Sector News

Exelixis and Genentech hammer out new deal terms

July 24, 2017
Life sciences

Dive Brief:

Exelixis and Genentech have finally settled the dispute over Cotellic (cobimetinib) commercialization terms that has been rumbling for a while, and went into arbitration in June 2016. Cotellic is used in combination with Zelboraf (vemurafenib), Plexxikon and Genentech’s BRAF inhibitor for the treatment of melanoma.

Under the new terms, which cover Cotellic’s current use as a combination with Zelboraf, as well as other uses in the future, maintains Exelixis’ entitlement to an initial share of U.S. profit and loss, but changes how future revenues will be calculated.

Exelixis will still co-promote Cotellic in the U.S., providing up to a quarter of the U.S. sales force, and will be eligible for royalties outside of the U.S.

Dive Insight:

Back in December 2006, Exelixis and Genentech hooked up to develop and commercialize Cotellic (cobimetinib), Exelixis’ MEK inhibitor. The deal gave Exelixis initial upfront and milestone payments, and then an equal share of U.S. profit and loss, which would decrease as sales increased. The two companies also agreed to share U.S. commercialization costs. The deal shifted in November 2013, when Exelixis exercised its option to co-promote cobimetinib in the U.S. Outside the U.S.. Exelixis gets royalties on any sales.

In June 2016, the companies went to arbitration to try to settle alleged breaches of the collaboration agreement. Exelixis stated that that Genentech had breached the contract, and made claims about cost and revenue allocations in connection with Cotellic’s promotion in the United States. In turn, Genentech counterclaimed breach of contract, and sought damages and interest.

In an update in January 2017 reporting a partial settlement, Genentech withdrew a counterclaim for breach of contract against Exelixis, seeking damages and interest, and stated that it would change how promotional expenses would be allocated for the Cotellic/Zelboraf combination therapy. This meant that Exelixis would not have to pay $18.7 million of disputed costs; Exelixis has also invoiced Genentech for $7.1 million for previously paid costs.

The final settlement, made yesterday, will likely come as a relief to the two companies, which have an ongoing collaboration.

“The settlement and revised revenue and commercial cost-sharing arrangements lay the groundwork for our continued work together,” said Michael M. Morrissey, president and CEO  of Exelixis. “Since signing our collaboration agreement with Genentech more than ten years ago, cobimetinib has advanced from our discovery and early clinical efforts into Genentech’s global clinical development organization – where it is now the subject of three ongoing or planned pivotal trials – and into commercial use around the world.”

Following the launch of its kidney cancer drug Cabometyx (cabozantinib) last year, things are looking good for Exelixis; the company was able to (mostly) clear the deck of debt last month, saving itself around $12 million in interest expenses.

By Suzanne Elvidge

Source: BioPharma Dive

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