Recurring rumors that Xoma Corp. might be acquired by one ofits marketing partners boosted the company's stock Monday,but several analysts expressed skepticism at the prospect.
Xoma shares (NASDAQ:XOMA) rose $1.25 to $23.50 on reportsthat part or all of the Berkeley, Calif., company might be boughtby Pfizer Inc. or Johnson & Johnson. Pfizer is Xoma's marketingpartner for its E5 monoclonal antibody to treat gram-negativesepsis. J&J has rights to market CD5 Plus to treat graft-vs.-hostdisease, transplant rejection and type I diabetes. E5 has beenstalled at the Food and Drug Administration awaitingmarketing approval. CD5 Plus is also at the FDA for the GvHDindication.
"We have a range of ongoing discussions with many companiesat various levels," said Xoma spokeswoman Carol DeGuzman."It's our policy not to talk about those discussions."
"Most failed biotech companies have gotten acquired," saidStuart Weisbrod of Merrill Lynch. But he said Xoma isn't a goodcandidate because it has the weakest technological base of anyof the major biotech companies. "I don't see what Pfizer wouldget. Even if E5 is approved, the market for first-generationseptic shock products will be very short and very limited."
Jay Silverman of Nomura Research agreed that the probabilityof an acquisition was very low. But he said it might make sensefor Pfizer, which already has put a lot of money into E5 andlacks in-house biotech capability.
If E5 is approved, Silverman expects annual sales of $200million within two years, which he calculates would makeXoma worth about $700 million. If Pfizer is optimistic aboutXoma's other products, Xoma's current $500 million marketcapitalization might make it an attractive buy, he said.
"It's less likely that J&J might buy them," he said. "J&J doesn'texpect big numbers from CD5."
-- Karen Bernstein BioWorld Staff
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