Allergan and XOMA Expand rPBI Ophthalmic Collaboration.

Business Editors/Health & Medical Writers

BERKELEY, Calif.--(BW HealthWire)--May 30, 2000

XOMA Ltd. (Nasdaq:XOMA) announced it is broadening its ophthalmic anti-infective product development collaboration with Allergan (NYSE:AGN). Since June of 1999, Allergan has had an exclusive license from XOMA to develop ophthalmic anti-infective products that combine rBPI (recombinant bactericidal/permeability-increasing protein) with antibiotics to treat bacterial eye infections. The expanded collaboration covers all ophthalmic anti-infective formulations, including "stand-alone" formulations of rBPI, and covers eye infections caused by all microbes.

The amended agreement provides for additional milestone payments beyond those under the original agreement. Allergan will continue to pay all future development costs for products developed under this agreement, and XOMA will be entitled to royalties on net sales worldwide of all Allergan anti-infective products that incorporate rBPI. The relationship also includes a product supply agreement under which a XOMA affiliate will manufacture rBPI for Allergan.

"The expansion of this collaboration follows from encouraging results of laboratory tests performed jointly with Allergan as part of our original product development agreement," said Jack Castello, chairman, president and CEO of XOMA. "These studies not only confirmed that our first rBPI21/antibiotic combination is active in vitro against multiple strains of bacteria that cause eye infections, but also showed that formulations of rBPI21 itself are active against a number of such strains. Earlier research at XOMA had demonstrated the possibility of targeting additional microbial pathogens, such as fungi and protozoa, that are covered by XOMA patents."

BPI, a naturally occurring human host-defense protein with multiple anti-infective properties, is the basis of XOMA's anti-infective drug development platform. XOMA has been researching ophthalmic applications of rBPI since 1995 under its "I-PREX(TM)" ophthalmic research and development program. Laboratory studies by XOMA and collaborators originally discovered the anti-microbial and anti-angiogenic activities in eye infections of formulations of rBPI21 (a modified recombinant 193 amino acid fragment of BPI). XOMA and other collaborators, including Allergan, have also demonstrated that formulations of rBPI21 can act synergistically with all major classes of antibiotics against many strains of antibiotic-resistant bacteria.

XOMA develops and manufactures protein and antibody-derived biopharmaceuticals in Berkeley and Santa Monica, California. Medical targets include infectious diseases, immunologic and inflammatory disorders, and cancer. BPI is XOMA's infectious disease product development platform. BPI was discovered at New York University School of Medicine (NYU) by Peter Elsbach, M.D., and Jerrold Weiss, Ph.D. XOMA has agreements with Allergan and with The Hyland Immuno Division of Baxter Healthcare Corporation to develop BPI-related products. For more information, visit XOMA's web site at www.xoma.com.

Statements in this press release related to collaborative relationships, other aspects of product development, or that otherwise relate to future periods, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions that may not prove accurate. Actual results could differ materially from those anticipated due to risks inherent in the biotechnology industry and for companies engaged in the development of new products in a regulated market. These risks, including those related to the timing or results of pending or future clinical trials, changes in the status of the Company's collaborative relationships, uncertainties regarding the legal standards applicable to biotechnology patents, and actions by the U.S. Food and Drug Administration or the U.S. Patent and Trademark Office, are discussed in the Company's most recent annual report on Form 10-K and in other SEC filings. Consider such risks carefully in evaluating XOMA's prospects.