Bristol-Myers Squibb and Exelixis have signed an alliance to discover, develop and market oncology products.

Under the terms of the deal, Exelixis will be responsible for the identification and preclinical development of small molecule drug candidates, while B-MS will have the option to select up to three compounds against three different targets, before taking on responsibility for all global activities related to these candidates.

Exelixis will receive an upfront payment of $60 million and could receive $20 million for each drug candidate selected by B-MS. Exelixis is also eligible to receive royalties on product sales outside the USA, if any of the compounds make it to market and the companies plan to co-develop and co-commercialise the drugs in the USA.

The two drugmakers have been partners on oncology projects since 2000, and Exelixis chief executive George Scangos said: "I am confident that this new collaboration will build on the excellent relationship between the companies and on the knowledge that we have generated during those years."