I am sure the details are in the 10ks etc but its a common option in biotech. EXEL has the right, at its own expense, to get a greater share of the profit as long as it contributes to the expense of marketing as well. Something to that effect. If it chooses not to exercise the option, then expense will be Genetech's expense and EXEL will get a smaller royalty on the sale of the drug.So EXEL has a time frame to determine if they want to invest cash in marketing (and sometimes in development, there may be other costs or a price for EXEL to pay to exercise this option) or just take the royalty and forget about it.Tinker
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