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Exelixis Announces Fourth Quarter And Full Year 2012 Financial Results

Revenues for the quarter ended December 31, 2012 were $7.8 million, compared to $93.3 million for the comparable period in 2011; and for the year ended December 31, 2012 were $47.5 million compared to $289.6 million for the year ended December 31, 2011. The decreases for both the quarter and year were primarily due to extraordinary one-time revenue events in 2011, namely: the acceleration of license revenue as a result of the termination of the company's agreement with Bristol Myers-Squibb Company for XL281 in October 2011, the termination in December 2011 of the company's PI3K discovery collaboration with Sanofi, and the transfer in April 2011 of substantially all development activities pertaining to XL147 and XL765 to Sanofi.

Research and development expenses for the quarter ended December 31, 2012 were $32.5 million, compared to $30.8 million for the comparable period in 2011; and for the year ended December 31, 2012 were $128.9 million compared to $156.8 million for the year ended December 31, 2011. The increase of approximately 6% for the quarter was primarily due to an increase in costs related to clinical trial activities for the COMET-1 and COMET-2 phase 3 pivotal trials in metastatic CRPC as well as an increase in wages and benefits related to employee bonuses. The decrease of approximately 18% for the full year was primarily due to the gradual wind down of EXAM, the company's phase 3 pivotal trial for cabozantinib in progressive, metastatic MTC, the completion of various clinical pharmacology studies that occurred in 2011 in support of the company's new drug application (NDA) filing for cabozantinib for the treatment of progressive, metastatic MTC and the wind down of the company's phase 2 randomized discontinuation trial for cabozantinib.

General and administrative expenses for the quarter ended December 31, 2012 were $9.8 million, compared to $7.0 million for the comparable period in 2011; and for the year ended December 31, 2012 were $31.8 million compared to $33.1 million for the year ended December 31, 2011. The increase of approximately 40% for the quarter was primarily due to increased marketing and commercialization activities in preparation for the launch of COMETRIQ, as well as wages and benefits related to employee bonuses in 2012. The decrease of approximately 4% for the full year was primarily related to lower rent and utilities, decreased legal and accounting fees and decreased depreciation and amortization. These decreases were partially offset by increases in consulting fees and reduced allocations to research and development as a result of lower headcount.

Restructuring charge for the quarter ended December 31, 2012 was $7.5 million, compared to $3.9 million for the comparable period in 2011; and for the year ended December 31, 2012 was $9.2 million compared to $10.1 million for December 31, 2011. The increase in the restructuring charges for the fourth quarter 2012 was primarily due to Exelixis' exit of the remaining portions of office and lab space in one of its buildings in South San Francisco, California for the remainder of the lease term. For the full year 2012, the restructuring charge included the facility charges described above, offset by a decrease in termination benefits compared to the full year 2011.

Other income (expense), net for the quarter ended December 31, 2012 was ($10.1) million compared to ($4.0) million in the quarter ended December 31, 2011; and for the year ended December 31, 2012 was ($25.1) million compared to ($12.5) million for the year ended December 31, 2011. The increase in expense for both the quarter and year was primarily due to interest expense in connection with the $287.5 million aggregate principal amount of 4.25% convertible senior subordinated notes due 2019 issued in August 2012. Included in interest expense for the quarter and year ended December 31, 2012 was ($6.5) million and ($15.6) million of non-cash interest expense related to the 4.25% convertible senior subordinated notes due 2019 and the company's financing arrangement with entities affiliated with Deerfield Management Company, L.P., respectively.

Net (loss) income for the quarter ended December 31, 2012 was ($52.2) million, or ($0.28) per share, compared to $46.3 million, or $0.35 per share, basic, for the comparable period in 2011; and for the year ended December 31, 2012 was ($147.6) million, or ($0.92) per share, compared to $75.7 million, or $0.60 per share, basic, for the year ended December 31, 2011. The increased net loss for the quarter was primarily due to decreases in revenues as well as increased restructuring and interest expense, as described above. The increased net loss for the full year was primarily due to decreases in revenues and increases in interest expense, partially offset by decreased research and development costs, as described above.

Cash and cash equivalents, short- and long-term investments and short- and long-term restricted cash and investments totaled $634.0 million at December 31, 2012, compared to $283.7 million at December 31, 2011.

Financial Outlook

For the full year 2013, Exelixis expects contract and license revenue of approximately $16 million. The company is not providing guidance on expected revenue from COMETRIQ product sales at this time. The company expects total costs and expenses in the range of $200 million to $230 million, including non-cash expenses of approximately $16 to $18 million related primarily to stock-based compensation expense. Exelixis further expects interest expense of approximately $45 million, which includes non-cash charges of $26 million. Exelixis expects its cash and cash equivalents, short- and long-term investments and short- and long-term restricted cash and investments to be approximately $400 million at the end of 2013.

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