Exelixis announced this morning that it will license a pair of early-stage cancer drugs to Sanofi-Aventis in a pact that's worth $140 million upfront and could eventually break the billion-dollar mark. Analysts cheered the partnership as a fresh example of a burst in deal-making that has fueled some excitement in a battered biotech industry hungry for upbeat news.
"The process we've been going through has been painful for the small companies," Jim Birchenough, a biotech analyst at Barclays Capital, tells the Wall Street Journal. The new developments "may be the beginning of a better environment for biotech overall," adds the analyst, who has upgraded his rating on the biotech sector from neutral to positive.
The latest round of deals includes Amgen's decision to exercise its option on one of Cytokinetics' programs for $50 million and Johnson & Johnson's recent $894 million pact with Cougar Biotechnology. And the analyst sees Dendreon and Rigel as prime targets for new pacts or acquisitions.
Sanofi-Aventis is licensing drugs--XL147 and XL765--that inhibit an enzyme which plays a key role in metastasis and resistance to chemotherapy. South San Francisco-based Exelixis gets not only the upfront payment but also $21 million in research funding over three years, hundreds of millions in milestones and royalties on approved products.