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Orphan Status for XOMA's Candidate

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XOMA Corporation’s (XOMA - Free Report) gevokizumab recently received Orphan Drug Designation from the US Food & Drug Administration (FDA) for treating non-infectious intermediate, posterior, or pan-uveitis, or chronic non-infectious uveitis (NIU). Notably, Orphan Drug Designation is granted to those candidates that aim to treat rare diseases with unmet medical needs.

Gevokizumab is an IL-1 beta modulating antibody. In June this year, the company initiated patient enrollment in two clinical trials to evaluate gevokizumab for treating interleukin-1 beta-mediated inflammatory diseases.

The first study (phase III) is evaluating the candidate’s potential in reducing the symptoms like vitreous haze in patients suffering from non-infectious uveitis (NIU) involving the intermediate and/or posterior segment of the eye. The primary endpoint of the randomized, double-masked, placebo-controlled study is the proportion of patients showing reduction in vitreous haze score on day 56 following gevokizumab treatment.

The other study (phase II) is evaluating the potential of the candidate to improve symptoms of pain, physical function and other abnormalities in patients suffering from erosive osteoarthritis of the hand.

We note that, in January 2011, XOMA entered into a partnership with Les Laboratoires Servier to develop and commercialize gevokizumab. As per the agreement, XOMA received around $35 million in upfront payment and can get up to $470 million in milestone payments and tiered royalties. Moreover, XOMA retained development and commercialization rights for NIU and other inflammatory and oncology indications in the US and Japan.

Earlier this month, XOMA and its partner, Servier, entered into a manufacturing agreement with Boehringer Ingelheim. The companies joined forces to utilize XOMA's technology and process for the commercial manufacturing of gevokizumab. Per the agreement, Boehringer Ingelheim will be manufacturing gevokizumab in Biberach, Germany, for XOMA. It was also discussed that XOMA and Servier will be retaining their development and commercialization agreement for the candidate.

Our Recommendation

Currently, we have a Neutral long-term stance on XOMA. The company carries a Zacks #3 Rank (Hold rating) in the short run.

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