XOMA Corporation (Nasdaq:XOMA), a leader in the discovery and
development of therapeutic antibodies, today announced several
corporate actions to further streamline its operations to focus on
XOMA 358 clinical development, monetize non-core assets, and
strengthen its balance sheet.
“With this transaction, we have generated $83
million in non-dilutive liquidity since October 2015,” said Jim
Neal, newly appointed Chief Executive Officer and Director of
XOMA. “HealthCare Royalty Partners (“HCR”) has an established
history of supporting the biotechnology industry. They provide
companies with the opportunity to realize value in non-core assets
without diluting equity shareholders. Two royalty agreements
from XOMA’s extensive portfolio of licensed assets particularly
attracted HCR’s interest. XOMA’s scientific discoveries have served
us well, financing our clinical development over the past two
years.”
Paul Hadden, Managing Director, HealthCare
Royalty Partners, said, “We are extremely pleased to partner with
XOMA on this asset sale, providing non-dilutive capital at an
important point in their evolution.”
Tom Burns, Vice President, Finance, and Chief
Financial Officer of XOMA, commented, “To further reduce our
operating costs, we have taken two actions. First, we are using a
portion of the proceeds from this transaction to partially repay
our debt held by Hercules Technology Growth Capital, Inc.
(“Hercules”). Second, to reflect our operational focus on
advancing XOMA 358, we are streamlining our team and eliminating 57
positions. These two actions will significantly reduce our
expenses so the company can more efficiently fund XOMA 358 clinical
development.”
John Varian stated, “I believe XOMA is well
positioned, and this is the right time for me to retire and turn
the reins over to Jim Neal. He has the right plan in place to
ensure the company achieves its next clinical development and
financial goals.”
Denny Van Ness, XOMA’s Chairman of the Board,
stated, “As Chief Operating Officer, Jim has been leading the XOMA
358 project team, as well as leading the company’s business
development activities. The Board, John, and I have every
confidence that Jim and his team will take XOMA 358 forward in a
cost-effective manner and continue to drive the licensing of XOMA’s
non-core assets.”
“XOMA 358 is an important potential therapy for
the patients and families affected by Congenital Hyperinsulinism
(“CHI”) or who experience hypoglycemia post bariatric surgery.
We now have over 25 patients enrolled in our two Phase 2
Proof-of-Concept studies, which reflects the desire for new
therapeutic options in these rare indications. We need to do
everything possible to develop XOMA 358 and bring it to market,”
Mr. Neal added. “The financing and the operational cost
reductions we announced today allow us to aggressively move
forward. Our next step is launching our multi-dose study in CHI
patients. Importantly, we have retained other non-core assets
that could potentially be deployed in the future to fund our
clinical development efforts.”
HealthCare Royalty Partners Asset
Sale
XOMA sold its rights under two license
agreements to its patented bacterial cell expression
technology. The first of these covers TRUMENBA®, a
meningococcal group B vaccine marketed by Pfizer, on which XOMA has
been receiving low single-digit royalties from commercial
sales. The second agreement is with Dyax Corp. All
rights to future royalties and other payments associated with these
licenses have been acquired by HCR as detailed in the Form 8-K
filed on December 21, 2016.
Hercules Technology
Growth Capital, Inc.
XOMA entered into a Loan and Security Agreement
with Hercules in 2015 under which XOMA borrowed $20.0 million.
The company has been paying principal and accrued interest
since July 1, 2016, and the loan is scheduled to mature on
September 1, 2018. On September 30, 2016, the outstanding
balance was $18.5 million. In January, XOMA will apply $10 million
from the HCR asset sale proceeds to reduce its debt obligation to
Hercules.
Corporate Restructuring
Based upon the data being generated in the XOMA
358 clinical studies in patients with hypoglycemia due to
Congenital Hyperinsulinism or post bariatric surgery, XOMA is
preparing to expand the program into multi-dose clinical
studies. These two indications are rare conditions with very
high unmet therapeutic needs. Therefore, the company is
concentrating its investments on clinical development, with an
initial focus on the XOMA 358 clinical programs.
To reflect this narrowed corporate focus, the
company will reduce its headcount by 57 positions.
“We have shown the assets that XOMA has
discovered and developed hold significant interest to companies
dedicated to improving human health. Importantly, we retain
the future revenue streams from our most recent licensing
agreements with Novartis and NovoNordisk,” commented Mr.
Burns. “We continue to expect we will earn a $10 million
milestone payment within the next few months under one of our
existing license or collaboration agreements. In light of the
interest we have received from our recently unveiled IL-2 antibody
program for immuno-oncology and our PTH1R program for oncology
indications, we believe these two assets could provide additional
funding to support our development plans for XOMA 358 in CHI and
post-bariatric surgery.”
About XOMA Corporation
XOMA Corporation is a leader in the discovery
and development of therapeutic antibodies. The Company's innovative
product candidates result from its expertise in developing
ground-breaking monoclonal antibodies, including allosteric
antibodies, which have created new opportunities to potentially
treat a wide range of human diseases. XOMA's scientific research
has produced a portfolio of endocrine assets, each of which has the
opportunity to address multiple indications. The Company's lead
product candidate, XOMA 358, is an allosteric monoclonal antibody
that reduces insulin receptor activity, which could have a major
impact on the treatment of hyperinsulinism. The Company has ongoing
Phase 2 development activities for XOMA 358 in patients with
congenital hyperinsulinism, and in patients with hypoglycemia after
bariatric surgery. For more information, visit www.xoma.com.
About HealthCare Royalty
Partners
HealthCare Royalty Partners (HCR) is a private
investment firm that purchases royalties and, using debt-like
structures, invests in commercial or near-commercial stage assets
for life science companies. HCR has raised approximately $3.4
billion in committed capital and is headquartered in Stamford,
CT. Over the past decade, HCR's senior professionals have
completed more than 60 healthcare investments. For more
information, visit www.healthcareroyalty.com.
Forward-Looking Statements
Certain statements contained in this press
release including statements related to reaching future payment
milestones, the development and potential commercialization of XOMA
358, the impact of XOMA’s elimination of employee positions and
planned repayment of Hercules debt, the transition in XOMA’s
leadership, the expected sources of future revenues, and other
statements that relate to future periods are each 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.
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 under the heading
“Risk Factors” contained in XOMA’s quarterly report on Form 10-Q
for the quarter ended September 30, 2016, which is
on file with the Securities and Exchange Commission, 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 law.
Contact:
Company and Investor Contact:
Tom Burns, Chief Financial Officer
510-204-7200
burns@xoma.com
Juliane Snowden
The Oratorium Group, LLC
jsnowden@oratoriumgroup.com
Media contact:
Colin Sanford
W2O Group
415-946-1094
csanford@w2ogroup.com
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