Shares of XOMA Ltd. rose 18 percent on Tuesday after the antibody company unveiled a license agreement that provides Pfizer Inc. with non-exclusive, worldwide access to XOMA's patented bacterial cell expression (BCE) technology.

Specifically, the Berkeley, Calif.-based company's stock (NASDAQ:XOMA) closed at $2.68 on Tuesday, up 40 cents.

In exchange for granting the license, XOMA gets a $30 million upfront cash payment, which President and CEO Steven Engle noted is more than the company's entire 2006 revenue haul. The deal also calls for Pfizer to pay XOMA undisclosed fees and milestones, as well as potential royalties that fall within XOMA's standard range of one-half of a percent to mid-single digits.

The Pfizer deal is one of more than 45 licenses XOMA has granted for its BCE technology, which uses the microbial secretion of antibodies, antibody fragments and other proteins to improve antibody phage display as well as the discovery, development and manufacture of recombinant antibodies. Genentech Inc.'s blockbuster age-related macular degeneration antibody Lucentis (ranibizumab) benefited from BCE, as did UCB SA's Crohn's disease antibody Cimzia (certolizumab pegol), which is under regulatory review in the U.S. and Europe.

License fees and royalties contributed to XOMA's second quarter revenues of $14.1 million, yet the company still posted a second quarter loss of $8.3 million, or 6 cents per share. Engle declined to specify when the company expects to become profitable but said income from technology deals is integral to supporting XOMA's internal pipeline of antibodies.

That pipeline includes XOMA 052, a monoclonal antibody targeting interleukin-1 beta that just began a Phase I trial for Type II diabetes last month. XOMA plans to initiate a similar trial in Europe before the end of the year as well as advance the synthetic peptide XOMA 629 into clinical trials for acne and other skin infections.

Also in XOMA's pipeline is Neuprex (opebacan), a modified, recombinant fragment of bactericidal/permeability-increasing protein (BPI). After an unsuccessful Phase III trial to prevent infection in hemorrhagic shock, a foiled attempt at FDA approval in meningococcemia, and two failed partnerships, XOMA is pursuing a European approval with the drug under exceptional circumstances in meningococcemia. Phase I trials are also underway in severe burns and open-heart surgery, and a Phase I/II trial was started earlier this year in allogeneic hematopoietic stem cell transplantation. (See BioWorld Today, Sept. 28, 1999, April 26, 2000, July 9, 2003 and July 19, 2005.)

XOMA also has several product candidates under development with partners. The antibody HCD122 is in Phase I for chronic lymphocytic leukemia and multiple myeloma under a partnership with Novartis AG. Other partners for preclinical programs include Lexicon Pharmaceuticals Inc. and Takeda Pharmaceutical Co. Ltd., among others. This joint development strategy has already paid off for XOMA, leading to revenues on Genentech's marketed psoriasis antibody Raptiva (efalizumab).

Engle said XOMA has been "working hard to move the proprietary pipeline forward," and he "doesn't see any reason" why that work wouldn't continue. However, considering he just joined the company earlier this month, he declined to make too many predictions about long-term strategic goals.

"We're in a 'checking everything out' mode," Engle said. "People underestimate just how much technology and knowledge is sitting in this company."

But one thing that's clear to Engle is the increasing importance of antibody product candidates. "Companies are repositioning themselves to make sure they have the resources to develop antibody drugs," he said, adding that XOMA plays a "very valuable" role in antibody drug development.

Over the last two years, several acquisitions have illustrated just how valuable antibody companies can be. Amgen Inc. bought Abgenix Inc. for $2.2 billion, AstraZeneca plc took over Cambridge Antibody Technology for $1.3 billion, Eisai Co. Ltd bought Morphotek Inc. for $325 million, and Peptech Ltd. absorbed EvoGenix Ltd. for about $128.6 million.

Engle didn't make any commitments about potential acquisitions, but said to "get ready and stay tuned" for more progress from XOMA in the coming months.

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