XOMA Reports Third Quarter 2017 Financial Results
November 06 2017 - 4:05PM
Validated business strategy with transformational
license agreements with Novartis;Expanded portfolio of
partner-funded programs with potential for future milestone and
royalty payments;Current cash balance sufficient to fund operations
for approximately five years
XOMA Corporation (Nasdaq:XOMA), a pioneer in the discovery,
development and licensing of therapeutic antibodies, today
announced its third quarter 2017 financial results and recent
business highlights.
“We made significant progress on multiple fronts executing our
new business strategy, and in doing so we completely transformed
the Company. The highlight events were clearly the license
agreements we secured for both gevokizumab and our IL-1 beta
intellectual property portfolio with Novartis. Our strategy was
further reinforced with new license agreements for use of our
proprietary phage display libraries for antibody discovery. We also
received milestone payments from our extensive portfolio of
partner-funded programs,” stated Jim Neal, Chief Executive Officer
of XOMA. “These third quarter transactions have resulted in a
completely revamped balance sheet and multiple years of projected
cash runway. With more than two dozen partner-funded programs that
have the potential to generate substantial additional milestone and
royalty payments, we are very well positioned to deliver sustained
growth in the years ahead and create long-term value for
shareholders.”
Recent Business Highlights
XOMA made important progress positioning the Company for
long-term strategic success:
- Licensing the global commercial rights to gevokizumab, a novel
anti-IL-1 beta allosteric monoclonal antibody, to Novartis. In a
separate agreement, XOMA granted Novartis a license to its
intellectual property covering the use of IL-1 beta targeting
antibodies in the treatment of cardiovascular disease. Under these
agreements, XOMA received $31 million in cash payments, including a
$5 million equity investment. The Company is eligible to receive up
to $438 million in development, regulatory and commercial
milestones plus tiered high-single to mid-double-digit royalties on
net sales of gevokizumab. XOMA is also eligible to receive
low-single-digit royalties on canakinumab sales in cardiovascular
indications, rising to mid-single-digit royalties under certain
circumstances. In addition to the upfront payments, Novartis also
settled XOMA's €12 million debt to Servier, and extended the
maturity date on the Company’s debt to Novartis from September 2020
to September 2022.
- Entering into new non-exclusive license agreements with three
separate companies, Tizona Therapeutics, Inc., Torch Biosciences,
Inc., and LakePharma, for use of XOMA's proprietary phage display
libraries for antibody discovery. Under these agreements, the
Company is eligible to receive development and regulatory milestone
payments plus single-digit royalties on net sales of products.
- Earning a $3 million milestone payment related to the clinical
advancement of an anti-botulism product candidate the Company
licensed to Nanotherapeutics, Inc., in 2015. In September 2017,
XOMA received an initial cash payment of $250,000 related to the
milestone. The remaining amounts of the milestone payment will be
received in monthly payments over the next eleven months. If the
product candidate advances from its current stage of development to
production and stockpiling by governmental agencies, XOMA is
eligible to receive a 15 percent royalty on net sales.
- Continuing implementation of the Company's previously announced
aggressive corporate cost reduction plan.
Financial Results
XOMA recorded total revenues of $36.2 million for the third
quarter of 2017, compared to $0.6 million for the third quarter of
2016. The increase in revenues for the third quarter of 2017 was
due primarily to upfront payments received relating to the
Company’s license agreements with Novartis in August 2017.
Research and development (R&D) expenses were $0.3 million
for the third quarter of 2017, compared to $8.7 million for the
third quarter of 2016. The decrease in R&D expenses for the
third quarter of 2017 was due primarily to reductions of $3.5
million in salaries and related expenses, $1.8 million in external
manufacturing activities, $1.2 million in the allocation of
facilities and information technology costs, $0.9 million in
clinical trial costs, and $0.4 million in consulting costs. The
decrease in external manufacturing costs included a one-time
adjustment of $0.7 million to reverse the cost of a batch of drug
material that did not meet quality standards. The significant
reduction in R&D spending year-over-year is a result of the
execution of the Company’s corporate strategy of leveraging its
extensive portfolio of partnered programs and licensed
technologies.
General and administrative (G&A) expenses were $7.3 million
for the third quarter of 2017, compared to $4.1 million for the
third quarter of 2016. G&A expenses for the three months ended
September 30, 2017, included increases of $1.9 million in
consulting services primarily related to the Company’s license
agreements with Novartis, $1.0 million in the allocation of
facilities and information technology costs due to a greater
proportion of general and administrative personnel after the
Company’s restructuring activities, and $1.0 million in stock
compensation cost, partially offset by a $0.6 million decrease in
salaries and benefits.
Net income for the third quarter of 2017 was $26.3 million,
compared to net loss of $12.5 million for the third quarter of
2016. The significant net income for the third quarter of 2017 was
due primarily to the increase in total revenues previously
discussed.
On September 30, 2017, XOMA had cash and cash equivalents of
$47.7 million. The Company ended December 31, 2016, with cash and
cash equivalents of $25.7 million. The Company’s current cash and
cash equivalents are expected to be sufficient to fund its
operations for multiple years.
About XOMA Corporation
XOMA has an extensive portfolio of products, programs, and
technologies that are the subject of licenses the Company has in
place with other biotech and pharmaceutical companies. Many
of these licenses are the result of the Company's pioneering
efforts in the discovery and development of antibody therapeutics.
There are more than two dozen such programs that are fully funded
by partners and could produce milestone payments and royalty
payments in the future. For more information, visit
www.xoma.com.
Forward-Looking Statements
Certain statements contained in this press release 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, including statements regarding: the potential of
XOMA’s portfolio of partnered programs and licensed technologies
generating substantial milestone and royalty proceeds over time;
the significant unmet therapeutic need for certain rare medical
conditions associated with hyperinsulinism; XOMA’s intent to
license X213 and X358; and statements that otherwise relate to
future periods. These statements are based on assumptions that may
not prove accurate, and 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. Potential risks to XOMA
meeting these expectations are described in more detail in XOMA's
most recent filing on Form 10-K and in other SEC filings. Consider
such risks carefully when considering XOMA's prospects. Any
forward-looking statement in this press release represents XOMA's
views only as of the date of this press release and should not be
relied upon as representing its views as of any subsequent date.
XOMA disclaims any obligation to update any forward-looking
statement, except as required by applicable law.
XOMA CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS) |
(unaudited) |
(in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Revenues: |
|
|
|
|
|
|
|
|
License
and collaborative fees |
|
$ |
36,068 |
|
|
$ |
430 |
|
|
$ |
46,993 |
|
|
$ |
3,196 |
|
Contract
and other |
|
|
115 |
|
|
|
205 |
|
|
|
340 |
|
|
|
1,844 |
|
Total revenues |
|
|
36,183 |
|
|
|
635 |
|
|
|
47,333 |
|
|
|
5,040 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research
and development |
|
|
307 |
|
|
|
8,674 |
|
|
|
7,215 |
|
|
|
35,986 |
|
General
and administrative |
|
|
7,255 |
|
|
|
4,053 |
|
|
|
17,625 |
|
|
|
13,138 |
|
Restructuring charge (credit) |
|
|
(29 |
) |
|
|
— |
|
|
|
3,451 |
|
|
|
15 |
|
Total operating expenses |
|
|
7,533 |
|
|
|
12,727 |
|
|
|
28,291 |
|
|
|
49,139 |
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
|
28,650 |
|
|
|
(12,092 |
) |
|
|
19,042 |
|
|
|
(44,099 |
) |
|
|
|
|
|
|
|
|
|
Other
income (expense): |
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(202 |
) |
|
|
(982 |
) |
|
|
(1,108 |
) |
|
|
(2,991 |
) |
Other
(expense) income, net |
|
|
(263 |
) |
|
|
289 |
|
|
|
337 |
|
|
|
585 |
|
Revaluation of contingent warrant liabilities |
|
|
— |
|
|
|
260 |
|
|
|
— |
|
|
|
10,455 |
|
Loss on
extinguishment of debt |
|
|
(135 |
) |
|
|
— |
|
|
|
(650 |
) |
|
|
— |
|
Income (loss) before income tax |
|
|
28,050 |
|
|
|
(12,525 |
) |
|
|
17,621 |
|
|
|
(36,050 |
) |
Provision for income
taxes |
|
|
(1,706 |
) |
|
|
— |
|
|
|
(1,706 |
) |
|
|
— |
|
Net income (loss) and
comprehensive income (loss) |
|
$ |
26,344 |
|
|
$ |
(12,525 |
) |
|
$ |
15,915 |
|
|
$ |
(36,050 |
) |
Basic net income (loss)
available to common stockholders |
|
$ |
16,038 |
|
|
$ |
(12,525 |
) |
|
$ |
6,609 |
|
|
$ |
(36,050 |
) |
Diluted net income
(loss) available to common stockholders |
|
$ |
16,418 |
|
|
$ |
(12,525 |
) |
|
$ |
6,669 |
|
|
$ |
(36,050 |
) |
|
|
|
|
|
|
|
|
|
Basic net income (loss)
per share available to common stockholders |
|
$ |
2.06 |
|
|
$ |
(2.08 |
) |
|
$ |
0.89 |
|
|
$ |
(6.00 |
) |
Diluted net income
(loss) per share available to common stockholders |
|
$ |
1.98 |
|
|
$ |
(2.08 |
) |
|
$ |
0.88 |
|
|
$ |
(6.00 |
) |
Weighted
average shares used in computing basic net income (loss) per share
available to common stockholders |
|
|
7,786 |
|
|
|
6,029 |
|
|
|
7,424 |
|
|
|
6,010 |
|
Weighted
average shares used in computing diluted net income (loss) per
share available to common stockholders |
|
|
8,275 |
|
|
|
6,029 |
|
|
|
7,617 |
|
|
|
6,010 |
|
|
|
|
|
|
|
|
|
|
XOMA CORPORATION |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
(unaudited) |
|
(in thousands, except share and per share
amounts) |
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
47,747 |
|
|
$ |
25,742 |
|
|
Trade and
other receivables, net |
|
|
1,026 |
|
|
|
566 |
|
|
Prepaid
expenses and other current assets |
|
|
318 |
|
|
|
852 |
|
|
Total
current assets |
|
|
49,091 |
|
|
|
27,160 |
|
|
Property and equipment,
net |
|
|
97 |
|
|
|
1,036 |
|
|
Other assets |
|
|
522 |
|
|
|
481 |
|
|
Total
assets |
|
$ |
49,710 |
|
|
$ |
28,677 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT) |
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
4,046 |
|
|
$ |
5,689 |
|
|
Accrued
and other liabilities |
|
|
1,601 |
|
|
|
4,215 |
|
|
Accrued
restructuring costs |
|
|
444 |
|
|
|
3,594 |
|
|
Income
taxes payable |
|
|
1,706 |
|
|
|
— |
|
|
Deferred
revenue – current |
|
|
6,287 |
|
|
|
899 |
|
|
Interest
bearing obligations – current |
|
|
— |
|
|
|
17,855 |
|
|
Accrued
interest on interest bearing obligations – current |
|
|
140 |
|
|
|
254 |
|
|
Total
current liabilities |
|
|
14,224 |
|
|
|
32,506 |
|
|
Deferred revenue –
non-current |
|
|
17,101 |
|
|
|
18,000 |
|
|
Interest bearing
obligations – non-current |
|
|
14,322 |
|
|
|
25,312 |
|
|
Other liabilities –
non-current |
|
|
— |
|
|
|
69 |
|
|
Total
liabilities |
|
|
45,647 |
|
|
|
75,887 |
|
|
Stockholders’ equity
(deficit): |
|
|
|
|
|
Preferred
stock, $0.05 par value, 1,000,000 shares authorized, 5,003 and 0
shares issued and outstanding as of September 30, 2017 and
December 31, 2016, respectively |
|
|
— |
|
|
|
— |
|
|
Common stock, $0.0075 par value, 277,333,332 shares authorized,
8,143,643 and 6,114,145 shares issued and outstanding at
September 30, 2017 and December 31, 2016, respectively |
|
|
61 |
|
|
|
46 |
|
|
Additional paid-in capital |
|
|
1,181,742 |
|
|
|
1,146,357 |
|
|
Accumulated deficit |
|
|
(1,177,740 |
) |
|
|
(1,193,613 |
) |
|
Total
stockholders’ equity (deficit) |
|
|
4,063 |
|
|
|
(47,210 |
) |
|
Total liabilities and stockholders’ equity (deficit) |
|
$ |
49,710 |
|
|
$ |
28,677 |
|
|
|
|
|
|
|
|
Investor contact:Luke HeaglePure
Communications+1 910-726-1372lheagle@purecommunications.com
Media contact:Julie NormartPure
Communications+1 415-946-1087jnormart@purecommunications.com
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