Xoma, Genentech Say Psoriasis Drug Delayed

Shares of Xoma Ltd. and Genentech Inc. fell after the biotechnology partners said their experimental psoriasis drug Xanelim will be delayed.

An application for U.S. regulatory approval of Xanelim will be held up because a study failed to prove the companies could make consistent batches of the drug, Xoma and Genentech said. The partners previously had expected approval next year.

The setback leaves Xoma and Genentech behind Biogen Inc., which filed an application for a competing drug, Amevive, in August. Biogen has said it expects to win approval this year, gaining an edge in the estimated $2-billion market to treat psoriasis, a chronic skin condition. Approval of Xanelim, which would be Xoma’s first product, may not happen until 2004.

Shares of Berkeley-based Xoma, which is relying on Xanelim to generate its first profits, fell $3.21, or 42%, to $4.42 on Nasdaq. Genentech shares fell $4.29, or 8.8%, to $44.70 on the NYSE.