Added seven new partner-funded programs in 2018
with potential for milestone and royalty paymentsCurrent cash
balance sufficient to fund operations for multiple years
XOMA Corporation (Nasdaq: XOMA) announced its fourth quarter and
full-year 2018 financial results and business highlights.
“In 2018, we completed the first transaction under our
royalty-aggregator business model, adding seven assets being
developed by Merck and Incyte, bringing our royalty license
portfolio to 45 assets. We added $20 million of capital and
established a $20 million credit facility to strengthen our balance
sheet and to continue building our royalty portfolio. We believe
XOMA is in a healthy financial position, and we are focused on
delivering shareholder value,” stated Jim Neal, Chief Executive
Officer of XOMA. “In early 2019, we added Barbara Kosacz to our
Board of Directors; her legal expertise in analyzing, structuring,
and negotiating pharmaceutical and biotechnology license agreements
will be invaluable as we execute on our business strategy.”
Business HighlightsXOMA continued making
significant progress to position the Company for long-term growth,
while strengthening its balance sheet in multiple ways during
2018.
- Acquired a milestone and royalty interest in seven
immuno-oncology assets being developed by Merck and Incyte.
- Completed a $20 million rights offering with XOMA stockholders
including BVF Partners, LP.
- Secured $20 million credit facility with Silicon Valley
Bank.
- Reduced operating expenses to historic lows, reflecting our new
low-cost infrastructure.
- Strengthened the Board of Directors and leadership team.
2018 Updates About Partnered Assets in
Development“During its R&D Update on November 25,
2018, Novartis highlighted 26 potential blockbuster drug candidates
from their 340 programs under development. XOMA has up to
double-digit royalty interests on two of those potential
blockbuster assets,” concluded Mr. Neal.
Novartis-licensed assets:
- Novartis announced gevokizumab will enter oncology clinical
studies.
- Novartis has listed Phase 2 trials for CFZ533 in four separate
indications on ClinicalTrials.gov.
Financial ResultsXOMA recorded total revenues
of $1.7 million for the fourth quarter of 2018, compared to $5.4
million for the fourth quarter of 2017. For the full year of 2018,
XOMA recorded revenues of $5.3 million, compared to $52.7 million
for the full year of 2017. Revenues for the full year of 2017
reflect $40.2 million of licenses and collaborative fee revenue
received in connection with the Company’s 2017 license agreements
with Novartis and a $10.0 million clinical development milestone
payment from Novartis related to another therapeutic candidate.
Research and development (R&D) expenses were $0.2 million
for the fourth quarter of 2018, compared to $0.7 million for the
fourth quarter of 2017. Research and development expenses for the
full year of 2018 were $1.7 million, compared to $7.9 million for
the same period in 2017. The decrease in R&D expenses for the
full year of 2018, as compared with 2017, was primarily due to the
implementation of our royalty-aggregator business model during the
first quarter of 2017, at which time the Company ceased
substantially all development activities. The decrease primarily
consisted of $1.9 million in clinical trial costs, $1.4 million in
consulting costs, $1.2 million in the allocation of facilities
costs, $0.5 million in stock-based compensation, and $0.4 million
in salaries and related expenses. The decrease in allocation of
facilities costs is a result of a decreased proportion of R&D
employees due to our restructuring activities in late 2016 and June
2017.
General and administrative (G&A) expenses were $4.3 million
for the fourth quarter of 2018, compared to $6.7 million for the
fourth quarter of 2017. General and administrative expenses were
$18.6 million for the full year of 2018, compared to $24.3 million
for the full year of 2017. The decrease of $5.7 million for the
full year of 2018, as compared with the full year of 2017, was
primarily due to decreases of $2.9 million in stock-based
compensation, $2.1 million in consulting services, and $0.5 million
in information technology costs, partially offset by an increase of
$1.2 million in the allocation of facilities costs due to a greater
proportion of G&A personnel compared to R&D personnel after
our restructuring activities.
For the years ended December 31, 2018 and 2017, XOMA recorded
$1.9 million and $3.4 million, respectively in charges related to
severance, other termination benefits, outplacement services, and
lease-related charges associated with restructuring
activities.
For the years ended December 31, 2018 and 2017, XOMA recorded
other income of $4.3 million and $1.1 million, respectively. Other
income in both periods included income received in relation to the
Company’s disposition of its biodefense business to Ology
Bioservices in March 2015. During the year ended December 31, 2018,
XOMA also received $1.8 million in sublease income. This was
partially offset by a loss of $0.6 million for the decrease in fair
value of long-term equity securities that consisted of shares of
Rezolute’s common stock. For the year ended December 31, 2017, XOMA
realized a foreign exchange loss of $1.6 million related to
re-measurement of the Servier Loan which was paid in 2017 and a
sublease loss of $0.8 million, offset by a $1.2 million gain on the
sale and disposal of equipment located in one of its leased
facilities.
Net loss for the fourth quarter of 2018 was $3.0 million,
compared to net loss of $1.3 million for the fourth quarter of
2017. Net loss for the full year of 2018 was $13.3 million,
compared to net income of $14.6 million for the full year of 2017.
The significant net income for the full year of 2017 was due
primarily to the increase in total revenues as previously
discussed.
On December 31, 2018, XOMA had cash and cash equivalents of
$45.8 million. The Company ended December 31, 2017, with cash and
cash equivalents of $43.5 million. The Company’s current cash and
cash equivalents are expected to be sufficient to fund its
operations for multiple years.
About XOMA CorporationXOMA has built a
significant portfolio of products that are licensed to and being
developed by other biotechnology 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 programs with third-party
funding. For more information, visit www.xoma.com.
Forward-Looking Statements/Explanatory
NotesCertain 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; if
the therapeutic product candidates to which we have a royalty
interest do not receive regulatory approval, our third-party
licensees will not be able to 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.
EXPLANATORY NOTE: All references to “portfolio” in this
presentation are to milestone and/or royalty rights associated with
drug products in development. All references to “assets” in this
presentation are to milestone and/or royalty rights associated with
individual drug products in development.
XOMA CORPORATION |
|
CONSOLIDATED BALANCE SHEETS |
|
(unaudited) |
|
(in thousands, except share and per share
amounts) |
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
45,780 |
|
|
$ |
43,471 |
|
|
Trade and
other receivables, net |
|
|
1,468 |
|
|
|
397 |
|
|
Prepaid
expenses and other current assets |
|
|
378 |
|
|
|
327 |
|
|
Total
current assets |
|
|
47,626 |
|
|
|
44,195 |
|
|
Property and equipment,
net |
|
|
59 |
|
|
|
83 |
|
|
Long-term royalty
receivables |
|
|
15,000 |
|
|
|
— |
|
|
Long-term equity
securities |
|
|
392 |
|
|
|
— |
|
|
Other assets |
|
|
708 |
|
|
|
657 |
|
|
Total
assets |
|
$ |
63,785 |
|
|
$ |
44,935 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
1,244 |
|
|
$ |
1,679 |
|
|
Accrued
and other liabilities |
|
|
2,382 |
|
|
|
2,693 |
|
|
Income
taxes payable |
|
|
— |
|
|
|
1,637 |
|
|
Unearned
revenue recognized under units-of-revenue method |
|
|
490 |
|
|
|
615 |
|
|
Contract
liabilities |
|
|
798 |
|
|
|
798 |
|
|
Current
portion of long-term debt |
|
|
789 |
|
|
|
— |
|
|
Total
current liabilities |
|
|
5,703 |
|
|
|
7,422 |
|
|
Unearned revenue
recognized under units-of-revenue method – long-term |
|
|
17,017 |
|
|
|
17,123 |
|
|
Long-term debt |
|
|
21,690 |
|
|
|
14,572 |
|
|
Other liabilities –
long-term |
|
|
590 |
|
|
|
32 |
|
|
Total
liabilities |
|
|
45,000 |
|
|
|
39,149 |
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
Convertible preferred stock, $0.05 par value, 1,000,000 shares
authorized, 6,256 and 5,003 shares issued and outstanding at
December 31, 2018 and 2017, respectively |
|
|
— |
|
|
|
— |
|
|
Common
stock, $0.0075 par value, 277,333,332 shares authorized, 8,690,723
and 8,249,158 shares issued and outstanding at December 31,
2018 and 2017, respectively |
|
|
65 |
|
|
|
62 |
|
|
Additional paid-in capital |
|
|
1,211,122 |
|
|
|
1,184,783 |
|
|
Accumulated deficit |
|
|
(1,192,402 |
) |
|
|
(1,179,059 |
) |
|
Total
stockholders’ equity |
|
|
18,785 |
|
|
|
5,786 |
|
|
Total
liabilities and stockholders’ equity |
|
$ |
63,785 |
|
|
$ |
44,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
XOMA CORPORATION |
|
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE (LOSS) INCOME |
|
(unaudited) |
|
(in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
Revenues: |
|
|
|
|
|
|
|
|
Revenue
from contracts with customers |
$ |
1,550 |
|
|
$ |
5,423 |
|
|
$ |
5,068 |
|
|
$ |
52,428 |
|
|
Revenue
recognized under units-of-revenue method |
|
135 |
|
|
|
(66 |
) |
|
|
231 |
|
|
|
262 |
|
|
Total
revenues |
|
1,685 |
|
|
|
5,357 |
|
|
|
5,299 |
|
|
|
52,690 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research
and development |
|
237 |
|
|
|
660 |
|
|
|
1,682 |
|
|
|
7,875 |
|
|
General
and administrative |
|
4,327 |
|
|
|
6,711 |
|
|
|
18,563 |
|
|
|
24,337 |
|
|
Restructuring (credit) charges |
|
543 |
|
|
|
(4 |
) |
|
|
1,911 |
|
|
|
3,447 |
|
|
Total
operating expenses |
|
5,107 |
|
|
|
7,367 |
|
|
|
22,156 |
|
|
|
35,659 |
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income from operations |
|
(3,422 |
) |
|
|
(2,010 |
) |
|
|
(16,857 |
) |
|
|
17,031 |
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense): |
|
|
|
|
|
|
|
|
Interest
expense |
|
(365 |
) |
|
|
(129 |
) |
|
|
(922 |
) |
|
|
(1,238 |
) |
|
Loss on
extinguishment of debt |
|
— |
|
|
|
- |
|
|
|
— |
|
|
|
(650 |
) |
|
Other
income, net |
|
677 |
|
|
|
777 |
|
|
|
4,338 |
|
|
|
1,115 |
|
|
(Loss)
income before income tax |
|
(3,110 |
) |
|
|
(1,362 |
) |
|
|
(13,441 |
) |
|
|
16,258 |
|
|
Income
tax benefit (expense) |
|
98 |
|
|
|
44 |
|
|
|
98 |
|
|
|
(1,662 |
) |
|
Net
(loss) income and comprehensive (loss) income |
$ |
(3,012 |
) |
|
$ |
(1,318 |
) |
|
$ |
(13,343 |
) |
|
$ |
14,596 |
|
|
Net (loss) income and
comprehensive (loss) income available to common
stockholders, basic |
$ |
(3,012 |
) |
|
$ |
(1,318 |
) |
|
$ |
(13,343 |
) |
|
$ |
5,714 |
|
|
Net (loss) income and
comprehensive (loss) income available to common
stockholders, diluted |
$ |
(3,012 |
) |
|
$ |
(1,318 |
) |
|
$ |
(13,343 |
) |
|
$ |
5,810 |
|
|
Basic net (loss) income
per share available to common stockholders |
$ |
(0.35 |
) |
|
$ |
(0.16 |
) |
|
$ |
(1.59 |
) |
|
$ |
0.75 |
|
|
Diluted net (loss) income
per share available to common stockholders |
$ |
(0.35 |
) |
|
$ |
(0.16 |
) |
|
$ |
(1.59 |
) |
|
$ |
0.73 |
|
|
Weighted average shares
used in computing basic net (loss) income per share
available to common stockholders |
|
8,430 |
|
|
|
8,197 |
|
|
|
8,373 |
|
|
|
7,619 |
|
|
Weighted average shares
used in computing diluted net (loss) income per share
available to common stockholders |
|
8,430 |
|
|
|
8,197 |
|
|
|
8,373 |
|
|
|
7,980 |
|
|
|
|
|
|
|
|
|
|
|
Investor contact:Juliane SnowdenOratorium
Group, LLC+1 646-438-9754jsnowden@oratoriumgroup.com
Media contact: Kathy Vincent KV Consulting
& Management +1 310-403-8951kathy@kathyvincent.com
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