Xoma's Potential Heartbreak of a Psoriasis Drug Delay

Evidence is mounting that biotech firms Genentech(DNA Quote) and Xoma(XOMA Quote) will be forced to delay an approval application for their groundbreaking psoriasis drug, Xanelim, according to sources familiar with the drug's development.

Wall Street expects the companies to file an approval application for Xanelim with the U.S. Food and Drug Administration by the end of this year or in the first quarter of next year. That application would be based on tests already completed. But one of the drug's principal researchers believes an additional ongoing long-term safety trial is crucial to approval. And that test may not be completed in time.

The Street has high hopes for Xanelim, so any delay in the approval process will be viewed as a major setback for investors. Genentech, with its existing stable of profitable drugs, is largely insulated from any hiccups. But a delay will be especially damaging to Xoma, which has pushed as many drugs to market in the past 20 years as the Boston Red Sox have won World Series. (Answer: Zero.) The company's shares have jumped more than 200% over the past year in anticipation of Xanelim's release, and a delay might hurt the company's chances of raising the cash it will need by the end of next year. ...