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12:00 AM
Sep 03, 2007
 |  BioCentury  |  Finance

Ebb & Flow

Xoma (XOMA) managed to more than double its cash via last week's licensing deal with Pfizer (PFE). Investors welcomed the news, boosting the shares $0.47 (20%) to $2.77 and a market cap of $365 million.

At June 30, XOMA had $24 million in cash. The PFE deal, under which the pharma received a non-exclusive worldwide license to use XOMA's bacterial cell expression (BCE) technology for phage display and other research, development and manufacturing of antibody products for undisclosed indications, will put another $30 million in the biotech's coffers.

XOMA also is eligible for milestones, royalties and other fees on future sales of all products subject to the license.

On the heels of the cash infusion, XOMA expects to provide financial and pipeline guidance in about a month, CEO Steven Engle, who came on board in early August, told Ebb & Flow.

The BCE technology is licensed to more than 45 companies. XOMA had royalty, licensing and contract manufacturing revenue totaling $26.4 million in 1H07, more than twice its revenue of $13.1 million in 1H06.

The company's pipeline now will become more of a priority, Engle said. "The company has been building a revenue stream - let's take that and move forward with the pipeline," he said.

On the company's 2Q call last month, Engle said XOMA could have as many as four product candidates by the end of 2007. These could include XOMA 052, in Phase I testing to treat Type II diabetes; XOMA 629, a topical synthetic peptide derived from bactericidal/permeability-increasing protein (BPI) in preclinical development to treat acne and other skin infections; and Neuprex opebacan recombinant BPI.

Engle said XOMA 052, a monoclonal antibody targeting interleukin-1 (IL-1) beta, will be a key beneficiary of the influx of cash. The company hopes the compound could be used to treat a range of autoimmune and inflammatory indications.

Neuprex has been studied in a number of indications, but the only ones highlighted in the 2Q call were a Phase I/II study for bone marrow transplant patients and the potential submission of an MAA to treat meningococcemia under Europe's "exceptional circumstances" legislation.

In 2000, XOMA and then partner Baxter (BAX) said data from a Phase III trial to treat pediatric patients with severe meningococcemia were not sufficient to support a BLA submission.

Turning a new leaf

Just two years after closing its first fund, New Leaf Ventures is raising the $400 million NLV II. The New Leaf team was hardly new to healthcare venture capital; it was spun out from Sprout Group, the venture capital arm of Credit Suisse First Boston.

The first New Leaf fund, NLV I, was $310 million and closed in August 2005. Devoted to biopharmaceutical, medical device, diagnostics and laboratory infrastructure companies, NLV I was invested in 17 companies.

So far, the firm has seen one early exit from NLV I - the acquisition of infectious disease company Cerexa by Forest (FRX) for $494 million in January.

New Leaf also manages three Sprout funds, from which "we had a whole series of sales over the past 18 months," Managing Director Philippe Chambon told Ebb & Flow.

Among them were renal disorder company Ilypsa, which Amgen (AMGN) announced it would acquire for $420 million in June, and RNAi company Sirna, which Merck (MRK) bought last year for $1.1 billion in cash.

Chambon noted that New Leaf has benefited significantly from the recent wave of acquisitions and that the firm had focused on "creating companies that someone would want to buy, and not have all of our eggs in the IPO basket."

Although Chambon said M&A has felt "a little bit less active"...

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