Novartis buys Xoma’s failed IL-1 drug at a knockdown price

Xoma stopped investing in gevokizumab last year after setbacks in the clinic.

Novartis has bought the rights to Xoma’s gevokizumab. The Swiss Big Pharma is paying $31 million (€26 million) upfront for the anti-IL-1 beta allosteric monoclonal antibody, a price that reflects the battering its prospects took as a late-phase clinical development program unraveled. 

Xoma has used the deal to add to its bank balance and rejig its debt obligations. The cash part of the deal adds $31 million, $5 million of which is an equity investment. On the debt side, Novartis is settling the €12 million Xoma owes Servier—cutting what the biotech owes in half—and pushing the date on which it will recall its own loan back by two years.

In return, Novartis is acquiring the rights to gevokizumab and Xoma’s accompanying IL-1 beta IP portfolio. The assets bolster Novartis’ position in a niche it once looked set to contest with Xoma, as well as other companies with IL-1 assets such as Eli Lilly and Regeneron. In the end, Xoma and Lilly canned their programs, while Novartis and Regeneron’s candidates became Ilaris and Arcalyst, respectively.     

Novartis picked up an FDA approval for Ilaris in two subtypes of the rare autoinflammatory diseases cryopyrin-associated periodic syndromes in 2009. The R&D team followed up that nod by starting a big trial of at-risk cardiovascular disease patients with high levels of chronic inflammation. That dialed up the stakes significantly.

Data presented in recent months show Novartis has succeeded in demonstrating an anti-inflammatory drug can cut the risk of major cardiovascular events. If Novartis can make the commercial case for Ilaris, its big bet on cardiovascular disease may pay off. 

Exactly where gevokizumab fits into Novartis’ plans is unclear. But, at the very least, buying up the IP portfolio gives Novartis the protection that comes from owning patents one observer called “quite broad.”

Xoma picked up that and other patents back when gevokizumab, then known as XOMA 052, was spearheading its R&D activities. But Xoma stopped investing in gevokizumab and put a for-sale sign on the asset about 18 months ago. Back then, Xoma said several companies had already approached it about buying the program. But the process of turning this interest into a signed contract has dragged on, perhaps coincidentally until Novartis is about to ramp up its commercial IL-1 activities.