By Randall Osborne
West Coast Editor
As Wall Street jumped, settled and then sank on news regarding results from the contested presidential vote, Xoma Ltd. said it also got word that the "eyes" no longer have it - that Allergan Inc. has chosen to give back all rights to ophthalmic anti-infective products containing recombinant bactericidal/permeability-increasing protein (BPI).
For Berkeley, Calif.-based Xoma, the financial impact of the pullout is nil, said Ellen Martin, director of corporate communications at Xoma.
"We were talking five years to a product approval [in the Allergan agreement], and it's an ophthalmic product, which is not particularly large, compared to others we hope to develop," she said. And there was happier Xoma news Friday, when the company said it filed a shelf registration for up to 10 million shares, to be sold during the next two years.
If the full 10 million shares were sold at Xoma's closing price Thursday of $11.25, the financing would raise $112.5 million. The shares (NASDAQ: XOMA) ended Friday at $9.937, down $1.312, or 12 percent.
The early stage of the BPI ophthalmic research may mean it's "a lot easier to pick this up and go elsewhere," Martin said. "There were parties we were talking to in addition to Allergan when we struck this deal."
Allergan, of Irvine, Calif., backed out because the company has more drug candidates than it can fund, Martin said.
"This was not a technical problem," Martin said. "They just had too much. Certain projects fell off the bottom of the budget, and ours was one of them."
The potential $11 million deal, entered mid-last year, included an up-front payment as well as potential milestones, one of which Xoma has earned. Martin said Allergan was "perfectly happy [with the product], as the milestone demonstrated." (See BioWorld Today, June 29, 1999.)
Xoma made a "fairly minor" amount of money from the deal, Martin told BioWorld Today.
"The fact that we haven't disclosed it tells you it is pretty small," she said.
BPI is a naturally occurring human host-defense protein found in white blood cells. Earlier this year, Xoma took a hit with another BPI drug, Neuprex, when the FDA said there was not enough data to file a biologics license application for Neuprex, as a treatment for severe meningococcemia. The company's stock fell 25 percent on the news. Four months earlier, Baxter Healthcare Corp., of Deerfield, Ill., entered a potential $35 million worldwide rights deal for Neuprex. (See BioWorld Today, April 26, 2000.)
"Baxter's looking at various options," Martin said. "We're planning to start the next indication clinical study in the first quarter of 2000." The indication will be disclosed later, she said.
Xoma also has a deal with Genentech Inc. for its anti-CD11 antibody product for psoriasis, which is in two Phase III studies that began about a year ago. (See BioWorld Today, Dec. 21, 1999.)
"They're quite large trials, about 500 patients each," Martin said. Enrollment was completed for both in October. "[Psoriasis is] a chronic disease, and it's a 12-week administration of drug, so enrollment is the middle of the trial. It will be another year before we have data."
Anti-CD11a is a humanized antibody designed to prevent activation of T cells and their migration to sites of inflammation, and Xoma believes it has applications in organ transplant rejection as well. Data from a Phase I/II study of the antibody in kidney transplants are expected in the second quarter of next year.
Further back in Xoma's pipeline are ING-1, an engineered antibody in Phase I studies for cancer; Genimune, an antibody-based immunofusion product in preclinical development for autoimmune diseases and immunological cancers; Mycoprex, in preclinical development for the treatment of fungal infections; and anti-angiogenic compounds for retinal disorders.
All programs will benefit from proceeds from Xoma's shelf offering, which "seems to be the hot financial vehicle of the moment, given the volatility of the market, Monday and Friday being excellent cases in point," Martin said. "A lot of biotech stocks dropped."
Martin blamed "the presidential deadlock [as] the background for all this." A Florida state judge's ruling Friday in favor of Republicans, with regard to the vote count in the presidential election, was followed by a market rise, but stocks went lower overall. Another factor was said to be investor anxiety over earnings reports.
Xoma's quarterly numbers were disclosed last Monday, and showed a net loss for the third quarter of $7.4 million, or 11 cents per share, compared to a net loss of $11.6 million, or 21 cents per share, in the third quarter of 1999.