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XOMA Corporation (XOMA - Snapshot Report) announced that the U.S. Food and Drug Administration (FDA) awarded orphan drug designation to gevokizumab for the treatment of pyoderma gangrenosum (PG).

We note that XOMA’s gevokizumab already has orphan drug designation in the U.S. for three other indications: non-infectious, intermediate, posterior or pan uveitis, chronic non-infectious anterior uveitis and Behçet’s uveitis.

Orphan drug designation is granted to novel drugs or biologics targeting rare diseases or conditions that affect less than 0.2 million patients in the U.S. Under this status, the company developing the orphan drug enjoys a seven-year period of marketing exclusivity in the U.S., receives assistance on studies conducted on the drug and tax credits on costs related to such studies, can apply for annual grant funding and is exempted from paying fees under the Prescription Drug User Fee Act (PDUFA).

We remind investors that XOMA has a license and collaboration agreement with Servier to jointly develop and commercialize gevokizumab for multiple indications.

In Oct 2013, XOMA had said that it is looking to start a phase III pivotal study on gevokizumab for inflammatory PG. XOMA will discuss the requirements with the FDA for advancing gevokizumab into the phase III study in this indication.

Meanwhile, gevokizumab is currently in a phase III program (EYEGUARD). While the EYEGUARD-A study is being conducted to evaluate gevokizumab for the treatment of non-infectious uveitis (NIU), EYEGUARD-B is evaluating gevokizumab’s ability to prevent disease flares in patients with Behçet's uveitis. Another study, EYEGUARD-C is being conducted to evaluate gevokizumab for the prevention of disease flares in NIU patients who are controlled with steroids and immunosuppressants.

XOMA holds a Zacks Rank #3 (Hold). Some better ranked stocks in the biopharmaceutical sector include Alexion Pharmaceuticals, Inc. (ALXN - Analyst Report), Biogen Idec Inc. (BIIB - Analyst Report) and Acceleron Pharma, Inc. (XLRN - Snapshot Report). While Alexion and Biogen carry a Zacks Rank #1 (Strong Buy), Acceleron holds a Zacks Rank #2 (Buy).

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