West Coast Editor

An 18-month, $15 million anti-bioterrorism contract from the National Institutes of Health boosted the stock price of XOMA Ltd., enlisted by the NIH's National Institute of Allergy and Infectious Diseases to come up with three monoclonal antibodies against botulinum neurotoxin.

The company's stock (NASDAQ:XOMA) closed Friday at $1.31, up 27 cents or 26 percent.

"We've been saying that an important part of our strategy to be profitable in three years is manufacturing deals, and there was an element of show-me, of wanting to see some action" by investors - especially since other companies have claimed a similar strategy and not done very well, Peter Davis, chief financial officer of Berkeley, Calif.-based XOMA, told BioWorld Today.

Deb McManus, XOMA's manager of corporate communications, said the firm "certainly has been undervalued," and the NIH deal shows "us taking some of our internal assets and leveraging them. Hopefully it will be reflected in the stock price."

XOMA will develop monoclonal antibody therapeutics using proprietary antibody expression systems to make anti-type A-botulinum neurotoxin monoclonal antibodies, including a Master Cell Bank, Manufacturer's Working Cell Bank and other designated deliverables.

"It's fairly technical, but the upshot is that these validate the process so we can develop these antibodies," McManus said, adding that the firm can "absolutely" accomplish that in 18 months.

"When you're working with government contracts, they just stipulate a specified period of time," but after performing well in the botulism contract, XOMA might well be in line for consideration to undertake other work. Subcontracted to develop potency assays in the project is SRI International, an independent, nonprofit research institute in Menlo Park, Calif.

XOMA took a hit last summer, losing 35 percent of its stock value to close at $2.27 when the firm disclosed preliminary data from the Phase II trial with its acne gel, XMP.629, showing no statistically significant difference between the treatment and placebo. (See BioWorld Today, Aug. 18, 2004.)

Better news came at the start of this year, when XOMA retooled its deal with South San Francisco-based Genentech Inc. for the psoriasis drug Raptiva (efalizumab), switching from a profit-sharing arrangement to a royalty setup - and eliminating a loan obligation - thus making Raptiva a profitable product for XOMA starting in the first quarter of this year. (See BioWorld Today, Jan. 14, 2005.)

McManus acknowledged XOMA's stock has been sliding for months.

"It's tough to indicate what's happening," she told BioWorld Today. "Obviously you've got a mixed market out there, with a lot of scrutiny. Investors are looking at late-stage pipelines to generate revenues with an approved product."

XOMA has that in Raptiva, McManus noted.

"And the good news is that we have a mix" of in-house products and collaborative efforts, she said, albeit mostly preclinical and Phase I except for Neuprex, the Phase II bactericidal/permeability-increasing protein licensed to New York-based Zephyr Sciences Inc. in a potential $73 million deal. (See BioWorld Today, Nov. 12, 2004.)

Among its partnering efforts, XOMA has a worldwide collaboration with Aphton Corp., of Miami, for the treatment of gastrointestinal and other gastrin-sensitive cancers using anti-gastrin monoclonal antibodies. In the spring of 2004, the firm entered a worldwide exclusive agreement focused on cancer antibodies with Chiron Corp., of Emeryville, Calif. (See BioWorld Today, March 2, 2004.)