Following on from the recent rise in Xoma shares, that I discussed in yesterday’s blog post, the company announced this morning that they have signed a commercialization deal with Les Laboratoires Servier, France’s largest privately held pharmaceutical company (2010 revenue 3.7 billion euros).
According to the press release, the key elements of the deal are as follows:
- XOMA will receive approximately $35 million upfront, up to approximately $470 million in milestone payments and tiered royalties up to a mid-teens percentage rate.
- XOMA retains development and commercialization rights for Behcet’s uveitis and other inflammatory and oncology indications in U.S. and Japan. Servier receives similar rights in the rest of the world.
- Servier will fund the first $50 million of XOMA 052 development expenses and 50% of further expenses for the Behcet’s uveitis indication. XOMA 052 is expected to advance into Phase 3 development in Behcet’s uveitis in 2011.
- Servier will fund development for diabetes and cardiovascular disease indications in exchange for worldwide rights.
- XOMA retains an option to reacquire the development and commercialization rights to the diabetes and cardiovascular indications in the U.S. and Japan by paying an option fee and partial reimbursement of incurred development expenses. If XOMA reacquires these rights, it has the ability to license them to one or more third parties.
This is a large injection of cash into Xoma that will help fund phase 3 clinical trials. The regional deal also keeps open the possibility of licensing U.S. marketing rights to another partner in the future.
The only surprise perhaps is the timing of the announcement, which is in advance of the phase 2 clinical trial results for XOMA 052 in diabetes. The expectation from all the signals is that this data could be positive, although there are no guarantees in clinical research and I’d give this a 50:50 shot at success. It will be interesting to see what happens to XOMA 052 as it moves forward in development.