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ORTHO WILL MARKET XOMA’s XOMAZYME-CD5 PLUS WORLDWIDE

Executive Summary

ORTHO WILL MARKET XOMA's XOMAZYME-CD5 PLUS WORLDWIDE for the prevention of solid organ transplant rejection and graft versus host disease under a marketing agreement with Xoma announced on March 19. The Johnson & Johnson subsidiary will also get rights to Xomazyme-CD7 Plus. Xoma has worldwide manufacturing rights. Ortho Biotech's marketing rights for the Xoma products exclude Japan, Korea and the Peoples Republic of China, where Xoma is in discussions with potential marketing partners. Ortho will pay Xoma $9 mil. for the development and marketing contract: $4 mil. in cash and $5 mil. for an equity stake of 247,000 shares (about 1.8% of Xoma's approximately 13.4 mil. shares outstanding). Terms of the royalty payment schedule were not disclosed. Xoma reported 1989 revenues of $10.4 mil., mainly from contract R&D revenues, and a net loss of $18.9 mil. Xoma filed a product licensing application for Xomazyme-CD5 Plus (formerly known as Xomazyme-H65), the company's first PLA, in December 1988 as an orphan treatment for Graft versus Host Disease (GvHD); the firm expects FDA approval this year. Xoma said it is set to begin clinicals with Xomazyme-CD5 for the prevention of solid organ transplant rejection. The immunotoxin Xomazyme-CD7 Plus recently went into Phase I clinicals for lymphocyte malignancies. The product, which targets the CD7 antigen, also may have uses for other autoimmune disorders. Xoma said that it will "probably" begin the first efficacy studies with Xomazyme-CD7 in aplastic anemia. Xomazyme-CD5 Plus and Xomazyme-CD7 Plus will be marketed in the U.S. by Ortho Biotech and overseas by Cilag, J&J's international unit. The Xoma products should make a good fit with Ortho's Orthoclone OKT3, which is marketed in the U.S. for acute kidney transplant rejection. Approved in June 1986, OKT3 was the first monoclonal antibody-based product to clear FDA. In March 1989, Ortho made supplemental submissions for Orthoclone OKT3 covering use in heart and liver transplant rejection. In addition to the GvHD and anti-organ transplant rejection indications, Ortho Biotech has the option to acquire the rights to Xomazyme-CD5 Plus for the treatment of Type I diabetes (juvenile onset, insulin dependent), inflammatory bowel disease, lymphocyte malignancies and for GvHD prophylaxis. The product is in Phase I/II for the first three indications and in Phase III for the fourth. Xoma expects to file a PLA for the GvHD prevention in either late 1990 or early 1991. Xoma retains rights to Xomazyme-CD5 Plus for rheumatoid arthritis, which is currently in Phase II studies. Human trials for that indication began in June 1989. The company reported promising preliminary results of a small-scale, 16-patient Phase I trial on rheumatoid arthritis patients last summer at the American College of Rheumatology meeting and could report interim results of the 40-patient Phase II trial at the group's upcoming October annual meeting. Phase III clinicals are expected to begin in mid-year, the company forecast. Xoma's second PLA was filed in March 1989 for the gram negative sepsis treatment Xomen-E5. That product, which will be marketed by Pfizer under a June 1987 agreement, remains under active FDA review, according to Xoma. * The murine monoclonal antibody-based product is in a race for approval with Centocor's Centoxin human-based MAb for the same indication. Centocor filed its PLA in September 1989. In its recently-released annual report, Centocor says the "most likely" date for Centoxin approval is 1991.
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