Xoma 052 is expected to start in Phase III trials for Behcet’s uveitis this year.

Servier is paying Xoma $35 million up front as part of a deal for development of the latter’s clinical-stage anti-inflammatory candidate Xoma 052 in multiple indications. Xoma claims the agreement means it will now be able to progress the candidate into Phase III trials for the treatment of the orphan indication Behcet’s uveitis during 2011.

Under terms of the deal Servier receives worldwide rights to develop Xoma 052 for diabetes and cardiovascular disease indications worldwide, and will fund all development activities for relevant diseases. Xoma does, however, retain an option to reacquire development and commercialization rights to the diabetes and cardiovascular indications in the U.S. and Japan by paying an option fee and the partial reimbursement of Servier’s incurred development expenses. Xoma says it plans to report results from two ongoing Phase II studies with Xoma 052 in type 2 diabetes during the first quarter of 2011.

The firm also retains the rights to develop and commercialize its drug for the Behcet’s uveitis and other inflammatory and oncology indications in the U.S. and Japan, with Servier being granted development rights to Xoma 052 for these indications in all other regions.

Overall Xoma could receive $470-$800 million in milestone payments on top of its up-front fee, dependent on whether it reacquires the diabetes and cardiovascular disease rights to Xoma 052 for the U.S. and Japan. The firm will in addition earn tiered royalties on future sales of Xoma 052 by its partner. Servier will fund the first $50 million of Xoma 052 development expenses, and 50% of further expenses for the Behcet’s uveitis indication.

“The agreement advances our strategy of focusing on opportunities in the U.S. where we can directly participate in the development and commercialization of our novel products,” remarks Steven B. Engle, Xoma chairman and CEO. “This agreement substantially increases our cash resources while reducing future cash requirements, provides a pathway to commercialization of Xoma 052 in the near term, and supports development in diabetes and cardiovascular disease while maintaining our ability to participate in these programs.”

Xoma 052 is a human engineered antibody targeting interleukin-1 beta (IL-1β), which Xoma projects could have potential utility in the treatment of a range of disorders including diabetes, cardiovascular disease, rheumatoid arthritis, acute gout, and systemic juvenile idiopathic arthritis. The drug is currently in Phase II development for types 1 and 2 diabetes, and cardiovascular disease. Orphan drug status for Xoma 052 has also been granted in the U.S. and EU for the Behcet’s uveitis indication, for which Xoma says has previously reported proof of concept data.

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