By MARLEY SEAMANAP Health Writer NEW YORK (AP) — Bristol-Myers Squibb Co. said Friday it has teamed with biotechnology company Exelixis Inc. in a deal worth at least $240 million to develop two drugs designed to block the growth of cancer cells.Bristol-Myers will make an upfront cash payment of $195 million to gain development and marketing rights to the two experimental drugs, XL184 and XL281. The New York-based drugmaker also will pay Exelixis another $45 million in 2009. The deal is part of Bristol-Myers’ strategy to trim costs by $1 billion through 2012 by reducing internal R&D but still growing its pipeline by purchasing drug candidates or companies which target treatments of major diseases. Industrywide, big pharma has struggled this year with patent expirations and pricing pressures, with most cutting jobs and launching restructuring efforts. Many drugmakers are using acquisitions to fill pipeline gaps. Earlier this year, Bristol-Myers bought cancer drug developers Kosan Biosciences and Adnexus Therapeutics, scooping up dozens of new anti-cancer compounds in the process. XL184, which is in late-stage testing, targets three enzymes: MET, which encourages tumor cell survival and movement, VEGF2, which helps tumors develop new blood vessels, and RET, which is also involved in cell growth and migration and is found in many thyroid cancers. XL281, still in early-stage testing, is aimed at the enzyme RAF, a pathway through which cells get the message to divide and grow. In tumors, cell growth is more rapid and less controlled than in healthy cells.By shutting down enzymes, the drugs are designed to be safer and more effective than chemotherapy.The companies will share the costs of developing XL184 and collaborate on development strategies, and they may market the drug together in the U.S. upon approval. If they do so, Exelixis could receive up to $150 million in sales milestone payments and royalty payments of more than 10 percent on sales overseas. If the South San Francisco, Calif.-based company opts out of the U.S. co-development agreement, it will receive up to $295 million in development, regulatory and sales milestone fees, as well as double-digit royalties. Bristol-Myers Squibb will have the exclusive right to license and develop XL281 and will cover all development costs. It will pay Exelixis up to $315 million if the drug advances through development and regulatory hurdles, along with milestone payment of up to $150 million and double-figure royalties on worldwide sales.Exelixis reported $113.5 million in revenue in 2007. Bristol-Myers generates much of its revenue through partnerships, marketing colon cancer drug Erbitux through a partnership with ImClone Systems Inc. The company also makes leukemia treatment Sprycel, breast cancer drug Ixempra and the chemotherapy agent Taxol. Bristol-Myers has three other cancer drugs in late-stage testing, ipilimumab, brivanib and tanespimycin. As of July 31, the company said it had 10 other cancer drug candidates in preclinical, early or midstage clinical development.