XOMA Inks Deal with French Pharma - Analyst Blog

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XOMA Corporation ( XOMA ) recently announced that it has entered into an agreement with Les Laboratoires Servier, a privately-owned French pharmaceutical company, to acquire the US rights to the perindopril franchise from the latter. The perindopril franchise includes Aceon (perindopril erbumine), an angiotensin converting enzyme ("ACE") inhibitor and three other fixed dose combination ("FDC") candidates. 

Aceon is approved for treating patients suffering from essential hypertension. The drug is also marketed for reducing the risk of cardiovascular death or nonfatal myocardial infarction in patients with stable coronary artery disease.

XOMA intends to start the commercialization activities in the US, including delivering Aceon to patients from January 23, 2012 onwards. However, the company will not actively market the product. 

We note that XOMA paid Servier a licensing fee of $1.5 million pertaining to the deal in the third quarter of 2010. Additionally, XOMA has to make milestone payments subject to the achievement of certain development and commercialization targets. XOMA is also liable to pay tiered royalties ranging from mid-single digit to up to a mid-teen on the sales of Aceon and mid-teens in the case of FDCs. 

The perindopril franchise generated ex-US sales in excess of $1.2 billion in 2011. However, we remain cautious about Aceon's potential in the US, considering the fact that generic versions of perindopril erbumine are available in the US since 2009. 

We remind investors that XOMA had inked a deal with Servier in December 2010 as well, regarding gevokizumab (formaly known as XOMA 052).  Currently, it is the lead pipeline candidate of XOMA. However, on March 22, 2011, Xoma reported negative results from phase IIb trial of gevokizumab for type II diabetes.

The trial failed to meet the primary endpoint of reducing glycosylated hemoglobin (HbA1c) after six months of treatment as compared to placebo. However, data from the trial revealed a significant reduction in C-reactive protein - a biomarker for the risk of heart attack, stroke and other diseases - in patients treated with gevokizumab versus placebo. 

XOMA is also developing the candidate for Behcet's uveitis and other indications. 

Our Recommendation

We currently have an Outperform recommendation on XOMA. Our long-term recommendation is supported by the Zacks #1 Rank (Strong Buy) carried by the stock in the short run.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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