Xoma reported discouraging results from a Phase II trial of gevokizumab in patients with erosive osteoarthritis of the hand (EOA), and will cease development of the drug for EOA. Data from the trial did not show drug-related benefits for patients after six months. The company will, however, continue to assess gevokizumab in patients with non-infectious and Behçet’s uveitis, pyoderma gangrenosum, and other rare diseases.

Last month, the FDA awarded orphan drug designation to gevokizumab for the treatment of pyoderma gangrenosum. Gevokizumab already has orphan drug designation in the U.S. for noninfectious and Behçet’s uveitis.

“We launched our proof-of-concept program for gevokizumab just over two years ago. We developed a thoughtful plan that would allow data derived from well-designed clinical studies using gevokizumab to lead us to the best opportunities to follow our ongoing Phase III studies in non-infectious and Behçet’s uveitis. While we are disappointed in today’s results, the new information we received from these Phase II studies informs our next decisions. The data we generated in our erosive osteoarthritis of the hand studies enabled our decision not to initiate large Phase III studies for this indication. In contrast, the data that we generated last fall in pyoderma gangrenosum allowed us to select this orphan indication as our next Phase III effort,” stated John Varian, CEO of Xoma. “The data Servier and we are generating in six additional indications we have disclosed, as well as other indications we haven’t yet disclosed, will continue to light our pathway forward.”

Xoma’s future is very much tied to the success of gevokizumab as was evident in its fourth quarter and full year 2013 financial results also reported yesterday. The company recorded total revenues of $35.5 million for the twelve months ended December 31, 2013, compared with $33.8 million during the same period of 2012. For the three months ended December 31, 2013, Xoma recorded revenues of $12.5 million compared to $7.4 million during the corresponding period of 2012. The increase in the fourth-quarter and full-year 2013 revenues was due primarily to the receipt of license and collaboration fees, which were offset by reductions in contract revenue and related expenses from NIAID government contracts and from reimbursements by Servier for gevokizumab-related activities.

For the year ended December 31, 2013, Xoma had a net loss of $124.1 million, compared with a net loss of $71.1 million in the year ended December 31, 2012. Annual research and development (R&D) expenses for 2013 were $74.9 million compared to $68.5 million in 2012. For the three-month periods ended December 31, 2013 and 2012, R&D expenses were $22.9 million and $15.8 million, respectively. The increases in both of the 2013 periods reflect the increased external clinical trial costs associated with Xoma’s gevokizumab clinical development programs.

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