Second Indication for Drug in Development for Type 2 Diabetes

BERKELEY, CA, USA | March 4, 2009 | XOMA Ltd. (Nasdaq:XOMA) today announced the initiation of a Phase 2a clinical study evaluating its product candidate XOMA 052, a potent monoclonal antibody targeting interleukin-1 beta (IL-1 beta) for the treatment of rheumatoid arthritis. IL-1 beta is a pro-inflammatory cytokine involved in the pathophysiology and development of rheumatoid arthritis, diabetes, gout and other inflammatory diseases. With this study, XOMA expands the development of XOMA 052 beyond its ongoing efforts in Type 2 diabetes, where it has shown anti-inflammatory and anti-diabetic effects in both preclinical and human studies.

The U.S.-based Phase 2a clinical study is a randomized, placebo-controlled study designed to enroll up to 18 patients with moderate to severe rheumatoid arthritis and evaluate the safety, pharmacokinetics and disease-specific outcomes of XOMA 052. Standard rheumatoid arthritis clinical assessment scores will be calculated using the American College of Rheumatology core criteria which assess inflammatory status, joint physical exam, and general patient functional status. Patients will be enrolled into one of three groups. Each group will include one patient who receives "standard of care" treatment plus placebo and five who receive "standard of care" treatment plus a single dose of XOMA 052 at 0.3 milligrams per kilogram of body weight. In one group, XOMA 052 will be administered by subcutaneous injection. In the other two groups, XOMA 052 will be administered by intravenous infusion. Patients will be followed for eight weeks.

Rheumatoid arthritis is a chronic, multi-system autoimmune disease where the cells of the immune system attack the joints, causing inflammation and joint destruction which can be debilitating and reduces life expectancy. An estimated two to three million patients in the U.S. are affected with rheumatoid arthritis.

Steven Engle, Chairman and Chief Executive Officer of XOMA, stated, "We continue to be excited by the potential of XOMA 052 to address a number of chronic diseases with major unmet medical needs. Last September, XOMA presented encouraging results supporting one of the most significant medical advances in diabetes in decades — a move from insulin therapy to anti-inflammatory treatment. The interim results from our diabetes trials have provided the impetus to move into other inflammatory diseases such as rheumatoid arthritis. This initial study is intended to build on our encouraging diabetes results and on the anticipated results from clinical studies evaluating other IL-1 blockers being evaluated in rheumatoid arthritis."

XOMA 052 Diabetes Study Results

In 2008, XOMA announced positive interim results from two Phase 1 clinical studies evaluating five of six planned dose levels of XOMA 052. In the studies, a single dose of XOMA 052 demonstrated biological activity in patients with Type 2 diabetes as measured by standard measures of diabetes and inflammatory markers for up to three months. The median glycosylated hemoglobin (HbA1c) levels were reduced in all 5 dose groups, and the median reduction was as much as 0.6 percent compared to baseline as measured 28 days following treatment. XOMA 052 reduced median HbA1c in 4 of 5 drug dose levels when compared to placebo. A single dose of XOMA 052 reduced levels of ultrasensitive C-reactive protein, a standard measure of systemic inflammation, as compared to placebo in all five of the dose groups. The studies support XOMA 052’s novel anti-inflammatory approach to Type 2 diabetes treatment that may preserve insulin-producing cells.

The safety and pharmacokinetic results showed that XOMA 052 was well tolerated at all five dose levels and had a potential dosing profile of once per month or longer in Type 2 diabetes patients.

Recently announced preclinical results indicate that animals treated with XOMA 052 have increased insulin production and proliferation of insulin-producing islet cells. They also show decreased islet cell death, reduced peripheral insulin resistance and lower cholesterol levels. There was an absence of weight gain and hypoglycemic events.

Regulatory Approval of IL-1 blockers

The FDA has approved two drugs that use the IL-1 therapeutic approach. In 2001, the first drug, anakinra, was approved by the FDA for the treatment of rheumatoid arthritis. As a result, a significant amount of information is available about the safety of the IL-1 therapeutic approach. In 2008, the FDA approved the second IL-1 drug, rilonacept, for cryopyrin-associated periodic syndromes (CAPS), providing additional regulatory support for the development of IL-1 therapeutics.

The positive clinical effect of the IL-1 therapeutic class of drugs was demonstrated recently in two different indications. In 2008, two companies announced positive results in Phase 2 studies of two IL-1 antibodies, one in rheumatoid arthritis and another in Muckle-Wells disease. The anti-IL-1 antibodies in each study were reported to be well tolerated and to reduce symptoms in patients. Clinical studies are being conducted in diabetes, rheumatoid arthritis, gout and other diseases. XOMA believes these results strengthen the medical hypothesis for the development of XOMA 052.

About XOMA 052

XOMA 052 is a potent monoclonal antibody with the potential to improve the treatment of patients with a wide variety of inflammatory diseases. XOMA 052 binds strongly to Interleukin-1 beta (IL-1 beta), a pro-inflammatory cytokine that is involved in the development of diabetes, rheumatoid arthritis, gout, and other diseases. By binding to IL-1 beta, the drug inhibits the activation of the IL-1 receptor, thereby preventing the cellular signaling events that produce inflammation. XOMA 052 is a humanized IgG2 antibody with a half-life of 22 days. Based on its binding properties, specificity to IL-1 beta and half-life, XOMA 052 may provide convenient dosing of once per month or longer. XOMA 052 was developed by XOMA using the Company’s proprietary antibody technologies, capabilities and expertise. XOMA owns worldwide rights to the antibody and related intellectual property.

About Interleukin-1 and Inflammatory Disease

IL-1 is a pro-inflammatory cytokine secreted by a number of cell types including monocytes and macrophages. The IL-1 gene family includes IL-1 beta, which is released from cells as part of an inflammatory reaction. IL-1 beta produces a range of biological effects, mainly through the induction of other pro-inflammatory mediators such as corticotrophin, platelet factor-4, prostaglandin E2 (PGE2), IL-6, and IL-8. IL-1 beta induces both local and systemic inflammatory effects through the activation of the IL-1 Type 1 receptor found on almost all cell types. IL-1 beta is implicated in the pathogenesis of many disease states involving localized and systemic inflammation. Targeting this pathway and reducing the effects of IL-1 beta may provide clinical benefit in rheumatoid arthritis, systemic juvenile idiopathic arthritis, osteoarthritis, and other inflammatory diseases.

About XOMA

XOMA discovers, develops and manufactures therapeutic antibody and other agents designed to treat inflammatory, autoimmune, infectious and cancerous diseases. The company’s proprietary product pipeline includes XOMA 052, an anti-IL-1 beta antibody, and XOMA 3AB, a biodefense anti-botulism antibody candidate.

XOMA’s proprietary development pipeline is primarily funded by multiple revenue streams resulting from the licensing of its antibody technologies, product royalties, development collaborations and biodefense contracts. XOMA’s technologies and experienced team have contributed to the success of marketed antibody products, including RAPTIVA(r) (efalizumab) for chronic moderate to severe plaque psoriasis, LUCENTIS(r) (ranibizumab injection) for wet age-related macular degeneration and CIMZIA(r) (certolizumab pegol) for Crohn’s disease.

The company has a premier antibody discovery and development platform that incorporates leading antibody phage display libraries and XOMA’s proprietary Human Engineering(tm) and bacterial cell expression and manufacturing technologies. Bacterial cell expression (BCE) is a key breakthrough biotechnology for the discovery and manufacturing of antibodies and other proteins. As a result, more than 50 pharmaceutical and biotechnology companies have signed BCE licenses.

In addition to developing its own products, XOMA develops products with premier pharmaceutical companies including Novartis AG, Schering-Plough Research Institute and Takeda Pharmaceutical Company Limited. XOMA has a fully integrated product development infrastructure, and a team of 200 employees at its Berkeley location. For more information, please visit http://www.xoma.com.

SOURCE: XOMA Ltd.