The up-and-down clinical development path followed by Neuprex took another twist Tuesday as XOMA Ltd. lost its partner.

The Berkeley, Calif.-based company said it would receive a one-time, $10 million payment after terminating its license and supply agreements with Baxter Healthcare Corp., which agreed to make the payment no later than January. The Deerfield, Ill.-based firm will reimburse XOMA for a portion of certain development expenses related to the more than three-year-old agreement surrounding Neuprex, a drug that has been studied in several late-stage trials in multiple indications but has never been approved by the FDA.

The companies previously reported plans to find a third partner to support development efforts of Neuprex (rBPI-21) for systemic anti-infective and anti-endotoxin indications. Going forward, Baxter will have no involvement with the product - a development viewed as positive in terms of finding another partner, according to company spokeswoman Ellen Martin.

"I think it's been clear that Neuprex has not moved along as quickly as either party would like," she told BioWorld Today. "I think it's a positive development because XOMA is seeking a new partner, and this event should facilitate that, not to mention the additional cash."

XOMA, which received $10 million upon entering the Baxter deal and also received research funding, reported a cash position of $33.1 million through March 31.

Neuprex, which has been studied in Phase III trials for severe pediatric meningococcemia and infection, as well as in a Phase II trial for Crohn's disease, has followed a bumpy development path since the companies shook hands on the agreement in which Baxter acquired worldwide rights to the drug in a deal worth up to $35 million. (See BioWorld Today, Jan. 26, 2000.)

Most notably, just three months later the FDA decided that XOMA did not have sufficient data to file a biologics license application for Neuprex in meningococcemia. The product is an injectable formulation of rBPI-21, a modified recombinant fragment of BPI (bactericidal/permeability-increasing protein) - a human host-defense protein found in white blood cells. (See BioWorld Today, April 26, 2000.)

The year before, XOMA halted a Phase III trial designed to evaluate Neuprex's ability to prevent infection in patients who have undergone hemorrhagic trauma. XOMA, which developed rBPI-21, said BPI kills Gram-negative bacteria, enhances the activity of antibiotics, neutralizes endotoxin (a poisonous molecule in the cell walls of Gram-negative bacteria that can trigger local and systemic inflammatory reactions in the human host) and inhibits inflammation. (See BioWorld Today, Sept. 28, 1999.)

Though there are no ongoing clinical studies of the drug, XOMA plans to continue developing rBPI-21 in multiple infectious and inflammatory disease indications.

According to data from the placebo-controlled, double-blinded, randomized, 395-patient Phase III trial in meningococcemia published in the September 2000 issue of The Lancet, researchers concluded that the study was underpowered to detect significant differences in mortality. But they added that rBPI-21 is beneficial in decreasing complications of meningococcal disease.

Findings from the Crohn's disease study, which ended late last year, have yet to be released.

XOMA said it expects to record $10 million in revenue in the third quarter related to the Baxter payment, and at the same time establish a $1.3 million reserve against BPI inventories produced for Baxter that remain on XOMA's balance sheet.

Baxter is not the first partner to turn its back on XOMA's BPI technology. In late 2000, Allergan Inc. gave back all rights to ophthalmic anti-infective products containing recombinant BPI. XOMA received an up-front payment, as well as a milestone payment, as part of the potential $11 million deal before Irvine, Calif.-based Allergan decided it had too many drug candidates on its plate. (See BioWorld Today, Nov. 20, 2000.)

XOMA's stock (NASDAQ:XOMA) gained 19 cents Tuesday to close at $6.09.