Actions taken in 2016 set the stage for reduced
operating costs and capital requirements
XOMA Corporation (Nasdaq:XOMA), a pioneer in the discovery and
development of therapeutic antibodies, today announced its fourth
quarter and full year 2016 financial results, clinical development
and operational highlights.
“Our key accomplishments in 2016 included monetizing certain
license assets, reducing our operating costs, reducing our debt and
appointing new leadership to reflect our changed strategy,” stated
Jim Neal, recently appointed Chief Executive Officer of XOMA. “In
early 2017, we established proof-of-concept for X358 in congenital
hyperinsulinism (CHI) and hypoglycemia post-bariatric surgery
(PBS). In addition, with the investment of $25 million from BVF
Partners, we launched a new strategy that leverages our extensive
portfolio of partnered programs and licensed technologies that has
the potential to generate substantial future milestone and royalty
proceeds for the Company. Our objective is to drive shareholder
value by combining the revenue from this portfolio of
collaborator-funded programs with a lean cost structure. The
positive momentum that began late in 2016 is growing in 2017, and
we are excited about the future of the Company.”
Clinical Development Highlights – Assets Available for
Out-licensing
In 2016, XOMA focused its clinical development efforts on
advancing X358, a novel first-in-class fully human antibody that is
a negative allosteric modulator of the insulin receptor. X358 is
being investigated as a novel treatment for hyperinsulinemic
hypoglycemia (low blood glucose caused by excessive insulin
production). XOMA is conducting Phase 2 development activities for
X358 in patients with CHI and in PBS patients. A therapy that
safely and effectively mitigates insulin-induced hypoglycemia has
the potential to address a significant unmet therapeutic need for
these rare medical conditions associated with hyperinsulinism. The
Company achieved the following milestones in the program during
2016 and in early 2017:
- Established proof-of-concept for X358 in 14 patients with CHI
and 13 patients with PBS.
- Met with the UK's Medicines and Healthcare Regulatory Authority
(MHRA) and secured agreement to initiate a multi-dose Phase 2
clinical study of X358 in children older than age two diagnosed
with hypoglycemia due to CHI.
- Received Orphan Drug Designation in the European Union for X358
for treatment of CHI.
As an extension of the X358 program, XOMA has developed X129, a
fragment of the X358 antibody. This antibody has potential to treat
severe acute hypoglycemia. At ENDO 2016, the Company presented
results from preclinical studies demonstrating X129 decreases the
activity of insulin on mammalian cells in a dose-dependent manner
and confirming X129 binds to the INSR and acts as a negative
allosteric modulator.
XOMA's proprietary antibody phage display libraries continue to
generate antibodies and highlight the Company’s expertise in
identifying novel oncology and oncology-related candidates with the
potential to positively affect outcomes in cancer patients. These
programs are available for partnering. Most recently, the
Company:
- Unveiled XOMA’s interleukin-2 (IL-2) monoclonal antibody
program, a series of novel agents, that when combined with
checkpoint inhibitors offer the potential to improve patient
outcomes in certain cancers.
- Advanced XOMA’s parathyroid hormone receptor 1 (PTH1R) antibody
antagonist program. In vivo studies show these antibodies could
potentially address high unmet medical needs, including primary
hyperparathyroidism (PHPT) and humoral hypercalcemia of malignancy
(HHM).
The Company initiated a proof-of-mechanism study for X213 in
lactation cessation. Similar to its other clinical and pre-clinical
assets, XOMA intends to license this antibody for further
development.
Operational Highlights
XOMA implemented multiple actions to improve the Company’s
financial health.
- Completed $25 million Registered Offering of Common Stock and
Convertible Stock to BVF Partners, L.P. (BVF) in February
2017. Associated with this investment, the Company appointed
Matthew Perry, President of BVF Partners, L.P., a highly
accomplished investor and industry professional, to XOMA’s Board of
Directors.
- Generated $18 million through a sale of XOMA’s rights under two
license agreements to its patented bacterial cell expression
technology to Healthcare Royalty Partners (HCRP). The Company may
receive up to $4 million in additional sales milestones if certain
net sales targets are reached by Pfizer in 2017, 2018 and
2019.
- Reduced the debt balance on XOMA’s loan from Hercules
Technology Growth Capital, Inc., by $10 million.
- Negotiated with Servier to delay a loan repayment by XOMA of €5
million until July 15, 2017.
- Initiated a significant corporate cost reduction plan; reduced
headcount from approximately 80 to less than 20 and monthly
operating costs by over 50 percent.
- Effected a reverse stock split to maintain compliance with
Nasdaq’s listing requirement.
Financial Results
XOMA recorded total revenues of $0.5 million for the fourth
quarter of 2016, compared to $48.2 million for the fourth quarter
of 2015. For the full year of 2016, XOMA recorded revenues of $5.6
million, compared to $55.4 million for the full year of 2015. The
decrease in revenues for the fourth quarter and full year 2016 was
due primarily to lower upfront and milestone payments relating to
various out-licensing arrangements. Revenue related to the $18
million received from HCRP will be recognized using the
units-of-revenue method beginning in the first quarter of 2017.
Research and development (R&D) expenses were $8.2 million
for the fourth quarter of 2016, compared to $13.6 million for the
fourth quarter of 2015. R&D expenses for the full year of 2016
were $44.2 million, compared to $70.9 million for the same period
in 2015. The decrease in 2016 was due primarily to a $13.7 million
reduction in salaries and related expenses, a $6.8 million
reduction in clinical trial costs and a $2.2 million decrease in
consulting services due to the Company’s decision to cease further
investments in the development of gevokizumab.
Selling, general and administrative (SG&A) expenses were
$5.2 million for the fourth quarter of 2016, compared to $4.7
million for the fourth quarter of 2015. SG&A expenses were
$18.3 million for the full year of 2016, compared to $20.6 million
for the full year of 2015. The decrease in the full year 2016
SG&A expenses was due primarily to a reduction in salaries and
related personnel costs due to the Company’s restructuring
activities in 2015.
Restructuring charges for the full year of 2016 were $4.6
million, compared to $3.7 million for the full year of 2015. These
charges related primarily to severance, other termination benefits
and outplacement services associated with the Company’s
restructuring activities in 2016.
Net loss for the fourth quarter of 2016 was $17.5 million,
compared to net income of $25.4 million for the fourth quarter of
2015. Fourth quarter 2015 results reflected the favorable impact of
upfront and milestone payments relating to various out-licensing
arrangements recognized in the fourth quarter of 2015. Net loss for
the full year of 2016 was $53.5 million, compared to $20.6 million
for the full year of 2015. Net loss for the full year of 2016 and
2015 included gains of $10.5 million and $17.8 million,
respectively, related to the revaluation of contingent warrant
liabilities, which resulted primarily from fluctuations in XOMA's
stock price. Excluding the gain from those revaluations, net loss
for 2016 was $64.0 million and net loss for 2015 was $38.4
million.
On December 31, 2016, XOMA had cash and cash equivalents of
$25.7 million. The Company ended December 31, 2015, with cash and
cash equivalents of $65.8 million. In February 2017, the Company
received $25 million through a registered direct offering with
BVF.
Conference Call Details
The Company will host a conference call at 9:00 a.m. ET today,
to review its business highlights and describe XOMA’s new strategic
direction and initiatives. The webcast can be accessed via the
Investors and Media section of XOMA's website
at http://investors.xoma.com/events.cfm and will be available
for replay. An accompanying slide presentation also can be accessed
via the XOMA website. Telephone numbers for the live conference
call are 1-877-369-6589 (U.S./Canada) and 1-408-337-0122
(international) with the passcode 82058103.
About Congenital Hyperinsulinismi,ii,iii
Congenital Hyperinsulinism (CHI) is a genetic disorder in which
the insulin-secreting cells of the pancreas (beta cells) secrete
inappropriate and excessive insulin. Ordinarily, beta cells secrete
just enough insulin to keep blood sugar in the normal range. In
people with CHI, the secretion of insulin is not properly
regulated, causing excess insulin secretion and frequent episodes
of low blood sugar (hypoglycemia). In infants and young children,
these episodes are characterized by a lack of energy (lethargy),
irritability or difficulty feeding. Repeated episodes of low blood
sugar increase the risk for serious complications, such as
breathing difficulties, seizures, intellectual disability, vision
loss, brain damage, coma, and possibly death. About 60 percent of
infants with CHI experience a hypoglycemic episode within the first
month of life. Other affected children develop hypoglycemia by
early childhood. Current treatments for CHI are limited to medical
therapy and surgical removal of part or all of the pancreas
(pancreatectomy).
About Hypoglycemia Post-Bariatric Surgeryiv
As the number of gastric bypass surgeries to treat severe
obesity has increased, so too has the awareness that this
population may experience postprandial hypoglycemia (low blood
glucose following a meal) with symptoms developing months or years
following the gastric bypass surgery. Postprandial hypoglycemia
occurs with a range of severity in post-bariatric surgery patients.
The mild end of the spectrum may be managed largely through diet
modification. The most severe forms are more prevalent in patients
who underwent a Roux-en-Y procedure, and result in severe
refractory postprandial hyperinsulinemic hypoglycemia with possible
neuroglycopenic symptoms (altered mental status, loss of
consciousness, seizures) that cannot be managed through diet
modification. If currently available pharmacologic agents do not
resolve the condition, these patients are treated with either a
partial pancreatectomy or attempted reversal of the gastric
bypass.
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 20 such programs that are fully funded by
partners and could produce milestone payments and royalty payments
in the future. In order to maximize its value in a licensing
transaction, XOMA continues to invest in X358, an allosteric
monoclonal antibody that reduces insulin receptor activity, as the
antibody could have a major impact on the treatment of
hyperinsulinism. 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;
positive momentum in 2017; the significant unmet therapeutic need
for certain rare medical conditions associated with
hyperinsulinism; the continued generation of antibodies by XOMA's
proprietary phage display libraries; the potential of IL-2 to
provide opportunities to improve patient outcomes; the potential
for PTH1R to address high unmet medical needs; XOMA’s intent to
license X213 and X358; the possibility of the receipt of up to $4
million in additional sales milestones under our agreements with
HCRP; 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.
i Congenital hyperinsulinism. National Institutes of Health
website. ghr.nlm.nih.gov/condition/congenital-hyperinsulinism.
January 24, 2017. Accessed January 31, 2017.
ii Congenital Hyperinsulinism. Children's Hospital of
Philadelphia website.
www.chop.edu/conditions-diseases/congenital-hyperinsulinism/about#.VXncFU3bKHt.
Accessed January 31, 2017.
iii Arnoux et al.: Congenital hyperinsulinism: current
trends in diagnosis and therapy. Orphanet Journal of Rare Diseases
2011. 6:63.
iv Singh et al.: Hypoglycemia After Gastric Bypass Surgery.
Diabetes Spectrum 2012 Nov; 25(4): 217-221.
|
|
XOMA CORPORATION |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
(in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
Revenues: |
|
|
|
|
|
|
|
|
License
and collaborative fees |
$ |
100 |
|
|
$ |
47,212 |
|
|
$ |
3,296 |
|
|
$ |
49,064 |
|
|
Contract
and other |
|
424 |
|
|
|
971 |
|
|
|
2,268 |
|
|
|
6,383 |
|
|
Total
revenues |
|
524 |
|
|
|
48,183 |
|
|
|
5,564 |
|
|
|
55,447 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research
and development |
|
8,248 |
|
|
|
13,598 |
|
|
|
44,234 |
|
|
|
70,852 |
|
|
Selling,
general and administrative |
|
5,184 |
|
|
|
4,707 |
|
|
|
18,322 |
|
|
|
20,620 |
|
|
Restructuring |
|
4,551 |
|
|
|
1,138 |
|
|
|
4,566 |
|
|
|
3,699 |
|
|
Total
operating expenses |
|
17,983 |
|
|
|
19,443 |
|
|
|
67,122 |
|
|
|
95,171 |
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations |
|
(17,459 |
) |
|
|
28,740 |
|
|
|
(61,558 |
) |
|
|
(39,724 |
) |
|
|
|
|
|
|
|
|
|
|
Other
income (expense): |
|
|
|
|
|
|
|
|
Interest
expense |
|
(955 |
) |
|
|
(1,041 |
) |
|
|
(3,946 |
) |
|
|
(4,194 |
) |
|
Other
income, net |
|
925 |
|
|
|
4,046 |
|
|
|
1,510 |
|
|
|
5,500 |
|
|
Revaluation of contingent warrant liabilities |
|
9 |
|
|
|
(6,394 |
) |
|
|
10,464 |
|
|
|
17,812 |
|
|
Net
(loss) income |
$ |
(17,480 |
) |
|
$ |
25,351 |
|
|
$ |
(53,530 |
) |
|
$ |
(20,606 |
) |
|
|
|
|
|
|
|
|
|
|
Basic
net income (loss) per share of common stock |
$ |
(2.89 |
) |
|
$ |
4.27 |
|
|
$ |
(8.89 |
) |
|
$ |
(3.50 |
) |
|
Diluted
net income (loss) per share of common stock |
$ |
(2.89 |
) |
|
$ |
4.24 |
|
|
$ |
(8.89 |
) |
|
$ |
(3.50 |
) |
|
Shares
used in computing basic net income (loss) per share of common
stock |
|
6,107 |
|
|
|
5,943 |
|
|
|
6,021 |
|
|
|
5,890 |
|
|
Shares
used in computing diluted net income (loss) per share of common
stock |
|
6,107 |
|
|
|
5,973 |
|
|
|
6,021 |
|
|
|
5,890 |
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive loss: |
|
|
|
|
|
|
|
|
Net
(loss) income |
$ |
(17,480 |
) |
|
$ |
25,351 |
|
|
$ |
(53,530 |
) |
|
$ |
(20,606 |
) |
|
Net
unrealized gain on available-for-sale securities |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Comprehensive income (loss) |
$ |
(17,480 |
) |
|
$ |
25,351 |
|
|
$ |
(53,530 |
) |
|
$ |
(20,606 |
) |
|
|
|
|
|
|
|
|
|
|
XOMA CORPORATION |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
(in thousands, except share and per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
25,742 |
|
|
$ |
65,767 |
|
|
Marketable securities |
|
|
— |
|
|
|
496 |
|
|
Trade and
other receivables, net |
|
|
566 |
|
|
|
4,069 |
|
|
Prepaid
expenses and other current assets |
|
|
852 |
|
|
|
1,887 |
|
|
Total
current assets |
|
|
27,160 |
|
|
|
72,219 |
|
|
Property and equipment,
net |
|
|
1,036 |
|
|
|
1,997 |
|
|
Other assets |
|
|
481 |
|
|
|
664 |
|
|
Total
assets |
|
$ |
28,677 |
|
|
$ |
74,880 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
5,689 |
|
|
$ |
6,831 |
|
|
Accrued
and other liabilities |
|
|
4,215 |
|
|
|
6,566 |
|
|
Accrued
restructuring costs |
|
|
3,594 |
|
|
|
459 |
|
|
Deferred
revenue |
|
|
899 |
|
|
|
3,198 |
|
|
Interest
bearing obligations – current |
|
|
17,855 |
|
|
|
5,910 |
|
|
Accrued
interest on interest bearing obligations – current |
|
|
254 |
|
|
|
331 |
|
|
Total
current liabilities |
|
|
32,506 |
|
|
|
23,295 |
|
|
Deferred revenue –
non-current |
|
|
18,000 |
|
|
|
— |
|
|
Interest bearing
obligations – non-current |
|
|
25,312 |
|
|
|
42,757 |
|
|
Contingent warrant
liabilities |
|
|
— |
|
|
|
10,464 |
|
|
Other liabilities –
non-current |
|
|
69 |
|
|
|
673 |
|
|
Total
liabilities |
|
|
75,887 |
|
|
|
77,189 |
|
|
|
|
|
|
|
|
Stockholders’
(deficit): |
|
|
|
|
|
Preferred
stock, $0.05 par value, 1,000,000 shares authorized, 0 issued and
outstanding at December 31, 2016 and 2015 |
|
|
— |
|
|
|
— |
|
|
Common
stock, $0.0075 par value, 277,333,332 shares authorized, 6,114,145
and 5,952,278 shares issued and outstanding at December 31,
2016 and 2015, respectively
|
|
|
46 |
|
|
|
45 |
|
|
Additional paid-in capital |
|
|
1,146,357 |
|
|
|
1,137,729 |
|
|
Accumulated deficit |
|
|
(1,193,613 |
) |
|
|
(1,140,083 |
) |
|
Total
stockholders’ (deficit) |
|
|
(47,210 |
) |
|
|
(2,309 |
) |
|
Total
liabilities and stockholders’ (deficit) |
|
$ |
28,677 |
|
|
$ |
74,880 |
|
|
|
|
|
|
|
|
Investor contact:
Luke Heagle
Pure Communications
+1 910-726-1372
lheagle@purecommunications.com
Media contact:
Colin Sanford
Pure Communications
+1 415-946-1094
csanford@purecommunications.com
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