The document outlines the development timeline of XL-119, starting from its discovery by Bristol-Myers Squibb in 1986 and covering various clinical trials, licensing to Exelixis, and the drug's efficacy in bile duct cancer. It highlights challenges in formulation, funding, and operational risks while noting the drug's orphan status that provides market protection for seven years. The document also identifies potential market opportunities and competitive risks associated with the treatment of bile duct cancer.

1. XL 119 Team Clive Boulton Catherine Sheppard Nisha Rose Thomas

2. The XL-119 story 1988 1996 1995 Patented by Bristol Myers Squibb US Pat. # 4,785,085 Pharmaceutical Reformulation US Pat. # 5,496,809 Clinical Brochure published by NCI 1997 Phase I study results published 1999 Pediatric Phase I study results published Phase I study results published 2001 Licensed to Exelixis 2004 Phase III study in Bile Duct cancer initiated 2003 IND for Bile duct cancer filed Granted Orphan Drug Designation 2002 Phase II study in bile duct cancer results published 2008 2016 Molecule patent expires Formulation patent expires

3. Exelixis Evolution Founded as a genomics based company George Scangos appointed president and CEO Bristol-Myers Squibb collaboration initiated IPO / BMS collaboration extended Receive exclusive worldwide license to develop and commercialize XL-119 Jeffrey R. Latts, M.D., appointed Chief Medical Officer 2002 Annie Fong, Ph.D., appointed director, development Harold Keer, M.D., Ph.D., appointed director, clinical R&D Kimberly J. Manhard appointed VP, regulatory affairs Steven A. Lacy, Ph.D. appointed senior director, preclinical development 2003 Preliminary Phase 2 data on XL-119 in Hepatobiliary tumors announced IND filed for XL-784 Steven P. James appointed senior VP, commercial operations Initiates phase I study with XL-784 Shake-up of board of directors Special Protocol Assessment for Phase 3 studies of XL-119 agreed with FDA IND filed for XL-119 2004 IND filed for XL-647 XL-119 granted orphan drug status

4. XL-119 the road to the clinic Discovered by Bristol-Myers Squibb (BMS) in 1986 the Rebeccamycin analogue (BMY-27557, BMS-181167) was found to be a potent inhibitor of cell proliferation both in vitro and in vivo. There were problems in the formulation of the compound, it was unstable for prolonged periods of time in solution. It was therefore reformulated and a patent for the new stable formulation was issued in 1996. It is assumed that BMS filed an IND for this compound, although the date of which remains unclear. However, a clinical brochure for the compound was released by the National Cancer Institute (NCI) in 1995. It is thought that at this time BMS were no-longer pursuing this molecule as a lead candidate as the Phase I and II trials were further sponsored by the NCI (compound renamed NSC-655649). Several Phase I trials were carried out and the results were published between 1997 and 2001. These established the maximum tolerated dose, efficacious dose, optimal dosing regime, toxicity and pharmacokinetic profile of the drug. Phase I studies also included analysis in pediatric solid tumors. Once optimal dosing had been established the indication for the drug was investigated. Phase I trials had determined that there was response to the drug in patients with hepatobiliary tumors, therefore a Phase II trial of 33 patients with bile duct carcinoma was carried out and in 2003 the results of these trials indicated an increase in median survival time for these patients. Results from phase II clinical trials in other indications were also published in 2003, these indicated that the drug was not efficacious in the treatment of metastatic colorectal cancer and showed modest antitumor activity in renal cell cancer. As part of a licensing agreement in a deal with BMS, Exelixis were granted an exclusive worldwide license to develop and commercialize the compound in 2001. With the efficacy of the drug in bile duct cancer Exelixis filed an IND for the compound in 2003. In 1Q04 Exelixis were granted orphan drug status by the FDA for XL-119 and announced they would start pivotal Phase III studies of the drug in patients with bile duct cancer in 2Q04.

5. XL-119 Target Market Bile duct cancer (gall bladder tumors and cholangiocarcinomas ) 30,000 patients world-wide (7,500-10,000 cases in the U.S. and in Europe, and a comparable number in Japan and other Asian countries) Median survival in patients with non-resectable tumors is approximately 5 months. Median survival of patients in Phase II clinical trials for bile duct cancer is 8.8 months. Patients will be dosed daily for 5 days which is then repeated 21 days later, therefore each patient will receive approximately 45 doses. XL-119 future potential In phase II for pediatric solid tumors In phase II for non-small cell lung carcinoma.

6. Business Risks Business risk is high Dependence on many larger drug companies who provide financing All drug development is funded by partners Gene to Drug platform R&D milestones = payments (later = royalties) Partnering contacts depend on Exelixis retaining key senior mgmt

7. Competitive risks Competitive risks from other forms of treatment is low No approved standard therapy for bile duct tumors The prognosis for bile duct cancer patients is poor with surgical resection, radiation therapy and chemotherapy being the only current treatments XL119 targets people in the last stages of bile duct cancer so there is no competition from other drug treatments Competitive risks due to other companies is low bile duct cancer is a small market that would not give a good ROI orphan drug status gives market protection for 7 years

8. Technological risk XL 119 molecule derived from natural product Inhibits Topo I ~ induces breaks in DNA Inducing DNA damage is an established chemotherapeutic methodology Lack of efficacy in many cancer indications BUT FDA /NCI granted orphan drug status reducing technological risk

9. Implementation risk Implementation risk is very high When Exelixis received rights for XL119 in 1999 it did not have: a clinical trials group GMP/GLP facilities marketing and sales team Actions taken by Exelixis to reduce the risk Appointed people with substantial experience who would then form their groups: head of a corporate communications in March 2000 VP of clinical development appointed the in 2001 VP of pharmaceuticals in February 2002 head of commercial operations in June 2003 Current implementation risks Establishing cross functional teams that would run smoothly would require extensive cooperation Problem of informational exchange as the compound has been developed by BMS and the NCI Long time to conduct the phase 3 trials since rare disease makes patient recruitment difficult

10. Operational risks Operational risks are high Exelixis have no GMP/GLP facilities to manufacture compounds for clinical trials so rely on third parties for manufacturing Lacks procedures and project management maturity Company transitioning to development Hired experienced VP PM (Feb 2004)

11. Market risk Market risk is low The Rebeccamycin analogue was assigned no financial value while licensing from BMS Phase 1 and 2 trails were not funded by Exelixis (It was conducted and funded by National Cancer Institute). Exelixis only funding Phase 3 trials. Orphan drug status reduces phase 3 trial costs by giving tax credits, waivers FDA user fees and provides market protection for 7 years Though market size is small, pricing could be favorable to Exelixis (the annual cost of life-long treatment with Credase for Gaucher's disease is about $150,000 per patient)

12. Exelixis Maturity Model L1 Initial Process XL 119 / 784 / 647 L2 Structured Process & Stds IND Outsource L3 Institutionalized Process & Stds NDA Mrkt L4 Managed Process L5 Optimizing Process

13. Hypothesis - Why Exelixis accepted Rebeccamycin analogue Exelixis was a genomics based company that wanted to focus on discovery and development of potential new drug therapies, specifically for cancer and other proliferative diseases With Rebeccamycin analogue, an anticancer compound of Bristol-Myers Squibb, Exelixis received an exclusive worldwide license to develop and commercialize it. Exelixis did not have to pay for the in-licensing of the compound Bristol-Myers Squibb agreed to provide access to its internal clinical development expertise to support Exelixis in the development of this compound The low market risks and low competitive risks made it an attractive candidate XL119 could serve as the pilot project that would help Exelixis assess their strengths and weaknesses and reduce the risk of other products in the pipeline. The pilot project could also help Exelixis build a relation with the FDA, NCI, oncology physicians and other stakeholders

14. Hypothesis - why BMS gave XL119 to Exelixis XL119 was received as a part of cancer alliance with BMS The 2003 10-k form of Exelixis says, “Due to risk and uncertainties with Rebeccamycin, and because the analogue had not reached technological feasibility and has no alternative use, the analogue was assigned no value for financial reporting purposes.” This shows that: BMS did not consider it a worthy investment Even if it had been validated for bile duct cancer that would not have given BMS a low ROI (opportunity cost)

15. XL119 - product portfolio strategy XL119

16. Mode of Operation -- XL119 --Key to Exelixis Keeping Key Partners happy to fund Operations. Allows the discovered gene to drug pipeline XL 784 / 647 … to commercialize Transitioning from Drug Discovery to Development Maturing its Project Management and Processes

17. Sources http:// www.exelixis.com http:// www.ncbi.nlm.nih.gov / http://patft.uspto.gov/ http://www.fda.gov/orphan/ http://www.cancer.org http://www.merck.com/about/feature_story/05192004_mectizan.html Phase I Clinical and Pharmacokinetic Study of Rebeccamycin Analog NSC 655649 Given Daily for Five Consecutive Days. Journal of Clinical Oncology , Vol 19, Issue 8 (April), 2001: 2309-2318 Phase I Clinical and Pharmacokinetic Study of NSC 655649, a Rebeccamycin Analogue, Given in Both Single-Dose and Multiple-Dose Formats. Clinical Cancer Research Vol. 8, 2193-2201, July 2002 Phase I and Pharmacokinetic Study of NSC 655649, a Rebeccamycin Analog With Topoisomerase Inhibitory Properties. Journal of Clinical Oncology , Vol 19, Issue 11 (June), 2001: 2937-2947