WASHINGTON -- After a long day of second-guessing byanalysts that sent Xoma Corp.'s stock gyrating, a Food and DrugAdministration advisory panel on Monday recommended thatthe agency approve the company's CD5 Plus for treatment ofacute graft-vs.-host disease (GvHD).

The Biological Response Modifiers review committee voted 7-1for approval "contingent on a good faith effort by themanufacturer to obtain a satisfactory recent control group.This recommendation was based on the safety profile ofXomaZyme (CD5 Plus) and the life-threatening nature of thedisease condition."

GvHD is an immune system disease that occurs following bonemarrow transplants. CD5 Plus is a strategic product for Xoma,which hopes to apply it to numerous other immune disordersbeyond GvHD.

Approval for the drug had been widely expected. But toughquestions at the advisory panel hearing about Xoma's use ofhistorical rather than clinical control data led to speculationearly in the day that the application was in trouble.

Monday morning, analyst Joseph Edelman of Prudential BacheSecurities reportedly repeated his "sell" rating on the stock.

Also during the morning, Oppenheimer & Co. analyst Jeff Casdinreported that FDA officials subjected the application to "someof the toughest questioning" he had ever seen.

Casdin's office said, "We believe it is possible Xoma couldwalk away with nothing today."

Casdin said the FDA's concern centered on the fact that twotrials of CD5 Plus produced different results. "This could alsobe applied to the company's septic shock product, E5," hewarned, citing Xoma's other key product awaiting FDA approval."In addition, there are some open questions related tomanufacturing the product which could also apply to the septicshock product. Lastly, some side-effect questions related toCD5 could extend to the rheumatoid arthritis application."

Xoma's stock tumbled, then rallied later in expectation of morepositive treatment by the review panel, which did not renderits decision until late afternoon. It reached a low of $21.25and a high of $28 before closing at $26.75, down $1.13.

Testimony from physicians who sought approval of CD5 Plus asthe sole potential therapy and the fact that there are noserious side effects, apparently swayed the panel.

Steven Mendell, chairman and chief executive officer, toldBioWorld: "We ran the best trial you can possibly run, and itincluded historical controls because you can't run an activecontrol because of the nature of the disease. Since there is noalternative therapy, you can't run a control."

Regarding the committee's expectation that the company wouldwork in "good faith" to resolve the control group issue, Mendellsaid: "I think it is a positive motion. It means they're trying toget the product out to the patients who need it as quickly aspossible."

-- Steve Usdin BioWorld Washington Bureau

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