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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM10-Q

   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended July 1, 2022
or
   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-30235
exel-20220701_g1.jpg
EXELIXIS, INC.
(Exact name of registrant as specified in its charter)

Delaware04-3257395
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)

1851 Harbor Bay Parkway
Alameda, CA 94502
(650) 837-7000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock $.001 Par Value per ShareEXELThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days).    Yes  ý No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   No ý
As of August 1, 2022, there were 321,831,784 shares of the registrant’s common stock outstanding.


EXELIXIS, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
2

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
EXELIXIS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
 
June 30, 2022December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$627,000 $647,169 
Short-term investments907,938 819,905 
Trade receivables, net235,400 282,650 
Inventory33,020 27,493 
Prepaid expenses and other current assets48,281 57,530 
Total current assets1,851,639 1,834,747 
Long-term investments463,889 371,112 
Property and equipment, net108,529 104,031 
Deferred tax assets, net113,958 111,663 
Goodwill63,684 63,684 
Other long-term assets279,705 131,002 
Total assets$2,881,404 $2,616,239 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$19,978 $24,258 
Accrued compensation and benefits61,450 61,969 
Accrued clinical trial liabilities76,740 77,544 
Rebates and fees due to customers43,795 33,700 
Accrued collaboration liabilities29,990 86,753 
Other current liabilities72,568 53,366 
Total current liabilities304,521 337,590 
Long-term portion of deferred revenues7,209 8,739 
Long-term portion of operating lease liabilities161,019 51,272 
Other long-term liabilities17,395 8,023 
Total liabilities490,144 405,624 
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.001 par value, 10,000 shares authorized and no shares issued
  
Common stock, $0.001 par value; 400,000 shares authorized; issued and outstanding: 321,800 and 318,842 at June 30, 2022, and December 31, 2021, respectively
322 319 
Additional paid-in capital2,477,117 2,427,561 
Accumulated other comprehensive loss(8,917)(758)
Accumulated deficit(77,262)(216,507)
Total stockholders' equity2,391,260 2,210,615 
Total liabilities and stockholders' equity$2,881,404 $2,616,239 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
3

EXELIXIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Revenues:
Net product revenues$347,044 $284,248 $657,342 $511,460 
License revenues57,526 39,640 89,593 67,168 
Collaboration services revenues14,857 61,289 28,472 76,779 
Total revenues419,427 385,177 775,407 655,407 
Operating expenses:
Cost of goods sold13,481 14,884 26,684 28,082 
Research and development199,481 148,790 356,152 308,078 
Selling, general and administrative122,759 98,495 225,622 200,846 
Total operating expenses335,721 262,169 608,458 537,006 
Income from operations83,706 123,008 166,949 118,401 
Interest income4,757 1,891 6,579 4,573 
Other income (expense), net45 (11)209 (101)
Income before income taxes88,508 124,888 173,737 122,873 
Provision for income taxes17,836 28,796 34,492 25,180 
Net income$70,672 $96,092 $139,245 $97,693 
Net income per share:
Basic$0.22 $0.31 $0.43 $0.31 
Diluted$0.22 $0.30 $0.43 $0.30 
Weighted-average common shares outstanding:
Basic321,117 314,117 320,349 313,295 
Diluted324,904 322,941 324,096 322,114 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

EXELIXIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net income$70,672 $96,092 $139,245 $97,693 
Other comprehensive loss:
Net unrealized losses on available-for-sale debt securities, net of tax impact of $639, $257, $2,295 and $756, respectively
(2,252)(755)(8,159)(2,491)
Comprehensive income$68,420 $95,337 $131,086 $95,202 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
4

EXELIXIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)

Three Months Ended June 30, 2022
Common StockAdditional
Paid-in
Capital
Accumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders' Equity
SharesAmount
Balance at March 31, 2022
320,268 $320 $2,448,130 $(6,665)$(147,934)$2,293,851 
Net income— — — — 70,672 70,672 
Other comprehensive loss— — — (2,252)— (2,252)
Issuance of common stock under equity incentive plans and stock purchase plan1,532 2 10,317 — — 10,319 
Stock transactions associated with taxes withheld on equity awards— — (6,225)— — (6,225)
Stock-based compensation— — 24,895 — — 24,895 
Balance at June 30, 2022
321,800 $322 $2,477,117 $(8,917)$(77,262)$2,391,260 
Three Months Ended June 30, 2021
Common StockAdditional
Paid-in
Capital
Accumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders' Equity
SharesAmount
Balance at March 31, 2021
313,262 $313 $2,354,103 $2,740 $(445,969)$1,911,187 
Net income— — — — 96,092 96,092 
Other comprehensive loss— — — (755)— (755)
Issuance of common stock under equity incentive plans and stock purchase plan1,560 2 11,283 — — 11,285 
Stock transactions associated with taxes withheld on equity awards— — (2,767)— — (2,767)
Stock-based compensation— — 28,035 — — 28,035 
Balance at June 30, 2021
314,822 $315 $2,390,654 $1,985 $(349,877)$2,043,077 

Continued on next page

5

EXELIXIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)

Six Months Ended June 30, 2022
Common StockAdditional
Paid-in
Capital
Accumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders' Equity
SharesAmount
Balance at December 31, 2021
318,842 $319 $2,427,561 $(758)$(216,507)$2,210,615 
Net income— — — — 139,245 139,245 
Other comprehensive loss— — — (8,159)— (8,159)
Issuance of common stock under equity incentive plans and stock purchase plan2,958 3 15,829 — — 15,832 
Stock transactions associated with taxes withheld on equity awards— — (11,185)— — (11,185)
Stock-based compensation— — 44,912 — — 44,912 
Balance at June 30, 2022
321,800 $322 $2,477,117 $(8,917)$(77,262)$2,391,260 
Six Months Ended June 30, 2021
Common StockAdditional
Paid-in
Capital
Accumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders' Equity
SharesAmount
Balance at December 31, 2020
311,627 $312 $2,321,895 $4,476 $(447,570)$1,879,113 
Net income— — — — 97,693 97,693 
Other comprehensive loss— — — (2,491)— (2,491)
Issuance of common stock under equity incentive plans and stock purchase plan3,195 3 15,484 — — 15,487 
Stock transactions associated with taxes withheld on equity awards— — (9,413)— — (9,413)
Stock-based compensation— — 62,688 — — 62,688 
Balance at June 30, 2021
314,822 $315 $2,390,654 $1,985 $(349,877)$2,043,077 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6

EXELIXIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Six Months Ended June 30,
 
20222021
Net income$139,245 $97,693 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization9,266 6,895 
Stock-based compensation44,381 62,688 
Non-cash lease expense6,443 2,586 
Deferred taxes 22,800 
Other, net4,359 22,831 
Changes in operating assets and liabilities:
Trade receivables, net46,693 (12,313)
Inventory(8,322)(8,020)
Prepaid expenses and other assets(26,025)(12,296)
Deferred revenue(1,831)9,346 
Accrued collaboration liabilities(53,263)2,972 
Accounts payable and other liabilities17,903 25,863 
Net cash provided by operating activities178,849 221,045 
Cash flows from investing activities:
Purchases of property, equipment and other(17,946)(33,768)
Purchases of investments(692,091)(688,903)
Proceeds from maturities and sales of investments500,356 714,081 
Net cash used in investing activities(209,681)(8,590)
Cash flows from financing activities:
Proceeds from issuance of common stock under equity incentive plans15,791 15,487 
Taxes paid related to net share settlement of equity awards(11,164)(9,413)
Net cash provided by financing activities4,627 6,074 
Net (decrease) increase in cash, cash equivalents, and restricted cash equivalents(26,205)218,529 
Cash, cash equivalents and restricted cash equivalents at beginning of period663,891 320,772 
Cash, cash equivalents and restricted cash equivalents at end of period$637,686 $539,301 
Supplemental cash flow disclosures:
Non-cash operating activities:
Right-of-use assets obtained in exchange for lease obligations$120,363 $4,893 
Non-cash investing activities:
Unpaid liabilities incurred for purchases of property and equipment$3,570 $5,125 
Unpaid liabilities incurred in asset acquisition$500 $9,000 
Unpaid liabilities incurred for unsettled investment purchases$ $7,378 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
7

EXELIXIS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Exelixis, Inc. (Exelixis, we, our or us) is an oncology-focused biotechnology company that strives to accelerate the discovery, development and commercialization of new medicines for patients with difficult-to-treat cancers. Using our considerable drug discovery, development and commercialization resources and capabilities, we have invented and brought to market innovative therapies that appropriately balance patient benefits and risks; we will continue to build on this foundation as we strive to provide cancer patients with new treatment options that improve upon current standards of care.
Today, four products that originated in Exelixis laboratories are available to be prescribed to patients. Sales related to our flagship molecule, cabozantinib, account for the large majority of our revenues. Cabozantinib is an inhibitor of multiple tyrosine kinases including MET, AXL, VEGF receptors and RET and has been approved by the U.S. Food and Drug Administration (FDA) and in 62 other countries as: CABOMETYX® (cabozantinib) tablets approved for advanced renal cell carcinoma (RCC), both alone and in combination with Bristol-Myers Squibb Company’s (BMS) OPDIVO® (nivolumab), for previously treated hepatocellular carcinoma (HCC) and, currently by the FDA and European Commission (EC), for previously treated, radioactive iodine (RAI)-refractory differentiated thyroid cancer (DTC); and COMETRIQ® (cabozantinib) capsules approved for progressive, metastatic medullary thyroid cancer (MTC). For physicians treating these types of cancer, cabozantinib has become or is becoming an important medicine in their selection of effective therapies.
The other two products resulting from our discovery efforts are: COTELLIC® (cobimetinib), an inhibitor of MEK approved as part of multiple combination regimens to treat specific forms of advanced melanoma and marketed under a collaboration with Genentech, Inc. a member of the Roche Group (Genentech); and MINNEBRO® (esaxerenone), an oral, non-steroidal, selective blocker of the mineralocorticoid receptor approved for the treatment of hypertension in Japan and licensed to Daiichi Sankyo Company, Limited (Daiichi Sankyo).
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements include the accounts of Exelixis and those of our wholly owned subsidiaries. These entities’ functional currency is the U.S. dollar. All intercompany balances and transactions have been eliminated.
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial statements for the periods presented have been included. Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or for any future period. The accompanying Condensed Consolidated Financial Statements and Notes thereto should be read in conjunction with our Consolidated Financial Statements and Notes included in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 18, 2022 (Fiscal 2021 Form 10-K).
We have adopted a 52- or 53-week fiscal year policy that generally ends on the Friday closest to December 31st. Fiscal year 2022, which is a 52-week fiscal year, will end on December 30, 2022 and fiscal year 2021, which was a 52-week fiscal year, ended on December 31, 2021. For convenience, references in this report as of and for the fiscal periods ended July 1, 2022 and July 2, 2021, and as of and for the fiscal year ending December 30, 2022 are indicated as being as of and for the fiscal periods ended June 30, 2022 and June 30, 2021, and the year ending December 31, 2022, respectively.
Segment Information
We operate in one business segment that focuses on the discovery, development and commercialization of new medicines for difficult-to-treat cancers. Our Chief Executive Officer, as the chief operating decision-maker, manages and allocates resources to our operations on a total consolidated basis. Consistent with this decision-making process, our Chief
8

Executive Officer uses consolidated, single-segment financial information for purposes of evaluating performance, forecasting future period financial results, allocating resources and setting incentive targets.
All of our long-lived assets are located in the U.S. See “Note 2. Revenues” for enterprise-wide disclosures about product sales, revenues from major customers and revenues by geographic region.
Use of Estimates
The preparation of the accompanying Condensed Consolidated Financial Statements conforms to accounting principles generally accepted in the U.S., which requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenues and expenses, and related disclosures. On an ongoing basis, we evaluate our significant estimates. We base our estimates on historical experience and on various other market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates.
Reclassifications
Certain prior period amounts in the accompanying Condensed Consolidated Financial Statements have been reclassified to conform to the current period presentation. Such reclassifications did not impact previously reported total revenues, income from operations, net income, total assets, total liabilities or total stockholders’ equity.
Significant Accounting Policies
There have been no material changes to our significant accounting policies during the six months ended June 30, 2022, compared to the significant accounting policies disclosed in “Note 1. Organization and Summary of Significant Accounting Policies” of the “Notes to Consolidated Financial Statements” included in Part II, Item 8 of our Fiscal 2021 Form 10-K.
Recently Adopted Accounting Pronouncements
There were no new accounting pronouncements adopted by us since the filing of our Fiscal 2021 Form 10-K, which could have a significant effect on our Condensed Consolidated Financial Statements.
Recent Accounting Pronouncements Not Yet Adopted
There were no new accounting pronouncements issued since the filing of our Fiscal 2021 Form 10-K, which could have a significant effect on our Condensed Consolidated Financial Statements.
NOTE 2. REVENUES
Revenues consisted of the following (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Product revenues:
Gross product revenues$483,073 $380,204 $931,310 $694,409 
Discounts and allowances(136,029)(95,956)(273,968)(182,949)
Net product revenues347,044 284,248 657,342 511,460 
Collaboration revenues:
License revenues57,526 39,640 89,593 67,168 
Collaboration services revenues14,857 61,289 28,472 76,779 
Total collaboration revenues72,383 100,929 118,065 143,947 
Total revenues$419,427 $385,177 $775,407 $655,407 
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The percentage of total revenues by customer who individually accounted for 10% or more of our total revenues were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Affiliates of McKesson Corporation16 %14 %17 %14 %
Affiliates of CVS Health Corporation16 %13 %16 %14 %
Affiliates of AmerisourceBergen Corporation15 %12 %16 %13 %
Ipsen Pharma SAS15 %24 %12 %19 %
Accredo Health, Incorporated10 %8 %9 %8 %
The percentage of trade receivables by customer who individually accounted for 10% or more of our trade receivables were as follows:
June 30, 2022December 31, 2021
Ipsen Pharma SAS30 %50 %
Affiliates of McKesson Corporation17 %10 %
Affiliates of AmerisourceBergen Corporation14 %11 %
Affiliates of CVS Health Corporation14 %9 %
Cardinal Health10 %6 %
Revenues by geographic region were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
U.S.$349,615 $287,190 $663,680 $517,147 
Europe62,240 90,921 96,767 124,727 
Japan7,572 7,066 14,960 13,533 
Total revenues$419,427 $385,177 $775,407 $655,407 
Total revenues include net product revenues attributed to geographic regions based on the ship-to location and license and collaboration services revenues attributed to geographic regions based on the location of our collaboration partners’ headquarters.
Net product revenues and license revenues are recorded in accordance with ASC Topic 606, Revenue from Contracts with Customers (Topic 606). License revenues include the recognition of the portion of milestone payments allocated to the transfer of intellectual property licenses for which it had become probable in the current period that the milestone would be achieved and a significant reversal of revenues would not occur, as well as royalty revenues and our share of profits under our collaboration agreement with Genentech. Collaboration services revenues were recorded in accordance with ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 and by analogy to Topic 606. Collaboration services revenues include the recognition of deferred revenues for the portion of upfront and milestone payments allocated to our research and development services performance obligations, development cost reimbursements earned under our collaboration agreements, product supply revenues, net of product supply costs, and the royalties we paid on sales of products containing cabozantinib by our collaboration partners.
Net product revenues by product were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
CABOMETYX$339,159 $275,614 $641,971 $499,209 
COMETRIQ7,885 8,634 15,371 12,251 
Net product revenues$347,044 $284,248 $657,342 $511,460 
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Product Sales Discounts and Allowances
The activities and ending reserve balances for each significant category of discounts and allowances, which constitute variable consideration, were as follows (in thousands):
Chargebacks, Discounts for Prompt Payment and Other
Other Customer Credits/Fees and Co-pay Assistance
Rebates
Total
Balance at December 31, 2021
$14,625 $8,875 $24,825 $48,325 
Provision related to sales made in:
Current period175,564 24,444 72,890 272,898 
Prior periods1,311 (168)(73)1,070 
Payments and customer credits issued(171,534)(22,186)(64,812)(258,532)
Balance at June 30, 2022
$19,966 $10,965 $32,830 $63,761 
The allowance for chargebacks, discounts for prompt payment and other are recorded as a reduction of trade receivables, net, and the remaining reserves are recorded as rebates and fees due to customers in the accompanying Condensed Consolidated Balance Sheets.
Contract Assets and Liabilities
We receive payments from our collaboration partners based on billing schedules established in each contract. Amounts are recorded as accounts receivable when our right to consideration is unconditional. We may also recognize revenue in advance of the contractual billing schedule, and such amounts are recorded as a contract asset when recognized. We may be required to defer recognition of revenue for upfront and milestone payments until we perform our obligations under these arrangements, and such amounts are recorded as deferred revenue upon receipt or when due. For those contracts that have multiple performance obligations, contract assets and liabilities are reported on a net basis at the contract level. Contract assets are primarily related to Ipsen Pharma SAS (Ipsen) and contract liabilities are primarily related to deferred revenues from Takeda Pharmaceutical Company Limited (Takeda).
Contract assets and liabilities were as follows (in thousands):
June 30, 2022December 31, 2021
Contract assets (1)
$394 $1,665 
Contract liabilities:
Current portion (2)
$7,513 $7,814 
Long-term portion (3)
7,209 8,739 
Total contract liabilities$14,722 $16,553 
____________________
(1)    Presented in other long-term assets in the accompanying Condensed Consolidated Balance Sheets.
(2)    Presented in other current liabilities in the accompanying Condensed Consolidated Balance Sheets.
(3)    Presented in the long-term portion of deferred revenues in the accompanying Condensed Consolidated Balance Sheets
During the six months ended June 30, 2022 and 2021, we recognized $4.5 million and $4.8 million, respectively, in revenues that were included in the beginning deferred revenues balance for those periods.
During the three and six months ended June 30, 2022, we recognized $59.4 million and $91.1 million, respectively, in revenues for performance obligations satisfied in previous periods. Such revenues were primarily related to royalty payments allocated to the license performance obligations for our collaborations with Ipsen, Takeda, Daiichi Sankyo and Genentech and the recognition of license revenue for the achievement of milestones during the three months ended June 30, 2022, allocated to the license performance obligations for our collaboration with Ipsen.
As of June 30, 2022, $89.3 million of the combined transaction prices for our Ipsen and Takeda collaborations were allocated to our research and development services performance obligations that had not yet been satisfied. See “Note 3. Collaboration Agreements and Business Development Activities” of the “Notes to Consolidated Financial Statements”
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included in Part II, Item 8 of our Fiscal 2021 Form 10-K for additional information about the expected timing to satisfy these performance obligations.
NOTE 3. COLLABORATION AGREEMENTS AND BUSINESS DEVELOPMENT ACTIVITIES
We have established multiple collaborations with leading pharmaceutical companies for the commercialization and further development of our cabozantinib franchise. Additionally, we have entered into several research collaborations, in-licensing arrangements and other strategic transactions to further enhance our early-stage pipeline and expand our ability to discover, develop and commercialize novel therapies with the goal of providing new treatment options for cancer patients and their physicians. Historically, we also entered into other collaborations with leading pharmaceutical companies pursuant to which we out-licensed other compounds and programs in our portfolio.
See “Note 3. Collaboration Agreements and Business Development Activities” of the “Notes to Consolidated Financial Statements” included in Part II, Item 8 of our Fiscal 2021 Form 10-K, as further described below, for additional information on certain of our collaboration agreements and in-licensing arrangements.
Cabozantinib Commercial Collaborations
Ipsen Collaboration
In February 2016, we entered into a collaboration agreement with Ipsen for the commercialization and further development of cabozantinib. Under the terms of the collaboration agreement, as amended, Ipsen received exclusive commercialization rights for current and potential future cabozantinib indications outside of the U.S. and Japan. We have also agreed to collaborate with Ipsen on the development of cabozantinib for current and potential future indications. The parties’ efforts are governed through a joint steering committee and appropriate subcommittees established to guide and oversee the collaboration’s operation and strategic direction; provided, however, that we retain final decision-making authority with respect to cabozantinib’s ongoing development.
Revenues under the collaboration agreement with Ipsen were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
License revenues$51,168 $33,656 $75,782 $56,107 
Collaboration services revenues11,072 57,265 20,985 68,620 
Total$62,240 $90,921 $96,767 $124,727 
During the three months ended June 30, 2022, we recognized $25.7 million in revenues in connection with two regulatory milestones totaling $27.0 million upon approval by the European Commission and Health Canada of cabozantinib as monotherapy for the treatment of adult patients with locally advanced or metastatic differentiated thyroid carcinoma (DTC), refractory or not eligible to radioactive iodine (RAI) who have progressed during or after prior systemic therapy.
As of June 30, 2022, $51.9 million of the transaction price for this collaboration was allocated to our research and development services performance obligations that have not yet been satisfied.
Takeda Collaboration
In January 2017, we entered into a collaboration and license agreement with Takeda for the commercialization and further development of cabozantinib. Pursuant to this collaboration and license agreement, as amended, Takeda has exclusive commercialization rights for current and potential future cabozantinib indications in Japan, and the parties have agreed to collaborate on the clinical development of cabozantinib in Japan. The operation and strategic direction of the parties’ collaboration is governed through a joint executive committee and appropriate subcommittees.
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Revenues under the collaboration agreement with Takeda were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
License revenues$2,700 $2,097 $5,065 $3,398 
Collaboration services revenues3,785 4,024 7,487 8,159 
Total$6,485 $6,121 $12,552 $11,557 
As of June 30, 2022, $37.5 million of the transaction price for this collaboration was allocated to our research and development services performance obligations that have not yet been satisfied.
Royalty Pharma
In October 2002, we established a product development and commercialization collaboration agreement with GlaxoSmithKline (GSK), that required us to pay a 3% royalty to GSK on the worldwide net sales of any product incorporating cabozantinib sold by us and our collaboration partners. Effective January 1, 2021, Royalty Pharma plc (Royalty Pharma) acquired from GSK all rights, title and interest in royalties on net product sales containing cabozantinib for non-U.S. markets for the full term of the royalty and for U.S. market through September 2026, after which time U.S. royalties will revert back to GSK. Royalties earned by Royalty Pharma in connection with our sales of cabozantinib are included in cost of goods sold and in connection with sales by our collaboration partners are included as a reduction of collaboration services revenues. Such royalties were $14.6 million and $27.7 million during the three and six months ended June 30, 2022, respectively, as compared to $12.1 million and $22.2 million in the corresponding periods in 2021.

Other Commercial Collaborations
Genentech Collaboration
In December 2006, we out-licensed the development and commercialization of cobimetinib to Genentech under a worldwide collaboration agreement. In November 2015, the FDA approved cobimetinib, under the brand name COTELLIC, in combination with Genentech’s ZELBORAF® (vemurafenib) for the treatment of patients with BRAF V600E or V600K mutation-positive advanced melanoma. COTELLIC in combination with ZELBORAF has also been approved in the European Union and multiple additional countries for use in the same indication. In July 2020, the FDA also approved COTELLIC for use in combination with ZELBORAF and TECENTRIQ® (atezolizumab) for the treatment of patients with BRAF V600 mutation-positive advanced melanoma in previously untreated patients.
License revenues under the collaboration agreement with Genentech were as follows (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Profits on U.S. commercialization$1,682 $2,160 $3,821 $3,954 
Royalty revenues on ex-U.S. sales$889 $782 $2,517 $1,733 
Research Collaborations, In-Licensing Arrangements and Other Business Development Activities
Our research collaborations, in-licensing arrangements and other strategic transactions include upfront payments, development, regulatory, commercial milestone payments and royalty payments, contingent upon the occurrence of certain future events linked to the success of the asset in development. Certain of our research collaborations provide us exclusive options that give us the right to license programs developed under the research collaborations for further discovery and development. When we decide to exercise the options, we are required to pay an exercise fee and then, in most instances we will assume the responsibilities for all subsequent clinical development, manufacturing and commercialization. In conjunction with each of these collaborative in-licensing arrangements, we were subject to upfront payments and will make payments for potential future development, regulatory, and commercial milestones as well as royalties on future net product sales.
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In June 2022, we entered into an exclusive option and license agreement with BioInvent International AB (BioInvent), upon which we paid BioInvent an upfront payment of $25.0 million. Upon option exercise, we will pay BioInvent an option exercise fee, and BioInvent will be eligible for additional payments from us for future development and commercial milestones, as well as royalties on future net product sales.
As of June 30, 2022, in conjunction with each of our collaborative in-licensing arrangements, and an asset purchase agreement entered in 2021, we will make payments for potential future development milestones of up to $321.8 million, regulatory milestones of up to $453.7 million and commercial milestones of up to $2,070.7 million, each in the aggregate per product or target, as well as royalties on future net product sales.
NOTE 4. CASH AND INVESTMENTS
Cash, Cash Equivalents and Restricted Cash Equivalents
A reconciliation of cash, cash equivalents, and restricted cash equivalents reported in the accompanying Condensed Consolidated Balance Sheets to the amount reported within the accompanying Condensed Consolidated Statements of Cash Flows was as follows (in thousands):
 
June 30, 2022December 31, 2021
Cash and cash equivalents$627,000 $647,169 
Restricted cash equivalents included in other long-term assets10,686 16,722 
Cash, cash equivalents, and restricted cash equivalents as reported in the accompanying Condensed Consolidated Statements of Cash Flows$637,686 $663,891 
Restricted cash equivalents are used to collateralize letters of credit and consist of money-market funds and certificates of deposit with original maturities of 90 days or less. The restricted cash equivalents are classified as other long-term assets based upon the remaining term of the underlying restriction. As of June 30, 2022, restricted cash equivalents included $9.2 million of short-term investments, which is collateral under our January 2021 standby letter of credit to guarantee our obligation to fund a portion of the total tenant improvements related to our build-to-suit lease at our corporate campus. As we fund these tenant improvements, our restricted cash becomes available for operations. Our January 2021 standby letter of credit will remain effective through August 31, 2022.
Cash, Cash Equivalents, Restricted Cash Equivalents and Investments
Cash, cash equivalents, restricted cash equivalents and investments consisted of the following (in thousands):
June 30, 2022
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
Debt securities available-for-sale:
Commercial paper$880,593 $ $(107)$880,486 
Corporate bonds573,343 117 (9,059)564,401 
U.S. Treasury and government-sponsored enterprises255,407 58 (2,057)253,408 
Municipal bonds12,350  (202)12,148 
Total debt securities available-for-sale1,721,693 175 (11,425)1,710,443 
Cash80,747   80,747 
Money market funds87,821   87,821 
Certificates of deposit130,502   130,502 
Total cash, cash equivalents, restricted cash equivalents and investments$2,020,763 $175 $(11,425)$2,009,513 

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December 31, 2021
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
Debt securities available-for-sale:
Commercial paper$945,801 $42 $(2)$945,841 
Corporate bonds541,774 876 (1,672)540,978 
U.S. Treasury and government-sponsored enterprises33,965 1 (21)33,945 
Municipal bonds12,924 15 (35)12,904 
Total debt securities available-for-sale1,534,464 934 (1,730)1,533,668 
Cash135,653   135,653 
Money market funds66,531   66,531 
Certificates of deposit119,056   119,056 
Total cash, cash equivalents, restricted cash equivalents and investments
$1,855,704 $934 $(1,730)$1,854,908 
Interest receivable was $3.6 million and $2.9 million as of June 30, 2022 and December 31, 2021, respectively, and is included in prepaid expenses and other current assets in the accompanying Condensed Consolidated Balance Sheets.
Realized gains and losses on the sales of investments were insignificant during the three and six months ended June 30, 2022, and 2021.
We manage credit risk associated with our investment portfolio through our investment policy, which limits purchases to high-quality issuers and limits the amount of our portfolio that can be invested in a single issuer. The fair value and gross unrealized losses on debt securities available-for-sale in an unrealized loss position were as follows (in thousands):
June 30, 2022
Fair ValueGross Unrealized Losses
Corporate bonds$540,226 $(9,059)
U.S. Treasury and government-sponsored enterprises237,680 (2,057)
Commercial paper14,000 (107)
Municipal bonds12,148 (202)
Total$804,054 $(11,425)