Health Care Sector Update for 09/06/2017: XOMA,VSTM,PULM

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Health care stocks were trying to extend their earlier gains this afternoon, with the NYSE Health Care Index climbing almost 0.4% in recent trading while shares of health care companies in the S&P 500 also were up nearly 0.5% as a group.

In company news, Xoma Corp ( XOMA ) again reversed course in Wednesday trading, with the biotech company's shares returning to positive ground after a 10.5% retreat to a session low of $14.42 apiece and regaining the positive momentum that initially followed Swiss drugmaker Novartis AG ( NVS ) last night disclosing a 6.6% equity stake in Xoma.

Novartis acquired 539,131 Xoma shares on August 24, according to yesterday's joint regulatory filing. The companies struck a licensing pact in October 2015 as part of a wider immuno-oncology initiative at Novartis, although the recent stock purchase was instead tied to a separate license agreement executed last month between the firms providing Novartis with an exclusive, global license for Xoma's gevokizumab product candidate.

Xoma received a $16 million upfront payment as part of the gevokizumab license agreement and is eligible for up to $438 million in future payments from Novartis, which also repaid $12 million in debt owed by Xoma to Les Laboratoires Servier. Novartis also paid $5 million total - or about $9.27 per share, a 25% premium to the stock's average closing price over the prior 30 days - in the Aug. 24 stock sale in exchange for commercialization rights to Xoma's IL-1 beta intellectual property portfolio.

Novartis also agreed to extend the maturity date on its prior loan to Xoma by another two years until September 2022.

In other sector news,

(+) VSTM, (+29.4%) Duvelisib drug candidate meets primary endpoint during Phase III testing in patients with relapsed or refractory chronic lymphocytic leukemia or small lymphocytic lymphoma, demonstrating superiority extending progression-free survival compared with another drug, ofatumumab.

(-) PULM, (-11.3%) Licenses its PUR0200 drug candidate to treat chronic obstructive pulmonary disease to the U.K.'s Vectura Group (VEC.L), which will now be responsible for all future development costs. Pulmatrix also receives $1 mln technology-access fee.

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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 Nasdaq, Inc.

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