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This Booming Biotech Inks Huge Lease in the East Bay

5/3/2017 6:39:04 AM

This Booming Biotech Inks Huge Lease in the East Bay May 3, 2017
By Mark Terry, Breaking News Staff

Based in South San Francisco, Exelixis (EXEL) released its first-quarter financials on May 1, indicating that business was booming. And the company, in response, signed a 10-year lease for 110,783 square feet of office and research space in Alameda, Calif.

An oncology company, Exelixis is currently focused on developing two compounds, cabozantinib and cobimetinib. Cabometyx (cabozantinib) has been approved for advanced renal cell carcinoma (RCC). It generated $62.4 million in net product revenue in the first quarter of this year. Cometrix (cabozantinib) has been approved for progressive, metastatic medullary thyroid cancer. It brought in an additional $6.5 million in net product revenue. The company is currently working to submit a supplemental New Drug Application (sNDA) for cabozantinib to treat previously untreated patients with advanced RCC. And with its partner Genentech (RHHBY), they are co-promoting Cotellic (cobimetinib) in combination with vemurafenib to treat unresectable or metastatic melanoma with a BRAF V600E mutation in the U.S.

Exelixis expects the lease to trigger on or around Feb. 1, 2018. It has been given an allowance of about $5.5 million for tenant improvements, and is also entitled to $1.2 million in additional allowance and contributions to update the HVAC systems on the facilities. It also has the option to extend the 10-year lease by two five-year periods, as well as the right to lease certain additional space.

Total monthly base rent will be $182,792 per month for the first year of the lease, rising each year and ending at $238,502 per month in year 10.

The company’s total revenues for the first quarter of 2017 were $80.9 million, up from $15.4 million in the first quarter of 2016. Income from operations in the first quarter were $20.2 million, up from a loss of $49.1 million in the first quarter the previous year.
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“The Exelixis team’s progress this quarter is a launching point from which to build throughout 2017 as we work diligently to position the company as a sustainable business focused on improving the treatment of cancer for patients on a global basis,” said Michael Morrissey, Exelixis’ president and chief executive officer, in a statement. “During the first quarter of 2017, we reached the important milestone for our shareholders of achieving profitability based on operations. In addition, we further advanced cabozantinib’s commercialization and clinical development through our ongoing strong execution on the Cabometyx U.S. launch, made additional progress in our preparations to submit a sNDA for previously untreated patients with advanced RCC, entered into important clinical development collaborations that will evaluate cabozantinib in combination with leading immunotherapies, and granted Japanese rights to a new cabozantinib partner, Takeda.”

The company also indicated that its Phase III trial evaluation cobimetinib and atezolizumab in third-line advanced or metastatic colorectal cancer, had hit full enrollment in the first quarter. It has two trials in melanoma underway.

In addition, at the company’s quarterly conference call, it announced an operational profit for the first time, with diluted earnings per share of $0.05. The company has also prepaid its $80 million term loan with Silicon Valley Bank in March, ahead of its expected due date in May. That’s taken care of most of the company’s debt, now owing slightly over $113 million, which isn’t due until July 1, 2018. It hopes to pay it off in July 2017.

Exelixis stock is currently trading for $22.90. Shares traded on Sept. 27, 2016 for $15.48, dropped to $10.20 on Nov. 3, 2016, and rose to $23.09 on Feb. 27, 2017.

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