Exelixis Forms Joint Venture With Bayer For Insecticides

By Lisa Seachrist

Washington Editor

Functional genomics specialist Exelixis Pharmaceuticals Inc. and Bayer AG have expanded their $30 million collaboration begun in 1998 to form an $80 million joint venture aimed at discovering new generations of insecticides and nematicides.

As a result of forming the joint venture, Exelixis will limit its efforts in finding targets for new insecticides and nematicides to the joint venture. The new company formed out of the joint venture will be called GenOptera LLC and will be headquartered in South San Francisco.

"We were really pleased to be able to announce this transaction," said Lloyd Kunimoto, vice president of business development for the South San Francisco-based Exelixis. "We have the opportunity to work with the market leader. And Bayer really believes in the ability of our technology to make new and better classes of compounds."

Under the terms of the agreement, Leverkusen, Germany-based Bayer will pay Exelixis $20 million up-front for granting exclusive licensing rights to Bayer and GenOptera. Bayer will provide a minimum of $80 million in research support in addition to the funds it is providing under the original agreement. The funds will be used for insecticide target discovery and validation at Exelixis.

Bayer, in return, will receive exclusive, royalty-bearing rights to commercialize insecticides based on technology developed by GenOptera. Bayer will pay Exelixis performance-based milestone and royalty payments should new insecticides come to market. Kunimoto described the royalty rate as in the range of other target deals.

"This deal basically quadruples the annual research funding for this project from Bayer," said Kunimoto. "We will be working with them until 2007."

The deal, originally inked in April 1998 and expanded in June 1999, calls for Exelixis to perform genetic modifier screens using fruit fly and roundworm models to identify key regulatory molecules. Exelixis will use its PathFinder screening technology along with its fruit fly expressed sequence tag database, called FlyTag, to identify and validate targets and develop assays for high-throughput screening. In addition, Exelixis is establishing an expressed sequence tag database for a pest species chosen by Bayer.