By Randall Osborne
To push ahead with ongoing Phase III trials of its lead product, Neuprex, an infection treatment derived from a human host protein that kills bacteria, Xoma Corp. received $27 million from two sources related to development of the company's secondary focus area: the anti-CD20 and anti-CD11a monoclonal antibodies.
Xoma, of Berkeley, Calif., got $17 million for assigning certain anti-CD20 antibody patents and royalty rights to Pharmaceutical Partners LLC, of New York, a financial manager of limited partnerships.
The anti-CD20 technology previously had been licensed exclusively to Genentech Inc., of South San Francisco, which sublicensed it to IDEC Pharmaceuticals Inc., of San Diego, for use in Rituxan, the monoclonal antibody to treat cancer. Rituxan was approved late last year for low-grade, non-Hodgkin's lymphoma recurrences. (See BioWorld Today, Dec. 1, 1997, p. 1.)
Assigning the royalty rights to investors in Pharmaceutical Partners gave Xoma four or five years' worth of royalties in one payment, said Ellen Martin, spokeswoman for Xoma.
"We know the royalty rate [for Rituxan sales], although IDEC has asked us not to disclose it, and it's a smallish royalty rate," Martin said. Although IDEC has sales estimates, no guarantees of specific revenues for Xoma can be made.
"There's nothing uncertain about $17 million in cash," Martin said. Although the buying of royalty streams is a practice more common in the mining and entertainment industries, it was the smartest thing for Xoma to do with Rituxan, she said. "In our case, it was ideal."
In a separate transaction, Xoma received $10 million from Genentech to fund the development of the hu1124 (anti-CD11a) product, a humanized monoclonal antibody that selectively inhibits T cells, which is in a Phase Ib multidose study in psoriasis patients. The Phase Ia trials were in single doses.
Under the terms of their contract, upon getting favorable Phase II results, Xoma would either codevelop the product with Genentech or be paid off in a lump sum. (See BioWorld Today, April 23, 1996, p. 1.)
"Hu1124 pays for itself, basically, and the anti-CD20 is being liquidated," said Martin, which allows Xoma to concentrate on Neuprex, its lead product.
Neuprex is derived from bactericidal/permeability-increasing protein (BPI), a human host-defense protein found in white blood cells. It is being studied in two Phase III trials, one for meningococcemia — a rare but deadly infection that strikes children — and the other to prevent pulmonary complications in patients who suffer severe blood loss. (See BioWorld Today, Nov. 6, 1997, p. 1.)
The $27 million was paid to Xoma at the end of December, putting the company's cash at about $55 million, Martin said. Xoma's stock (NASDAQ:XOMA) closed Thursday at $6.125, up $0.50. *