Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2008 Exelixis Earnings Conference Call. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of this conference. (Operator Instructions). I would now like to turn the presentation over to your host for today’s call, Mr. Charles Butler, Head of Investor Relations.

Thank you everyone for joining us on our 2008 fourth quarter and year end earnings call. As usual, joining me today are George, Frank, and Mike who will talk through the company’s outlook, review of our 2008 financials, as well as an R&D update. Before we go onto that, let me just briefly read our forward-looking statement. I would like to note that during our presentation today, we will be making certain statements that are forward looking, including without limitations statements related to our financial objectives, our 2009 year-end financial guidance and expectations regarding our 2010 cash balance, our expectations regarding future partnering and business development activities and goals, our development plans and goals for compounds in the pipeline, the potential efficacy of our compounds, and the execution of our business strategies. These statements are only predictions and are based upon our current assumptions and expectations. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements because of risks and uncertainties discussed in the presentation materials, the comments made during this presentation, and the risk factor section of our 10-Q for the quarter ended September 26, 2008, and our other reports filed with the Securities & Exchange Commission. We expressly disclaim any duty to make any updates or revisions to any forward-looking statements. With that, I will turn the call over to George.

Thanks everyone for joining us today on our year end call. The year 2008 was a busy and productive year for Exelixis and typically I would devote a fair amount of time to reviewing our numerous clinical, business, and corporate development achievements over the past year. I think our industry is facing a rather challenging time right now, and as proud as I am of our accomplishments over the past year, I know that what matters most today is where we’re going, how we intend to rise to the challenges ahead of us, and how are we going to continue to make progress towards our goal of brining innovative therapies to the market in the face of a challenging economic climate. In our last quarterly call in October, we outlined a plan that we believe would enable us to operate free of the equity markets for the next few years. Our newest collaboration with BMS which we signed in December enabled us to end 2008 with $284 million and is an excellent first step to achieving that goal. One of the things we would like to accomplish on this call is to explain the plan that will enable us to operate the company through 2011. Our plan is based on careful management of our expenses, increase in support from our current collaborators, and a reasonable set of business development assumptions based on ongoing discussions and current assets. As you know, our goal was to end 2008 with more than $200 million in cash. In fact, we ended with $284 million. In 2009, we are again projecting that we will end the year with more than $200 million in cash, and that includes making the $35 million cash loan repayment to GSK. We have been able to a large extent to…

Before I get into the financials in depth, I would like to emphasize that we are in a strong financial position and that our financial outlook is solid. We finished 2008 with $284 million in cash which far exceeded our cash guidance for the year. With close to $500 million in cash and committed funding, expect to generate significant new cash inflows from business development activities this year, and we expect to finish 2009 and 2010 with a healthy cash balance. So in short, our financing strategy is serving us very well in the current tough economic environment. The year 2008 was a very successful year for us. We met our financial guidance for the year for revenue and operating expense and substantially exceeded our guidance for year end cash with substantial liquidity available to us, and we expect significant additional cash inflows from ongoing business development discussions as well as our already existing collaborations. Through our new partnership with BMS, we offloaded a substantial amount of future development expenses, and we reduced our operating expense base and substantially cut back on capital expenditure. All in all, we are confident about our objective of having the ability to operate financially independent from the capital markets for an extended period of time and just as important to be adequately resourced to aggressively advance our most promising clinical programs. I would like to briefly review some of our 2008 financial accomplishments before I turn to the Q4 and year end results in detail. Some of these reflect measures initiated early in 2008 in anticipation of a difficult economic environment. We secured $150 million financing facility with Deerfield that served as a safety net and put us in a strong financial position during our negotiations with potential new partners. We forged a new…

Before we go into more detail about the activities within R&D, I’ll start by saying first we’ve matured a set of first in class and/or best in class compounds that will either be the subject of new collaborations or that will develop independently. We believe that our small molecule franchise in oncology is one of the best in the business. Second, we currently have 12 compounds in development ranging from Phase I to Phase III, either being developed internally or by partners. Each of these compounds has an attractive clinical profile with meaningful commercial potential. This is a point we’ve been building towards for several years. Finally, XL184 is our key priority, and ongoing Phase III trial in MTC, Phase II in glioblastoma or GBM, and a planned expansion which could lead to a Phase III trial in GBM later this year or early 2010. So we ended 2008 with a bolus of momentum, by first retaining XL184 and 281 from our GSK collaboration in October and then partnering these compounds with BMS in December, after a great deal of interest from the pharma community. Our primary objective for XL R&D moving forward in 2009 is to advance XL184 towards NDA filings as quickly and as broadly as possible and our collaboration with BMS. In the simplest terms, the XL184 development program is our highest priority and has top billing in all aspect of resource allocation and staff deployment. Collaboration with BMS, we have completed our initial planning phase of the full development program for XL184 in a variety of oncology indications, including potential pivotal trials that we expect to initiate in late 2009 or early 2010 as well as a broad Phase II trial that we plan to initiate this year to identify other potential indications. We have staffed…

I’ll be brief here in my summary. I hope you can see from all of that that we’re in a strong and stable financial position. We’ve brought in a lot of cash at the end of 2008, and we expect to bring in substantially more cash this year, both from existing partners and from new partnerships. We’ve reduced our expenses. As it has in the past, our discovery group is expected to cover the majority of this cost through the compounds we generate, and an increasing fraction of our development costs are being borne by partners. The result is that we’re well on our way to fulfilling our goal of financial independence for a substantial period of time. At the same time, we have moved key assets in our pipeline forward, and they’ve generated encouraging data. Together with BMS, we’re mounting an aggressive late stage development program for 184. This compound has utility well beyond MTC, and we hope to get first glimpse of that when our abstracts are accepted at ASCO, and 184 has several opportunities to gain regulatory approval in the next few years. Although we’ve talked a lot about 184 since it’s our most advanced compound, I don’t want anyone to get the impression that we’re a one trick pony. Many of the other compounds that we have continue to generate encouraging data as well, so that our maturity pipeline of oncology compounds is taking shape and I think emerging as one of the most promising in the industry. In the coming months, we expect to have news on both the medical and business fronts. We’ve submitted 10 abstracts to ASCO, and we should hear about their acceptance within the next few weeks. We look forward to presenting data on some of our mid and late stage compounds at that meeting, and we’ll of course have more data later in the year at EORTC and ASH. We expect to initiate further pivotal trials for XL184 as well as start a number of Phase II trials for the compound. On our financial and business development side, we’re in discussions around potential new collaborations for our PI3 kinase programs. We’re having multiple discussions concerning those compounds. We’re confident of signing an attractive partnership within the next few months. Additionally, we’re having discussions around several program that are preclinical including compounds for oncology, metabolic disease and inflammation. We believe that the combination of our compounds advancing and generating encouraging data, financial stability, and the additional partnering revenue this year could substantially increase shareholder value over the coming months and years. I’ll stop there, and now we’ll be happy to open up the call for questions.

(Operator Instructions). Your first question comes from the line of Eric Schmidt with Cowen and Company. Eric Schmidt – Cowen and Company: I think it was actually Frank who mentioned that you re-triggered some of the phase I studies on 228, 888, and 019 to get to sooner or clearer no-go decision. I’m just kind of curious as to what’s potentially changed in some of the protocols as to how you are now designing those studies?

It revolves around for all those compounds having minimal data sets either in the dose escalation phase or an expansion cohorts that will allow us to show very clear on target activity at the MTD and then some level of clinical activity in specific tumor types, and those are all different for individual compounds obviously, but it’s a very focused approach that gets us to a very crisp go or no-go based upon clinical data this year. Eric Schmidt – Cowen and Company: Then on the PI3 kinase partnership, how important is it that you get some signs of clinical activity out of those compounds and not just target modulation? How does that work with the terms that you are interested in getting? Can you get to where you want to be without clear clinical response for example?

Well, I guess I would caution you that the last data set that we published was last October at EORTC, so that’s another four months since then. I think we are very well along in terms of those discussions, and I think the totality of the data with both compounds looks very encouraging right now. Eric Schmidt – Cowen and Company: On the $35 million payment to GSK, I guess a question for Frank, have you made the decision to pay that initial repayment to GSK in cash or didn’t you have the option?

Eric, we have not made a decision, but we have been conservative in our financial projections, and we have assumed that we would repay it in cash. What we eventually end up doing will depend on a variety of factors once we get closer to the actual payment date, but again in our financial projection we try to be as conservative as possible. Eric Schmidt – Cowen and Company: Do you have a stock price at which you would be potentially more interested in paying it in cash?

We will have to evaluate a variety of factors at the time when the payment comes due and stock price is one of them, and we will see where we come out at that point in time.

Your first question comes from the lines of Cory Kasimov with J.P. Morgan. Cory Kasimov – J.P. Morgan: I have a couple of questions first here Frank relating to the ’09 financials. On the spending related to XL184, when do you expect to get through that initial $100 million before switching over to this 65:35 deal with Bristol?

We’re not really disclosing that. It depends obviously on the progress that we’re making under the program. We have agreed on the budgets with BMS, but we’re not exactly disclosing how we exactly we’re going to go into that money. Cory Kasimov – J.P. Morgan: Maybe I can ask you this another way. Can you tell us roughly what percent of your ’09 R&D budgeted spend is dedicated to 184?

Not exactly. We’re also not disclosing that. As you know in the past, we have never disclosed spend on a program by program basis. What we can say is that for 2009 roughly 50% of our total operating expense is development related, and a substantial portion of that is related to XL184. As you know, a big portion of that will be covered by BMS. I hope you understand there is of course some sensitivity here in what we can and cannot say about both the development plans as well as the actual budgets because we have to coordinate here with BMS. Cory Kasimov – J.P. Morgan: Your topline guidance for ’09, can you comment on what that may look like if we were not to assume any new deals this year?

The revenue guidance, I presume? Cory Kasimov – J.P. Morgan: Yes.

What I can say is that our revenue guidance for the year is based on very conservative assumptions about revenue being booked from new business development activities as well as from revenue that we expect to come in on our existing collaborations. What exactly the mix is there, we’ve not disclosed this in the past, we are not disclosing now, but again we are very confident with where we stand in our business development discussions, and that’s really a reflection of the quality and the number of assets that we have available for partnering and secondly the quality of the discussions that we are having and the level of interest that we’re seeing from potential partners. Cory Kasimov – J.P. Morgan: One clinical question for Mike relating to 184 for GBM. With this 100 patient amendment to the phase 2 study, if the data were compelling enough and given the imminent medical need that GBM represents, could this potentially become a pivotal phase II or is it clearly going to phase III before you even think about approval?

That’s a scenario that is possible based on upon how the data comes out, so we are certainly opening up the door to be able to move in that direction which is actually based upon how that data actually plays out. Cory Kasimov – J.P. Morgan: Is that one of the reasons behind putting the additional patients in there to see if additional dosing works and things like that?

That’s one of the reasons.

Your next question comes from the line of Joel Sendek with Lazard Capital Markets. Please proceed. Joel Sendek – Lazard Capital Markets: So when you say you are in advanced discussions with regard to the partnering for the PI3 kinase and that the interest rivals that you saw in late ’08, should we interpret that to mean that you could get deal terms that are in the same ballpark as the Bristol deal, and are you going to partner those drugs separately or together?

When we say that the interest rivals what we saw with 184, I think one of the reasons we are able to get attractive terms for 184 is not only the quality of the data set we have, and remember you have only seen part of the data; we have lot more data, but also the fact that there are multiple parties interested in each of the 184 compounds. We are actively pursuing a number of those discussions, some of them are very late stage, and I don’t want to really speculate at this time as to what the exact terms will be, but we are expecting to get very attractive very terms as we have in the past. Joel Sendek – Lazard Capital Markets: So potentially you could partner off 147 to one partner and 765 to another?

In theory, yes. We would prefer not to do that, I think. On the other hand, that’s certainly a possibility. Joel Sendek – Lazard Capital Markets: Just to be clear, there are multiple parties so you have competitive bidding going on with regard to that right now?

There are multiple parties to whom we are talking, yes. Joel Sendek – Lazard Capital Markets: Just to follow up on 184 amendment, I’m kind of confused. Should we view this as an acceleration or a delay? I don’t know how to characterize it.

I would look at it as a way to get more data quickly in the second line population as the primary driver for the amendment and then to frame that relative to the data set we will talk about hopefully at ASCO in June and how that then might play out relative to the initiation of a pivotal trial in the second line setting either later this year or early next year, being obviously big on purpose to respect certainly our BMS relationship at all so because the data is still in progress, right? I think we are lining things up to be able to maximize success here, and we have to now do the experiment and see how it all plays out. Joel Sendek – Lazard Capital Markets: Are you more or less excited on that program now versus three months ago or two months ago?

I would say we are extremely excited about the program, about the potential in GBM based on our view of published data obviously, the feedback we are getting from our investigators and consultants and experts, and we are very excited about where this could go.

(Operator Instructions). Your next question comes from the line of Jessica Lee with Goldman Sachs. Jessica Lee – Goldman Sachs:

I don’t really want to comment on that. I really have to leave it up to you how you run your model. As you know, we don’t provide real guidance on burn, but I did say that the net change and cash balance obviously implied in our guidance is less than $85 million and that includes a $35 million dollar cash repayment of the first tranche of the GSK loan. Jessica Lee – Goldman Sachs: Just on your topline or revenue guidance, if you do include any revenue related to the future deals, will that be amortization of the cash that you receive?

It’s actually both, and I think it’s important to know that a substantial portion of the revenue that we are guiding to for 2009 is already secure because it relates to the revenue amortization based on the BMS deal that we signed in December. On top of that, as we said, we are due to receive $45 million from BMS in the first half of 2009, which is also fully committed and not at risk, and which will also call some part into our revenue recognition in 2009. On top of that, we’ve also assumed a certain portion of our revenue to come from new business development-related activities, and as I said before, the assumptions we’ve made here are very conservative, and we’re very comfortable that we’ll be able to meet our BD objectives, and again it’s a reflection of the quality and the number of assets that we have available and the quality of discussions we are having at the moment and the level of interest that we are seeing.

We have no further questions at this time. I’ll now turn the call over to Mr. George Scangos for closing remarks.

Let me thank everybody once again for your attention and your interest. We’ll get back to work and make sure we achieve all these goals we just laid out, and before we sign off, let me just again thank all of our employees who worked very hard last year to accomplish everything we have and who are continuing to work incredibly hard so we can meet this year’s goals as well, so thanks to all of them, many of whom I know are listening right now, and thanks to all of you once again.