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Farallon lands three directors on Exelixis board to push for changeshttps://www.bizjournals.com/sanfrancisco/news/2023/05/31/exelixis-farallon-capital-exel-cancer-cabozantinib.html Ron Leuty May 31, 2023 Shareholders of cancer drug developer Exelixis Inc. elected three Farallon Capital Management LLC-backed candidate to its board Wednesday, setting up a showdown around cutting the Alameda company's research spending and turning over the savings to investors. The votes tallied Wednesday came after a campaign by Farallon, which went public in early April, in which the San Francisco-based hedge fund said Exelixis (NASDAQ: EXEL) needed a more-focused approach to research and development. The company, which has explored various ways to combine its signature cancer-fighting drug cabozantinib with other drugs to expand its uses, had said spending on "cabo" and other drugs was needed to drive long-term revenue. "We expect the remaining incumbent directors to heed the clear message of this election and recognize that Exelixis must embrace change to achieve its full potential for patients and shareholders," Farallon said in a statement Wednesday. The battle is one of a handful of proxy fights involving Bay Area life sciences companies to emerge during the run-up to annual shareholder meetings. Those companies — Illumina Inc., Theravance Biopharma and Cutera Inc. — all rake in revenue from assets while most biotech companies do not. That revenue is attractive to activist investors, who pressure companies to cut costs to keep stock values high. Exelixis stock closed up 27 cents per share Wednesday to $19.28. Exelixis' Cabozantinib — branded as Cabometyx in tablet form for some kidney cancer patients and as Cometriq capsules for medullary thyroid cancer — in March failed a late-stage clinical trial in combination with the Roche immunotherapy Tecentriq against advanced kidney cancer. In the background at that point, Farallon was pushing for ways to return more of the windfall from cabo — a drug with $1.4 billion revenue last year — to shareholders. Doing so, Farallon partner Philip D. Dreyfuss said in a letter the firm made public in early April, would reward shareholders and ensure that Exelixis, led by CEO Michael Morrissey, would be "disciplined in priorities and maximizing the return on its research program." Exelixis pledged in March to buy back $550 million in shares, but Farallon, which owns about 7% of Exelixis' share, said the move wasn't enough. Farallon last month pressured Exelixis management to support two of the hedge fund's three director candidates, former Johnson & Johnson venture unit head Tom Heyman and former Otsuka America Pharmaceutical CEO Robert Oliver. Farallon then targeted director Lance Willsey, saying the longtime board member has "not had an active medical license since the 1990s"; Willsey resigned earlier this month, clearing the way for Farallon-backed Dave Johnson, the managing partner at health care activist hedge fund Caligan Partners, to join the board. "We are pleased that our three exceptional nominees were elected to the board of Exelixis and would like to thank our fellow shareholders for their engagement and overwhelming support at the annual meeting," Farallon said in its statement. "Tom, Dave and Bob are ready to work constructively with the rest of the board to fulfill the mandate they received from shareholders and help the company better allocate capital and focus its R&D efforts." |
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