EXELIXIS 2010 ANNUAL REPORT 2010 was a transformative year for Exelixis. Our commitment to creating value for investors and bringing important new therapies to patients has never been stronger. The dual activity of cabozantinib in both metastatic soft tissue and bone lesions represents an innovative paradigm for treating a variety of cancers, most notably metastatic prostate cancer. Exelixis is on track to file the first new drug application for cabozantinib in medullary thyroid cancer by the end of 2011. With the unprecedented data in prostate cancer, we are poised to initiate the first pivotal trail in that indication by year-end, and we also plan to initiate additional pivotal trials in 2012. MICHAEL MORRISSEY, PhD, PRESDIENT AND CHIEF EXECUTIVE OFFICER, EXELIXIS Emerging Cabozantinib Oncology Franchise Cabozantinib STAGE OF DEVELOPMENT INDICATIONS (XL184) Phase 3 Medullary Thyroid Cancer PRINCIPAL TARGETS: Phase 2 Metastatic Castration-Resistant MET / VEGFR2 Non-Randomized Prostate Cancer Extension Cohort Ovarian Cancer Phase 2 Breast Cancer Randomized Gastric/GE Junctional Discontinuation Trial Hepatocellular Carcinoma Melanoma Metastatic Castration-Resistant Prostate Cancer Non-Small Cell Lung Cancer Ovarian Cancer Pancreatic Cancer Small Cell Lung Cancer Phase 1B Differentiated Thyroid Cancer Renal Cell Carcinoma Additional Pipeline Assets There are 14 additional compounds in various stages of development by partners for which Exelixis is eligible for substantial milestones and royalties in various disease therapeutic areas, including oncology, inflammation, cardiovascular disease and metabolism (see page 5 of this annual report for a list of Exelixis’ collaborations). Exelixis has also recently discontinued development efforts on five development programs which it is seeking to out-license to potential partners (see page 11 of this annual report for a list of these programs). To Our Stockholders, 2010 was a tumultuous but momentous our other parnership obligations wind year for Exelixis. While regaining the rights down. Our leaner structure allowed us to to cabozantinib and changing our executive reduce our expenses without sacrifi cing the leadership may have led some outside quality or speed with which we advance our company to become disillusioned, our the cabozantinib development program. confi dence in cabozantinib and our ability Importantly, even as we focus our internal to drive the potential value of this unique efforts on cabozantinib, we have interests anticancer agent never wavered. By focusing in 14 programs that are being developed on advancing the cabozantinib clinical by partners. Although these programs program and making diffi cult but necessary continue to advance in development, we changes to our business model and organ- are not responsible for any unfunded costs izational structure, we have transformed our for these programs but we are eligible for company and believe we have redefi ned a substantial milestones and royalties. path to build sustainable stockholder value. MICHAEL M. MORRISSEY, PH.D CABOZANTINIB: A PRODUCT A STRATEGY FOR SUCCESS WITH FRANCHISE POTENTIAL Exelixis is a data-driven company and, upon regaining full rights Following the presentation of the cabozantinib data at the to cabozantinib in June, we embarked on a path to urgently EORTC-NCI-AACR Symposium in November 2010, we started generate additional clinical data that would help illuminate 2011 with substantial momentum and a streamlined corporate the value proposition of this novel and differentiated drug structure that is optimized to help us move toward our fi rst New candidate for both patients and investors alike. Our efforts Drug Application (NDA) fi ling for cabozantinib in medullary in the summer and fall resulted in an exhaustive update for thyroid cancer (MTC) and expand the breadth and depth of cabozantinib at the EORTC-NCI-AACR Symposium on data in advanced prostate cancer. We have completed enrollment Molecular Targets and Cancer Th erapeutics in November 2010, in the pivotal trial of cabozantinib in patients with MTC, and including new data from the prostate, ovarian, hepatoma, remain on track to report top-line data in the fi rst half of the year melanoma, and non-small cell lung cancer cohorts of our and to potentially fi le an NDA in this indication by the end of ongoing randomized discontinuation trial (RDT). Th e interim the year. Cabozantinib has shown substantial and durable clinical data from the prostate cancer cohort provided unique insight benefit in our earlier MTC phase 1 trial, and we expect that a into the unprecedented dual activity of cabozantinib in both potential approval in this indication will be the fi rst step toward metastatic soft tissue/visceral and bone lesions on a scale that developing a broad franchise in multiple cancer types. had not been observed previously. Interim data from the prostate cancer cohort of our phase 2 RDT With compelling data in hand, we undertook a broad strate- are unique and compelling, and we believe that the dual activity gic reorganization designed to enhance our ability to create profi le of cabozantinib against both soft tissue/visceral and stockholder value by focusing exclusively on cabozantinib bone lesions has signifi cant clinical and commercial potential in and aligning our resources and spending accordingly. This the treatment of metastatic castration-resistant prostate cancer reorganization required hard decisions as we deprioritized (mCRPC). As reported at the American Society of Clinical our early-stage discovery efforts and other pipeline assets Oncology (ASCO) Genitourinary Cancers Symposium in while dramatically reducing our staff and internal costs February 2011, 85% of the 62 patients with mCRPC for whom assigned to those activities. In 2010 we reduced our head- bone scan data were available had complete or partial resolution count by 65%, and we will make additional reductions as of metastatic lesions on bone scan, and 13% had stable disease, resulting in an overall disease control rate of 98% in metastatic in the United States have bone involvement as part of their lesions on bone scan. Resolution of metastatic lesions on bone advancing cancer across numerous indications. Th e results to scan was observed in patients with or without prior docetaxel date strongly support the potential of cabozantinib to develop therapy and was oft en accompanied by a profound reduction into a signifi cant oncology franchise. in symptomatic bone pain and narcotic usage in patients with PLANS TO CREATE VALUE IN 2011 AND BEYOND pain. Additionally, decreases were observed in the levels of We started 2011 with renewed energy, increased urgency, and key biomarkers that are oft en elevated in patients with bone unwavering focus on executing the cabozantinib development lesions. Cabozantinib also demonstrated substantial activity strategy. With the successful completion of a fi nancing of net against soft tissue and visceral tumor lesions. Bone metastases proceeds of $179 million in March, we are well positioned to are associated with significant morbidity in patients with achieve our goals for this promising drug candidate. Th roughout mCRPC, and cabozantinib has the potential to offer these 2011, we expect to reach multiple milestones that should serve as patients an important new approach to managing their disease. catalysts for creating value, and to provide metrics of our progress. We have converted the phase 2 RDT design to an expanded non- In the fi rst half of the year, we expect to report top-line data from randomized single arm study for the mCRPC cohort, and initial the phase 3 MTC registration trial, and to continue to enroll in data gained through this expansion will set the stage for initiating the non-randomized single arm cohort studies for mCRPC and a planned phase 3 pivotal trial in this indication in the second ovarian cancer. We plan to make three cabozantinib presentations half of 2011. We plan to focus this trial on a composite endpoint at this year’s ASCO Annual Meeting in June, and we believe that of improvement of bone pain and bone scan resolution. Additional data from these abstracts will demonstrate the broad potential dose-ranging and combination studies are planned for this of cabozantinib across diverse oncology indications. We expect year, and we expect to initiate further pivotal trials in 2012 to to present updated data from the fully enrolled mCRPC cohort evaluate cabozantinib for the prevention of bone metastases in of the RDT, including an update on duration of response to pre-metastatic prostate cancer patients and for extending overall cabozantinib. Anticipated presentations at ASCO also include survival of patients with mCRPC. Th ese studies will be designed a signifi cant update from the ovarian cancer cohort and the to expand the utility of cabozantinib into earlier-stage disease. overall RDT. Milestones expected in the second half of the year Each of these segments could generate more than $1 billion in include fi ling the NDA for cabozantinib in MTC, initiating the annual sales in the United State alone. Our analyses suggest that composite endpoint pivotal trial in mCPRC, and preparing to the European market for cabozantinib has similar potential and initiate additional studies of cabozantinib in other tumor types. that there may be substantial region- and indication-specific Our agenda is ambitious and our goals are clear. I am confi dent opportunities in Asia. in our ability to meet these critical objectives with