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XOMA Reports Second Quarter 2018 Financial Results

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EMERYVILLE, Calif., Aug. 07, 2018 (GLOBE NEWSWIRE) -- XOMA Corporation (NASDAQ:XOMA), a pioneer in the discovery, development and licensing of therapeutic antibodies, today announced its second quarter 2018 financial results. 

"We continue to focus our efforts on expanding our portfolio of partner-funded programs through both acquisition and out-license activities," said Jim Neal, Chief Executive Officer at XOMA.  "We believe we are well-positioned to execute on our royalty-aggregator strategy to create near- and long-term value for shareholders."

Financial Results
XOMA recorded total revenues of $2.3 million for the second quarter of 2018, $1.8 million of which was recognized under XOMA's license agreement and common stock purchase agreement with Rezolute.  In the second quarter of 2017, XOMA reported $10.9 million in revenue, $10.0 million of which was milestone revenue earned under one of the Company's license agreements with Novartis.

Research and development (R&D) expenses were $0.4 million for the second quarter of 2018, compared to $2.9 million for the second quarter of 2017.  The decrease in R&D expenses was due primarily to reductions of $1.0 million in clinical trial costs, $0.4 million in consulting costs, $0.4 million in the allocation of facilities costs, $0.4 million in external manufacturing activities, and $0.1 million in stock-based compensation.  The significant reduction in R&D spending is a result of the discontinuation of clinical trial activities and the execution of the Company's royalty-aggregator business model.

General and administrative (G&A) expenses were $4.4 million for the second quarter of 2018, compared to $5.2 million for the second quarter of 2017.  The decrease in G&A expenses was due primarily to reductions of $0.9 million in stock-based compensation, $0.2 million in legal and accounting fees, and $0.1 million in information technology costs, partially offset by increases of $0.2 million in consulting services and $0.4 million in the allocation of facilities costs due to a greater proportion of G&A personnel after the Company's restructuring activities.

The Company recorded a lease-related restructuring charge of $0.5 million in the second quarter of 2018, compared with $1.5 million for personnel-related restructuring expenses in the same period of 2017.

Total other income, net was $1.2 million for the second quarter of 2018, compared to other expense of $0.7 million for the second quarter of 2017.  During the second quarter of 2018, we recorded $1.0 million in income from Ology Bioservices related to the disposition of our biodefense business in March 2016.  Separately, we received long-term equity securities that consisted of an investment in Rezolute Inc.'s common stock under the terms of a licensing agreement.  As of June 30, 2018, the fair value of the long-term equity securities had decreased, and we recognized a loss of $0.4 million.

Net loss for the second quarter of 2018 was $1.9 million, compared to net income of $0.3 million for the second quarter of 2017.  

On June 30, 2018, XOMA had cash and cash equivalents of $38.7 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 Corporation
XOMA has built a significant portfolio of 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. 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
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share and per share amounts)

             
    June 30,     December 31,  
    2018     2017  
             
ASSETS                
Current assets:                
Cash and cash equivalents   $ 38,690     $ 43,471  
Trade and other receivables, net     480       397  
Prepaid expenses and other current assets     588       327  
Total current assets     39,758       44,195  
Property and equipment, net     74       83  
Long-term equity securities     553        
Other assets     831       657  
Total assets   $ 41,216     $ 44,935  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
Accounts payable   $ 1,082     $ 1,679  
Accrued and other liabilities     1,142       2,675  
Income taxes payable           1,637  
Unearned revenue recognized under units-of-revenue method – current     171       615  
Contract liabilities     798       798  
Accrued interest on long-term debt – current           18  
Total current liabilities     3,193       7,422  
Unearned revenue recognized under units-of-revenue method – non-current     17,592       17,123  
Long-term debt     14,853       14,572  
Other liabilities – non-current     726       32  
Total liabilities     36,364       39,149  
                 
                 
                 
Stockholders' equity:                
Convertible preferred stock, $0.05 par value, 1,000,000 shares authorized, 5,003 shares
issued and outstanding at June 30, 2018 and December 31, 2017
           
Common stock, $0.0075 par value, 277,333,332 shares authorized, 8,379,163 and 8,249,158
shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively
    63       62  
Additional paid-in capital     1,189,601       1,184,783  
Accumulated deficit     (1,184,812 )     (1,179,059 )
Total stockholders' equity     4,852       5,786  
Total liabilities and stockholders' equity   $ 41,216     $ 44,935  
                 
The accompanying notes are an integral part of these consolidated financial statements.  
   


XOMA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited)
(in thousands, except per share amounts)

   
  Three Months Ended June 30,     Six Months Ended June 30,  
  2018     2017     2018     2017  
Revenues:                              
Revenue from contracts with customers $ 2,341     $ 10,780     $ 2,743     $ 10,930  
Revenue recognized under units-of-revenue method   (86 )     110       (25 )     220  
      Total revenues   2,255       10,890       2,718       11,150  
                               
Operating expenses:                              
Research and development   376       2,916       808       6,908  
General and administrative   4,411       5,203       9,579       10,370  
Restructuring   459       1,460       459       3,480  
     Total operating expenses   5,246       9,579       10,846       20,758  
                               
     (Loss) income from operations   (2,991 )     1,311       (8,128 )     (9,608 )
                               
Other income (expense):                              
Interest expense   (178 )     (297 )     (348 )     (906 )
Loss on extinguishment of debt                     (515 )
Other income (expense), net   1,222       (729 )     2,723       600  
     Net (loss) income and comprehensive (loss) income $ (1,947 )   $ 285     $ (5,753 )   $ (10,429 )
Net (loss) income and comprehensive (loss) income available to
  common stockholders, basic and diluted
$ (1,947 )   $ 172     $ (5,753 )   $ (16,032 )
Basic net (loss) income per share available to common stockholders $ (0.23 )   $ 0.02     $ (0.69 )   $ (2.21 )
Diluted net (loss) income per share available to common
  stockholders
$ (0.23 )   $ 0.02     $ (0.69 )   $ (2.21 )
Weighted average shares used in computing basic net (loss) income
  per share available to common stockholders
  8,362       7,588       8,338       7,240  
Weighted average shares used in computing diluted net (loss) income
  per share available to common stockholders
  8,362       7,643       8,338       7,240  
                               

Investor contact:
Juliane Snowden
Oratorium Group, LLC
+1 646-438-9754
jsnowden@oratoriumgroup.com

Media contact:
Kathy Vincent
KV Consulting & Management
+1 310-403-8951
kathy@kathyvincent.com

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