Xoma crushed as lead drug flunks a PhIII challenge

Xoma's Paul Rubin

After stoking investors' dreams of a turnaround, Xoma delivered another nightmare. The Berkeley, CA-based biotech reported early Wednesday that a Phase III study of gevokizumab in patients with Behçet's disease uveitis was a bust.

The company's shares were crushed in the rout that followed, dropping 75% as Xoma skated along the boundary of penny stock territory.

Xoma partner Servier handled the trial, enrolling 83 patients (40 on gevokizumab and 43 on placebo). Patients were randomized to either a 60-mg dose of gevokizumab or placebo administered subcutaneously once monthly on top of their current therapies.

The drug, though, failed the primary endpoint: time to first acute ocular exacerbation. And the company has been in this uncomfortable position before with its lead therapy. Gevokizumab flunked a Phase II program for erosive osteoarthritis of the hand a little more than a year ago, ending any shot it had at a broad pivotal study in that indication.

Even though investors clearly weren't in a forgiving mood, company officials hustled to put a positive spin on the news.

"Although the study did not achieve its main objective, we did see signals of drug activity such as preserved visual acuity, less severe ocular exacerbations and a reduced incidence of reported macular edema in patients treated with gevokizumab," said Paul Rubin, the senior VP of R&D and chief medical officer. "We will continue to work closely with our partner, Servier, and uveitis experts to conduct a thorough analysis of the data to fully understand gevokizumab's impact on several clinically relevant endpoints."

CEO John Varian also turned to other assets in the pipeline to make a case that the company has a future. Its experimental meds include XOMA 358, which is "active in down-regulating the insulin receptor," and the preclinical program for XOMA 089, an anti-TGFβ monoclonal antibody.

- here's the release