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Feeding the Machine: Exelixis Buys X-Ceptor

Exelixis' needs to address its increasing burn rate--expected to hit 90 million this year. With a stock mired around $8, any significant equity financing would be dilutive. Partnering was the obvious answer--except that Exelixis didn't have much to partner. By acquiring X-Ceptor Therapeutics it gets a set of much-needed near-term partnering opportunities, and it did so without significantly increasing its projected burn.

Five months ago, Exelixis Inc. reorganized, cutting 62 jobs, mostly in early discovery, in order to free up resources for downstream integration. Having started out as a genomics-based drug discovery company, the move was natural: Exelixis had already created a proprietary small-molecule screening platform and a set of assays. It was time to address the challenge of commercializing its pipeline of cancer compounds, which currently includes three in the clinic and four at or close to an IND filing.

But the workforce reduction was only one small step (it cut roughly one-sixth of its total R&D group) towards addressing...

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