April 27, 2006

XOMA and AVEO Announce Agreement to Apply Human Engineering Technology™ to AV-299, AVEO’s Novel Anti-HGF Antibody

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– Human Engineering™ Technology to Accelerate Development of Clinical Candidate –

Berkeley, CA and Cambridge, MA — April 27, 2006 — XOMA Ltd. (Nasdaq: XOMA) and AVEO Pharmaceuticals, Inc. (AVEO) today announced an agreement for XOMA to utilize its Human Engineering™ (HE™) technology to humanize AV-299, AVEO’s novel anti-HGF monoclonal antibody.  For work conducted and licenses granted, AVEO will pay XOMA an up-front license fee, development milestones and royalties.  AVEO retains all development and commercialization rights to AV-299.  Additional financial terms were not disclosed.

“AV-299 is a highly potent antagonist of hepatocyte growth factor/scatter factor (HGF/SF) which has demonstrated excellent efficacy in preclinical models of human cancer.  Along with AV-412, our AV-299 program is another example of the progress we have made applying our scientific platform to build a portfolio of novel oncology product development programs,” said Tuan Ha-Ngoc, AVEO’s President and CEO.  “XOMA’s clinically-validated HE™ technology is intended to accelerate product development timelines for the AV-299 program, while increasing the potential for clinical and commercial success.”

“The alliance with AVEO represents a new business extension of our HE™ technology, which was previously available only for XOMA’s internal and collaborative product development programs,” said Jack Castello, XOMA’s Chairman, President and CEO.  “We hope this is the first of many HE™ relationships as it joins with our other initiatives to leverage XOMA’s innovations, expertise and other assets.  Importantly, we are pleased to improve the medical and commercial potential of AVEO’s AV-299 antibody product candidate through the use of our HE™ technology.”

AV-299 Program

AV-299 is a high-affinity antibody whose binding to HGF potently neutralizes the biological activities of HGF in vitro and in vivo.  The HGF/c-Met pathway is frequently deregulated in different types of human cancers and is thought to play an important role in regulating tumor growth, invasion and metastasis.  Utilizing its proprietary technology platform, AVEO has developed substantial evidence of the importance of the HGF pathway in tumor maintenance.  The diverse biological roles of the HGF/c-Met pathway make the selection of patients most likely to respond to anti-HGF therapies especially difficult.  To guide the clinical development of AV-299, AVEO is using its proprietary preclinical models of human cancer to identify specific populations of tumors in which the HGF/c-Met pathway plays a critical role in tumor maintenance, as opposed to those in which the pathway is activated but not essential.  AVEO’s Human Response Prediction™ platform provides AVEO with unique insight into the biology of anti-HGF therapies, and uniquely positions it to move AV-299 forward into clinical development.

AVEO’s AV-299 program exemplifies the progress AVEO has made in discovering drugs that target functionally-relevant tumor maintenance genes identified and validated by AVEO in its proprietary in vivo cancer models.   

Human Engineering™ Technology

HE™ technology is a patented, clinically validated humanization technology for modifying non-human antibodies to make them suitable for medical purposes in humans.  HE™ technology is distinct from other humanization techniques and is independent of CDR grafting.  XOMA’s HE™ technology is based on the conserved structure-function relationships among antibodies and defines which amino acid residues in a non-human antibody variable region are candidates for substitution.  The result is a 93%-95% human antibody generated in approximately 3 months with preserved antigen binding, structure, and function.

About AVEO

AVEO is a private biopharmaceutical company focused on the discovery and development of novel cancer therapeutics.  The Company utilizes its proprietary, genetically-defined cancer models for the identification and validation of novel cancer targets, and has begun to build an impressive portfolio of drug discovery programs around these high-value targets.  AVEO also leverages its Human Response Prediction™ platform to allow for the identification of genetic profiles that correspond with patient responsiveness.  AVEO is located in Cambridge, Massachusetts.  For more information, please visit the company’s website at www.aveopharma.com.

About XOMA

XOMA is a leader in the discovery, development and manufacture of therapeutic antibodies, with a therapeutic focus that includes cancer and immune diseases. 

The company has built a premier antibody discovery and development platform that includes access to seven of the leading commercially available antibody phage display libraries and XOMA’s proprietary Human Engineering™ and bacterial cell expression (BCE) technologies.  More than 45 companies have signed BCE licenses.  As a leader in therapeutic antibodies, XOMA has established a unique and comprehensive collection of technologies for antibody discovery, optimization, development and production. With a fully integrated product development infrastructure, XOMA’s product development capabilities extend from preclinical sciences to product launch.  For more information, please visit the company’s website at www.xoma.com.

Certain statements contained herein concerning 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 certain 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 results of discovery research and preclinical testing; the timing or results of pending and future clinical trials (including the design and progress of clinical trials; safety and efficacy of the products being tested; action, inaction or delay by the FDA, European or other regulators or their advisory bodies; and analysis or interpretation by, or submission to, these entities or others of scientific data); uncertainties regarding the status of biotechnology patents; uncertainties as to the cost of protecting intellectual property; changes in the status of the existing collaborative and licensing relationships; the ability of collaborators, licensees and other third parties to meet their obligations; market demand for products; scale up and marketing capabilities; competition; international operations; share price volatility; XOMA’s financing needs and opportunities and risks associated with XOMA’s status as a Bermuda company, are described in more detail in XOMA’s most recent annual report on Form 10-K and in other SEC filings.  Consider such risks carefully in considering XOMA’s prospects.