Drug developer Exelixis Wednesday it agreed to develop cancer drug candidate XL518 with biotech drug maker Genentech.
Under the agreement, Exelixis stands to receive $40 million in upfront and milestone payments. In December, Exelixis filed with the Food and Drug Administration to begin clinical trials for XL518, a novel small molecule drug designed to inhibit MEK, a substance that is key in the growth of tumor cells when improperly activated.
The company will be responsible for developing the drug through early-stage clinical trials.
Genentech can exercise an option to further develop the compound and will provide Exelixis with additional payments as well as development costs.
Exelixis has the option of selling any resulting product from the development agreement. Exelixis will be entitled to an equal share of the profits for U.S. sales, a share that will diminish as sales increase, and royalties for sales outside the U.S.