Exelixis lays off 175 employees in refocus on ‘emerging pipeline’

The stream of new year layoffs that have greeted biotech employees shows no sign of abating, with Exelixis announcing that around 175 of its staff will be heading for the exits in the coming months.

The layoffs, equivalent to a 13% reduction in the company’s workforce, are part of a broader restructuring aimed at “concentrate[ing] R&D resources to advance our emerging pipeline,” CEO Michael Morrissey, Ph.D., explained in a Jan. 7 release.

“Rebalancing our investment priorities” means Exelixis can focus on label expansions for the approved cancer drug Cabometyx, as well as pushing ahead with the development of zanzalintinib, a tyrosine kinase inhibitor that’s in late-stage studies for colorectal cancer and renal cell carcinoma.

Also on the agenda is the phase 1 trial of an antibody-drug conjugate for various solid tumors and a phase 1 USP1 inhibitor recently licensed from Insilico Medicine that’s being developed to treat tumors that have become refractory to PARP inhibitors.

In addition, Morrissey mentioned plans to “move three promising preclinical programs into clinical development.”

The restructuring plan, which is due to be completed this quarter and will likely cost around $25 million, will provide the “positive cash flow” necessary to follow through with Exelixis’ plans for a $450 million share repurchase program this year. That would follow a successful $550 million share repurchase last year.

“We are taking these steps with the conviction that they are necessary for our continued progress toward the company’s goal of delivering an innovative pipeline of biotherapeutics and small molecules to help patients with cancer and create value for all of our stakeholders,” Morrissey added in the preliminary 2023 financial results.

The company is riding off the success of Cabometyx, which is approved by the FDA to treat renal cell carcinoma, hepatocellular carcinoma and thyroid cancer. The Ipsen-partnered tyrosine kinase inhibitor was behind the $1.8 billion revenue Exelixis brought in across 2023, and the biotech is hoping to snag further approvals for neuroendocrine tumors and prostate cancer.

William Blair analysts said they “agree with management’s decision to implement corporate restructuring, especially taking into account Cabometyx’s growth trajectory … and continued macroeconomic uncertainty.”

“In parallel, it is prudent to advance clinical programs with the highest chance of technical success, in our view, since the largest expenditure in drug development continues to be costs associated with conducting clinical trials,” the analysts added in a Jan. 8 note.

They also pointed out that XL102, CDK7 inhibitor that was in phase 1 development for solid tumors, had been removed from Exelixis’ pipeline.

Exelixis’ announcement comes in a month that has already seen the likes of Senti Bio, AlloVir, NanoString Technologies and Pfizer all lay off staff.