XOMA Reports Fourth Quarter and Full Year 2017 Financial Results and Provides Business Update
March 07 2018 - 4:05PM
Transformed business model to a royalty aggregator
with extensive asset portfolio and capital;Added nine new
partner-funded programs in 2017 with potential for milestone and
royalty payments;Current cash balance sufficient to fund operations
for multiple years
XOMA Corporation (Nasdaq:XOMA), a pioneer in the discovery,
development and licensing of therapeutic antibodies, today
announced its fourth quarter and full year 2017 financial results
and business highlights.
“In 2017, we completely transformed XOMA’s business model and
operations. We are now a lean, well-capitalized royalty aggregator
with the potential to generate significant future milestone
payments and recurring revenue. We added nine new partner-funded
programs during the year, including two additional licenses with
Novartis. We dramatically reduced our cost structure, eliminated
$32 million of short-term debt, and extended our projected cash
runway beyond that of most biotechnology companies,” stated Jim
Neal, Chief Executive Officer of XOMA. “In the year ahead, we plan
to further expand our portfolio of partner-funded programs. We have
become more aggressive in our activities to acquire potential
milestone and royalty revenue streams on additional assets. We also
have increased our focus on out-licensing our internally developed
product candidates, including our IL-2 program. Ultimately, we
believe we will create additional near- and long-term value for
shareholders in 2018.”
Business Highlights
XOMA made significant progress to position the Company for
long-term growth, while strengthening its balance sheet in multiple
ways during 2017.
- Launched a royalty-aggregator strategy that leverages XOMA's
extensive portfolio of partner-funded programs and licensed
technologies that has the potential to generate significant future
milestone payments and royalty revenue for the Company.
- Completed a $25 million registered offering of common stock and
convertible preferred stock to BVF Partners, L.P. (BVF). Associated
with this investment, the Company appointed Matthew Perry,
President of BVF, a highly accomplished investor and industry
professional, to XOMA's Board of Directors.
- Licensed the global development and commercialization rights to
gevokizumab, a novel anti-IL-1 beta allosteric monoclonal antibody,
to Novartis. XOMA is eligible to receive up to $438 million in
development, regulatory and commercial milestones plus tiered high
single-digit to mid-teens royalties on net sales of
gevokizumab.
- Granted Novartis a license to its intellectual property
covering the use of IL-1 beta targeting antibodies in the treatment
of cardiovascular disease. XOMA is eligible to receive low
single-digit royalties on canakinumab sales in cardiovascular
indications, rising to mid single-digit royalties under certain
circumstances.
- Received $31 million from Novartis in cash payments, including
a $5 million equity investment in connection with the gevokizumab
and intellectual property licenses.
- Settled XOMA's €12 million debt to Servier as part of the
gevokizumab transaction with Novartis, as well as extended the
maturity date on the Company’s debt to Novartis from September 2020
to September 2022.
- Licensed the global development and commercialization rights
for XOMA 358 to Rezolute, Inc., formerly AntriaBio, Inc., a
biopharmaceutical company that specializes in developing therapies
for metabolic and orphan diseases. XOMA is entitled to receive up
to approximately $232 million in potential milestone payments plus
royalties ranging from the high single-digits to mid-teens on net
sales of RZ358. XOMA also is entitled to receive low single-digit
royalties on net sales of AB101 and two other products developed
from Rezolute’s extended release and oral plasma kallikrein
inhibitor platforms.
- Entered 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.
- Earned a $10 million milestone payment in May 2017 reflecting
the clinical advancement of an asset the Company licensed to one of
its pharmaceutical partners.
- Earned a $3 million milestone payment related to the clinical
advancement of an anti-botulism product candidate the Company
licensed in 2015 to Ology Bioservices, Inc.
- Repaid the full outstanding balance under the Company's term
loan with Hercules Technology Growth Capital, Inc., which had an
outstanding principal balance of $17.5 million as of December 31,
2016.
- Completed the Company's previously announced aggressive cost
reductions by decreasing headcount to fewer than 20 employees as of
December 31, 2017.
- Strengthened the leadership team with the appointment of Dee
Datta, Ph.D., as Chief Business Officer.
Financial Results
XOMA recorded total revenues of $5.4 million for the fourth
quarter of 2017, compared to $0.5 million for the fourth quarter of
2016. For the full year of 2017, XOMA recorded revenues of $52.7
million, compared to $5.6 million for the full year of 2016. The
increase in revenues for the full year 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 $0.7 million
for the fourth quarter of 2017, compared to $8.2 million for the
fourth quarter of 2016. R&D expenses for the full year of 2017
were $7.9 million, compared to $44.2 million for the same period in
2016. The decrease in R&D expenses for the full year of 2017
was due primarily to reductions of $12.9 million in salaries and
related expenses, $8.5 million in external manufacturing
activities, $7.6 million in clinical trial costs, $4.0 million in
the allocation of facilities and information technology costs, and
$1.0 million in consulting costs. The significant reduction in
R&D spending year-over-year is a result of the execution of the
Company’s royalty-aggregator business model that leverages its
extensive portfolio of partnered programs and licensed
technologies.
General and administrative (G&A) expenses were $6.7 million
for the fourth quarter of 2017, compared to $5.2 million for the
fourth quarter of 2016. G&A expenses were $24.3 million for the
full year of 2017, compared to $18.3 million for the full year of
2016. The increase in G&A expenses for the full year of 2017
was due primarily to increases of $4.0 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, $2.9 million in third party
costs related to the execution of license agreements, including the
two Novartis agreements in August 2017, and $2.2 million in
stock-based compensation. The increases are partially offset
by decreases of $2.8 million in salaries and related costs due to
the Company’s restructuring activities in 2016 and 2017 and $1.0
million in legal fees.
Restructuring charges for the full year of 2017 were $3.4
million, compared to $4.6 million for the full year of 2016. These
charges related primarily to severance, other termination benefits
and outplacement services associated with the Company’s
restructuring activities in 2017.
Net loss for the fourth quarter of 2017 was $1.3 million,
compared to net loss of $17.5 million for the fourth quarter of
2016. Net income for the full year of 2017 was $14.6 million,
compared to net loss of $53.5 million for the full year of 2016.
The significant net income for the full year of 2017 was due
primarily to the increase in total revenues and decrease in R&D
expenses previously discussed.
On December 31, 2017, XOMA had cash and cash equivalents of
$43.5 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 built a portfolio of over two dozen products that are
licensed to and being developed by other biotech and pharmaceutical
companies. The Company’s portfolio of partner-funded programs spans
multiple stages of the drug development process and across various
therapeutic areas. Many of these licenses are the result of XOMA’s
pioneering efforts in the discovery and development of antibody
therapeutics. The Company’s royalty-aggregator business model
includes acquiring additional licenses to partner-funded programs.
XOMA’s license portfolio has the potential to generate significant
milestone payments and royalty revenue 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,
creating additional value for the stockholders and cash sufficiency
forecast. 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, including those related to the fact that
our product candidates subject to out-license agreements are still
being developed, and our licensees’ may require substantial funds
to continue development which may not be available; we do not know
whether there will be, or will continue to be, a viable market for
the products in which we have an ownership or royalty interest; we
may not be successful in entering into out-license agreements for
our product candidates; if our therapeutic product candidates do
not receive regulatory approval, our third-party licensees will not
be able to manufacture and market them. Other 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 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (LOSS) |
(unaudited) |
(in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
|
License
fees |
|
$ |
5,318 |
|
|
$ |
100 |
|
|
$ |
52,311 |
|
|
$ |
3,296 |
|
Contract
and other |
|
|
39 |
|
|
|
424 |
|
|
|
379 |
|
|
|
2,268 |
|
Total
revenues |
|
|
5,357 |
|
|
|
524 |
|
|
|
52,690 |
|
|
|
5,564 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research
and development |
|
|
660 |
|
|
|
8,248 |
|
|
|
7,875 |
|
|
|
44,234 |
|
General
and administrative |
|
|
6,711 |
|
|
|
5,184 |
|
|
|
24,337 |
|
|
|
18,322 |
|
Restructuring charge (credit) |
|
|
(4 |
) |
|
|
4,551 |
|
|
|
3,447 |
|
|
|
4,566 |
|
Total
operating expenses |
|
|
7,367 |
|
|
|
17,983 |
|
|
|
35,659 |
|
|
|
67,122 |
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations |
|
|
(2,010 |
) |
|
|
(17,459 |
) |
|
|
17,031 |
|
|
|
(61,558 |
) |
|
|
|
|
|
|
|
|
|
Other
income (expense): |
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(129 |
) |
|
|
(955 |
) |
|
|
(1,238 |
) |
|
|
(3,946 |
) |
Loss on
extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
(650 |
) |
|
|
— |
|
Other
income, net |
|
|
777 |
|
|
|
925 |
|
|
|
1,115 |
|
|
|
1,510 |
|
Revaluation of contingent warrant liabilities |
|
|
— |
|
|
|
9 |
|
|
|
— |
|
|
|
10,464 |
|
Income
(loss) before income tax |
|
|
(1,362 |
) |
|
|
(17,480 |
) |
|
|
16,258 |
|
|
|
(53,530 |
) |
Provision for income
tax benefit (expense) |
|
|
44 |
|
|
|
— |
|
|
|
(1,662 |
) |
|
|
— |
|
Net income (loss) and
comprehensive income (loss) |
|
$ |
(1,318 |
) |
|
$ |
(17,480 |
) |
|
$ |
14,596 |
|
|
$ |
(53,530 |
) |
Net income (loss) and
comprehensive income (loss) available to common stockholders,
basic |
|
$ |
(1,318 |
) |
|
$ |
(17,480 |
) |
|
$ |
5,714 |
|
|
$ |
(53,530 |
) |
Net income (loss) and
comprehensive income (loss) available to common stockholders,
diluted |
|
$ |
(1,318 |
) |
|
$ |
(17,480 |
) |
|
$ |
5,810 |
|
|
$ |
(53,530 |
) |
|
|
|
|
|
|
|
|
|
Basic net income (loss)
per share available to common stockholders |
|
$ |
(0.16 |
) |
|
$ |
(2.89 |
) |
|
$ |
0.75 |
|
|
$ |
(8.89 |
) |
Diluted net income
(loss) per share available to common stockholders |
|
$ |
(0.16 |
) |
|
$ |
(2.89 |
) |
|
$ |
0.73 |
|
|
$ |
(8.89 |
) |
Weighted
average shares used in computing basic net income (loss) per share
available to common stockholders |
|
|
8,197 |
|
|
|
6,053 |
|
|
|
7,619 |
|
|
|
6,021 |
|
Weighted
average shares used in computing diluted net income (loss) per
share available to common stockholders |
|
|
8,197 |
|
|
|
6,053 |
|
|
|
7,980 |
|
|
|
6,021 |
|
|
|
|
|
|
|
|
|
|
|
|
XOMA CORPORATION |
|
CONSOLIDATED BALANCE SHEETS |
|
(unaudited) |
|
(in thousands, except share and per share
amounts) |
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
43,471 |
|
|
$ |
25,742 |
|
|
Trade and
other receivables, net |
|
|
397 |
|
|
|
566 |
|
|
Prepaid
expenses and other current assets |
|
|
327 |
|
|
|
852 |
|
|
Total
current assets |
|
|
44,195 |
|
|
|
27,160 |
|
|
Property and equipment,
net |
|
|
83 |
|
|
|
1,036 |
|
|
Other assets |
|
|
657 |
|
|
|
481 |
|
|
Total
assets |
|
$ |
44,935 |
|
|
$ |
28,677 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT) |
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
1,679 |
|
|
$ |
5,689 |
|
|
Accrued
and other liabilities |
|
|
2,545 |
|
|
|
4,215 |
|
|
Accrued
restructuring costs |
|
|
130 |
|
|
|
3,594 |
|
|
Income
taxes payable |
|
|
1,637 |
|
|
|
— |
|
|
Deferred
revenue – current |
|
|
1,413 |
|
|
|
899 |
|
|
Interest
bearing obligations – current |
|
|
— |
|
|
|
17,855 |
|
|
Accrued
interest on interest bearing obligations – current |
|
|
18 |
|
|
|
254 |
|
|
Total
current liabilities |
|
|
7,422 |
|
|
|
32,506 |
|
|
Deferred revenue –
non-current |
|
|
17,123 |
|
|
|
18,000 |
|
|
Interest bearing
obligations – non-current |
|
|
14,572 |
|
|
|
25,312 |
|
|
Other liabilities –
non-current |
|
|
32 |
|
|
|
69 |
|
|
Total
liabilities |
|
|
39,149 |
|
|
|
75,887 |
|
|
Stockholders’ equity
(deficit): |
|
|
|
|
|
Convertible preferred stock, $0.05 par value, 1,000,000 shares
authorized, 5,003 and 0 shares issued and outstanding at December
31, 2017 and 2016, respectively |
|
|
— |
|
|
|
— |
|
|
Common
stock, $0.0075 par value, 277,333,332 shares authorized,
8,249,158 and 6,114,145 shares issued and outstanding at
December 31, 2017 and 2016, respectively |
|
|
62 |
|
|
|
46 |
|
|
Additional paid-in capital |
|
|
1,184,783 |
|
|
|
1,146,357 |
|
|
Accumulated deficit |
|
|
(1,179,059 |
) |
|
|
(1,193,613 |
) |
|
Total
stockholders’ equity (deficit) |
|
|
5,786 |
|
|
|
(47,210 |
) |
|
Total
liabilities and stockholders’ equity (deficit) |
|
$ |
44,935 |
|
|
$ |
28,677 |
|
|
|
|
|
|
|
|
Investor contact:Luke HeagleW2O
pure+1 910-726-1372lheagle@w2ogroup.com
Media contact:Julie NormartW2O
pure+1 415-946-1087jnormart@w2ogroup.com
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