 million in cash at the end of the quarter.