The head-to-head court battle between Xoma Corp. andCentocor Inc. over drugs to treat gram-negative sepsis hasaroused impassioned argument among Wall Street analysts.

As information about clinical trials of Xoma's E5 andCentocor's Centoxin has trickled out of the patent infringementtrial brought by Xoma against Centocor, several analysts havechanged their ratings on the companies.

Xoma stock (NASDAQ:XOMA) closed down 88 cents at $22.88 onThursday and Centocor stock (NASDAQ:CNTO) rose $1.75 to $36after analysts, including Robert Kupor of Kidder, Peabody andLinda Miller of PaineWebber, raised their ratings on Centocor.

Kupor issued a "buy" rating on Centocor after Xoma testified onWednesday that E5 didn't reduce overall mortality in its secondPhase III clinical trial.

"We've had this almost cataclysmic disclosure that E5 didn'twork in the second trial, as it didn't in the first," said Kupor."So it's very likely Centocor can get a monopoly on monoclonalsfor septicemia."

Kupor said that Centocor has already taken most of its lumpsbecause Xoma is winding up its case. Centocor will get to tellits side of the story next.

Jim McCamant, editor of the Medical Technology Stock Letterin Berkeley, Calif., disagreed. "These analysts are totallymisunderstanding what's happening," he said. "Xoma has twostudies that show marginal efficacy, while Centocor has onlyone study that shows marginal efficacy."

McCamant said other analysts are ignoring what he considersCentocor's badly flawed trials. "Xoma brought in a statisticianwho ripped apart Centocor's study," he said, lowering thesignificance of Centocor's mortality data.

"Based on the data available, E5 has a better chance to get FDAapproval than Centoxin does," he said.

Other analysts are more cautious. "It's a mess," said DeniseGilbert of Smith Barney in San Francisco. "There's no way I cancome to an educated decision on who has a better product. I'mkeeping my 'hold' on both stocks until after the advisorycommittee meeting." The Food and Drug Administration panel isscheduled to meet Sept. 4.

"If I had to make a guess now, I'd say Xoma could get a claim onprevention of organ failure and Centocor would get a mortalityclaim on (toxic) shock," she added.

And what about the actual subject of the trial, Centocor'salleged infringement of Xoma's patent?

"If Xoma loses the patent trial, it's a non-event," said Gilbert,who expects the FDA committee to rule before the trial ends.If Xoma wins, that would be critical because Centoxin saleswould be blocked even with FDA approval.

-- Karen Bernstein BioWorld Staff

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