Awaiting multiple gevokizumab (XOMA 052) data readouts in 2014, including the first Phase III data by midyear, on Friday Xoma Corp. priced a public offering of 9.5 million shares of common stock at $5.25 apiece, seeking to raise $50 million. The Berkeley, Calif.-based company granted underwriters a 30-day option to purchase up to an additional 1.4 million shares, potentially increasing its haul by $7.5 million.

The offering priced at a 7 percent discount to the stock’s closing price of $5.66 on Thursday. Predictably, the company’s shares (NASDAQ:XOMA) slid toward the offering price Friday, down 39 cents to close at $5.27.

The offering is nearly twice the size of Xoma’s last stock sale in August, which priced at $3.62, the previous day’s close, for gross proceeds of $27.2 million. The company’s stock price has climbed more than 50 percent since that time – 73 percent at the 52-week high of $6.28 on Dec. 4 – giving the company a market cap of approximately $494 million. (See BioWorld Today, Aug. 21, 2013.)

Xoma said proceeds from the offering will be used to continue development, preclinical testing and clinical studies related to lead candidate gevokizumab and its Xmet diabetes program, as well as other corporate purposes. Through a spokeswoman, the company declined additional comment.

In 2011, Xoma licensed gevokizumab to Paris-based Les Laboratoires Servier SA in a potential $505 million deal, retaining the right to promote the drug in the U.S. and Japan for the rare Behçet’s uveitis, for which the antibody has orphan status in the U.S. and Europe, and other inflammatory and oncology indications. (See BioWorld Today, Jan. 5, 2011.)

In March of that year, gevokizumab missed its primary endpoint in a Phase IIb trial in Type II diabetes, knocking it out of the running in the giant indication. (See BioWorld Today, March 24, 2011.)

A year later, after kickstarting its commercial operations by in-licensing the approved hypertension drug perindopril from Servier, Xoma raised about $39.2 million from a public offering to advance gevokizumab, then in a Phase II proof-of-concept trial in inflammatory acne, into additional proof-of-concept trials in erosive osteoarthritis (EOA) of the hand and a third indication. The funds also were designed to cover Xoma’s share of expenses for two Phase III studies of the compound in noninfectious uveitis (NIU). The EOA and NIU trials began enrolling in June of last year. (See BioWorld Today, Jan. 19, 2012, March 7, 2012, and June 28, 2012.)

On Xoma’s third quarter earnings call last month, CEO John Varian said the company received initial data from four pyoderma gangrenosum (PG) patients enrolled in a pilot study of gevokizumab and from two patients with generalized pustular psoriasis who received the drug under a compassionate use protocol. The rare indications fall under the neutrophilic dermatoses umbrella, a group of conditions characterized by skin lesions with intense epidermal and/or dermal inflammatory infiltrates but no sign of infection.

“While we have treated only a very small number of patients, the apparent responses are compelling,” Varian said at the time, adding that the company planned to meet with the FDA to review the data and determine the next steps to move into a pivotal program in PG.

In the meantime, Varian said the company was encouraged by the reductions in AUSCAN scores reported at day 84 in the Phase II study of gevokizumab in EOA of the hand. Although the findings were not statistically significant, gevo-treated patients showed greater improvement in all components of the AUSCAN composite score than the placebo-treated group through the first three months of treatment. “Importantly, the separation between the two arms was increasing at a greater rate between two and three months of treatment,” Varian pointed out, bolstering the company’s confidence in the compound’s efficacy.

Xoma also said the EYEGUARD studies in NIU and Behçet’s were progressing steadily. Although enrollment in the EYEGUARD A and C studies in NIU was slower than expected, Xoma increased the number of sites in the U.S., now enrolling in 68 of 70, and Servier still expects top-line data in the first half of next year. Xoma is considering a biologics license application filing for the Behçet’s indication in the U.S. and plans to seek guidance from the FDA after the top-line data readout.

Analysts are cautiously optimistic about prospects for gevokizumab, counting it as one of biotech’s major 2014 catalysts. Cowen and Co. analyst Simos Simeonidis wrote that disclosure of the PG and early EOA data “provided further evidence that gevokizumab looks like a drug, and does so in two more potential indications.” Additionally, gevokizumab has shown a clean safety and tolerability profile, with no drug-related severe adverse events (AE) and with comparable AEs between drug and placebo, he observed.

RBC Capital Markets analyst Adnan Butt wrote in a research note earlier this month that the expected second quarter 2014 readout of the gevokizumab Phase III in Behçet’s “could be an important driver (25-50+ percent combined with a second positive Phase III) as this could be the first potential approval addressing an orphan indication.” Xoma could score another positive Phase III for gevo next year in NIU, Butt added, though he suggested two positive Phase III studies will be needed for approval in the indication.

Xoma also is eager to partner candidates from its Xmet platform and move them into the clinic. The company’s insulin receptor-activating antibodies (XmetA) are designed to provide long-acting insulin-like activity to diabetic patients who cannot make sufficient insulin, potentially reducing the number of insulin injections needed to control blood glucose levels. Its insulin receptor-sensitizing antibodies (XmetS) are designed to reduce insulin resistance and could enable diabetic patients to use their own insulin more effectively to control blood glucose levels.

A third group, known as XmetD, offers potential in orphan indications. Xoma indicated last month that it plans to submit an investigational new drug application for XmetD (XOMA 247) in mid-2014 and develop and commercialize the drug internally, pursuing congenital hyperinsulinism and insulinoma.

In its prospectus supplement, filed with the SEC Thursday before the offering priced, Xoma reported cash, equivalents and short-term investments of $74 million as of Sept. 30, with 92.7 million shares of common stock outstanding.

The offering is expected to close by Dec. 18. Credit Suisse Securities (USA) LLC and Jefferies LLC are acting as joint book-running managers, with Cowen and Co. LLC, Piper Jaffray & Co. and RBC Capital Markets LLC acting as co-managers.

In other financings news:

Adamis Pharmaceuticals Corp., of San Diego, priced an underwritten public offering of about 3.7 million shares of common stock at an offering price of $5.95 per share. The gross proceeds to Adamis from are expected to be about $22 million, and the offering is expected to close on Dec. 18. In connection with the offering, Adamis has completed a 1-for-17 reverse stock split of its common stock, which is effective as of Dec. 13. The common stock began trading, on a split-adjusted basis, on Nasdaq under the symbol “ADMP” on Dec. 13. Shares closed Friday at $5.95. //