Novartis returns to the discount aisle, buys Xoma's failed PhIII drug for $31M
Two years after a Phase III flop for its lead drug gevokizumab put Xoma $XOMA under a dark cloud, Novartis has stepped up to buy the drug and help relieve the financial strain at the biotech.
One look at this deal and you can see that Novartis CEO Joe Jimenez is dead serious when he says he won’t pay top dollar for biotech assets.
In a bottom feeding expedition, the pharma giant has agreed to pay $31 million for gevokizumab, which includes $5 million for an equity stake. Novartis is also settling a €12 million bill outstanding with Les Laboratoires Servier while restructuring its own loan to Xoma.
In return Novartis gets the global commercial rights to gevokizumab and its IP for IL-1 beta targeting antibodies in the treatment of cardiovascular disease — a major focus at Novartis.
Xoma shares curiously jumped 12% yesterday and added a 26% gain this morning as investors shared the biotech’s enthusiasm at being able to open a new chapter at the company.
Xoma was battered by the news that gevokizumab failed a Phase III study in patients with Behçet’s disease uveitis back in 2015. With its shares crushed, Xoma had to scramble to stay in business. A few months ago the biotech reported positive but very early proof-of-concept results for a small study of XOMA-358 in postbariatric surgery hyperinsulinism (PBS) and congenital hyperinsulinism.
Novartis has played a key role in keeping Xoma afloat. Back in 2015, after the trial catastrophe, the pharma giant fronted $37 million on another one of the biotech’s programs, which helped buy time for the executive crew.
Said Jim Neal, the CEO at Xoma:
The immediate impact of these licensing agreements for gevokizumab and our IL-1 beta intellectual property eliminates almost half of XOMA’s outstanding debt, more than doubles our cash position, and generates potential recurring revenues through royalties.
The small deal, along with the news of the Dimension buyout this morning in an all-stock deal, tend to underscore Big Pharma’s lack of interest in executing big money deals this year. It’s been quiet on the deal front, and these new pacts won’t improve the industry’s sentiment on that score.