Exelixis Climbs On Sanofi Cancer Drug Partnership

NEW YORK (AP) — Shares of Exelixis Inc. surged Thursday after the company struck a cancer drug development partnership with one of the world's largest drugmakers, Sanofi-Aventis, worth $140 million upfront and potentially more than $1 billion.

The agreement gives Sanofi-Aventis the rights to two Exelixis drug candidates that are in early clinical testing, and the companies will work together to develop other biotech drugs that block enzymes involved in the proliferation of cancer cells and the spread of tumors. Those enzymes, which are called PI3K, are also involved in creating resistance to chemotherapy and radiation therapy.

Exelixis stock jumped $1.05, or 23.3 percent, to $5.56 in afternoon trading.

"These deal terms are very impressive to us and highlight the general excitement in the drug development space for the PI3K target for oncology," said Merriman Curhan Ford analyst Joe Pantginis.

Paris-based Sanofi-Aventis will take over most of the cost of researching the drugs, as well as handling regulatory submissions and most of the marketing expenses if they are approved. Pantginis said that will reduce Exelixis' expenses significantly, and the $140 million payment will be recognized over the next four years.