Xoma to Stop Testing Drug as Arthritis Treatment

By Vrinda Manocha

Xoma Corp said it would not proceed with late-stage studies of its lead drug, an antibody called gevokizumab, as a treatment for erosive osteoarthritis (EOA) of the hand after two mid-stage studies showed the drug was not effective enough.

With one estimate of potential lost sales running to $1 billion, the company's shares slid about 22% to $7.34 after the bell on Tuesday.

The study results are a blow to California-based Xoma, founded in 2011, as it seeks to bring its first drug to market.

The mid-stage studies in EOA patients compared gevokizumab with a placebo and assessed whether the drug improved pain, stiffness and physical function in the hand when injected once a month.

The company said patients given the placebo showed a greater improvement than patients treated with the drug in the final three months of one of the studies. Xoma said its analyses of the study did not show a significant drug-related benefit even after six months.

Data from a second study showed weaker results than the first study after 84 days of treatment.

The company said the drug was well-tolerated and there were no serious side effects. Common side effects, including headache, pain and urinary tract infections, were comparable between patients who used gevokizumab and those on placebo.

Gevokizumab is an antibody which binds to a protein that causes inflammation, and modulates the signaling between cells that causes inflammation.

Chief executive John Varian said Xoma is also no longer pursuing the study of gevokizumab as a broad treatment for acne. Instead, the company would focus on treating a smaller group of skin disorders known as neutrophilic dermatoses, which have acne as a symptom, Varian said.

Xoma also said it would focus on starting late-stage development of the drug to treat pyoderma gangrenosum (PG), a rare skin disease, and on completing late-stage studies of the drug as a treatment for the eye disease non-infectious uveitis.

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