Investors

XOMA Reports 2009 and Fourth Quarter Financial Results

Mar 11, 2010

BERKELEY, Calif., Mar 11, 2010 (GlobeNewswire via COMTEX News Network) -- XOMA Ltd. (Nasdaq:XOMA), a leader in the discovery and development of therapeutic antibodies, today announced its financial results for the full year and fourth quarter of 2009 and provided a general business update.

XOMA had total revenues of $98.4 million in 2009, compared with $68.0 million in 2008. XOMA had net income of $0.6 million, or $0.00 per share, in 2009 compared with a net loss of $45.2 million, or $0.34 per share, in the year ended 2008. In the quarter ended December 31, 2009, XOMA had total revenues of $21.6 million and net income of $3.0 million, or $0.01 per share, compared with revenues of $36.9 million and net income of $10.0 million, or $0.07 per share in the fourth quarter of 2008.

At December 31, 2009, XOMA had cash, cash equivalents and short-term investments of $23.9 million, compared with $10.8 million at December 31, 2008. In January and February 2010, XOMA received approximately $21.0 million in proceeds from financing transactions, after underwriting discounts, expenses and an amendment fee to certain existing warrant holders.

"In 2009, we made significant progress in the XOMA 052 clinical development program through completion of a successful Phase 1 program in Type 2 diabetes and initiation of Phase 2 development. XOMA 052 is a novel anti-inflammatory approach to the treatment of Type 2 diabetes and cardio-metabolic diseases," said Steven B. Engle, XOMA's Chairman and Chief Executive Officer. "We expanded the XOMA 052 program beyond our initial focus on diabetes to cardiovascular disease. This expansion is supported by results from our Phase 1 trials demonstrating benefit in biomarkers of cardiovascular disease, in vivo studies evaluating XOMA 052 in cardio-metabolic disease models, and studies with other IL-1 targeting agents. Some of these results will be presented at the American College of Cardiology meeting this weekend.

"Also during 2009, we significantly increased revenue from antibody discovery, development and licensing collaborations, including expanded or new agreements with Takeda Pharmaceutical Company Limited, Arana Therapeutics, a subsidiary of Cephalon, Inc., and Kaketsuken, a Japanese research foundation. Our growing biodefense program was expanded to include the development of antibodies to the SARS and H1N1/H5N1 viruses."

Priorities for 2010

  --  Report interim results from an 80 patient, Phase 2a trial of XOMA 052 in
      Type 2 diabetes with 60 patients on active drug and 20 patients on
      placebo

  --  Conduct  a 325 patient Phase 2b dose-ranging trial of XOMA 052 in Type 2
      diabetes

  --  Pursue a partnership for the development and commercialization of XOMA
      052

  --  Publish results from completed XOMA 052 Phase 1 trials and preclinical
      studies and present results at medical and scientific meetings

  --  Pursue new antibody  discovery, development and licensing
      collaborations

  --  Increase biodefense revenue in support of anti-botulinum toxin antibody
      development program

  --  Advance the proprietary preclinical pipeline


2009 Accomplishments

  --  Successfully completed the XOMA 052 Phase 1 development program in Type
      2 diabetes

  --  Initiated XOMA 052 Phase 2 development program focused on Type 2
      diabetes and cardiovascular disease

  --  Demonstrated statistically significant reduction in the formation of
      plaque in the aorta with XOMA 052 in an in vivo model of
      atherosclerosis

  --  Presented results at an international diabetes meeting demonstrating
      XOMA 052's unique regulatory mechanism of action in regulating IL-1 beta
      signaling

  --  Received first U.S. and European patent grants covering XOMA 052

  --  Advanced novel anti-botulism antibody XOMA 3AB and added new biodefense
      contracts for development of antibodies to H1N1/H5N1 and SARS viruses

  --  Earned revenues of  $43.8 million from antibody discovery, development
      and licensing collaborations and royalty-related revenues of $29.1
      million

  --  Following the market withdrawal of RAPTIVA(R) by Genentech, eliminated
      outstanding term loan with Goldman Sachs Specialty Lending Holdings,
      Inc., partially through sale of XOMA's royalty interest in LUCENTIS(R)
      to Genentech for $25 million

  --  Completed a restructuring of the organization in January 2009 which
      resulted in annualized cost savings of approximately $27 million


Additional Fourth Quarter Financial Results

XOMA's total revenues in the fourth quarter of 2009 included $14.5 million in license and collaborative fees, $6.8 million in contract and other revenue and $0.2 million in royalty income. In the fourth quarter of 2008, revenues included $14.9 million in license and collaborative fees, $15.7 million in contract and other revenue, and $6.3 million in royalties.

XOMA's research and development expense for the fourth quarter of 2009 was $14.7 million, compared with $20.1 million in the same period of 2008. This decrease was due to reduced personnel costs as a result of the January 2009 workforce reduction, and multiple additional cost control initiatives. Selling, general and administrative expenses in the fourth quarter of 2009 were $4.8 million compared with $5.2 million for the same period last year.

Interest expense for the fourth quarter of 2009 was $0.1 million compared with $2.0 million for the same period of 2008. This decrease is primarily due to the repayment of the Goldman Sachs loan in September 2009 and a decrease in the average outstanding principal balance of and a reduced interest rate on XOMA's note due to Novartis AG.

Additional Fiscal Year 2009 Financial Results

XOMA's revenues in the year ended December 31, 2009 included $43.8 million in license and collaborative fees, $25.5 million in contract and other revenue and $29.1 million in royalty income. In the year ended December 31, 2008, revenues included $16.4 million in license and collaborative fees, $30.5 million in contract and other revenue, and $21.1 million in royalties.

XOMA's research and development expense for the year ended December 31, 2009 was $58.1million, compared with $82.6 million in the year ended December 31, 2008. This decrease was due to reduced personnel costs as a result of the January 2009 workforce reduction, and multiple additional cost control initiatives. Selling, general and administrative expenses in 2009 were $23.7 million compared with $24.1 million in 2008.

Interest expense for the year ended December 31, 2009 was $4.9 million, compared with $7.0 million in the year ended December 31, 2008. This decrease is primarily due to the repayment of the Goldman Sachs loan in September 2009 and a decrease in the average outstanding principal balance of and a reduced interest rate on the note due to Novartis.

Debt Obligations

In September 2009, XOMA fully repaid the Goldman Sachs loan, including the outstanding principal balance of $42.0 million, accrued interest of $2.4 million and a prepayment premium of $2.5 million.

With this repayment, XOMA's sole long-term debt obligation at the end of 2009 was the $13.3 million Novartis note. This note was established to facilitate XOMA's participation in its collaboration with Novartis including the development of HCD 122 which is being evaluated for the treatment of lymphoma in Phase 1a/2 studies. The Novartis loan is secured by XOMA's interest in the collaboration and is due in 2015.

Liquidity and Capital Resources

Cash provided by operating activities during 2009 was $7.4 million compared with cash used in operating activities of $33.0 million during 2008. This change is primarily due to the sale of the LUCENTIS(R) royalty interest to Genentech and license and collaborative fees.

Guidance

The company will not be providing guidance on revenues or cash receipts for 2010 so as to best manage its ongoing negotiations for XOMA 052 and technology licensing and in light of general economic and market conditions. The company expects that cash used in operating activities may range from $45 million to cash neutral or positive.

NASDAQ Update

As previously announced, in September 2009, XOMA received notice from NASDAQ that for the 30 consecutive business days preceding September 15, 2009 the bid price for its common shares closed below the minimum $1.00 per share required by NASDAQ's continued listing rules and that XOMA has until March 15, 2010, to regain compliance with this requirement. The company anticipates receiving a letter from NASDAQ on or shortly after March 16, 2010, indicating that it has not regained compliance with this requirement. XOMA intends to request a hearing before the NASDAQ Listing Qualifications Panel (the "Panel"), which request will stay delisting pending the Panel's decision following the hearing. At the hearing, XOMA intends to request continued listing based on a plan for regaining compliance. Although the Panel has the authority to grant the company up to an additional 180 days from the date of the forthcoming NASDAQ notice, to implement its plan, there can be no assurance that the Panel will grant XOMA's request for continued listing.

Investor Conference Call

XOMA will host a conference call and webcast to discuss its full-year and fourth quarter 2009 financial results today, March 11, 2009, at 4:30 pm ET. The webcast can be accessed via the Investors section of XOMA's website at http://investors.xoma.com/events.cfm and will be available for replay until close of business on June 11, 2010. Telephone numbers for the live audiocast are 877-369-6589(U.S./Canada) and 408-337-0122(international). A telephonic replay will be available beginning approximately two hours after the conclusion of the call until close of business on March 18, 2010. Telephone numbers for the replay are 800-642-1687 (U.S./Canada) and 706-645-9291 (international), conference ID 61024144.

About XOMA

XOMA discovers, develops and manufactures novel antibody therapeutics for its own proprietary pipeline as well as through license and collaborative agreements with pharmaceutical and biotechnology companies, and under its contracts with the U.S. government. The company's proprietary product pipeline includes:

  --  XOMA 052, an anti-IL-1 beta antibody in Phase 2 clinical development for
      Type 2 diabetes, Type 1 diabetes and cardiovascular disease, with
      potential for the treatment of a wide range of inflammatory
      conditions.

  --  XOMA 3AB, an antibody candidate in pre-IND studies to neutralize the
      botulinum toxin, among the most deadly potential bioterror threats,
      under development through funding provided by the National Institute of
      Allergy and Infectious Diseases of the National Institutes of Health
      (Contract # HHSN266200600008C).

  --  A preclinical pipeline with candidates in development for several
      diseases.


In addition to its proprietary pipeline, XOMA develops products with premier pharmaceutical companies including Novartis AG, Schering Corporation, a subsidiary of Merck & Co., Inc. and Takeda Pharmaceutical Company Limited.

XOMA's technologies have contributed to the success of marketed antibody products, including LUCENTIS(r) (ranibizumab injection) for wet age-related macular degeneration and CIMZIA(r) (certolizumab pegol) for rheumatoid arthritis and Crohn's disease.

The company has a premier antibody discovery and development platform that incorporates an unmatched collection of antibody phage display libraries and proprietary Human Engineering(tm), affinity maturation, Bacterial Cell Expression (BCE) and manufacturing technologies. BCE is a key breakthrough biotechnology for the discovery and manufacturing of antibodies and other proteins. As a result, more than 50 pharmaceutical and biotechnology companies have signed BCE licenses, and several licensed product candidates are in clinical development.

XOMA has a fully integrated product development infrastructure, extending from pre-clinical science to approval, and a team of about 200 employees at its Berkeley, California location. For more information, please visit http://www.xoma.com.

The XOMA Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5960

Safe Harbor Statement

Certain statements contained herein concerning conduct or availability of results of clinical trials, entry into a XOMA 052 development partnership or potential licensing and collaboration arrangements or other aspects of product development, or that otherwise relate to future periods, 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. These statements are based on assumptions that may not prove accurate. 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.

Among other things, the conduct or availability of results of clinical trials may be impacted by, or delayed or may never occur as a result of, unavailability of resources, actions or inaction by our present or future collaboration partners, insufficient enrollment in such trials or unanticipated safety issues; and a XOMA 052 partnership may not be entered into in the timeframes indicated or at all.

These and other risks, including those related to in ability to comply with NASDAQ's continued listing requirements; the generally unstable nature of current economic conditions; the results of discovery research and preclinical testing; the timing or results of pending and future clinical trials (including the design and progress of clinical trials; safety and efficacy of the products being tested; action, inaction or delay by the FDA, European or other regulators or their advisory bodies; and analysis or interpretation by, or submission to, these entities or others of scientific data); uncertainties regarding the status of biotechnology patents; uncertainties as to the cost of protecting intellectual property; changes in the status of the existing collaborative and licensing relationships; the ability of collaborators, licensees and other third parties to meet their obligations; market demand for products; scale up and marketing capabilities; competition; international operations; share price volatility; XOMA's financing needs and opportunities; and risks associated with XOMA's status as a Bermuda company, are described in more detail in XOMA's most recent annual report on Form 10-K and in other SEC filings. Consider such risks carefully in considering XOMA's prospects.

                                     XOMA Ltd.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share amounts)


                                     Three months ended    Twelve months ended
                                        December 31,           December 31,
                                    --------------------  ----------------------

                                       2009       2008       2009       2008
                                    ---------  ---------  ---------  -----------
  Revenues:
   License and collaborative fees    $ 14,546   $ 14,900   $ 43,822     $ 16,366
   Contract and other revenue           6,830     15,745     25,492       30,473

   Royalties                              221      6,275     29,116       21,148
                                    ---------  ---------  ---------  -----------

     Total revenues                    21,597     36,920     98,430       67,987
                                    ---------  ---------  ---------  -----------
  Operating expenses:
   Research and development            14,659     20,132     58,131       82,576
   Selling, general and
    administrative                      4,764      5,161     23,736       24,145

   Restructuring                           --         --      3,603           --
                                    ---------  ---------  ---------  -----------

     Total operating expenses          19,423     25,293     85,470      106,721
                                    ---------  ---------  ---------  -----------
     Income (loss) from operations      2,174     11,627     12,960     (38,734)
  Other income (expense):
   Investment and interest income           2         62         49          859
   Interest expense                     (110)    (2,042)    (4,888)      (7,002)
   Loss on debt extinguishment             --         --    (3,645)        (652)

   Other income (expense)                 561       (48)      1,801         (99)
                                    ---------  ---------  ---------  -----------
     Net income (loss) before
      taxes                             2,627      9,599      6,277     (45,628)
  Provision for income tax expense
   (benefit)                            (356)      (383)      5,727        (383)
                                    ---------  ---------  ---------  -----------

     Net income (loss)                $ 2,983    $ 9,982      $ 550   $ (45,245)
                                    =========  =========  =========  ===========
  Basic and diluted net income
   (loss) per common share             $ 0.01     $ 0.07       $ --     $ (0.34)
                                    =========  =========  =========  ===========

  Shares used in computing basic
   net income (loss) per common
   share                              199,708    134,906    164,900      132,928
                                    =========  =========  =========  ===========
  Shares used in computing diluted
   net income (loss) per common
   share                              204,679    138,727    169,720      132,928
                                    =========  =========  =========  ===========


                      XOMA Ltd.
        CONDENSED CONSOLIDATED BALANCE SHEETS
                   (in thousands)

                                   December 31,
                               --------------------

                                  2009       2008
                               ---------  ---------
                       ASSETS
  Current assets:
   Cash and cash equivalents    $ 23,909    $ 9,513
   Short-term investments             --      1,299
   Restricted cash                    --      9,545
   Trade and other
    receivables, net               7,231     16,686
   Prepaid expenses and other
    current assets                 1,012      1,296

   Debt issuance costs                --        365
                               ---------  ---------
     Total current assets         32,152     38,704
  Property and equipment, net     20,270     26,843
  Debt issuance costs --
   long-term                          --      1,224

  Other assets                       402        402
                               ---------  ---------

     Total assets               $ 52,824   $ 67,173
                               =========  =========

         LIABILITIES AND SHAREHOLDERS' EQUITY
               (NET CAPITAL DEFICIENCY)
  Current liabilities:
   Accounts payable              $ 2,942    $ 9,977
   Accrued liabilities             8,629      4,438
   Accrued interest                   10      1,588
   Deferred revenue                2,114      9,105
   Warrant liability               4,760         --

   Other current liabilities         223      1,884
                               ---------  ---------
     Total current
      liabilities                 18,678     26,992
  Deferred revenue --
   long-term                       2,894      8,108
  Interest bearing
   obligations -- long-term       13,341     63,274

  Other long-term liabilities        385        200
                               ---------  ---------

     Total liabilities            35,298     98,574
                               ---------  ---------
  Shareholders' equity (net
   capital deficiency)            17,526   (31,401)
                               ---------  ---------
     Total liabilities and
      shareholders' equity
      (net capital
      deficiency)               $ 52,824   $ 67,173
                               =========  =========


This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: XOMA Ltd.

CONTACT:  XOMA Ltd.
Company and Investor Contact:
Carol DeGuzman
510-204-7270
deguzman@xoma.com
Porter Novelli Life Sciences
Media Contact:
Carolyn Hawley
619-849-5375
chawley@pnlifesciences.com

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