XBiotech, Inc. (XBIT) Slides as Doubt Surrounds Recent Clinical Trials Results

Shares of Austin, Texas, based XBiotech, Inc. (XBIT) fell sharply on Tuesday, against the backdrop of a generally lower day in stocks overall. XBiotech's stock plunged 32.53%, falling $8.10 per share, to close at $16.80, on volume of 6,295,725 shares. Last Saturday the company released the results of apparently successful clinical trials of their drug Xilonix in Europe. Industry analysts however saw the results of the trials in a less positive light, causing the stock to plummet.

Founded in 2005, XBiotech, Inc. is a clinical-stage biopharmaceutical company engaged in discovering and developing True Human (TH) monoclonal antibodies designed to treat several diseases.
It is developing Xilonix for the treatment of colorectal cancer, as well as advancing a robust pipeline of antibody therapies to redefine the standards of care in oncology, inflammatory conditions and infectious diseases. The company employs 78 workers and its stock trades on the NASDAQ Exchange.

At the 18th European Society of Medical Oncology World Congress on Gastrointestinal Cancer this past Saturday, XBiotech announced that its drug Xilonix showed improved clinical response for multiple symptoms associated with disease progression and overall survival with a notable lack of toxicity. The drug is targeted primarily at the treatment of colorectal cancer. It has been described by the company as the first antibody therapy to neutralize biological activity of interleukin-1 alpha (IL-1alpha), a potent anti-inflammatory signaling molecule known to promote the growth and spread of tumors. They also announced that Xilonix has been granted accelerated review by the European Medicines Agency (EMA), with an approval expected as early as the fourth quarter of 2016.

"There is an urgent need for new forms of anti-tumor, disease-modifying cancer therapies that effectively control disease while being less toxic," said John Simard, XBiotech Founder, President and Chief Executive Officer. "We believe these data demonstrate that our True Human monoclonal antibody targeting interleukin-1 alpha has the potential to meet this critical need."

Investors weren't so optimistic. Though the company reported that 33%of patients taking Xilonix experienced a positive Clinical Response Rate ("CRR"), 19% of patients on a placebo also experienced positive CRR. The difference between the two results raises questions about the true effectiveness of the drug. CRR is also a standard developed by XBiotech, and not an industry standard. CRR measures pain, fatigue, appetite loss and muscle loss, while standard goals used to evaluate cancer treatments measure response rate, progression-free survival and overall survival. XBiotech also failed to release data on tumor shrinkage.

Investors see the pending approval of the Xilonix by European authorities to be less than certain. The doubts were magnified by the fact that XBiotech's stock closed near its 52-week high on Friday, after more than doubling in price year-to-date. Meanwhile the company is conducting a separate Phase III study in the US that will use overall survival as the study standard. Until the results of that study are made available, the approval of Xilonix by European authorities remains uncertain.

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Published on Jul 6, 2016
By Kevin Mercadante

Copyrighted 2016. Content published with author's permission.

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