XOMA Ltd., a leader in the discovery and development of therapeutic antibodies, and Les Laboratoires Servier (Servier), France's largest privately-held pharmaceutical company, announced the signing of a regional agreement to jointly develop and commercialize XOMA 052, XOMA's anti-inflammatory drug candidate, in multiple indications. XOMA 052 is designed to inhibit the pro-inflammatory cytokine interleukin-1 beta that is believed to be a primary trigger of pathologic inflammation in multiple diseases.

Key elements of this agreement include:  XOMA will receive approximately $35 million upfront, up to approximately $470 million in milestone payments and tiered royalties up to a mid-teens percentage rate;  XOMA retains development and commercialization rights for Behcet's uveitis and other inflammatory and oncology indications in US and Japan. Servier receives similar rights in the rest of the world;  Servier will fund the first $50 million of XOMA 052 development expenses and 50% of further expenses for the Behcet's uveitis indication. XOMA 052 is expected to advance into Phase 3 development in Behcet's uveitis in 2011;  Servier will fund development for diabetes and cardiovascular disease indications in exchange for worldwide rights;  XOMA retains an option to reacquire the development and commercialization rights to the diabetes and cardiovascular indications in the US and Japan by paying an option fee and partial reimbursement of incurred development expenses. If XOMA reacquires these rights, it has the ability to license them to one or more third parties.

"This is an important collaboration for XOMA as we gain a seasoned partner in Servier and it allows us to accelerate XOMA 052 into phase 3 development this year in Behcet's uveitis, an orphan indication for which we have reported positive proof-of-concept results. The agreement advances our strategy of focusing on opportunities in the US where we can directly participate in the development and commercialization of our novel products," said Steven B. Engle, chairman and chief executive officer, XOMA. "This agreement substantially increases our cash resources while reducing future cash requirements, provides a pathway to commercialization of XOMA 052 in the near term, and supports development in diabetes and cardiovascular disease while maintaining our ability to participate in these programs. As a result, we can accelerate development of a new approach that targets the inflammatory cause of multiple diseases and has the potential to dramatically improve the lives of patients."

"Servier is a world-class pharmaceutical company with 2010 revenues of 3.7 billion euros and a long history of successful innovation and collaborations, global franchises in diabetes and cardiovascular disease and established operations in the geographical regions where Behcet's disease is most prevalent," Engle continued. "They are an ideal partner to maximize the clinical and commercial potential of XOMA 052."

"XOMA 052 gives us a later-stage asset to develop for diabetes and cardiovascular diseases, which are both areas of strength for us, as well as for rare diseases," said Emmanuel Canet, M.D., Ph.D., Servier's president, research and development. "With this therapeutic antibody designed to inhibit interleukin-1 beta we are reinforcing our strategy in the field of biologics and developing novel approaches aimed at treating severe diseases. We are especially eager to shepherd the development of XOMA 052 for the treatment of patients with Behcet's uveitis, a population that has very few options and may face eventual blindness."

In 2011, XOMA and Servier expect to hold discussions with multiple regulatory agencies to initiate Phase 3 studies of XOMA 052 in Behcet's uveitis, a debilitating ophthalmic inflammatory condition that often leads to vision-threatening complications including blindness. XOMA 052 has already received orphan drug designations for Behcet's disease from regulators in the US and European Union, which support an expedited path to commercialization. XOMA expects to release results from two ongoing phase 2 studies in patients with Type 2 diabetes in the first quarter of 2011.

XOMA will receive approximately $35 million in an upfront payment consisting of $15 million and a 15 million euro loan, which does not have to be repaid until 2016. Regarding milestone payments, if XOMA reacquires diabetes and cardiovascular rights in the US and Japan, then the milestone payments could be up to $470 million as mentioned above. If XOMA does not reacquire these rights, then the milestone payments could be up to $800 million. XOMA will be responsible for XOMA 052 manufacturing throughout clinical development and launch and anticipates being a long-term manufacturer. This adds to the company's potential profit participation during the life of the commercial product.

Behcet's (pronounced beh-CHETS) disease causes chronic inflammation of the blood vessels, or vasculitis, among other complications. Uveitis is a vasculitis of the blood vessels in the eye which can be vision-threatening. Behcet's uveitis is one of the most severe forms of uveitis which can lead to blindness and affects approximately 50% of Behcet's disease patients.

XOMA estimates that there are 250,000 patients diagnosed with Behcet's disease worldwide including 20,000 in the US. Onset of the disease occurs most commonly in adults in their twenties, thirties and forties, and is typically more severe in men.

Without immediate treatment, major exacerbations of Behcet's uveitis may lead to retinal detachment, macular edema, vitreous hemorrhage, glaucoma and eventual blindness. The effects of these exacerbations on vision are cumulative.  Patients often experience multiple exacerbations per year, requiring treatment to control the frequency and severity of attacks of this chronic disease. No therapies are approved in the US to treat Behcet's disease. It is treated with corticosteroids and immunosuppressive drugs, which can have significant side effects, including diabetes and hypertension, and can contribute to other eye diseases like glaucoma and the formation of cataracts. These drugs also can adversely affect the neurological, pulmonary, gastrointestinal, hematological and cardiovascular systems.

XOMA has completed a successful proof-of-concept phase 2 trial of XOMA 052 in patients with Behcet's uveitis. As previously reported, all seven patients displayed rapid reduction of intraocular inflammation and improvement in visual acuity or other ophthalmic measures after a single treatment with XOMA 052 and following discontinuation of immunosuppressive drugs such as cyclosporine and/or azathioprine. Follow-up results demonstrated that each of the five patients re-treated with XOMA 052 due to a recurring uveitis exacerbation responded again to XOMA 052 treatment and maintained their response for several months. The drug was well-tolerated, and no drug-related adverse events were reported.

XOMA 052 is a potent monoclonal antibody with the potential to improve the treatment of patients with a wide variety of inflammatory diseases and other diseases including cancer. XOMA 052 binds strongly to interleukin-1 beta (IL-1 beta), a pro-inflammatory cytokine involved in Behcet's uveitis, diabetes, cardiovascular disease, rheumatoid arthritis, gout, and other auto-inflammatory diseases. IL-1 is a well-validated therapeutic target, with three marketed IL-1 inhibitors that have been used by more than 200,000 patients overall. By binding to IL-1 beta, XOMA 052 inhibits the activation of the IL-1 receptor, thereby preventing the cellular signalling events that produce inflammation.

To date, nearly 600 patients have been enrolled in XOMA 052 clinical trials. XOMA has completed enrolment in two phase 2 clinical trials in patients with Type 2 diabetes and expects three month interim results from the phase 2a trial in the first half of January 2011 and six month results from the phase 2b trial in this quarter. The phase 2 trials follow a successful 98 patient phase 1 program in Type 2 diabetes in which XOMA 052 was shown to be well-tolerated, demonstrated evidence of biological activity in diabetes measures and cardiovascular biomarkers, and had a half-life that may provide convenient dosing of once per month or less frequently. The company has also demonstrated the potential for XOMA 052 in in vivo models of cardiovascular disease and in an in vitro model using human myeloma, or plasma cell cancer, cells.

Servier is the leading independent French pharmaceutical company, established in 1954 by its founder, Dr. Jacques Servier. The group is established in 140 countries and 88% of Servier products are prescribed outside of France. Sales turnover in 2010 reached about 3.7 billion euros. More than 25% of Servier's turnover is invested in Research and Development. Servier R&D counts 19 International Centers of Therapeutic Research, and its principal therapeutic research orientations are cardiovascular diseases, diabetes, neuropsychiatric disorders, cancer and osteoarticular diseases.

XOMA discovers, develops and manufactures novel antibody therapeutics for its own proprietary pipeline as well as through license and collaborative agreements with pharmaceutical and biotechnology companies, and under its contracts with the US government.