Beleaguered Xoma CEO Engle turns in his walking papers

About 5 months after Xoma's ($XOMA) lead drug flamed out in a crucial mid-stage study, Steve Engle has resigned as CEO and chairman of the beleaguered biotech. The company quickly tapped board member John Varian as interim CEO and W. Denman Van Ness, the biotech's lead independent director, as chairman as it launched a search to fill the top spot.

Back in March, Xoma's lead drug spectacularly failed a Phase IIb diabetes study, an event that quickly wiped out 37% of the biotech's market value. The trial was designed to track a drop in blood sugar in 421 diabetics assigned to either monthly injections of Xoma 052 or a placebo. But investigators failed to see any significant improvement in the drug group compared with placebo over 6 months of treatment.

Engle worked hard to give the data as much of a positive spin as possible, but a number of analysts harshly criticized his leadership. The company's interim leader is staying publicly upbeat about its future.

"Given our talented, capable management team, Xoma is well-positioned today to advance its product development programs led by Xoma 052, and we are prepared to maintain positive momentum in all of our core areas during this transition," Varian said. "Key pieces are in place that allow us to achieve our goal of discovering, developing and commercializing our own products in specialized U.S. markets, and we are presented with an opportunity to take a fresh look at our business, potentially finding additional ways to build value in the Company and for our shareholders."

- here's Xoma's press release