The psoriasis therapy Raptiva (efalizumab) will become profitable for Xoma in the first quarter following restructuring of the firm's collaboration with Genentech.

Under the revised deal, Xoma will receive a "mid-single digit royalty on worldwide sales of Raptiva with an additional royalty rate on sales in the U.S. in excess of a specified level," the company said Jan. 12.

Genentech will eliminate Xoma's obligation to pay the $40 mil. balance on a development loan plus interest. The agreement also allows Xoma to repay its fourth quarter share of Raptiva operating losses by offsetting them against future royalties.

Xoma could have opted to receive a higher worldwide royalty rate, but it would have required immediate repayment of the development loan.

"Besides strengthening our balance sheet by eliminating the $40 mil. loan payable, this restructuring moves Xoma to a royalty participation on Raptiva, providing us with positive cash flow from the product sooner than we would have experienced under the previous profit-sharing agreement," the company said.

Under the revised agreement, "Xoma will no longer be responsible for funding any development or sales and marketing activities or have right to co-promote Raptiva," the company said.

Raptiva was approved in October 2003 for the treatment of adults with chronic, moderate to severe plaque psoriasis who are candidates for systemic therapy.

Genentech reported Raptiva sales of $56.3 mil. in 2004.

Xoma also recently restructured its collaboration with Millennium on MLN2222, which is in Phase I for treatment of patients undergoing coronary artery bypass graft surgery.

Xoma will limit its development work on the compound through Phase I testing and will be entitled to milestone and royalty payments.

"Our goal over the next three years is to make Xoma profitable while continuing to strengthen and deepen our product pipeline," the company said in announcing the Raptiva agreement's restructuring.

On Dec. 20, Xoma announced that former GenVec VP-Manufacturing & Project Management Robert Tenerowicz was named VP-project & alliance management.

His responsibilities include "establishing new corporate partnerships with a particular focus on utilizing Xoma's manufacturing capabilities," the company said.

- Tericke Blanchard

Xoma Opts For Lower Raptiva Royalty In Lieu Of Loan Repayment To Genentech

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