Exelixis Files Definitive Proxy Statement and Mails Letter to Shareholders

Urges Shareholders to Vote “FOR” All of Exelixis’ 11 Recommended Director Nominees on the GOLD Proxy Card

ALAMEDA, Calif.–(BUSINESS WIRE)–Exelixis, Inc. (Nasdaq: EXEL) (the “Company”) today announced that it has filed its definitive proxy materials with the Securities and Exchange Commission (“SEC”) in connection with its 2023 Annual Meeting of Stockholders (the “Annual Meeting”), which will be held on May 31, 2023. Shareholders of record as of April 3, 2023, will be entitled to vote at the meeting.

In conjunction with the definitive proxy filing, Exelixis is mailing a letter to the Company’s shareholders that highlights, among other things, that Exelixis is:

• Executing a clear strategy to drive improved outcomes for patients, leading to long-term value creation: Exelixis today is a commercially successful oncology company, with its flagship medicine CABOMETYX^® (cabozantinib) now a leading therapy for three different forms of cancer and generating nearly $2 billion global net product revenue in the last year alone. The Company’s share price has increased over 300% since 2016 when CABOMETYX^® received its first U.S. approval.

• Underpinned by a disciplined approach to capital allocation: Exelixis’ capital plan strategically balances R&D spend with returning capital to shareholders. The Company’s capital efficient and highly-focused R&D strategy significantly offsets the inherent risk of oncology drug development. As a result of decades of experience in drug discovery and development, cost-sharing partnerships and selective, strategic investments, Exelixis has spent significantly less in R&D expense in the last five years as compared to other commercial-scale, oncology-focused biotech companies, which have had to resort to raising dilutive funds. The Company’s recently announced $550 million share repurchase program, which is expected to be completed this year, is an exceedingly rare action for a biotech company of Exelixis’ size and stage and a testament to its commitment to delivering meaningful shareholder returns.

• Overseen by a highly qualified Board of Directors committed to refreshment: The Exelixis Board includes some of the industry’s best scientific, financial and commercial minds, who have a deep understanding of the biopharmaceutical industry. At the Annual Meeting, two of Exelixis’ long-tenured directors will not stand for re-election and the Board is recommending the election of Tomas Heyman and Bob Oliver, two new independent directors who were originally nominated by Farallon Capital Management, L.L.C. (“Farallon”) along with fellow Exelixis shareholder Caligan Partners (together the “Activist Group”). The Board is actively identifying, evaluating and interviewing candidates with relevant skills and expertise and has committed to replace two directors, one in each of the next two years, with two new independent directors. Following the Annual Meeting, four of 11 Board members will have been elected in the last five years.

• Open to all shareholder input: Exelixis’ long history of engaging with Farallon demonstrates the Board’s willingness to engage with all shareholders. The Company has met with Farallon over 50 times since 2018, and most recently has embraced its proposals that the Board believed were in the best interests of all the Company’s shareholders.

• Working to avoid an unnecessary proxy contest despite Farallon’s highly unreasonable demands and insistence on an underqualified candidate: Despite the Board’s good faith efforts to reach a near-final settlement agreement, Farallon launched an unnecessary proxy contest, with unprecedented demands that would create dangerous liabilities for the Company, while jeopardizing the Company’s progress to deliver long-term value creation. The Activist Group’s candidate, David Johnson, does not understand the Company’s business, lacks key qualifications and would not be additive to the Exelixis Board.

Exelixis’ definitive proxy materials can be found on the Company’s website at https://ir.exelixis.com.

The full text of the letter being mailed to shareholders follows:

May 1, 2023

Dear Fellow Shareholder,

Your Exelixis Board of Directors and management team have been executing a clear and successful strategy to discover, develop and commercialize the next generation of anti-cancer medicines, while creating sustainable shareholder value. Our flagship medicine, cabozantinib, is now a leading cancer therapy sold in 68 countries worldwide – generating nearly $2 billion in global net product revenue annually. We continually leverage our expertise and learnings from this franchise to inform how best to strategically invest in, and grow, the Exelixis product pipeline. When we win for our patients, we win for our shareholders as well.

At the upcoming Annual Meeting of Stockholders (the “Annual Meeting”), you will have a critical decision to make regarding the future of your investment in Exelixis. There are five important reasons why we believe the choice is clear and you should vote “FOR” Exelixis’ 11 recommended director nominees on the GOLD universal proxy card:

• Exelixis’ strategy is driving improved outcomes for patients, leading to long-term value for shareholders.

• Exelixis’ success is underpinned by a disciplined capital plan that strikes the right balance between strategic R&D investment and returning capital to shareholders.

• Exelixis’ Board is exceptionally qualified, with some of the industry’s best scientific, financial and commercial minds and specialized expertise in disciplines that are priority areas for the business. The Board is committed to ongoing refreshment and, as a first step, has nominated two of the Activist Group’s nominees – Tomas Heyman and Robert Oliver – to replace two of our existing directors at the 2023 Annual Meeting and has committed to replace two directors, one in each of the next two years, with two new independent directors.

• Exelixis’ track record of shareholder engagement proves we are open to shareholder input, and we have acted upon it.

• Exelixis has a long history of constructive engagement with Farallon and embraced the vast majority of its proposals in a good faith effort to reach a settlement – this proxy contest is unnecessary and risks jeopardizing Exelixis’ mission, the progress we have made and our long-term shareholder value trajectory.

EXELIXIS’ NOMINEES REFLECT A THOUGHTFUL REFRESHMENT PROCESS AND ARE WELL-EQUIPPED TO HELP DRIVE GREATER VALUE FOR ALL SHAREHOLDERS, WHILE AVOIDING AN UNNECESSARY PROXY CONTEST. THE ACTIVIST GROUP HAS A DIFFERENT AGENDA.

In addition to Exelixis’ 11 recommended director nominees, you will see one other nominee listed on the proxy card – David Johnson. Mr. Johnson is a partner and the co-founder of Caligan Partners (“Caligan”), an activist investor. Caligan has joined forces with another Exelixis shareholder, Farallon Capital Management, L.L.C. (“Farallon”) (together the “Activist Group”), to pursue this proxy contest. Mr. Johnson is a nominee of the Activist Group. As detailed below, the Board determined he lacks the requisite skillsets and qualifications to serve as a director; as a result, Mr. Johnson is NOT recommended by the Board.

Exelixis has had over 50 meetings with Farallon in the past five years. When Farallon presented three director candidates, Messrs. Heyman, Oliver and Johnson, earlier this year, the Board immediately agreed to consider them in a thoughtful manner. Following extensive interviews, the Board determined that Messrs. Heyman and Oliver were excellent candidates and would further enhance our Board given their meaningful biopharma industry experience and complementary skills and expertise. Accordingly, we agreed to appoint them to the Board as part of our good faith effort to reach a settlement with Farallon and avoid an unnecessary and disruptive proxy contest. Following similar interviews and evaluation of Mr. Johnson, the Board determined that he would not be additive to the Board.

Despite our good faith efforts, Farallon abruptly abandoned settlement discussions. Still, we continue to believe that Messrs. Heyman and Oliver would be strong directors and, therefore, are recommending them for election in line with our Board’s commitment to acting in our shareholders’ best interests. As we look to add these two new directors at the Annual Meeting, we have announced that two incumbent directors – Carl Feldbaum, Esq. and Vincent Marchesi, M.D., Ph.D. – will not stand for re-election. We greatly appreciate their service and invaluable contributions to Exelixis.

In direct opposition to Exelixis’ attempts to seek compromise, the Activist Group has determined to pursue this unnecessary proxy contest. We believe its agenda, which calls for Exelixis to largely eliminate R&D spending in favor of near-term capital return to shareholders, is short-sighted and value destructive. It would cripple Exelixis’ ability to progress potentially life-saving medicines for cancer patients that would, in turn, create significant long-term value for shareholders.

It is imperative that the Company stay on the right course by executing on our commercial and R&D strategy with a balanced capital plan. This is why we strongly urge you to vote “FOR” Exelixis’ 11 recommended director nominees on the enclosed GOLD universal proxy card:

Maria Freire, Ph.D.		George Poste, DVM, Ph.D., FRS
Alan Garber, M.D., Ph.D.		Julie Anne Smith
Tomas Heyman		Lance Willsey, M.D.
Michael Morrissey, Ph.D.		Jacqueline Wright
Robert Oliver, Jr.		Jack Wyszomierski
Stelios Papadopoulos, Ph.D.

EXECUTING A CLEAR STRATEGY, DELIVERING PROGRESS ACROSS THE PORTFOLIO AND GENERATING STRONG FINANCIAL RESULTS

We have grown Exelixis into a commercially successful oncology company that helps cancer patients recover stronger and live longer. Today, Exelixis has a solid foundation for growth, marked by achieving six consecutive years of annual profitability and is building a differentiated pipeline of biotherapeutics and small molecules that address significant unmet medical needs in patients with solid cancer tumors. The Company’s share price has increased over 300% since 2016 when CABOMETYX^® received its first U.S. approval, underscoring the strength and consistency of our operational execution, which has resulted in meaningful long-term value creation.

January 2023 marked the tenth anniversary of the first commercial launch for cabozantinib in advanced medullary thyroid cancer. Cabozantinib:

• Is a leading therapy for three different forms of cancer and a standard of care in renal cell carcinoma (RCC);
• Has delivered strong product revenue growth of 89% since 2020, generating nearly $2 billion in global net product revenues in the last year alone; and
• Clearly demonstrates the ability of our integrated discovery and development platform to advance meaningful therapies for patients.

Exelixis’ robust innovation and discovery pipeline is fueling our strong momentum as we move through 2023. We are focused on:

• Advancing our wholly-owned assets: zanzalintinib, a next-generation tyrosine kinase inhibitor currently in phase 3 development that builds on our extensive experience with cabozantinib, and XB002, a next-generation, differentiated tissue factor targeting antibody-drug conjugate, expected to reach full development by year-end 2023;
• Building a sustainable and differentiated biotherapeutics and small molecule pipeline focused on key oncology pathways in solid tumors through targeted investment in internal discovery programs; and
• Leveraging business development collaborations to complement in-house discovery, with a disciplined approach to identifying opportunities that enhance the Exelixis pipeline, including two value-creating option deals that require limited capital and provide access to promising clinical-stage assets.

The Exelixis stock price has experienced headwinds due to ongoing abbreviated new drug application (ANDA) legal proceedings. We believe that the ANDA trial in Delaware Federal Court in October 2023 will illuminate key facts and related arguments, which should cause those headwinds to dissipate. In these proceedings, we continue to protect the intellectual property that underlies the innovative quality of our nearly $2 billion global oncology franchise.

PURSUING STRATEGIC R&D INVESTMENTS WHILE RETURNING $550 MILLION TO SHAREHOLDERS

Underpinning the execution of our strategy is a disciplined capital plan that strikes the right balance between strategic R&D investment and returning capital to shareholders. Since 2015, we have demonstrated financial discipline relying exclusively on net revenues to invest in growing our business without the need for dilutive financings. When we effectively invest in innovation, the pipeline and our platforms, we maximize our opportunities to achieve meaningful clinical success and maximize long-term value creation. In fact, the Company has incurred significantly less in R&D expense in the last five years as compared to other commercial-scale, oncology-focused biotech companies with similar net product revenues, some of which have had to resort to the capital markets to raise dilutive funds¹.

Our capital-efficient and rigorous R&D strategy significantly offsets the inherent risk of oncology drug development, which has a historically high failure rate:

• Collaboration: We have leveraged global oncology partners, including Bristol Myers Squibb, Roche, Ipsen and Takeda, to advance a broad phase 3 development strategy for CABOMETYX while sharing the majority of costs, totaling over $450 million or approximately 60% of development costs since 2017. This approach has resulted in significant label extensions and an approximate doubling of revenues for cabozantinib since 2020. Furthermore, we have supplemented our in-house research efforts with capital-efficient business development, including by leveraging option structures and backend-loaded economics, as evidenced by XB002 and XL102, which we in-licensed in 2020, and pay-for-success option deals with Cybrexa Therapeutics and Sairopa.

• Success-Driven: The majority of our R&D spend is focused on our two wholly-owned lead investigational therapeutics, zanzalintinib and XB002. These product candidates are based on clinical proof of concept from cabozantinib and Tivdak^®, respectively, which significantly diminishes their risk to our portfolio. Having focused our strategy in solid tumors, we will be able to leverage the successful commercial infrastructure we have built for CABOMETYX to commercialize next-generation zanzalintinib and XB002, resulting in an efficient multi-product salesforce.

• Rigorous: Our development portfolio beyond cabozantinib is also strategically focused, and we are currently sponsoring only six clinical trials to generate proof-of-concept data efficiently, as well as pursuing indications where we see clear opportunities both clinically and commercially.

• Disciplined: We have always deployed a disciplined capital allocation plan that ensures we make the right investments at the right time without burning hard-earned capital and adding undue risk to the Company. Our strong balance sheet allows us to opportunistically deploy capital to high-yield assets.

Supported by a balance sheet with approximately $2.1 billion in cash and investments at year-end 2022, as well as ongoing cash flow from operations, following ongoing conversations with our shareholders, the Company recently announced a $550 million share repurchase program – the first in our history – expected to be completed before the end of this year. Implementing a share buyback program demonstrates our commitment to being responsible stewards of shareholder capital, particularly given Exelixis’ size and stage as a biotech company.

YOUR BOARD IS HIGHLY QUALIFIED, ENGAGED AND FOCUSED ON CONTINUED REFRESHMENT

The Exelixis Board includes some of the industry’s best scientific, financial and commercial minds. Our Board members have a deep understanding of the biotech industry with highly-specialized expertise in R&D, commercial operations, licensing partnerships and strategic and financial planning – priority areas for our company. Collectively, our diverse Board has experience at many of the leading medical institutions, including Harvard Medical School, Stanford Medicine, the Dana-Farber Cancer Institute, TB Alliance, the National Institutes of Health, NYU Grossman School of Medicine, Yale New Haven Health and more.

We are refreshing our Board, and are confident that, if elected, the nominees that we support in the upcoming election, including Messrs. Heyman and Oliver who were originally nominated by the Activist Group, will bring valuable perspectives and expertise as we usher in our next chapter of growth. Messrs. Heyman and Oliver possess a deep understanding of the industry and importantly, of Exelixis and our operations. We are confident that their expertise will enable them to contribute to the execution of our R&D strategy and drive long-term returns.

The Board is actively identifying, evaluating and interviewing additional highly qualified candidates with relevant experience as part of the Board’s continued refreshment program. We have also committed to replace two directors, one in each of the next two years, with two new independent directors.

The Activist Group is attempting to remove one of our independent directors, Dr. Lance Willsey, from the Board. We strongly disagree with this proposal. Dr. Willsey brings a unique perspective at the intersection of investment and life sciences. He is a pioneer in the field of life science investing and, for the last 30 years, Dr. Willsey has served as an advisor to institutional investors in the field of oncology. He is also a recognized and highly-respected clinical oncologist and R&D expert with experience at some of the foremost medical institutions in the U.S., including the Dana-Farber Cancer Institute and Massachusetts General Hospital. Furthermore, he maintains deep relationships with leading experts in cancer, which we often leverage to help us execute on our mission to develop therapeutics to build long-term value and help patients.

We believe Dr. Willsey has an unmatched ability to oversee pipeline growth, business development opportunities and an integrated capital plan as well as bringing an investor perspective – all of which are critical aspects of Exelixis’ business and key focus areas for the Company today.

In contrast, the Activist Group’s candidate, Mr. Johnson, made it clear throughout the interview process that his motivations are fully aligned with those of the Activist Group and represent the same narrow short-term agenda. It is our strong belief that Mr. Johnson would not be open minded or act with independence in the Boardroom. During the interview process, Mr. Johnson was unable to articulate the fundamentals of our R&D strategy, capital plan or other critical areas of our business. Furthermore, Mr. Johnson has:

• No significant operational scientific or biotech expertise, including overseeing biotech R&D and product pipeline management
• No relevant experience in oncology R&D or commercialization
• No clear ability to properly opine on the technical merits of the Company’s ongoing discovery and R&D programs
• No scientific training
• No experience managing clinical trials or established relationships with clinical investigators
• No Board experience at biotech companies focused on oncology
• No experience in any executive leadership positions at life science companies

EXELIXIS HAS A LONG HISTORY OF ENGAGING WITH FARALLON AND HAS EMBRACED MANY OF ITS GROUP’S PROPOSALS – THIS CONTEST IS UNNECESSARY

Since 2018, we have discussed at length with Farallon the Company’s strategic plan, R&D plans and results, recent data presentations, competitive developments, our shareholder return framework and corporate governance. The Activist Group has not provided one actionable idea to advance our capital allocation framework and R&D strategy, beyond insisting that we dramatically cut R&D spend in favor of short-term gains, and at the cost of long-term value creation. And it continues to ignore the decisive actions the Company has taken regarding Board refreshment, significant progress we have made on our strategic initiatives and our balanced capital return framework.

Rather, Farallon has continually demanded that Exelixis return capital to shareholders, which the Company has already committed to and Farallon itself has acknowledged. The Activist Group has asserted false claims about Exelixis’ R&D strategy and spend that are short-sighted and rooted in a deep misunderstanding of the Company and oncology drug development in the biopharmaceutical industry as a whole. Implementing a repurchase plan any larger than $550 million would slow our growth and risk long-term value creation if Exelixis is unable to deploy sufficient capital to our pipeline and support future business development efforts.

Our track record of shareholder engagement proves that we are open to our shareholders’ input, resulting in:

• Authorization of a significant return of capital to shareholders in the form of a $550 million share repurchase plan; and
• Recommendation of two of the Activist Group’s nominees for election, alongside the announcement that two incumbent Exelixis directors will retire as part of our ongoing Board refreshment program.

As our most recent actions illustrate, the Exelixis Board is committed to acting in the best interests of shareholders and does not want to engage in an unnecessary proxy contest. We have embraced the vast majority of Farallon and the Activist Group’s requests:

• Immediately interviewed all five candidates Farallon initially proposed, conducting at least thirteen separate interviews;
• Proposed that Dr. Thomas Roberts Jr., a Partner at Farallon, himself join the Board, which Farallon declined;
• Agreed to appoint, and subsequently nominated, two of the Activist Group’s nominees to serve on the Board;
• Agreed to form a Capital Allocation Committee and to appoint two of the Activist Group’s nominees to serve on this committee;
• Agreed to appoint one of the Activist Group’s nominees to the Nominating and Corporate Governance Committee and one to the Research and Development Committee;
• Agreed to consider in good faith hosting an R&D and strategy day for investors;
• Agreed to invite Farallon to present to the full Board;
• Agreed that the Chairman of the Board would not trade the Company’s securities for a period of 24 months in a show of good faith; and
• Agreed to share confidential and non-public, proprietary information pertaining to Exelixis’ R&D strategy through a customary limited-duration non-disclosure agreement.

Unfortunately, beyond this extensive list of requests – and after we reached a near-final settlement agreement in March 2023 – Farallon abandoned our agreement and demanded that Exelixis provide unfettered access to the Company’s proprietary, scientific research and clinical trial data as a non-negotiable part of any settlement. This is an unprecedented and unreasonable demand that any Board would have rejected because it would create significant competitive risks for the Company and a disadvantage for all other shareholders. We could not agree to the following unreasonable demands of Farallon:

• Open-ended access to any information regarding Exelixis – including full access to all Board and Committee books and all other Com

Contacts

Investor Contacts

Chris Senner

Chief Financial Officer

Exelixis, Inc.

650-837-7240

[email protected]

Susan Hubbard

EVP, Public Affairs & Investor Relations

Exelixis, Inc.

650-837-8194

[email protected]

Media Contacts

Jamie Moser / Sharon Stern / Tali Epstein

Joele Frank, Wilkinson Brimmer Katcher

212-355-4449

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