Shares in Xoma climbed more than 3% to close at $2.42 on the Nasdaq yesterday, after investor excitement was sparked by news that the group has extended its antibody alliance with US drug major Schering-Plough.

S-P has decided to exercise its rights - set out in a deal signed last year - to initiate extra discovery and development programs under its alliance with Xoma, which is tasked with discovering therapeutic antibodies against multiple, undisclosed targets selected by S-P.

This is certainly good news for Xoma; not only is the move an endorsement of its antibody discovery technology but, in addition to research funding, it could also add substantial funds to its coffers in the form of success-based milestones and royalties from any products that make it to market.