Xoma’s share price has soared, up almost 18% to $2.68, on the news that it has signed a licensing deal with Pfizer.

The New York-based drugs giant has secured a non-exclusive licence to Xoma's bacterial cell expression (BCE) technology for phage display and other R&D and manufacturing of antibody products. In return, it will pay $30 million upfront, plus milestone, royalty and other fees on future sales of products subject to this license, including drugs currently in late-stage development.

Xoma chief executive Steven Engle said that the deal “provides clear validation” of the firm's antibody research and affirms its ability “to capitalise on the value of our patented technologies”. He added that BCE is “a proven technology for commercially significant therapeutic antibodies” as demonstrated by the success of Genentech’s Lucentis (ranibizumab) for wet age-related macular degeneration, on which Xoma receives royalties.

The US biotechnology group has also licensed its BCE technology to firms such as Merck & Co, Centocor and UCB, and it is employed in the production of the Belgian firm’s anti-tumour necrosis factor alpha antibody fragment Cimzia (certolizumab). The latter has been submitted for regulatory approval for Crohn's disease and is also being developed as a treatment for rheumatoid arthritis and psoriasis.

The deal is being seen as another move by Pfizer to increase its presence in biologics and previously the company has said that such drugs will make up some 20% of its portfolio by 2009.