The stock market pushed up the price of Xoma Corp. stock onTuesday despite second-quarter results showing a higher netloss and the announcement that two shareholders' suits havebeen filed against the company.

The earnings report for the second quarter ended June 30blamed a more than $4 million increase in operating expensesin part on legal costs related to the company's patentlitigation against Centocor Inc. Xoma alleges its E5 product totreat gram-negative sepsis has been infringed by Centocor'sCentoxin.

Two class-action lawsuits filed on July 24 in the U.S. DistrictCourt in San Francisco allege that Xoma and key companyexecutives, in their race to get marketing approval ahead ofCentocor, misled investors about the prospects for Food andDrug Administration approval of E5. The suits, citing an April10 letter signed by Dr. Paul Parkman, director of the FDA'sCenter for Biologics, allege that Xoma failed to disclose thatthe FDA deemed Xoma's data insufficient and that the agencystated that the product was ineffective.

Xoma said it has disclosed all relevant information related tothe FDA's review of E5 on a timely basis and intends to defenditself against the suits.

David Stone, a biotech analyst at Cowen & Co. in Boston, agreedwith Xoma's assessment. "I haven't seen anything in that letterthat isn't normal," he said. "Our view is that it's an approvablepackage. Clearly the market doesn't think it should have animpact, and I agree."

The suits name company Chairman and Chief Executive OfficerSteven C. Mendell, President Patrick J. Scannon, Vice ChairmanGary Wilcox and Senior Vice President Samuel K. Ackerman asco-defendants and seek an unspecified amount in damages.

For the second quarter, Xoma reported a net loss of $8.1million, or 41 cents a share, on revenues of $4.9 million. In thecomparable 1990 period, the Berkeley, Calif., company had anet loss of $5.9 million, or 43 cents a share, on revenues of$4.1 million. The per-share losses reflect an increase of 6.1million in shares outstanding.

The increase in operating expenses, which rose to $14.8million from $10.5 million in the same 1990 period, also wasattributed to expanded clinical activities.

Xoma stock (NASDAQ:XOMA) closed at $25 on Tuesday, up $1.75.

-- Karen Bernstein BioWorld Staff

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