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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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March 8, 2010

Bad News at Exelixis

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Posted by Derek

I'm hearing from more than one source that Exelixis has laid off about 40% of their work force, which is somewhere around 250 people (the numbers I get don't all agree). This seems to be across the board, all departments, and most everyone is being asked to leave today.

The Bay area biotech scene doesn't seem to be at its healthiest these days (although it's still in better shape than San Diego, from the sound of it), but this isn't going to help it one bit. . .

Comments (89) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. You're Pfizered on March 8, 2010 3:07 PM writes...

And the hits keep right on a-coming....

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2. Underworlds on March 8, 2010 3:29 PM writes...

Thanx for the heads up. Sorry to hear that so many people are being added to the unemployment statistics.

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3. Hap on March 8, 2010 3:54 PM writes...

Those kind of layoff fractions usually come from small companies with one or two potential drugs of which at least one just failed. Why is Exelixis laying off so much of their workforce (or why did they get so big with so few products)?

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4. Hap on March 8, 2010 4:00 PM writes...

Apparently Exelixis's fourth-quarter 2009 and full-year 2009 results are supposed to be announced tomorrow. Anyone want to guess how good they're going to look?

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6. Steve on March 8, 2010 4:30 PM writes...

Are those who were terminated asked to attend an early morning meeting? Were they handed a note by a security guard or did they find a note on their desk as they arrived asking them to pack up and leave? What would it say? "As of immediately, we won't be needing your services anymore, and, oh, would you mind selling that house you just bought, take your kids out of school, and get ready to roll over that retirement account?" There's no loyalty anymore. You are a commodity just like a barrel of salt out in the warehouse. That's exactly why I'm so glad I didn't pursue a job in the pharmaceutical industry. How do those of you in industry handle the idea that you could be fired/laid off/let go at any moment for no reason? How do you just pick up your lives and your families and move on?

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7. Steve on March 8, 2010 4:35 PM writes...

Are those who were terminated asked to attend an early morning meeting? Were they handed a note by a security guard or did they find a note on their desk as they arrived asking them to pack up and leave? What would it say? "As of immediately, we won't be needing your services anymore, and, oh, would you mind selling that house you just bought, take your kids out of school, and get ready to roll over that retirement account?" There's no loyalty anymore. You are a commodity just like a barrel of salt out in the warehouse. That's exactly why I'm so glad I didn't pursue a job in the pharmaceutical industry. How do those of you in industry handle the idea that you could be fired/laid off/let go at any moment for no reason? How do you just pick up your lives and your families and move on?

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8. Thumperska on March 8, 2010 4:54 PM writes...

Steve, a good way to deal with that type of instability is not to pretend that stability exists. Keep up your contacts and reputation. Stay current with the literature. It's not complicated, just takes diligence.At least with Boston there are many choices for employment in biotech and pharma. The Excelixis folks could have had it worse.

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9. Anonymous on March 8, 2010 4:57 PM writes...

"We are convinced that the restructuring is the right step for the company and positions us well to move into the future. However, it is extremely difficult to release many people who have contributed substantially to the company over the years and who are our friends and colleagues."

Does every damn pharmaceutical company use the exact same PR / "transitioning" firm? Can't these guys even be bothered to put together a few different versions of the "we need to treat you like used toilet paper so that we can satisfy our share holders" song and verse so as to at least give the appearance that they thought about it long and hard and aren't just jumping on the what's in vogue in pharma bandwagon?

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10. Hell to the chief on March 8, 2010 5:04 PM writes...

Looks again like a bigger blow for San Diego rather than Bay Area. Unconfirmed report says the Exelixis SD site is to close.

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11. Anonymous on March 8, 2010 5:05 PM writes...

"Keep up your contacts and reputation. Stay current with the literature. It's not complicated, just takes diligence."

So diligence is all it takes for the thousands being kicked to the curb by pharma every month to find jobs? Even the hundreds and hundreds of "overqualified ones" or the ones who don't meet the high demand "PhD with 0-5 years experience" requirement? That is so comforting to know. Thanks!

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12. CanChem on March 8, 2010 5:07 PM writes...

@8

Boston's a happening place for jobs in Bio/Pharm? Coulda fooled me. Everyone I've been in contact with (at least for MedChem) has been fully staffed or reducing headcount. Be more than happy to hear differently though.

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13. Hap on March 8, 2010 5:13 PM writes...

The only problem with instability as a permanent part of a pharma career is that the fact that 1) your partner will have to find a job, rendering almost all moves two-body problems and 2) other parts of one's life (such as children) depend on some level of stability.

Being in places with lots of jobs, particularly lots of kinds of chemistry jobs, might help - it at least minimizes the dislocation when one is laid off because there will likely be jobs nearby that one can take. Pharma centers help some unless (almost) everyone in pharma is laying off (like now). The problem is, those places are expensive to live in, generally, and so you have to have saved lots of money to afford to stay there while unemployed. Networks can't hurt, but the number of out of work people is probably straining everyone's networks - there aren't enough jobs. Having a resume (or at least a core list of what you have done and can do, since you don't necessarily know what jobs you might have to apply for) probably would help. I don't know anything else constructive.

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14. Joe on March 8, 2010 5:20 PM writes...

"At least with Boston there are many choices for employment in biotech and pharma"

Boston is full of Boston-centric snobs. If you didn't go to school in the area, don't expect to be hired.

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15. HelicalZz on March 8, 2010 5:24 PM writes...

No it isn't good and it isn't fun, but when a company moves from being primarily discovery to being primarily clinical this kind of restructuring should surprise no one.

The company doesn't need more shots on goal, it needs to put its capital to use proving out the ones it has already taken.

Zz

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16. Cloud on March 8, 2010 5:27 PM writes...

Steve- I consider Exelisis closer to biotech than pharma. It wasn't that big even before the layoffs. Most people working at a small drug discovery company know that their jobs are not secure. I personally handle this by keeping up with my network, keeping my resume updated, and keeping a hefty financial reserve. Hap is right that my husband has to work- but he wasn't too interested in being a stay at home dad, and I wasn't too interested in being a stay at home mom. I do have friends that work in this industry and have a stay at home partner, and they tend to handle it by having an even larger financial reserve. You figure out how long it is likely to take you to find another job from a standing start and given your restrictions (i.e., would you relocate) and then make sure your reserve covers that.

I also never blow off a headhunter, and always try to help anyone who contacts me via my network. What goes around, comes around.

Most companies provide severance, but I never count on that.

Also, after working in a couple of companies, you get a bit of a spidey-sense about when bad things are about to go down, so you aren't generally starting your search from nothing. I saw my last lay off coming, and was already well into a job search when it finally hit.

It also helps to be willing to make lateral moves and not get hung up on staying in a particular field.

None of this is to trivialize how much it sucks to work at Exelisis today. Good luck to all of them.

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17. bluefoot on March 8, 2010 5:46 PM writes...

Steve @6: I am told there were a couple of large meetings this morning at Exelixis where people were told.
Unfortunately instability has become part of the biotech/pharma "career path". The best you can do is try to mitigate the damage when you're laid off, because everyone is laid off in this industry at least once in their career. No matter how good they are. Cloud @16 pretty much nails the standard operating procedure of all the people I know in the industry.

The problem right now is that there just aren't enough jobs.

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18. Vermeer on March 8, 2010 5:57 PM writes...

"...for we must first descend if we wish to be raised."

-Dutch proverb.

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19. J-bone on March 8, 2010 6:19 PM writes...

high demand "PhD with 0-5 years experience" requirement

A lot of people keep talking about this, but I don't see it in the job postings I'm looking at. Most of what I'm seeing is "Ph.D w/8-10 yrs exp" (obviously a director/PI position) or "BS w/5-8 yrs exp, MS w/3-5 yrs exp (these are the former entry level Ph.D positions).

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20. Anonymous on March 8, 2010 6:35 PM writes...

My husband was one of the 270 to have been laid off today. Needless to say, it is unnerving.

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21. Hap on March 8, 2010 6:37 PM writes...

Has the "focus your cashflow on development rather than research" strategy actually worked? I'm used to seeing it as a flatline on a company's financial EKG - a preliminary to the forthcoming death certificate. At best, the company might be able to get itself sold to someone looking for a readymade product (particularly when no one in pharma seems interested in adding domestic research headcount), but usually it means that if the products don't hit, you're dead (in other words, you're dead).

The problem with assuming you have enough candidates is, well, that's what the big companies said too, until their candidates ran out. So many drugs fail, and lately, fail expensively, that it seems like no one has a clue which ones will succeed and which ones will fail. If you knew which drugs would fail ahead of time, well, you wouldn't be laying people off, because you'd own the pharma industry. Assuming you have enough candidates seems contrary to recent experience, sort of like assuming you have enough money.

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22. Cloud on March 8, 2010 6:43 PM writes...

Hap- look up the history of Amylin. That is the example that comes to mind of a company that was big, shrunk down to almost nothing, and then came back.

I think the general plan is to focus resources on getting a drug into the clinic, and then regrow the discovery side from that point. The shrinkage usually occurs when it is obvious which drug the company wants to bet on. It isn't so much that they want to bet on one or two compounds, but that they have to because they don't have enough cash to do otherwise.

I vaguely remember a twist in the Amylin case. I think they had a collaboration that tanked or something? I'm sorry, I can't recall the details. I think they were down to just a few people at one point, and now they're reasonably big.

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23. Been there on March 8, 2010 6:59 PM writes...

Agree with cloud...almost every biotech that has "made it" in the last 10 years or so has gone through a major restructuring. Typically this is accomplished by cutting research to focus on a few development projects. As I understand, EXEL is across the board, which suggests to me that they have (appropriately) decided that their pipeline is filled withe too many programs that are not sufficiently differentiated to be competitive. A good business move perhaps, but not exactly good news for the folks laid off. Been there and it sucks, particularly in today's environment when there are so many great people being laid off by biotech and pharma alike. Hope everyone gets thru this OK!

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24. Hap on March 8, 2010 7:08 PM writes...

Apparently Amylin cut their workforce by > 75% and still exist (they now have 1900 employees, according to Wikipedia) - they also survived losing a partnership with J+J on one of their two drugs and then a committee vote against its use for diabetes (and yet got an approvable letter anyway). Wow. They now have Byetta (which can't hurt), but I don't know what happened to their original drug.

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25. Chemjobber on March 8, 2010 7:31 PM writes...

It was a year and a half ago or so that Amylin was hiring folks like crazy; as I recall, they were actually "sponsoring" (advertising) their career fair on the local public radio station. Lots of open positions for folks with experience with protein chemistry -- not me, sadly.

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26. hell to the chief on March 8, 2010 7:32 PM writes...

#24 Hap
I think Byetta was one of their 'original' drugs (along with pramlintide aka symlin?). Sure it's on the market now, but they are still yet to make a profit. Hence another recent round of job cuts there to cut the bleeding of $50m per quarter.

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27. Wade on March 8, 2010 7:34 PM writes...

It is sad story of our dying pharma industry. Dear fellow chemists, try to learn something different, like Steve here. I know it is tough, I learnt the hard way, when I got laid off for third time in my biotech career of over 15 years. Second time I was a part of Pfizer layoffs.

However, eventually it works out with good planning and rock solid determination. Just remember, when we work with molecules, that nobody have seen; we can do anything. The chemists are by nature entreprenueur. I wish all fellow chemists best of luck.

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28. dd on March 8, 2010 8:30 PM writes...

Cloud

I don't this Amylin is exactly the poster child for coming back. Its major new BLA is held up at the FDA, it's got major personnel issues internally, and it looks to have some major competition in the making. That's hardly a poster child for "coming back".

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29. Cloud on March 8, 2010 8:47 PM writes...

dd- my point wasn't that Amylin is some sort of example of a great company. I don't really have an opinion on that. My point was just that it is a company that went through a drastic restructuring and survived.

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30. Skeptic on March 8, 2010 8:56 PM writes...

Where in this chain: (Consumer --> Pharmacist --> Doctor --> FDA Approval) is the chemist influential? The consumer relies upon government nutrition studies which are statistics (mostly nonsense)...the Pharmacist is beholden to the Dcotor...the Doctor (his chemistry content being less and less in university) simply looks up drug interactions on a database...and FDA is all about statistics. Nobody needs any knowledge of chemistry. They know nothing at all.

And the dumb money (pensions, etc) investors? They increasingly rely upon Hedge Funds which couldn't care less about success of chemistry ventures...just stock volatility in whatever direction.

Stop your obsession with the physical world. Statistics education is all you need.

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31. milkshake on March 8, 2010 9:04 PM writes...

a good friend of mine, an outstanding process chemist, got laid off from Exelexis some time before this latest round - as soon as he was done with improving the scale-up process to one of their clinical compounds and and there were no more new clinical candidates in development the management realized no process chemist was needed any longer... He found a new job since then but he is still very frustrated about that place. Because just like with his previous company (where we were together) the harder he worked to finish his project the sooner he found himself without a job.

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32. ron richardson on March 8, 2010 9:08 PM writes...

My uninformed analysis, looking at the exelixis pipeline on the website, is that they didn't go after any interesting or novel targets--you're just not going to beat the big boys at making a PI3K inhibitor, etc.

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33. Skeptic on March 8, 2010 11:58 PM writes...

Milkshake, if you and your buddy find the kitchen (in-vivo biology) is too hot then I'm afraid your membership in the Goldman Sach's Yacht Club is denied.

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34. Jack Bauer on March 8, 2010 11:58 PM writes...

A lot of bad news coming from the industry. Could I ask for a little advice? In this sort of "job climate" we are in, would it be advantageous to stay in grad school as long as possible? Will this clear up in 5 years?

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35. Skeptic on March 9, 2010 12:25 AM writes...

Jack, ask yourself why speculators will ever care about compartmentalized US scientists (chemists, physicists, biologists,) when the story stock era of basic molecular biology is over. Now you have to deliver.

And when a poster says med chemists are not to blame because "We are just finding out how hard it is..." then I think the proper advice is self-evident.

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36. Bob on March 9, 2010 3:01 AM writes...

Real sorry to hear this. Just read this article:
http://www.managementtoday.co.uk/search/article/985297/can-glaxosmithkline-its-medicine/

Can't see it getting better any time soon if ever!

#34 I'd think about retraining if I was you. Seriously!

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37. Jose on March 9, 2010 3:13 AM writes...

Jack, my estimate is that 4-6 years is going to be the bottom of the free fall in the US job market for chemists. Based on the timelines we saw in the combichem era, it will take another year or two to gut most everything stateside, and then 3-4 years of anxious waiting for the new India/China sites to (not) deliver their massive pipelines of blockbusters. At that point, mgmt will freak out, poop their skivvies again, and hire McKinzey and BCG to draw up yet another grand vision for a bright and shiny pharma future. This could include new chemistry stateside, but might not.

Many chemists will not be willing/able to make it through such a huge wasteland (too many hyper-experienced unemployed for too few jobs with marginal security) and will move to other fields. This means it could be a good time to finish, or we might all be watching the Götterdämmerung for an entire industrial era....

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38. Anonymous on March 9, 2010 4:41 AM writes...

#37 The problem with taking the wrong path each time is that the companies get smaller each time. So you've got to ride out at 7-8 year wasteland (that's just based on development time) and then whoever is left will still be getting smaller. Add to that the fact that the western economies will be increasingly impoverished (because they don't make anything) and your problems get worse - no-one is going to be prepared to pay for new drugs. You have to hope that your future employer probably based in China wants to use your skills over there.

Alternatively switch fields, but to what I really don't know.

The best tactic is probably to buy a small ranch in the middle of nowhere, stock up on food and ammo, and prepare for the end of days. It's not going to be pretty.

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39. Anonymous on March 9, 2010 5:28 AM writes...

Exelixis is one of the most successful small biotechs in recent years -- they've already partnered 11 early stage compounds.

#32 says "they didn't go after any interesting or novel targets--you're just not going to beat the big boys at making a PI3K inhibitor". That is exactly wrong. Exelixis went after the same targets as everyone else, and then sold almost every compound back to big pharma on great terms. e.g., Sanofi gave them $140M upfront cash + downstream royalties for their PI3-K program (for a Phase 1 compound!). They got $240M in upfront cash, plus downstream royalties, from BMS for a couple of Raf and Met inhibitors in phase I and II. The list goes on. You can't do better than that.

The reason that Exelixis is firing everyone is just what they say. They've partnered everything in their pipeline, and they need to wind down discovery in order to do development. Sucks if you are in discovery, but every small biotech dreams of getting to the point where they can do exactly what Exelixis is doing now.

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40. alig on March 9, 2010 7:27 AM writes...

Actually, every biotech dreams of putting drugs on the market. How many drugs does Exelixis have on the market?

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41. KinaseNerd on March 9, 2010 8:01 AM writes...

Morgan Stanley told big pharma rather recently to shut down in-house small molecule research and spent their money on in-licensing clinical compounds from small (biotech) companies. Great idea unless those biotech companies decide to kick out their own research staff to focus on supporting what they already have in the clinics. Bottomline, 10 years from now we will see a dramatic shortage of early clinical candidates and an inflation for licensing costs of phase I/II compounds. Will be interesting to watch how the Morgan Stanley guys will react to such a situation. I don't expect them to tell big pharma to reinvest into internal small molecule research ...

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42. Survivingfor now on March 9, 2010 8:38 AM writes...

I am a med chemist with >30 years in the industry. I've had to change jobs after layoffs in recent years but got something interesting and challenging outside Big Pharma but still in the industry. I'm one of the lucky ones who got out of BP earlier I guess. Anyway-I have told my kids that in no circumstances should they consider a career in science as I don't believe scientists are valued highly enough and I don't think that the jobs will be there in the future.
The sad thing is though is that in about 20 years there will probably be a scientist shortage and too many finance guys, lawyers and doctors around.

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43. Mike G on March 9, 2010 10:09 AM writes...

I agree with the posters who argue that the restructuring makes sense given Exelixis' situation. They've partnered out a bunch of anticancer compounds, most recently to Sanofi-Aventis ($140MM upfront), earlier to BMS ($195MM upfront plus an add'l $45MM in 2009). I assume these deals are still in place. I expect one of the BMS compounds may trigger milestone payments this year. The point is, they're in decent financial shape, and want to focus on advancing a handful of compounds into late stage development and beyond.

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44. Hap on March 9, 2010 10:28 AM writes...

#40: I don't think pharmas dream of putting compounds on the market anymore. That would require lots of money and lots of risk, and why do it if you don't have to. If big companies don't have discovery, they can outsource their risk to bigger companies and make lots of money. Of course, that puts the onus on bigger companies to be sure they aren't getting fleeced, which based on things like Sirtris, they might not be able to do.

I guess the concept of an economy where people trade goods and sell them for money is old-fashioned - now, you make money by making stuff up and hoping people are stupid enough to buy or by finding a captive audience who can't run away and bleed them dry, and in both cases hope no one notices before they're dead.

What happens when Exelixis's compunds tank? At a failure rate of 90%, there's a good chance of that, and then what? Heck, even if some do hit, what then - after all, you got rid of the people who found your last batch of drugs, and have to rebuild their knowledge and ability from scratch. And that's the best case.

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45. RB Woodward on March 9, 2010 10:29 AM writes...

"The reason that Exelixis is firing everyone is just what they say. They've partnered everything in their pipeline, and they need to wind down discovery in order to do development. Sucks if you are in discovery, but every small biotech dreams of getting to the point where they can do exactly what Exelixis is doing now."

This is the same business model I followed on my dairy farm. I had a herd of really productive cows, so once my tanks were topped off, I killed them all to concentrate on selling the milk.

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46. 2mrklr on March 9, 2010 11:01 AM writes...

@ RB Woodward

That's exactly the right strategy. After all, you can always get more cows from China, and they're real good at providing low cost milk too. Of course, it may come with a little melamine, but isn't that a good source of protein?

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47. tyrosine on March 9, 2010 11:01 AM writes...

RB Woodward,

Your sarcastic, but erroneous analogy would be applicable if Exelixis could borrow the money from big pharma or venture capital to "sell their milk". Unfortunately in this climate, they can't. And lest not forget that somewhere in their business model, they need to have something to sell.

I agree with the other posters who say that Exelixis is putting what little resources they have where they should. You cannot give up on your promising late-stage candidates. They are all you've got to lead you to success and at this point, succeeding in trials is far more important than discovering more drugs.

Finally, for everyone who is so negative on companies that keep on doing this, keep in mind that if Exelixis succeeds, more investors and more venture capital will flow into new startups. With that said, if Exelixis ends up as another failure, well...

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48. Hap on March 9, 2010 11:32 AM writes...

While milk doesn't cost much to sell, and developing a candidate into a drug does cost a lot, wasn't that development what all those great deals Exelixis was making were supposed to cover? They weren't supposed to have to flay themselves to the bone to cover their trial costs. In addition, their ability to get money from precisely those sou