Update on Dispute between Exelixis and Genentech, a Member of the Roche Group
January 09 2017 - 5:13AM
Business Wire
-- Genentech withdraws counterclaim
--
-- Exelixis relieved of $18.7 million of
disputed costs --
-- Genentech’s unilateral action does not
otherwise resolve the dispute --
Exelixis, Inc. (Nasdaq:EXEL) announced today that Genentech,
Inc. has withdrawn its counterclaim against Exelixis in the ongoing
JAMS arbitration concerning alleged breaches of the parties’
collaboration agreement. Genentech had asserted a counterclaim for
breach of contract, which sought monetary damages and interest
related to cost allocations under the collaboration agreement. When
notifying the arbitral panel, and Exelixis, of this unilateral
action, Genentech further stated that it is changing the manner in
which it allocates promotional expenses of the COTELLIC®
(cobimetinib) plus Zelboraf® (vemurafenib) combination therapy.
As a result of Genentech’s decision to change its cost
allocation approach, Exelixis is relieved of $18.7 million of
disputed costs previously charged by Genentech. Exelixis has
invoiced Genentech an additional $7.1 million with interest for
expenses that Exelixis paid previously.
Genentech’s revised allocation applies retrospectively and
prospectively and will substantially reduce Exelixis’ exposure to
costs associated with promotion of the COTELLIC + Zelboraf
combination in the United States. Exelixis and Genentech have
shared promotional costs since commercial activities were initiated
in early 2013. As detailed in previous regulatory filings, Exelixis
charged its Profit and Loss Statement approximately $38 million for
promotional costs through the third quarter of 2016. With the new
approach that Genentech has adopted unilaterally, Exelixis’
liability for promotional costs will be reduced to approximately
$15 million for the same period.
Other significant issues remain in dispute between the parties.
Genentech’s action does not address the claims in Exelixis’ Demand
for Arbitration related to Genentech’s clinical development,
pricing and promotional costs for COTELLIC in the United States,
nor does it fully resolve claims over revenue allocation. And,
Genentech has not confirmed how it intends to allocate promotional
costs incurred with respect to the collaboration’s promotion of
other combination therapies that include cobimetinib for other
indications that are in development and may be approved. Exelixis
will continue to press its position before the arbitral panel to
obtain a just resolution of these claims and the clarity it
requires.
About the Dispute
On June 3, 2016, Exelixis filed a Demand for Arbitration before
JAMS in San Francisco, California asserting claims against
Genentech related to its clinical development, pricing and
promotion of COTELLIC, and cost and revenue allocations in
connection with COTELLIC’s promotion in the United States. The
arbitration demand asserts that Genentech has breached the parties’
contract by, amongst other breaches, failing to meet its diligence
and good faith obligations. The demand seeks various forms of
declaratory, monetary, and equitable relief, including without
limitation that the cost and revenue allocations for COTELLIC be
shared equitably consistent with the collaboration agreement’s
terms, along with attorneys’ fees and costs of the arbitration.
Genentech had asserted a counterclaim for breach of contract, which
sought monetary damages and interest related to the cost
allocations under the collaboration agreement.
About Exelixis
Exelixis, Inc. (Nasdaq: EXEL) is a biopharmaceutical company
committed to the discovery, development and promotion of new
medicines with the potential to improve care and outcomes for
people with cancer. Since its founding in 1994, three medicines
discovered at Exelixis have progressed through clinical development
to receive regulatory approval. Currently, Exelixis is focused on
advancing cabozantinib, an inhibitor of multiple tyrosine kinases
including MET, AXL and VEGF receptors, which has shown clinical
anti-tumor activity in more than 20 forms of cancer and is the
subject of a broad clinical development program. Two separate
formulations of cabozantinib have received regulatory approval to
treat certain forms of kidney and thyroid cancer and are marketed
for those purposes as CABOMETYX™ tablets (U.S. and EU) and
COMETRIQ® capsules (U.S. and EU), respectively. Another
Exelixis-discovered compound, COTELLIC® (cobimetinib), a selective
inhibitor of MEK, has been approved in major territories including
the United States and European Union, and is being evaluated for
further potential indications by Roche and Genentech (a member of
the Roche Group) under a collaboration with Exelixis. For more
information on Exelixis, please visit www.exelixis.com or follow
@ExelixisInc on Twitter.
Forward-Looking Statements
This press release contains forward-looking statements,
including, without limitation, statements related to: Exelixis’
position that Genentech’s revised allocation approach will
substantially reduce Exelixis’ exposure to costs associated with
promotion of the COTELLIC + Zelboraf combination in the United
States; Exelixis’ plan to continue to press its position before the
arbitral panel to obtain a just resolution of the issues remaining
in dispute with Genentech; Exelixis’ commitment to the discovery,
development and promotion of new medicines with the potential to
improve care and outcomes for people with cancer; Exelixis’ focus
on advancing cabozantinib; and the continued development of
cobimetinib. Words such as “will,” “may,” “committed,” “focused,”
“potential,” or other similar expressions identify forward-looking
statements, but the absence of these words does not necessarily
mean that a statement is not forward-looking. In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances are
forward-looking statements. These forward-looking statements are
based upon Exelixis’ current plans, assumptions, beliefs,
expectations, estimates and projections. Forward-looking statements
involve risks and uncertainties. Actual results and the timing of
events could differ materially from those anticipated in the
forward-looking statements as a result of these risks and
uncertainties, which include, without limitation: that
Genentech/Roche may not account for promotional expenses in
accordance with Exelixis’ expectations; Exelixis’ dependence on its
relationship with Genentech/Roche with respect to cobimetinib
and ability to maintain its rights under the collaboration; risks
related to the potential failure of cabozantinib to demonstrate
safety and efficacy in clinical testing; market competition;
changes in economic and business conditions; and other factors
discussed under the caption “Risk Factors” in Exelixis’ quarterly
report on Form 10-Q filed with the Securities and Exchange
Commission (SEC) on November 3, 2016, and in Exelixis’
future filings with the SEC. The forward-looking statements
made in this press release speak only as of the date of this press
release. Exelixis expressly disclaims any duty,
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in Exelixis’ expectations with regard thereto or
any change in events, conditions or circumstances on which any such
statements are based.
Exelixis, the Exelixis logo, COMETRIQ and
COTELLIC are registered U.S. trademarks, and CABOMETYX is a U.S.
trademark.
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version on businesswire.com: http://www.businesswire.com/news/home/20170109005547/en/
Exelixis, Inc.Susan Hubbard, 650-837-8194EVP, Public Affairs and
Investor Relationsshubbard@exelixis.comorFor Exelixis, Inc.Hal
Mackins, 415-994-0040hal@torchcomllc.com
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