8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 8, 2017

 

 

XOMA CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

000-14710   Delaware   52-2154066

(Commission

File Number)

 

(State or other jurisdiction

of incorporation)

 

(IRS Employer

Identification No.)

 

2910 Seventh Street, Berkeley,

California

  94710
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (510) 204-7200

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02 Results of Operations and Financial Condition

On August 8, 2017, XOMA Corporation issued a press release announcing its financial results for the quarter ended June 30, 2017. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

 

Number

  

Description of Document

99.1    Press release entitled “XOMA Reports Second Quarter 2017 Financial Results” dated August 8, 2017


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: August 8, 2017     XOMA Corporation
    By:  

/s/ Thomas Burns

      Thomas Burns
      Senior Vice President, Finance and Chief Financial Officer


EXHIBIT INDEX

 

Exhibit
Number
   Description of Exhibit
99.1    Press release entitled “XOMA Reports Second Quarter 2017 Financial Results” dated August 8, 2017
EX-99.1

Exhibit 99.1

XOMA Reports Second Quarter 2017 Financial Results

Executing new corporate strategy leveraging extensive portfolio of partnered programs

Earned $10 million milestone payment from a pharmaceutical partner

Reduced combined R&D and G&A expenses 56% year-over-year

Current cash balance sufficient to fund operations through August 2018

Berkeley, Calif., August 8, 2017 – XOMA Corporation (Nasdaq:XOMA), a pioneer in the discovery and development of therapeutic antibodies, today announced its second quarter 2017 financial results and recent business highlights.

“We made significant progress executing our new strategy to create long-term value for shareholders in the second quarter,” stated Jim Neal, Chief Executive Officer of XOMA. “In addition to earning a $10 million milestone payment from one of our pharmaceutical partners, we continued to pursue out-licensing opportunities for our unpartnered programs and to produce valuable clinical evidence in support of those assets. We also focused on decreasing our cost infrastructure as we set the stage for a future positive cash flow environment. With our extensive portfolio of partner-funded programs, lean cost structure and strengthened balance sheet, we are positioning ourselves to deliver profitable growth in the years ahead.”

Recent Business Highlights

XOMA made important progress positioning the Company for long-term growth and improving its financial health, including:

 

    Executing a new strategy that leverages XOMA’s extensive portfolio of partnered programs and licensed technologies that has the potential to generate substantial future milestone and royalty proceeds for the Company.

 

    Earning a $10 million milestone payment in May 2017 that was received in July 2017, reflecting the clinical advancement of an asset the Company licensed to one of its pharmaceutical partners. Similar to this program, XOMA has more than 20 additional clinical and preclinical programs that are fully funded by partners across the biotech and pharmaceutical landscape and that are expected to add to the growth in milestone payments and royalty revenue streams over time.

 

    Pursuing strategic partner discussions with multiple companies regarding out-licensing certain of XOMA’s unpartnered programs. Recent developments in certain antibody target-related clinical trials have led to an increase in the interest in some of XOMA’s portfolio assets.

 

    Continuing implementation of the Company’s previously announced aggressive cost reductions by decreasing headcount to fewer than 20 employees as of June 30, 2017.

 

    Establishing a tentative agreement with Servier to extend payment terms on the Company’s €12.0 million debt arrangement.

Financial Results

XOMA recorded total revenues of $10.9 million for the second quarter of 2017, compared to $0.4 million for the second quarter of 2016. The increase in revenues for the second quarter of 2017 was due primarily to a $10 million milestone payment earned under the Company’s license agreement with one of its pharmaceutical partners. This milestone payment was received in July 2017.


Research and development (R&D) expenses were $2.9 million for the second quarter of 2017, compared to $13.7 million for the second quarter of 2016. The decrease in R&D expenses for the second quarter of 2017 was due primarily to a $3.8 million reduction in salaries and related expenses, a $3.6 million decrease in external manufacturing activities, a $1.6 million reduction in clinical trial costs, and a $1.0 million decrease in the allocation of facilities and information technology costs. The significant reduction in R&D spending year-over-year is a result of the execution of the Company’s new corporate strategy of leveraging its extensive portfolio of partnered programs and licensed technologies.

General and administrative (G&A) expenses were $5.2 million for the second quarter of 2017, compared to $4.8 million for the second quarter of 2016. G&A expenses for the three months ended June 30, 2017, included increases of $1.0 million in the allocation of facilities and information technology costs due to a greater proportion of general and administrative personnel after the Company’s restructuring activities, $0.3 million in legal, accounting and tax services and $0.2 million in consulting services, partially offset by a $0.8 million decrease in salaries and other personnel costs related to the reduction in headcount from its restructuring activities. G&A salaries and related expenses included $1.6 million of non-cash stock compensation expense.

Restructuring charges were $1.5 million for the second quarter of 2017. These charges related primarily to severance, other termination benefits and outplacement services associated with the Company’s restructuring activities in 2016 and the first half of 2017.

Net income for the second quarter of 2017 was $0.3 million, compared to net loss of $15.2 million for the second quarter of 2016. The Company recorded non-cash charges of $0.9 million for unrealized foreign exchange losses primarily related to the Company’s €12.0 million loan from Servier in the second quarter of 2017.

On June 30, 2017, XOMA had cash and cash equivalents of $12.5 million and $10 million included in accounts receivable from a milestone earned in May 2017 from one of its licensees, which was received in July 2017. The Company ended December 31, 2016, with cash and cash equivalents of $25.7 million. The Company’s current cash and cash equivalents are expected to be sufficient to fund its operations through August 2018.

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. 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; the significant unmet therapeutic need for certain rare medical conditions associated with hyperinsulinism; XOMA’s intent to license X213 and X358; 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.

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


XOMA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in thousands, except per share amounts)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2017     2016     2017     2016  

Revenues:

        

License and collaborative fees

   $ 10,775     $ 275     $ 10,925     $ 2,766  

Contract and other

     115       168       225       1,639  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     10,890       443       11,150       4,405  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and development

     2,916       13,703       6,908       27,313  

General and administrative

     5,203       4,779       10,370       9,084  

Restructuring

     1,460       (21     3,480       15  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     9,579       18,461       20,758       36,412  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     1,311       (18,018     (9,608     (32,007

Other income (expense):

        

Interest expense

     (297     (1,007     (906     (2,009

Other income (expense), net

     (729     602       600       296  

Revaluation of contingent warrant liabilities

     —         3,263       —         10,195  

Loss on extinguishment of debt

     —         —         (515     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 285     $ (15,160   $ (10,429   $ (23,525
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net income (loss) available to common stockholders

   $ 172     $ (15,160   $ (16,032   $ (23,525
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic net income (loss) per share available to common stockholders

   $ 0.02     $ (2.52   $ (2.21   $ (3.92
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income (loss) per share available to common stockholders

   $ 0.02     $ (2.52   $ (2.21   $ (3.92
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares used in computing basic net income (loss) per share available to common stockholders

     7,588       6,022       7,240       6,000  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares used in computing diluted net income (loss) per share available to common stockholders

     7,643       6,022       7,240       6,000  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss):

        

Net income (loss)

   $ 285     $ (15,160   $ (10,429   $ (23,525

Net unrealized loss on marketable securities

     —         (12     —         (54
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss)

   $ 285     $ (15,172   $ (10,429   $ (23,579
  

 

 

   

 

 

   

 

 

   

 

 

 


XOMA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

     June 30,
2017
    December 31,
2016
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 12,465     $ 25,742  

Trade and other receivables, net

     10,631       566  

Prepaid expenses and other current assets

     334       852  
  

 

 

   

 

 

 

Total current assets

     23,430       27,160  

Property and equipment, net

     234       1,036  

Other assets

     481       481  
  

 

 

   

 

 

 

Total assets

   $ 24,145     $ 28,677  
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ DEFICIT     

Current liabilities:

    

Accounts payable

   $ 3,512     $ 5,689  

Accrued and other liabilities

     2,062       4,215  

Accrued restructuring costs

     1,020       3,594  

Deferred revenue – current

     1,425       899  

Interest bearing obligations – current

     13,539       17,855  

Accrued interest on interest bearing obligations – current

     125       254  
  

 

 

   

 

 

 

Total current liabilities

     21,683       32,506  

Deferred revenue – non-current

     17,255       18,000  

Interest bearing obligations – non-current

     14,322       25,312  

Other liabilities – non-current

     —         69  
  

 

 

   

 

 

 

Total liabilities

     53,260       75,887  
  

 

 

   

 

 

 

Stockholders’ deficit:

    

Preferred stock, $0.05 par value, 1,000,000 shares authorized, 5,003 and 0 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively

     —         —    

Common stock, $0.0075 par value, 277,333,332 shares authorized, 7,593,230 and 6,114,145 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively

     57       46  

Additional paid-in capital

     1,174,912       1,146,357  

Accumulated deficit

     (1,204,084     (1,193,613
  

 

 

   

 

 

 

Total stockholders’ deficit

     (29,115     (47,210
  

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $ 24,145     $ 28,677