Investors wagered heavily Tuesday in the final day of tradingbefore Xoma Corp. and Centocor Inc. put their rival treatmentsfor gram-negative sepsis up for review today by a Food andDrug Administration advisory committee.

Centocor shares (NASDAQ:CNTO) jumped $4.25 to $37.50, whileXoma stock (NASDAQ:XOMA) lost $2.50, closing at $20.50.

Trading was heavy, with 4.5 million Xoma shares changinghands and 1.8 million shares of Centocor traded.

Price volatility was expected today as investors react tosignals from the hearing that was scheduled to begin at 8:30EDT this morning.

Price swings have become almost a daily occurrence since July15 as analysts have broadcast recommendations based onrevelations from the trial of Berkeley, Calif.-based Xoma'spatent infringement suit against Centocor of Malvern, Pa.

In addition, investors may be poised to cover significant shortpositions taken in anticipation of the committee's decisions.As of Aug. 15, the most recent reporting period, 2.7 millionXoma's shares had been sold short, or borrowed and then soldby investors in anticipation of the stock price falling, allowingthem to replace the shares at a lower price. Xoma has 20.9million shares outstanding. Centocor had 2.9 million sharesshort out of 33 million shares outstanding.

The market's gyrations reflect the fact that the outcome of thelong-awaited review of Xoma's E5 and Centocor's Centoxin bythe Vaccines and Related Biological Products advisorycommittee is anyone's guess.

Most analyst speculation has focused on three options that theadvisory committee might pursue: approving one or both drugsfor broad use; approving one or both for narrow indications --Centoxin for septic shock only and E5 for reversal of majororgan failures or mortality in patients with certain organfailures; and sending one or both back for further trials.

-- Karen Bernstein BioWorld Staff

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