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Exelixis Inks a Couple of Deals to Develop Novel ADCs for Cancer

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Exelixis, Inc. (EXEL - Free Report) announced that it has entered into an exclusive collaboration and license option agreement with Switzerland-based privately held company NBE-Therapeutics for developing multiple antibody-drug conjugates (ADCs) to treat cancer. With this partnership, both companies are looking to discover novel ADCs using NBE’s unique expertise and proprietary platforms in ADC discovery including site-specific conjugation and novel payloads.

Notably, this is the fourth biologics-focused agreement signed by Exelixis since 2018.

Per the agreement, Exelixis will make an upfront payment of $25 million to the Swiss biotech for an exclusive option to nominate a defined number of target programs for a couple of years. Exelixis will provide research and development support as both partners are looking to advance multiple ADCs into preclinical development.

Importantly, for Exelixis, prior to filing an investigational new drug (IND) application for any target program, it will be able to exercise its option to gain an exclusive worldwide license and continue the clinical development and commercialization activities thereafter for the same program. Meanwhile, NBE will be entitled to receive development-based milestone fees along with royalties on net sales upon potential approval of that target program.

The deal is a strategic fit for Exelixis, which is looking to pursue both internal drug discovery and external business development to build a portfolio of pipeline candidates that potentially make a difference for cancer patients.

Shares of Exelixis have rallied 17.5% so far this year against the industry’s decrease of 2.3%.

In a separate press release, Exelixis announced that it reached another collaboration and license option agreement with Redwood Bioscience, a subsidiary of Catalent, Inc. (CTLT - Free Report) , for developing multiple ADCs using the latter’s proprietary SMARTag site-specific bioconjugation technology.

Per this pact, Exelixis will make an upfront payment of $10 million to Catalent as the latter will use its SMARTag bioconjugation platform to develop ADCs using monoclonal antibodies (mAbs) from Exelixis’ growing preclinical pipeline. The company will gain an exclusive option to nominate a definite number of target programs for a period of three years.

Going by the press release, Exelixis will support the research & development stage while Catalent will be eligible for the development and commercial milestones and receive royalties on net sales upon potential approval of any product as part of the above collaboration.

Zacks Rank & Stocks to Consider

Exelixis currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the biotech sector include Emergent BioSolutions Inc. (EBS - Free Report) and Horizon Therapeutics Public Limited Company (HZNP - Free Report) , both sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Emergent’s earnings estimates have moved 83.2% and 62.6% north for 2020 and 2021, respectively, over the past 60 days. The stock has skyrocketed 93.1% year to date.

Horizon’s earnings estimates have been revised 60.6% and 56.5% upward for 2020 and 2021 each over the past 60 days. The stock has rallied 92.5% year to date.

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