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EXHIBIT 99.2
[PRUDENTIAL LOGO]
PRUDENTIAL VECTOR HEALTHCARE
GROUP
PRUDENTIAL SECURITIES
INCORPORATED
1751 Lake Cook Road
Deerfield IL 60015
Tel 847 940-1970 Fax 847
940-0774
PERSONAL & CONFIDENTIAL
September 7, 2000
The Board of Directors
Agritope, Inc.
16160 SW Upper Boones Ferry Road
Portland, OR 97224-7744
Members of the Board of Directors:
We understand that Agritope, Inc. (the "Company"), Exelixis, Inc. ("Parent")
and Athens Acquisition Corp., a wholly owned subsidiary of Parent ("Merger
Sub"), propose to enter into an Agreement and Plan of Merger and Reorganization
(the "Agreement"). Pursuant to the Agreement, Merger Sub shall merge with and
into the Company and the Company shall be the surviving corporation (the
"Merger"). In the Merger, each share of the Company's common stock, par value
$.01 per share ("Company Common Stock"), together with any associated rights
issuable under that certain Rights Agreement, dated November 14, 1997, between
the Company and ChaseMellon Shareholder Services, L.L.C., and series A preferred
stock, par value $.01 per share, outstanding immediately prior to the effective
time of the Merger will be converted into the right to receive that fraction of
a share of Parent common stock, par value $.001 per share ("Parent Common
Stock"), equal to an "Exchange Ratio" as set forth in the Agreement (the "Merger
Consideration").
The Agreement provides that the Exchange Ratio shall be calculated by
dividing $14.00 by the average of the closing sale price of a share of Parent
Common Stock as reported on the Nasdaq National Market for the 20 trading days
ending on, and including, the fifth trading day immediately preceding the
closing date of the Merger (the "Parent Average Closing Price"); PROVIDED,
HOWEVER, that (1) if the Parent Average Closing Price shall be less than or
equal to $40.00, then the Exchange Ratio shall be equal to 0.35 and (2) if the
Parent Average Closing Price shall be greater than or equal to $50.00, then the
Exchange Ratio shall be equal to 0.28.
You have requested our opinion as to the fairness from a financial point of
view of the Merger Consideration to holders of Company Common Stock. In
conducting our analysis and arriving at the opinion expressed herein, we have
reviewed such materials and considered such financial and other factors as we
deemed relevant under the circumstances, including:
(i) a draft, dated September 6, 2000, of the Agreement;
(ii) certain publicly available historical financial and operating data for
the Company, including, but not limited to: (a) the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1999; (b) the Company's
Quarterly Report on Form 10-Q for the quarter ended
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June 30, 2000; and (c) the Company's Proxy Statement for the Annual Meeting of
Stockholders held on February 29, 2000;
(iii) certain internal financial statements and other financial and operating
data concerning the Company, including financial forecasts for future fiscal
years, prepared by the management of the Company;
(iv) historical stock prices and trading volumes for Company Common Stock;
(v) certain publicly available historical financial and operating data for
Parent, including, but not limited to: (a) Parent's Amended Registration
Statement on Form S-1 filed on April 7, 2000; (b) Parent's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000; and (c) Parent's Proxy Statement
for the Annual Meeting of Stockholders held on July 25, 2000;
(vi) historical stock prices and trading volumes for Parent Common Stock;
(vii) certain internal financial statements and other financial and operating
data concerning Parent, including financial forecasts for future fiscal years,
prepared by the management of Parent;
(viii) publicly available financial, operating and stock market data
concerning certain companies engaged in businesses we deemed reasonably similar
to that of the Company and Parent;
(ix) the financial terms of certain recent merger or acquisition
transactions we deemed relevant to our inquiry; and
(x) such other financial studies, analyses and investigations that we deemed
appropriate.
We have assumed, with your consent, that the draft of the Agreement that we
reviewed (and referred to above) will conform in all material respects to that
document when in final form and that the Merger will be consummated on the terms
described in the Agreement without any waiver of any material terms or
conditions.
We have met with senior management of the Company to discuss: (i) the
prospects for their respective businesses; (ii) the financial impact of the
Merger on the respective companies; and (iii) such other matters that we deemed
relevant.
In connection with our review and analysis and in arriving at our opinion,
we have relied upon the accuracy and completeness of the financial and other
information that is publicly available or was provided to us by the Company and
Parent and we have not undertaken any independent verification of such
information or any independent valuation or appraisal of any of the assets or
liabilities of the Company or Parent. Further, we have not been provided with
any such valuation or appraisal. With respect to certain financial forecasts
provided to us by the Company and by Parent, we have assumed that such
information represents each respective management's best currently available
estimate as to the future financial performance of the Company and Parent,
respectively, and that the Company and Parent will perform in accordance with
such financial forecasts within the time frames indicated. Our opinion is
predicated on the Merger qualifying as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended.
In connection with the preparation of this opinion, we have not been
authorized by the Company or the Board of Directors to solicit, nor have we
solicited, third party indications of interest for the acquisition of all or any
part of the Company.
Our opinion is necessarily based on economic, financial and market
conditions as they exist and can be evaluated as of the date hereof. Our opinion
is based upon the premise that the Merger will be consummated under
circumstances where the Parent Average Closing Price will not, in fact, be less
than $40.00. We assume no responsibility to update or revise our opinion based
upon events or circumstances occurring after the date hereof.
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Our opinion does not address nor should it be construed to address the
relative merits of the Merger or alternative business strategies that may be
available to the Company. In addition, this opinion does not in any manner
address the prices at which Parent Common Stock will trade following
consummation of the Merger.
As you know, we have been retained by the Company to render this opinion and
provide other financial advisory services in connection with the Merger and will
receive an advisory fee for such services, a substantial part of which is
contingent upon the consummation of the Merger. In the past, we have provided
financial advisory services to the Company and have received fees for such
services. In the ordinary course of business, we may actively trade the shares
of Company Common Stock and Parent Common Stock for our own account and for the
accounts of customers and, accordingly, we may at any time hold a long or short
position in such securities.
This letter and the opinion expressed herein are for the use of the Board of
Directors of the Company. This opinion does not constitute a recommendation to
the stockholders of the Company as to how such stockholders should vote (or
agree to vote) or as to any other action such stockholders should take regarding
the Merger. This opinion may not be reproduced, summarized, excerpted from or
otherwise publicly referred to or disclosed in any manner, without our prior
written consent; except that the Company may include this opinion in its
entirety in any proxy statement or information statement relating to the Merger
sent to the Company's stockholders.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Merger Consideration is fair to the holders of Company
Common Stock from a financial point of view.
Very truly yours,
PRUDENTIAL SECURITIES
INCORPORATED
/s/ Prudential Securities Incorporated
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