Xoma cuts manufacturing to feed R&D

Berkeley, CA-based Xoma ($XOMA) is all but eliminating in-house manufacturing as it hunkers down into its area of expertise: discovery and development of monoclonal antibodies. The biotech said last week that it will cut one-third of its workforce as it shifts most Phase III and commercial manufacturing to a contractor.

According to the San Francisco Business Times, Xoma will cut 50 jobs now and another 34 by the end of the first quarter. The move is expected to free up $14 million, the company said in a statement, to be used instead for clinical development of gevokizumab, a monoclonal antibody treatment for inflammatory diseases. 

"Our strategy is to maximize the potential of Xoma's flagship product, pursue discovery-based opportunities, and establish a U.S. commercial presence," said CEO John Varian, in the statement.

To date, a "large portion" of manufacturing costs have been reimbursed by partners and biodefense contracts, the statement said. The shift to contract manufacturing, however, reduces Xoma's "financial exposure in future periods when contracts may not be in place."

Xoma has not revealed which contract manufacturer will take over the work. But the drug developer won't renew its lease on a 31,000-square-foot manufacturing facility when it expires in 2013, according to the statement. Some internal research activities also will be eliminated, while others are outsourced.

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