Replies to post #161002 on Biotech Values

[DewDiligence]

Transcript of XOMA’s presentation at Credit Suisse today; here’s the interesting part:

http://seekingalpha.com/article/1424611-xoma-management-presents-at-credit-suisse-2013-antibody-day-transcript?part=single

[Gevokizumab] is a very high affinity humanized monoclonal antibody that’s directed against IL-1 beta… And unlike many of the other monoclonal antibodies and also modulators of IL-1 beta signaling, this particular molecule binds to an allosteric binding site as opposed to orthosteric binding site. That is: it binds to a place that’s not the business end of the molecule.

This provides a number of theoretical and actual advantages because by binding to an allosteric site, it still allows ligand receptor interactions which is important from a number of perspectives. One, when you’re craving an antibody that blocks 100% of a circulating substance that the body needs for natural immunity, you’re essentially trading one disease for another. …you start off with too much of a substance and the molecule actually creates not enough.

So by our approach of allosteric modulation, we are allowing some ligand receptor interaction that still allows the body to mount a response if there is an overwhelming invasion such as infection or tumor cells. So we think the strategy for creating these can theoretically lead to molecules with better therapeutic index and obviously time will tell us we expand our database of patients that are being treated.

[iwfal]

XOMA -

the CMO, Paul Rubin (who may read this board) went out of his way to say that Gevokizumab’s allosteric modulation of the IL-1beta receptor allows for sufficient IL-1 to get through to IL-1’s orthosteric receptor to handle the body’s needs during a severe infection or other event requiring a heightened immune response.

On the topic of MOA data about infection risk:

1) IL-1 inhibitors are oft touted as being safer than tnf inhibitors because they "won't trigger latent TB". And yet they made mention today that their partner excluded a latent TB patients from the original uveitis trial. Great to talk MOA - but, for good reason, even the company members don't count on it.

2) They have a moderately sized database from the diabetes trials. Yet in the PRs coming out of that trial they specfically didn't talk about either balanced SAE or AE infection rates (one or the other - don't remember off hand which). And in other PRs for other trials they did talk about it. And, as we know in biotech, the unsaid item is the item to worry about.

- all that said, I'd agree that it is possible that some IL-1 inhibitors have very low excess risk of infection. Rilonacept and diacerein both have much lower rates than tnf inhibitors as a class. Nonetheless, given the missing diabetes trial data... .

On the topic of senior management reading thoughtful boards:

1) Wouldn't surprise me. As I have noted before, I know for a fact that for Qualcomm, well before it was the behemoth it is now, the CEO routinely read the board. And, somewhat more circumstantially, specifically addressed the concerns raised there ("addressed" sometimes meant actual policy changes).

2) When I detect that a company is reading the boards and has a non-evasive story to address the concerns then I consider that worth a lot of credit when deciding on my investments. Not becaue I think the boards are the font of all wisdom, but because it indicates that they can accept criticism wisely. That is a huge force multiplier in management.