As filed with the Securities and Exchange Commission on February 7, 2002
Registration No. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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XOMA LTD.
(Exact name of registrant as specified in its charter)
Bermuda 52-2154066
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2910 Seventh Street
Berkeley, California 94710
(510) 644-1170
(Address, including ZIP code, and telephone number,
including area code, of registrant's principal
executive offices)
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CHRISTOPHER J. MARGOLIN, ESQ.
XOMA LTD.
2910 Seventh Street
Berkeley, California 94710
(510) 644-1170
(Name, address, including ZIP code, and
telephone number, including area code,
of agent for service)
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Copy to:
GEOFFREY E. LIEBMANN, ESQ.
CAHILL GORDON & REINDEL
80 Pine Street
New York, New York 10005
(212) 701-3000
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Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
Title of Each Class Proposed Proposed
of Securities Amount Maximum Maximum Amount of
To Be To Be Offering Price Aggregate Registration
Registered Registered per Unit(1) Offering Price(1) Fee
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Common Shares,
par value U.S.$.0005
per share................... 3,000,000(2)(3)1 $10.425 $31,275,000 $2,877
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(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c).
(2) Includes a like number of Preference Share Purchase Rights (the "Rights").
Since no separate consideration is paid for the Rights, the registration
fee is included in the fee for the Common Shares.
(3) Pursuant to Rule 416 under the Securities Act of 1933, any additional
Common Shares issued as a result of stock splits, stock dividends or
similar transactions are deemed to be registered herewith.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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-2-
The information contained in this prospectus is not complete and may be changed.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
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Prospectus Subject to Completion,
dated February 7, 2002
XOMA Ltd.
3,000,000 Common Shares
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o All of the common shares offered by this o Our common shares are listed on the Nasdaq
prospectus are being offered by Millennium National Market under the symbol "XOMA."
Pharmaceuticals, Inc. through its wholly-owned The last reported sale price for the common
subsidiary, mHoldings Trust, which is a party shares on February 6, 2002 was U.S.$10.67
to an investment agreement with XOMA and will per share.
become one of our shareholders upon the
purchase of common shares under the investment
agreement. Millennium and mHoldings Trust
will receive all of the proceeds of this
offering; however, Millennium may sell common
shares to third parties at prevailing market
prices and apply those proceeds to satisfy, in
whole or in part, a $5.0 million convertible
subordinated note outstanding from XOMA to
Millennium, in which case XOMA would receive
the benefit of the sale of those common shares
through the cancellation of indebtedness.
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This investment involves a high degree of risk. Consider carefully the risk
factors beginning on page 3 of this prospectus before you invest.
Millennium Pharmaceuticals, Inc. and its wholly-owned subsidiary, mHoldings
Trust, are considered underwriters with respect to all of the common shares they
purchase under the investment agreement with XOMA and offered for sale under
this prospectus.
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Neither the SEC nor any state securities commission has approved these
securities or determined that this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
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The date of this prospectus is , 2002.
TABLE OF CONTENTS
Page Page
Risk Factors......................................3 Selling Shareholders.............................17
Incorporation of Information We File With Description of Share Capital.....................19
the SEC .......................................13 Plan of Distribution.............................22
Special Note Regarding Forward-Looking Legal Opinion....................................23
Statements ....................................14 Experts..........................................23
XOMA.............................................15 Where You Can Get More Information...............24
Price Range of Common Shares and Dividend
Information ...................................16
2
RISK FACTORS
You should carefully consider the following factors and other information
in this prospectus before deciding to invest in our common shares. You should
also consider carefully the other information contained, or incorporated by
reference, in this prospectus. The risks and uncertainties described below and
elsewhere are not the only ones facing our company and our shareholders.
Additional risks and uncertainties may also adversely impair our business. The
actual results of our business could differ materially from those described as a
result of these risk factors. In such case, the trading price of our common
shares could decline, and you may lose all or part of the money you paid to buy
our common shares.
Risks Relating To Our Business
None Of Our Pharmaceutical Products Have Received Regulatory Approval; If Our
Products Do Not Receive Regulatory Approval, Neither We Nor Our Third Party
Collaborators Will Be Able To Manufacture And Market Them
Even our most developed pharmaceutical product has yet to complete final
clinical testing. We will be unable to manufacture and market our products
without required regulatory approvals in the United States and other countries.
The United States government and governments of other countries extensively
regulate many aspects of our products, including:
o testing
o manufacturing
o promotion and marketing and
o exporting.
In the United States, the Food and Drug Administration regulates
pharmaceutical products under the Federal Food, Drug, and Cosmetic Act and other
laws, including, in the case of biologics, the Public Health Service Act. At the
present time, we believe that our products will be regulated by the FDA as
biologics. State regulations may also affect our proposed products.
In September 1996, we and Genentech, Inc. announced that an investigational
new drug application had been filed with the FDA for clinical testing of
Xanelim(TM) (Efalizumab) in patients with moderate to severe psoriasis. We
completed a Phase II efficacy study in Canada in psoriasis patients in late
1998, subsequently received a $2 million milestone payment from Genentech, and
agreed with Genentech to continue collaborative development of the product in
psoriasis through Phase III and to expand the program to include all indications
for the product. In June and July 2001, we and Genentech announced preliminary
positive results from the initial 12-week treatment periods of two Phase III
pivotal trials of Xanelim(TM) in patients with moderate to severe plaque
psoriasis. In October 2001, we and Genentech announced that an additional
pharmacokinetics study, to be included in the potential biologics license
application submission to the FDA, will delay the estimated filing date to
summer 2002. We cannot assure you that this study will be successful or that
this filing will be made on schedule. We have also initiated and completed
enrollment in a Phase I/II study of Xanelim(TM) in kidney transplant recipients.
We and Genentech are currently evaluating the results of this study and
potential designs for follow-on studies. No assurance can be given that there
will be follow-on studies or that any such studies will be sufficient for
regulatory approval. In January 2002, we and Genentech announced plans to
initiate testing of Xanelim(TM) in patients suffering from rheumatoid arthritis.
No assurance can be given that any such testing will demonstrate product safety
and efficacy in this patient population or result in regulatory approval.
3
In December 1992, we submitted an investigational new drug application to
the FDA to begin human testing of our NEUPREX(R) product, a
genetically-engineered fragment of a human protein (BPI). We have licensed
worldwide rights to all pharmaceutical compositions containing BPI (including
NEUPREX(R)) for treatment of meningococcemia (a potentially deadly bacterial
infection principally of children) and in substantially all future
anti-bacterial and anti-endotoxin human clinical indications to Baxter
Healthcare Corporation. In April 2000, members of the FDA and representatives of
XOMA and Baxter discussed results from the Phase III trial that tested
NEUPREX(R) in pediatric patients with severe meningococcemia, and senior
representatives of the FDA indicated that the data presented were not sufficient
to support the filing of an application for marketing approval at that time. We
cannot confirm that we will be able to supply such additional data. If we
conduct an additional trial, we cannot assure you that the results will be
adequate for approval. In September 1999, we discontinued patient enrollment in
our Phase III clinical trial testing NEUPREX(R) in trauma patients with severe
blood loss because an independent data safety monitoring board told us that
interim results from the trial did not support continuing the trial. We have
conducted earlier stage clinical trials testing NEUPREX(R) as a treatment in
three additional indications:
o prevention of complications following partial hepatectomy (a type of
major liver surgery)
o treatment of severe infections within the abdomen in combination with
antibiotics and
o treatment of cystic fibrosis patients (whose genetic disorder
predisposes them to recurring bacterial lung infections).
Baxter has initiated a Phase II study with NEUPREX(R) in Crohn's disease
patients. We continue to evaluate with Baxter alternatives regarding additional
indications. We cannot predict that results will support product approval or
justify further development.
We have also initiated and completed enrollment in a Phase I study in
cancer patients of ING-1, a high-affinity antibody to an antigen expressed on
epithelial cell cancers (breast, colorectal, prostate and others) that is
designed to destroy cancer cells by recruiting the patient's own immune system.
We have initiated a second Phase I study in this patient population and are
currently planning to initiate a third. We can give no assurance that these
studies will support moving on to Phase II testing of the product or that we
will ultimately achieve regulatory approval.
Our other potential products will also require significant additional
development, including extensive preclinical and clinical testing.
The FDA has substantial discretion in both the product approval process and
manufacturing facility approval process and we cannot predict at what point, or
whether, the FDA will be satisfied with our submissions or whether the FDA will
raise questions which may be material and delay or preclude product approval or
manufacturing facility approval. As we accumulate additional clinical data, we
will submit it to the FDA, which may have a material impact on the FDA product
approval process.
Given that regulatory review is an interactive and continuous process, we
maintain a policy of limiting announcements and comments upon the specific
details of the ongoing regulatory review of our products, subject to our
obligations under the securities laws, until definitive action is taken.
4
Because All Of Our Products Are Still In Development, We Will Require
Substantial Funds To Continue; We Cannot Be Certain That Funds Will Be Available
And, If Not Available, We May Have To Take Actions Which Could Adversely Affect
Your Rights
If adequate funds are not available, we may have to dilute or otherwise
adversely affect the rights of existing shareholders, curtail or cease
operations or, in extreme circumstances, file for bankruptcy protection. We have
spent, and we expect to continue to spend, substantial funds in connection with:
o research and development relating to our products and production
technologies
o scale-up of our production capabilities
o extensive human clinical trials and
o protection of our intellectual property.
Based on current spending levels and third party funding, we believe that we
have enough cash (including interest income) to meet our currently anticipated
needs for operating expenses, working capital, equipment acquisitions and
current research projects through approximately the middle of 2004. However, to
the extent we experience changes in the timing or size of expenditures or
unanticipated expenditures, or if our collaborators do not meet their
obligations to us, these funds may not prove adequate for this period. We
continue to evaluate strategic alliances, potential partnerships and financing
arrangements which would further strengthen our competitive position and provide
additional funding. Accordingly, we cannot assure you that:
o operations will generate meaningful funds
o additional agreements for product development funding can be reached
o strategic alliances can be negotiated or
o adequate additional financing will be available for us to finance our
own development on acceptable terms, if at all.
Cash balances and operating cash flow are influenced primarily by the timing and
level of payments by our licensees and development partners, as well as by our
operating costs.
Because All Of Our Products Are Still In Development, We Have Sustained Losses
In The Past And We Expect To Sustain Losses In The Future
We have experienced significant losses and, as of September 30, 2001, we
had an accumulated deficit of approximately U.S.$501.0 million.
For the year ended December 31, 2000 and the nine months ended September
30, 2001, we had net losses of approximately U.S.$29.4 million, or U.S.$0.45 per
common share (basic and diluted), and U.S.$21.0 million, or U.S.$0.31 per common
share (basic and diluted), respectively. We expect to incur additional losses in
the future. Our ability to make profits is dependent in large part on obtaining
regulatory approval for our products and entering into agreements for product
development and commercialization, both of which are uncertain. Our ability to
fund our ongoing operations is dependent on the foregoing factors and on our
ability to secure additional funds. We cannot assure you that we will ever make
a profit or that cash flow from future operations will be sufficient to meet our
needs.
5
If Third Party Collaborators Do Not Successfully Develop and Market Our
Products, We May Not Be Able To Do So On Our Own
Our financial resources and our marketing experience and expertise are
limited. Consequently, we depend to a large extent upon securing the financial
resources and marketing capabilities of third parties with whom we collaborate.
In April 1996, XOMA and Genentech entered into an agreement whereby XOMA agreed
to co-develop Genentech's humanized monoclonal antibody product Xanelim(TM). In
April 1999, the companies extended and expanded the agreement. In January 2000,
we licensed the worldwide rights to all pharmaceutical compositions containing
BPI (including NEUPREX(R)) for treatment of meningococcemia and substantially
all future anti-bacterial and anti-endotoxin human clinical indications to
Baxter. In January 2001, we entered into a strategic process development and
manufacturing alliance with Onyx Pharmaceuticals, Inc. pursuant to which we are
scaling up production to commercial volume and will manufacture Onyx's CI-1042
cancer product. In November 2001, we entered into a collaboration with
Millennium Pharmaceuticals, Inc. to develop two of Millennium's biotherapeutic
agents for certain vascular inflammation indications. We cannot assure you that
Genentech, Baxter, Onyx or Millennium will successfully develop or market any
products.
Even when we have a collaboration relationship, we cannot assure you that
it will result in successful development of marketable products. For example, in
June 1999, we licensed certain genetically-engineered fragments of BPI to
Allergan Inc. to use in combination with other anti-infectives in products to
treat bacterial ophthalmic infections. In May 2000, following successful product
testing at Allergan, we expanded the collaboration to include "stand-alone"
formulations of BPI and to cover eye infections caused by any microbes. In
November 2000, Allergan advised us that for internal economic reasons they
planned to discontinue development of BPI-derived ophthalmic anti-infective
products. We cannot assure you that we will succeed in finding another licensee
for these products or that any such licensee will be successful in developing
and marketing the products.
As of the date of this prospectus, we have not entered into any other
license agreements regarding our other products currently in development.
Although we continue to evaluate additional strategic alliances and potential
partnerships, we cannot predict whether or when any such alliances or
partnerships will be entered into.
If Any Of Our Products Receives Regulatory Approval, We May Not Be Able To
Increase Existing Or Acquire New Manufacturing Capacity Sufficient To Meet
Market Demand
We have never commercially introduced any pharmaceutical products. We
cannot assure you that the capacity of our existing manufacturing facilities can
be increased to produce sufficient quantities of our products to meet market
demand. Also, if we need additional manufacturing facilities to meet market
demand, we cannot assure you that we will successfully obtain those facilities.
If Our Patent Protection For Our Principal Products and Processes Is Not
Enforceable, We Will Not Realize Our Profit Potential
Because of the length of time and the expense associated with bringing new
products to the marketplace, we hold and are in the process of applying for a
number of patents in the United States and abroad to protect our products and
important processes and also have obtained or have the right to obtain exclusive
licenses to certain patents and applications filed by others. However, the
patent position of biotechnology companies generally is highly uncertain, and no
consistent policy regarding the breadth of allowed claims has emerged from the
actions of the U.S. Patent and Trademark Office with respect to biotechnology
patents. Legal considerations surrounding the validity of biotechnology patents
continue to be in transition, and we cannot assure you that historical legal
standards surrounding questions of validity will continue to be applied or
6
that current defenses as to issued biotechnology patents will in fact be
considered substantial in the future. Accordingly, we cannot assure you as to:
o the degree and range of protection any patents will afford against
competitors with similar technologies
o if and when patents will issue
o whether or not others will obtain patents claiming aspects similar to
those covered by our patent applications or
o the extent to which we will be successful in avoiding infringement of
any patents granted to others.
The Patent Office has issued and/or allowed 60 patents to us related to our
BPI-based products, including novel compositions, their manufacture,
formulation, assay and use. In addition, we are the exclusive licensee of
BPI-related patents and applications owned by New York University and Incyte
Pharmaceuticals Inc. The Patent Office has also issued and/or allowed nine
patents to us related to our bacterial expression technology.
If certain patents issued to others are upheld or if certain patent
applications filed by others issue and are upheld, we may require licenses from
others in order to develop and commercialize certain potential products
incorporating our technology or we may become involved in litigation to
determine the proprietary rights of others. We cannot assure you that these
licenses, if required, will be available on acceptable terms or that such
litigation will not be costly or will not have other adverse effects on our
business.
We may be required to engage in litigation or other proceedings to protect
our intellectual property. We are currently engaged in litigation with Biosite
Incorporated regarding certain license agreements and patents relating to our
expression technology. Our amended complaint seeks monetary damages, injunctive
and other relief for infringement of our expression technology patents, fraud
and misrepresentation, breach of contract, misappropriation and unfair business
practices. Biosite has made counterclaims for breach of contract, breach of
covenant of good faith and fair dealing, intentional interference with contracts
and with prospective economic advantage, unfair business practices, violation of
the Lanham Act and injunctive and declaratory relief. We cannot assure you that
proceedings of this type will not be costly or will not have other adverse
effects on our business.
Due to the uncertainties regarding biotechnology patents, we also have
relied and will continue to rely upon trade secrets, know-how and continuing
technological advancement to develop and maintain our competitive position. All
of our employees have signed confidentiality agreements under which they have
agreed not to use or disclose any of our proprietary information. Research and
development contracts and relationships between us and our scientific
consultants and potential customers provide access to aspects of our know-how
that are protected generally under confidentiality agreements. We cannot assure
you that these confidentiality agreements will be honored or are enforceable. To
the extent proprietary information is divulged to competitors or to the public
generally, such disclosure may have a material adverse effect on our ability to
develop or commercialize our products.
Other Companies May Render Some Or All Of Our Products Noncompetitive Or
Obsolete
We cannot assure you that developments by others will not render our
products or technologies obsolete or uncompetitive. Technologies developed and
utilized by the biotechnology and pharmaceutical industries are continuously and
substantially changing. Competition in the areas of genetically-engineered
DNA-based
7
and antibody-based technologies is intense and expected to increase in the
future as a number of established biotechnology firms and large chemical and
pharmaceutical companies advance in these fields. Many of these competitors may
be able to develop products and processes competitive with or superior to our
own for many reasons, including that they may have:
o significantly greater financial resources
o larger research and development and marketing staffs
o larger production facilities
o entered into arrangements with, or acquired, biotechnology companies
to enhance their capabilities or
o extensive experience in preclinical testing and human clinical trials.
These factors may enable others to develop products and processes
competitive with or superior to our own. In addition, a significant amount of
research in biotechnology is being carried out in universities and other
non-profit research organizations. These entities are becoming increasingly
interested in the commercial value of their work and may become more aggressive
in seeking patent protection and licensing arrangements.
It is possible that one or more other companies may be developing one or
more products based on BPI, and we cannot assure you that these product(s) will
not prove to be more effective than NEUPREX(R).
Without limiting the foregoing, we are aware that Biogen Inc. has filed in
both the U.S. and Europe for approval of its Amevive(R) product in chronic
plaque psoriasis, Centocor Inc., a unit of Johnson & Johnson, is testing its
rheumatoid arthritis and Crohn's disease drug in psoriasis, Immunex Corp. (which
is in the process of being acquired by Amgen Inc.) is testing its rheumatoid
arthritis drug in psoriasis, MedImmune is testing its anti-T cell monoclonal
antibody in psoriasis and other companies are developing monoclonal antibody or
other products for treatment of inflammatory skin disorders. In particular,
Biogen has announced that Amevive(R) achieved positive results in two Phase III
clinical trials in patients with moderate to severe plaque psoriasis and that
the FDA and the EMEA have officially accepted Biogen's filings for approval of
Amevive(R) in psoriasis.
We Have Been Sued In Class Action And Related Lawsuits
Three class action complaints alleging the same violations by us of the
federal securities laws were filed against us in late 2001 and are currently
pending. The class action lawsuits, which also name Genentech as a defendant,
allege that material misrepresentations and omissions were made concerning the
anticipated timetable for the filing of a biologics license application with the
FDA in connection with our development of Xanelim(TM). The complaints in the
class action lawsuits seek unspecified money damages, costs and expenses. The
actions purport to have been brought on behalf of investors who purchased our
common shares during the period from May 24, 2001 through October 4, 2001. A
complaint with similar factual allegations was recently filed in the California
Superior Court in San Diego County purporting to assert claims against us and
Genentech under the California Unfair Competition Act.
Although we feel that these suits are without merit and intend to
vigorously defend them, we cannot assure you that these matters will not be
determined in favor of the plaintiffs and result in consequences materially
adverse to us. Even if we prevail in these matters, such litigation could result
in substantial costs and divert management's attention and resources, which
could result in a material adverse consequence to us.
8
If We Do Business Internationally, We Will Be Subject To Additional Political,
Economic and Regulatory Uncertainties
We cannot assure you that we will be able to successfully operate in any
foreign market. We believe that, because the pharmaceutical industry is global
in nature, international activities will be a significant part of our future
business activities and that, when and if we are able to generate income, a
substantial portion of that income will be derived from product sales and other
activities outside the United States. Foreign regulatory agencies often
establish standards different from those in the United States, and an inability
to obtain foreign regulatory approvals on a timely basis could have an adverse
effect on our business. International operations may be limited or disrupted by:
o imposition of government controls
o export license requirements
o political or economic instability
o trade restrictions
o changes in tariffs
o restrictions on repatriating profits
o taxation and
o difficulties in staffing and managing international operations.
Also, our business may be adversely affected by fluctuations in currency
exchange rates.
Because We Are A Relatively Small Biopharmaceutical Company With Limited
Resources, We May Not Be Able To Attract And Retain Qualified Personnel, And The
Loss Of Key Personnel Could Delay Or Prevent Achieving Our Objectives
Our success in developing marketable products and achieving a competitive
position will depend, in part, on our ability to attract and retain qualified
scientific and management personnel, particularly in areas requiring specific
technical, scientific or medical expertise. There is intense competition for
such personnel, and we cannot assure you that we will be able to attract or
retain them. Our research, product development and business efforts would be
adversely affected by the loss of one ore more of key members of our scientific
or management staff.
Because We Engage In Human Testing, We Are Exposed To An Increased Risk Of
Product Liability Claims, Which Would Have An Adverse Effect On Our Business
The testing and marketing of medical products entails an inherent risk of
allegations of product liability. We believe that we currently have adequate
levels of insurance for our clinical trials; however, we cannot assure you that,
in the event of one ore more large awards, such levels will provide adequate
coverage. We will seek to obtain additional insurance, if needed, if and when
our products are commercialized; however, we cannot assure you that adequate
insurance coverage will be available or be available at acceptable costs or that
a product liability claim would not materially adversely affect our business.
9
If You Were To Obtain A Judgment Against Us, It May Be Difficult To Enforce
Against Us Because We Are A Foreign Entity
We are a Bermuda company. All or a substantial portion of our assets may be
located outside the United States. As a result, it may be difficult for
investors to enforce in United States courts judgments obtained against us. We
have irrevocably agreed that we may be served with process with respect to
actions based on offers and sales of securities made hereby in the United States
by serving Christopher J. Margolin, c/o XOMA Ltd., 2910 Seventh Street,
Berkeley, California 94710, our United States agent appointed for that purpose.
We have been advised by our Bermuda counsel, Conyers Dill & Pearman, that there
is doubt as to whether Bermuda courts would enforce judgments of United States
courts obtained in (a) actions against XOMA or our directors and officers that
are predicated upon the civil liability provisions of the Securities Act or (b)
original actions brought in Bermuda against XOMA or such persons predicated upon
the Securities Act. There is no treaty in effect between the United States and
Bermuda providing for such enforcement, and there are grounds upon which Bermuda
courts may not enforce judgments of United States courts. Certain remedies
available under the United States federal securities laws may not be allowed in
Bermuda courts as contrary to that nation's policy.
Risks Relating To This Offering
The Actual Or Anticipated Resale By Millennium Of Our Common Shares That It
Purchases From Us Under The Investment Agreement Or Otherwise Owns Or Acquires
May Have An Adverse Impact On The Market Price Of Our Common Shares
The resale by Millennium through open market transactions or other means of
the common shares that it purchases from us under the investment agreement, that
we issue to Millennium upon conversion of the convertible note we have issued to
them or that it otherwise owns or acquires may, depending upon the timing of the
resales, depress the market price of our common shares. Moreover, as all the
common shares we sell to Millennium or issue upon conversion will be available
for immediate resale, the mere prospect of our sales to it could depress the
market price of our common shares. In addition, actual or anticipated downward
pressure on the market price of our common shares due to actual or anticipated
resales of our common shares by Millennium could cause some institutions or
individuals to engage in short sales of our common shares, which may itself
cause the market price of our common shares to decline.
Our Issuance Of Common Shares To Millennium Will Reduce The Percentage Equity
Ownership Of Our Existing Shareholders
Under our investment agreement with Millennium, we may issue to Millennium
up to $50.0 million worth of our common shares over the 30 months following the
effective date of the investment agreement on several predetermined closing
dates. The precise number of common shares that we will issue to Millennium over
the term of the investment agreement will depend on the market price of our
common shares during the period immediately preceding the applicable closing
date. Each issuance of common shares to Millennium pursuant to the investment
agreement will proportionately decrease our existing shareholders' percentage
ownership of our total outstanding equity interests.
Our Shareholder Rights Agreement Or Bye-laws May Prevent Transactions That Could
Be Beneficial To Our Shareholders
Our shareholder rights agreement could make it considerably more difficult
or costly for a person or group to acquire control of XOMA in a transaction that
our board of directors opposes.
10
Our bye-laws:
o require certain procedures to be followed and time periods to be met
for any shareholder to propose matters to be considered at annual
meetings of shareholders, including nominating directors for election
at those meetings;
o authorize our board of directors to issue up to 1,000,000 preference
shares without shareholder approval and to set the rights, preferences
and other designations, including voting rights, of those shares as
the board of directors may determine; and
o contain provisions, similar to those contained in the Delaware General
Corporation Law, that may make business combinations with interested
shareholders more difficult.
These provisions of our shareholders rights agreement and our bye-laws,
alone or in combination with each other, may discourage transactions involving
actual or potential changes of control, including transactions that otherwise
could involve payment of a premium over prevailing market prices to holders of
common shares, or could limit the ability of shareholders to approve
transactions that they may deem to be in their best interests.
Because We Have No History Of Profitability And Because The Biotechnology Sector
Has Been Characterized By Highly Volatile Stock Prices, Announcements We Make
And General Market Conditions For Biotechnology Stocks Could Result In A Sudden
Change In The Value Of Our Common Shares
As a biopharmaceutical company, we have experienced significant volatility
in our common shares. Fluctuations in our operating results and general market
conditions for biotechnology stocks could have a significant impact on the
volatility of our common share price. From February 1, 2001 through February 1,
2002, our share price has ranged from a low of U.S.$5.313 to a high of
U.S.$17.75. On February 6, 2002 the last reported sale price of the common
shares as reported on the Nasdaq National Market was U.S.$10.67 per share.
Factors contributing to such volatility include:
o results of preclinical studies and clinical trials,
o evidence of the safety or efficacy of our products,
o developments regarding regulatory filings,
o announcements of new collaborations,
o failure to enter into collaborations,
o developments in existing collaborations,
o our funding requirements and the terms of our financing arrangements,
o announcements of technological innovations or new indications for our
therapeutic products,
o government regulations,
o developments in patent or other proprietary rights,
11
o the number of shares outstanding,
o the number of shares trading on an average trading day,
o announcements regarding other participants in the biotechnology and
pharmaceutical industries, and
o market speculation regarding any of the foregoing.
12
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The following documents filed by XOMA with the SEC pursuant to the
Securities Exchange Act are "incorporated by reference" in this prospectus,
which means we can disclose important information to you by referring you to
these documents and they are considered to be a part of this prospectus:
(1) annual report on Form 10-K for the fiscal year ended December 31,
2000 (file no. 000-26169);
(2) quarterly reports on Form 10-Q for the quarterly periods ended
March 31, 2001 (file no. 000-26169), June 30, 2001 and September 30, 2001
(file no. 0-14710);
(3) current report on Form 8-K dated January 29, 2001 filed on January
30, 2001, as amended by an amendment on Form 8-K/A dated and filed on
February 13, 2001 (file no. 000-26169);
(4) current report on Form 8-K dated and filed on June 27, 2001 (file
no. 000-26169);
(5) current report on Form 8-K dated and filed on November 27, 2001,
as amended by an amendment on Form 8-K/A dated and filed on December 13,
2001 (file no. 0-14710); and
(6) the description of the common shares in the registration statement
on Form 8-A dated and filed on May 21, 1999 under Section 12 of the
Securities Exchange Act, including any amendment or report for the purpose
of updating such description (registration no. 333-68045).
All documents filed by XOMA with the SEC pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act after the date of this prospectus and
before all of the common shares offered by this prospectus have been sold are
deemed to be incorporated by reference in, and to be part of, this prospectus
from the date any such document is filed.
Any statements contained in a document incorporated by reference in this
prospectus are deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus (or in
any other subsequently filed document which also is incorporated by reference in
this prospectus) modifies or supersedes such statement. Any statement so
modified or superseded is not deemed to constitute a part of this prospectus
except as so modified or superseded.
13
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements made in this prospectus are forward-looking in
nature, including those relating to the sufficiency of our cash position, the
FDA regulatory process, timing and results of clinical trials and other aspects
of product development, strategic collaborative relationships and other
statements that are not historical facts. The words "believe," "plan," "intend,"
"expect" and similar expressions are intended to identify forward-looking
statements. We caution you not to place undue reliance on these forward-looking
statements. They apply only as of the date of this prospectus except that
statements incorporated by reference from previously filed reports apply as of
the date made. The occurrence of the events described, and the achievement of
the intended results, depend on many events, some or all of which are not
predictable or not within our control. Actual results may differ materially from
those anticipated in any forward-looking statements. Many risks and
uncertainties are inherent in the biopharmaceutical industry. Others are more
specific to our business. Many of the significant risks related to our business
are described in this prospectus. These include, among others, risks associated
with technology and product development, sufficiency and availability of funds,
marketing risks, patent and intellectual property matters, regulatory and
manufacturing issues and risks associated with competition from other companies.
Many of these risks are discussed further in "Risk Factors." We undertake no
obligation to publicly update any forward-looking statements, regardless of any
new information, future events or other occurrences. We advise you, however, to
consult any additional disclosures we make in our reports to the SEC on Forms
10-K, 10-Q and 8-K.
--------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these common shares or our
solicitation of your offer to buy the common shares in any jurisdiction where
that would not be permitted or legal. Neither the delivery of this prospectus
nor any sales made hereunder after the date of this prospectus should imply that
the information contained in this prospectus or the affairs of XOMA have not
changed since the date of this prospectus.
14
XOMA
We are a biopharmaceutical company that develops and manufactures antibody
and other protein products to treat cancer, immunological and inflammatory
disorders, and infectious diseases. Our current product development programs
include:
o Xanelim(TM)(Efalizumab) is a humanized monoclonal antibody product
being developed in collaboration with Genentech. We and Genentech have
announced initial positive results from the initial 12-week treatment
periods of two Phase III pivotal trials of Xanelim(TM)in patients with
moderate to severe plaque psoriasis. We and Genentech have also
announced that an additional pharmacokinetics study, to be included in
the potential biologics license application submission to the FDA,
will delay the estimated filing date to summer 2002. We have also
initiated and completed enrollment in a Phase I/II study of
Xanelim(TM)in kidney transplant recipients. In January 2002, we and
Genentech announced plans to initiate testing of Xanelim(TM)in
patients suffering from rheumatoid arthritis.
o ING-1 is a Human Engineered(TM) recombinant monoclonal antibody that
binds with high affinity to an antigen expressed on epithelial cell
cancers (breast, colorectal, prostate and others). The antibody
destroys cancer cells by recruiting the patient's own immune system.
We have initiated and completed enrollment in a Phase I clinical study
in patients with advanced adenocarcinomas.
o CAB-2 and MLN-01, two of Millennium's biotherapeutic agents, are being
developed for certain vascular inflammation indications pursuant to a
collaboration agreement with Millennium.
o CI-1042 (also known as ONYX-015), developed by Onyx, is a therapeutic
tumor-selective, modified adenovirus genetically engineered to destroy
cancer cells. Under a strategic process development and manufacturing
alliance with Onyx, we are scaling up production to commercial volume
and will manufacture CI-1042. The product is currently in a Phase III
clinical trial for head and neck cancer and in Phase I and II clinical
trials for a number of additional cancer indications.
o NEUPREX(R) (rBPI21) is a recombinant modified fragment of human
bactericidal/permeability-increasing protein, called BPI. We completed
a Phase III efficacy clinical trial in 1999 in severe pediatric
meningococcemia, but the data from the trial were determined not to be
sufficient to file for regulatory approval. Further development of
this product is continuing under a license agreement with a division
of Baxter, and a Phase II study testing NEUPREX(R) in Crohn's disease
is in progress.
o Genimune(TM) is a Human Engineered(TM) recombinant antibody fusion
protein developed using our proprietary targeted gelonin technology.
The product delivers a proprietary enzyme (rGelonin) specifically to
CD5-positive cells. The CD5 antigen is expressed on mature T cells and
some B cells, but not on stem cells or other tissues. The product may
treat autoimmune diseases such as rheumatoid arthritis, as well as
cancers such as T and B cell lymphomas and chronic lymphocytic
leukemia.
Based on current spending levels and third party funding, we believe that
we have enough cash (including interest income) to meet our currently
anticipated needs for operating expenses, working capital, equipment
acquisitions and current research projects through approximately the middle of
2004. We continue to evaluate strategic alliances, potential partnerships and
financing arrangements which would further strengthen our competitive position
and provide additional funding. We cannot predict whether or when any such
alliances, partnerships or arrangements will be consummated or whether
additional funding will be available when required and on terms acceptable to
us.
15
PRICE RANGE OF COMMON SHARES AND DIVIDEND INFORMATION
XOMA's common shares (such common shares and the common stock of our
predecessor Delaware corporation are referred to in this prospectus as the
common shares) trade on the Nasdaq National Market under the symbol "XOMA." The
following table sets forth the quarterly range of high and low reported sale
prices of the common shares on the Nasdaq Stock Market for the periods indicated
(in United States dollars):
High Low
---- ---
2000:
First Quarter $16.000 $2.750
Second Quarter 10.125 3.125
Third Quarter 14.750 4.000
Fourth Quarter 15.250 7.750
2001:
First Quarter $13.875 $6.031
Second Quarter 17.750 5.313
Third Quarter 17.090 6.740
Fourth Quarter 10.500 6.400
2002:
First Quarter (through February 6) $11.500 $8.950
On February 6, 2002 the last reported sale price of the common shares as
reported on the Nasdaq National Market was U.S.$10.67 per share. As of February
5, 2002, there were approximately 3,199 record holders of XOMA's common shares.
XOMA has not paid dividends on its common equity. XOMA currently does not
intend to pay dividends and intends to retain any earnings for use in its
business and the financing of its capital requirements for the foreseeable
future. The payment of any future cash dividends on XOMA's common shares will
necessarily be dependent upon the earnings and financial needs of XOMA, along
with applicable legal and contractual restrictions.
16
SELLING SHAREHOLDERS
The selling shareholders are Millennium Pharmaceuticals, Inc. and its
wholly-owned subsidiary, mHoldings Trust, a Massachusetts business trust. On
November 26, 2001, Millennium and XOMA announced an agreement in which they will
collaborate to develop two of Millennium's biotherapeutic agents for certain
vascular inflammation indications. As previously announced, under an investment
agreement, Millennium has committed to purchase, at our option and subject to
certain conditions under the investment agreement, up to $50.0 million worth of
our common shares over the 30 months following the effective date of the
investment agreement on several predetermined closing dates, through a
combination of convertible debt and equity. Of the up to $50.0 million worth of
our common shares, $5.0 million worth (and accrued interest) may be issued at
our option upon conversion of a convertible subordinated note already issued to
Millennium. At four subsequent closings, we may issue up to $7.5 million, $7.5
million, $15.0 million and $15.0 million worth of our common shares,
respectively. At each closing, the precise number of shares to be purchased by
Millennium will be determined using a formula based on the average of certain
sale prices per common share as reported on the Nasdaq National Market for a
specified period of time prior to the applicable closing date (subject to
certain adjustments and limitations). The formula is intended to reflect the
current market price per common share, without any discount or premium.
The obligations of Millennium to purchase the common shares that we wish to
sell at each closing will be subject to the delivery of customary closing
documents, including legal opinions and certificates from our officers, and
updated financial information.
We have agreed to register the resale of the common shares that we may sell
to Millennium from each tranche and the common shares that we may issue to
Millennium upon conversion of the convertible debt. The registration statement
of which this prospectus is a part is intended to satisfy these registration
obligations. We will consummate the first direct sale of common shares to
Millennium after the registration statement of which this prospectus is a part
is declared effective.
We are registering 3,000,000 common shares based in part on our good faith
estimate of the maximum number of common shares we may issue to Millennium under
the investment agreement and upon conversion of the convertible debt. If the
price of our common shares increases, the number of common shares we are
registering for issuance may be higher than the number of common shares we
actually issue to Millennium under the investment agreement. In such case, the
number of shares resold by Millennium under this prospectus would be less than
the number of shares registered for resale. On the other hand, if the price of
our common shares decreases and the number of common shares we actually issue to
Millennium under the investment agreement is greater than the number of shares
we are now registering, we may need to file a new registration statement with
the Securities and Exchange Commission, which will need to become effective
prior to our completing the sales contemplated by the investment agreement. The
3,000,000 common shares that we are registering consist of shares to be issued
(i) directly to Millennium by XOMA either for cash pursuant to the investment
agreement between the parties or upon conversion at maturity of or upon an event
of default under the $5.0 million convertible subordinated note of XOMA held by
Millennium or (ii) directly from time to time for immediate sale by Millennium
to third parties at prevailing market prices, the proceeds of which will be
applied to satisfy, in whole or in part, such convertible note.
As of February 6, 2002, the selling shareholders do not directly hold any
of our common shares. Other than their obligation to purchase common shares at
subsequent closing dates under the investment agreement (at our option) and upon
conversion of the $5.0 million convertible note (at our option), the selling
shareholders have no commitments or arrangements to purchase any of our common
shares. Notwithstanding that the conversion by the selling shareholders of the
$5.0 million convertible note is at our option, the selling shareholders may be
deemed to be beneficial owners of the approximately 478,000 common shares
issuable upon the conversion of the convertible note as if the convertible note
had been converted on February 6, 2002. Assuming the selling shareholders sell
all of the common shares that they may
17
acquire under the investment agreement and do not otherwise acquire our common
shares, they will not own any of our common shares after this offering.
18
DESCRIPTION OF SHARE CAPITAL
The following statements with respect to our share capital are subject to
the detailed provisions of our memorandum of continuance and bye-laws. These
statements do not purport to be complete and, while we believe the descriptions
of the material provisions of the memorandum of continuance and bye-laws
incorporated by reference are accurate statements with respect to such material
provisions, such statements are subject to the detailed provisions in the
memorandum of continuance and bye-laws, to which reference is hereby made for a
full description of such provisions.
COMMON SHARES
General
The memorandum of continuance and the bye-laws provide that our authorized
common share capital is limited to 135,000,000 common shares, par value
U.S.$.0005 per share. As of February 5, 2002, there were 70,246,609 common
shares outstanding.
Voting
The holders of common shares are entitled to one vote per share. All
actions submitted to a vote of shareholders shall be voted on by the holders of
common shares, voting together as a single class (together with the Series A
preference shares (as described below), if any), except as provided by law.
Dividends
Holders of common shares are entitled to participate, on a share for share
basis, with the holders of any other common shares outstanding, with respect to
any dividends declared by our board of directors, subject to the rights of
holders of preference shares. Dividends will generally be payable in U.S.
dollars. We have not paid cash dividends on the common shares. We currently do
not intend to pay dividends and intend to retain any of our earnings for use in
our business and the financing of our capital requirements for the foreseeable
future. The payment of any future cash dividends on the common shares is
necessarily dependent upon our earnings and financial needs, along with
applicable legal and contractual restrictions.
Liquidation
On a liquidation of XOMA, holders of common shares will be entitled to
receive any assets remaining after the payment of our debts and the expenses of
the liquidation, subject to such special rights as may be attached to any other
class of shares.
Redemption
The common shares are not subject to redemption either by us or the holders
thereof.
Variation of Rights
Under our bye-laws, if at any time our share capital is divided into
different classes of shares, the rights attached to any class (unless otherwise
provided by the terms of the issue of the shares of that class) may be varied
with the consent in writing of the holders of a majority of the issued shares of
that class either in writing or with the sanction of a resolution passed at a
separate general meeting.
19
PREFERENCE SHARES
General
Under our memorandum of continuance and bye-laws, we have the authority to
issue 1,000,000 preference shares, par value U.S.$.05 per share. Of these,
135,000 preference shares have been designated Series A Cumulative Preference
Shares and 7,500 preference shares have been designated Convertible Preference
Shares, Series B. Under our bye-laws, subject to the special rights attaching to
any class of our shares not being varied and to any resolution approved by the
holders of 75% of the issued shares entitled to vote in respect thereof, our
board of directors may establish one or more classes or series of preference
shares having the number of shares, designations, relative voting rights,
dividend rates, liquidation and other rights, preferences and limitations that
the board of directors fixes without any shareholder approval.
The Series A Preference Shares
There are no Series A preference shares outstanding. Pursuant to the rights
of the Series A preference shares, subject to the rights of holders of any
shares of any series of preference shares ranking prior and superior, the
holders of Series A preference shares are entitled to receive, when, as and if
declared by our board of directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of March, June,
September and December in each year, commencing on the first dividend payment
date after the first issuance of a share or fraction of a share of Series A
preference shares, in an amount per share equal to the greater of (a) U.S.$1.00
or (b) 1,000 times the aggregate per share amount of all cash dividends, plus
1,000 times the aggregate per share amount of all non-cash dividends or other
distributions, other than a dividend payable in common shares, declared on the
common shares since the immediately preceding dividend payment date, or, with
respect to the first dividend payment date, since the first issuance of Series A
preference shares.
In addition to any other voting rights required by law, holders of Series A
preference shares shall have the right to vote on all matters submitted to a
vote of our shareholders with each share of Series A preference shares entitled
to 1,000 votes. Except as otherwise provided by law, holders of Series A
preference shares and holders of common shares shall vote together as one class
on all matters submitted to a vote of our shareholders.
Unless otherwise provided in the rights attaching to a subsequently
designated series of our preference shares, the Series A preference shares shall
rank junior to any other series of preference shares as to the payment of
dividends and distribution of assets on liquidation, dissolution or winding-up
and shall rank senior to the common shares. Upon any liquidation, dissolution or
winding-up of XOMA, no distributions shall be made to holders of shares ranking
junior to the Series A preference shares unless, prior thereto, the holders of
Series A preference shares shall have received an amount equal to accrued and
unpaid dividends and distributions, whether or not declared, to the date of such
payment, plus an amount equal to the greater of (1) U.S.$100.00 per share or (2)
an aggregate amount per share equal to 1,000 times the aggregate amount to be
distributed per share to holders of common shares or to the holders of shares
ranking on parity with the Series A preference shares, except distributions made
ratably on the Series A preference shares and all other such parity shares in
proportion to the total amount to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding-up.
If we shall enter into any consolidation, amalgamation, merger, combination
or other transaction in which common shares are exchanged for or changed into
cash, other securities and/or any other property, then any Series A preference
shares outstanding shall at the same time be similarly exchanged or changed in
an amount per share equal to 1,000 times the aggregate amount of cash,
securities and/or other property, as the case may be, into which or for which
each common share is changed or exchanged.
The Series A preference shares shall not be redeemable.
20
The Series B Preference Shares
There are no Series B preference shares outstanding. The 7,500 Series B
preference shares have been designated for issuance upon conversion of the
convertible subordinated loans to us made and to be made by Genentech in
connection with the funding of the our development costs for hull24. Such loans
are and will be convertible into Series B preference shares upon the occurrence
of certain events relating to certain regulatory approvals, payment defaults,
prepayments and other circumstances. Pursuant to the rights of the Series B
preference shares, the holders of Series B preference shares will not be
entitled to receive any dividends on the Series B preference shares.
The Series B preference shares will rank senior with respect to rights on
liquidation, winding-up and dissolution of XOMA to all classes of common shares.
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
XOMA, holders of Series B preference shares will be entitled to receive $10,000
per share of Series B preference shares before any distribution is made on the
common shares. The holders of Series B preference shares will have no voting
rights, except as required under Bermuda law.
The holders of Series B preference shares will have the right to convert
Series B preference shares into common shares at a conversion price equal to the
current market price of the common shares (determined as provided below). The
current market price will be determined (a) for Series B preference shares
issued in connection with a conversion of one or more of the convertible
subordinated loans upon certain regulatory approvals, payment defaults or in
certain other circumstances, as of the first date on which such a conversion
occurs, and (b) for Series B preference shares issued in connection with certain
prepayments of one or more of the convertible subordinated loans or a conversion
thereof in certain other circumstances, as of the date of the issuance of such
Series B preference shares.
The Series B preference shares will be automatically converted into common
shares at its then effective conversion rate immediately upon the transfer by
the initial holder to any third party which is not an affiliate of such holder.
We will have the right, at any time and from time to time, to redeem any or
all Series B preference shares for cash in an amount equal to the conversion
price multiplied by the number of common shares into which each such share of
Series B preference shares would then be convertible.
OUTSTANDING WARRANTS
XOMA issued 250,000 common stock purchase warrants to Incyte in July 1998,
of which 125,000 remain outstanding. Each Incyte warrant outstanding entitles
the holder thereof to purchase one common share, subject to anti-dilution
adjustments. A holder may exercise the Incyte warrants at an exercise price of
U.S.$6.00 per share on or before July 9, 2008 or earlier upon the related
license becoming fully paid up.
XOMA issued 379,000 warrants to purchase common shares in January 1999 and
March 1999, of which 175,000 remain outstanding. Each January and March 1999
warrant entitles the holder thereof to purchase one common share, subject to
anti-dilution adjustments. A holder may exercise the January and March 1999
warrants at an exercise price of U.S.$5.85008 per share on or before January 29,
2004.
XOMA issued 150,000 warrants to purchase common shares in July 1999. Each
July 1999 warrant entitles the holder thereof to purchase one common share,
subject to anti-dilution adjustments. A holder may exercise the July 1999
warrants at an exercise price of U.S.$5.75 per share on or before July 21, 2004.
XOMA issued 250,000 warrants to purchase common shares in February 2000.
Each February 2000 warrant entitles the holder thereof to purchase one common
share, subject to anti-dilution adjustments. A holder may exercise the February
2000 warrants at an exercise price of U.S.$5.00 per share on or before February
11, 2005.
21
None of the warrants described above have been registered under the
Securities Act and none may be transferred except pursuant to an effective
registration statement under the Securities Act or pursuant to an exception from
registration thereunder. Additionally, all of the warrants contain certain
restrictions on their transfer. XOMA is not obligated and does not intend to
register the warrants under the Securities Act.
PLAN OF DISTRIBUTION
Any or all of the common shares being offered by this prospectus may be
sold from time to time to purchasers directly by the selling shareholders or by
pledgees, donees, transferees or other successors in interest. Alternatively,
the selling shareholders may from time to time offer any or all of the common
shares through underwriters, brokers, dealers or agents who may receive
compensation in the form of underwriting discounts, concessions or commissions
from such selling shareholder and/or the purchasers of common shares for whom
they may act. The selling shareholders, and any such underwriters, brokers,
dealers or agents that participate in the distribution of common shares, may be
deemed to be underwriters, and any profit on the sale of the common shares by
them and any discounts, commissions or concessions received by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
Any such common shares may be so offered or sold in the open market, on the
Nasdaq National Market or such other exchange or market where our common shares
are then traded, in privately negotiated transactions (subject to limitations
imposed by the investment agreement), in an underwritten offering, in block
trades, to a broker or dealer for its account in ordinary brokerage
transactions, or a combination of such methods. The selling shareholders will
make such sales at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. To the extent
required, the name of the selling shareholder, the number of common shares to be
sold, the purchase price, the public offering price, the name of any agent,
dealer, broker or underwriter and any applicable commission or discount or other
items constituting compensation or indemnification arrangements with respect to
a particular offering will be set forth in an accompanying prospectus
supplement. These and other matters may also be addressed in one or more
post-effective amendments to the registration statement of which this prospectus
is a part. XOMA will receive no proceeds from the sale by the selling
shareholder of the common shares offered by this prospectus, except that
Millennium may sell shares to third parties at prevailing market prices and
apply such proceeds to satisfy, in whole or in part, a $5.0 million convertible
subordinated note from XOMA to Millennium, in which case XOMA would receive the
benefit of the sale of such shares through the cancellation of indebtedness.
In connection with distributions of the common shares, and subject to
limitations imposed by the investment agreement, the selling shareholders may
enter into option or other transactions with broker-dealers that involve the
delivery of the common shares to the broker-dealers, which may then resell or
otherwise transfer such common shares. The selling shareholder also may loan or
pledge the common shares to a broker-dealer and the broker-dealer may sell the
common shares so loaned or upon a default may sell or otherwise transfer the
pledged common shares.
In addition, the selling shareholders and any other persons participating
in the sale or distribution of the shares offered by this prospectus will be
subject to liability under the federal securities laws and must comply with the
requirements of the Securities Act and the Securities Exchange Act, including
Rule 10b-5 and Regulation M under the Securities Exchange Act. These rules and
regulations may limit the timing of purchases and sales of our common shares by
the selling shareholders or such other persons. Under these rules and
regulations, the selling shareholders and such other persons:
o may not engage in any stabilization activity in connection with our
common shares;
o must furnish each broker which offers our common shares covered by
this prospectus with the number of copies of this prospectus and any
prospectus supplement which are required by such broker; and
22
o may not bid for or purchase any of our common shares or attempt to
induce any person to purchase any of our common shares other than as
permitted under the Securities Exchange Act.
These restrictions may affect the marketability of our common shares by the
selling shareholders.
The selling shareholders have agreed, subject to certain conditions, to a
restriction on their sales in the public market based on the trading volume of
our common shares and that they will not sell shares other than in the public
market without our prior written consent.
To permit the selling shareholders to resell our common shares purchased by
it under the investment agreement, we agreed to register those shares and to
maintain that registration. We have also agreed with the selling shareholders
that, subject to limited exceptions for specified time periods, we will prepare
and file any amendments and supplements to this prospectus and the registration
statement of which it is a part as may be necessary to keep the registration
statement current and effective until:
o the date on which the selling shareholders may sell all of the common
shares then held by the selling shareholders that they purchased from
us under the investment agreement without restriction by the volume
limitations of Rule 144(e) of the Securities Act; or
o the date after which all of our common shares held by the selling
shareholders that are covered by the registration statement have been
sold by the selling shareholders under a registration statement or
pursuant to Rule 144.
We have agree to indemnify and hold harmless the selling shareholders, any
broker-dealer named in the registration statement of which this prospectus is a
part and their respective controlling persons against certain liabilities,
including liabilities under the Securities Act, which may be based upon, among
other things, any untrue statement or alleged untrue statement of a material
fact contained in or incorporated by reference into the registration statement
or any omission or alleged omission to state in the registration statement or
any document incorporated by reference into the registration statement a
material fact required to be stated therein or necessary to make the statements
therein not misleading, unless made or omitted in reliance upon and in
conformity with written information provided to us by the selling shareholders
or such broker-dealer.
All expenses incurred by XOMA in complying with the registration rights
granted to the selling shareholder pursuant to which the registration statement
to which this prospectus relates has been filed, estimated to be approximately
$105,000, will be borne by XOMA. As and when XOMA is required to update this
prospectus, it may incur additional expenses in excess of this estimated amount.
Any common shares offered by this prospectus that qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under such rule rather than
pursuant to this prospectus.
LEGAL OPINION
The validity of the common shares to which this prospectus relates has been
passed upon for XOMA by Conyers Dill & Pearman, located in Hamilton, Bermuda.
EXPERTS
The consolidated financial statements of XOMA Ltd. appearing in XOMA Ltd.'s
annual report (Form 10-K) for the year ended December 31, 2000 have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
23
WHERE YOU CAN GET MORE INFORMATION
This prospectus is part of a registration statement that we have filed with
the SEC. The registration statement contains exhibits and other information not
included in this prospectus. At your request, we will provide you, without
charge, a copy of any documents incorporated by reference in, or included as
exhibits to, our registration statement. If you would like more information,
write or call us at:
XOMA Ltd.
2910 Seventh Street
Berkeley, CA 94710
Telephone: (510) 644-1170
XOMA files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements
and other information we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington D.C. 20549. You can request copies of these documents,
upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
room. XOMA's SEC filings are also available to the public on the SEC Internet
site at http://www.sec.gov.
24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses in connection with this offering are as follows:
Amount
to be Paid
----------
SEC registration fee .......................................... $ 2,877
Nasdaq fee .................................................... 22,500
Legal fees and expenses (including Blue Sky fees
and expenses)................................................ 75,000
Accounting fees and expenses .................................. 3,000
Miscellaneous ................................................. 1,623
--------
Total ................................................ $105,000
Item 15. Indemnification of Directors and Officers
Under Bermuda law, a company is permitted to indemnify any officer or
director, out of the funds of the company, against (i) any liability incurred by
him or her in defending any proceedings, whether civil or criminal, in which
judgment is given in his or her favor, or in which he or she is acquitted, or in
connection with any application under relevant Bermuda legislation in which
relief from liability is granted to him or her by the court and (ii) any loss or
liability resulting from negligence, default, breach of duty or breach of trust,
save for his or her fraud and dishonesty.
The bye-laws of XOMA provide for the indemnity by XOMA of the officers,
directors and employees of XOMA to the fullest extent permitted by law.
Expenses (including attorneys' fees) incurred by an officer or director of
XOMA in defending any civil, criminal, administrative or investigative action,
suit or proceeding shall be paid by XOMA in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by XOMA pursuant to the
Companies Act 1981 of Bermuda.
An officer or director of XOMA shall not be personally liable to XOMA or
its shareholders for monetary damages for any breach of fiduciary duty as a
director or officer, except to the extent that such limitation is prohibited by
the Companies Act 1981 of Bermuda.
The indemnification and advancement of expenses and the limitation of
liability provided by the bye-laws shall not be deemed exclusive of any other
rights which any officer, director or employee, as such, may have or hereafter
acquire under the Companies Act 1981 of Bermuda, any other provision of the
bye-laws, or any agreement or otherwise. Any repeal or modification of the
aforementioned provisions of the bye-laws shall not adversely affect any right
or protection existing at the time of such repeal or modification.
II-1
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
Exhibit
Number Page
------ ----
3.1 Memorandum of Continuance of XOMA Ltd. (Exhibit 3.4) (1)
3.2 Bye-Laws of XOMA Ltd. (Exhibit 3.5) (1)
4.1 Amended and Restated Shareholder Rights Agreement dated as of October
27, 1993 and amended and restated as of December 31, 1998 by and among
XOMA and ChaseMellon Shareholder Services, L.L.C. as Rights Agent
(Exhibit 4.1) (2)
4.2 Form of Resolution Regarding Preferences and Rights of Series A
Preference Shares (Exhibit 4.2) (1)
4.3 Form of Resolution Regarding Preferences and Rights of Series B
Preference Shares (Exhibit 4.3) (1)
4.4 Form of Common Stock Purchase Warrant (Incyte Warrants) (Exhibit 2)
(3)
4.5 Form of Common Share Purchase Warrant (January and March 1999
Warrants) (Exhibit 5) (4)
4.6 Form of Common Share Purchase Warrant (July 1999 Warrants) (Exhibit 4)
(5)
4.7 Form of Common Share Purchase Warrant (2000 Warrants) (Exhibit 4) (6)
5.1 Opinion of Conyers Dill & Pearman
10.1 Investment Agreement dated as of November 26, 2001 by and among XOMA,
Millennium Pharmaceuticals, Inc. and mHoldings Trust (with certain
confidential information omitted, which omitted information is the
subject of a confidential treatment request and has been filed
separately with the Securities and Exchange Commission) (7)
10.2 Registration Rights Agreement dated as of November 26, 2001 by and
among XOMA, Millennium Pharmaceuticals, Inc. and mHoldings Trust (with
certain confidential information omitted, which omitted information is
the subject of a confidential treatment request and has been filed
separately with the Securities and Exchange Commission) (7)
10.3 Convertible Subordinated Promissory Note dated November 26, 2001 (with
certain confidential information omitted, which omitted information is
the subject of a confidential treatment request and has been filed
separately with the Securities and Exchange Commission) (7)
II-2
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Conyers Dill & Pearman (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature pages hereto)
- --------------------
(1) Incorporated by reference to the referenced exhibit to XOMA's Registration
Statement on Form S-4 filed November 27, 1998, as amended (File No.
333-68045).
(2) Incorporated by reference to the referenced exhibit to XOMA's Registration
Statement on Form 8-A filed May 21, 1999 (File No. 0-14710).
(3) Incorporated by reference to the referenced exhibit to XOMA's Current
Report on Form 8-K dated July 9, 1998 filed July 16, 1998 (File No.
0-14710).
(4) Incorporated by reference to the referenced exhibit to XOMA's Current
Report on Form 8-K dated January 28, 1999 filed January 29, 1999, as
amended (File No. 0-14710).
(5) Incorporated by reference to the referenced exhibit to XOMA's Current
Report on Form 8-K dated July 23, 1999 filed July 26, 1999 (File No.
0-14710).
(6) Incorporated by reference to the referenced exhibit to XOMA's Current
Report on Form 8-K dated February 11, 2000 filed February 14, 2000 (File
No. 0-14710).
(7) Incorporated by reference to the referenced exhibit to XOMA's Amendment No.
1 to Current Report on Form 8-K/A dated and filed December 13, 2001 (File
No. 0-14710).
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
II-3
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information
required to be included in the post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Berkeley, State of California, on February 7, 2002.
XOMA LTD.
By: /s/ John L. Castello
---------------------------------------
Name: John L. Castello
Title: Chairman of the Board,
President and Chief
Executive Officer
II-5
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John L. Castello and Christopher J.
Margolin, and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) and supplements to this registration
statement, and to file the same, with the SEC and the Bermuda Registrar or
Companies, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
Chairman of the Board, President and Chief February 7, 2002
Executive Officer (Principal Executive
/s/ John L. Castello Officer)
- ----------------------------
John L. Castello
Chief Scientific and Medical Officer and February 7, 2002
/s/ Patrick J. Scannon Director
- ----------------------------
Patrick J. Scannon
Vice President, Finance and Chief Financial February 7, 2002
Officer (Principal Financial and Accounting
/s/ Peter B. Davis Officer)
- ----------------------------
Peter B. Davis
/s/ James G. Andress Director February 7, 2002
- ----------------------------
James G. Andress
/s/ William K. Bowes, Jr. Director February 7, 2002
- ----------------------------
William K. Bowes, Jr.
/s/ Arthur Kornberg Director February 7, 2002
- ----------------------------
Arthur Kornberg
/s/ Steven C. Mendell Director February 7, 2002
- ----------------------------
Steven C. Mendell
/s/ W. Denman Van Ness Director February 7, 2002
- ----------------------------
W. Denman Van Ness
II-6
EXHIBIT INDEX
Exhibit
Number Page
------ ----
3.1 Memorandum of Continuance of XOMA Ltd. (Exhibit 3.4) (1)
3.2 Bye-Laws of XOMA Ltd. (Exhibit 3.5) (1)
4.1 Amended and Restated Shareholder Rights Agreement dated as of October
27, 1993 and amended and restated as of December 31, 1998 by and among
XOMA and ChaseMellon Shareholder Services, L.L.C. as Rights Agent
(Exhibit 4.1) (2)
4.2 Form of Resolution Regarding Preferences and Rights of Series A
Preference Shares (Exhibit 4.2) (1)
4.3 Form of Resolution Regarding Preferences and Rights of Series B
Preference Shares (Exhibit 4.3) (1)
4.4 Form of Common Stock Purchase Warrant (Incyte Warrants) (Exhibit 2)
(3)
4.5 Form of Common Share Purchase Warrant (January and March 1999
Warrants) (Exhibit 5) (4)
4.6 Form of Common Share Purchase Warrant (July 1999 Warrants) (Exhibit 4)
(5)
4.7 Form of Common Share Purchase Warrant (2000 Warrants) (Exhibit 4) (6)
5.1 Opinion of Conyers Dill & Pearman
10.1 Investment Agreement dated as of November 26, 2001 by and among XOMA,
Millennium Pharmaceuticals, Inc. and mHoldings Trust (with certain
confidential information omitted, which omitted information is the
subject of a confidential treatment request and has been filed
separately with the Securities and Exchange Commission) (7)
10.2 Registration Rights Agreement dated as of November 26, 2001 by and
among XOMA, Millennium Pharmaceuticals, Inc. and mHoldings Trust (with
certain confidential information omitted, which omitted information is
the subject of a confidential treatment request and has been filed
separately with the Securities and Exchange Commission) (7)
-2-
Exhibit
Number Page
------ ----
10.3 Convertible Subordinated Promissory Note dated November 26, 2001 (with
certain confidential information omitted, which omitted information is
the subject of a confidential treatment request and has been filed
separately with the Securities and Exchange Commission) (7)
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Conyers Dill & Pearman (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature pages hereto)
- --------------------
(1) Incorporated by reference to the referenced exhibit to XOMA's Registration
Statement on Form S-4 filed November 27, 1998, as amended (File No.
333-68045).
(2) Incorporated by reference to the referenced exhibit to XOMA's Registration
Statement on Form 8-A filed May 21, 1999 (File No. 0-14710).
(3) Incorporated by reference to the referenced exhibit to XOMA's Current
Report on Form 8-K dated July 9, 1998 filed July 16, 1998 (File No.
0-14710).
(4) Incorporated by reference to the referenced exhibit to XOMA's Current
Report on Form 8-K dated January 28, 1999 filed January 29, 1999, as
amended (File No. 0-14710).
(5) Incorporated by reference to the referenced exhibit to XOMA's Current
Report on Form 8-K dated July 23, 1999 filed July 26, 1999 (File No.
0-14710).
(6) Incorporated by reference to the referenced exhibit to XOMA's Current
Report on Form 8-K dated February 11, 2000 filed February 14, 2000 (File
No. 0-14710).
(7) Incorporated by reference to the referenced exhibit to XOMA's Amendment No.
1 to Current Report on Form 8-K/A dated and filed December 13, 2001 (File
No. 0-14710).
EXHIBIT 5.1
[Letterhead of Conyers Dill & Pearman]
7 February 2002
XOMA Ltd.
2910 Seventh Street
Berkeley, California 94710
USA
Dear Sirs
XOMA Ltd. (the "Company")
We have acted as special legal counsel in Bermuda to the Company in connection
with the Registration Statement on Form S-3 (the "Registration Statement", which
term does not include any other instrument or agreement whether or not
specifically referred to therein or attached as an exhibit or schedule thereto)
filed with the U.S. Securities and Exchange Commission (the "Commission")
relating to the registration under the U.S. Securities Act of 1933, as amended,
of an aggregate of 3,000,000 common shares par value US$.0005 per share (the
"Common Shares"), including 5.0 million worth of common shares issuable upon the
conversion of the convertible subordinated promissory note issued by the Company
pursuant to the Investment Agreement (as defined below).
For the purposes of giving this opinion, we have examined the following
documents:
(i) a facsimile copy of an Investment Agreement (the "Investment Agreement",
which term does not include any other instrument or agreement whether or
not specifically referred to therein or attached as an exhibit or schedule
thereto) dated as of 26 November 2001 between the Company and Millennium
Pharmaceuticals, Inc.;
(ii) a facsimile copy of a Convertible Subordinated Promissory Note (the "Note",
which term does not include any other instrument or agreement whether or
not specifically referred to therein or attached as an exhibit or schedule
thereto) dated as of 26 November 2001;
The documents listed in items (i) and (ii) above are herein sometimes
collectively referred to as the "Documents," (which term does not include any
other instrument or agreement whether or not specifically referred to therein or
attached as an exhibit or schedule thereto).
We have also reviewed the memorandum of continuance and the bye-laws of the
Company, each certified by the Secretary of the Company on 7 February 2002,
minutes of a meeting of its directors held on 1 November 2001 (the "Minutes")
and such other documents and made such enquiries as to questions of law as we
have deemed necessary in order to render the opinion set forth below.
-2-
We have assumed (a) the genuineness and authenticity of all signatures and the
conformity to the originals of all copies (whether or not certified) examined by
us and the authenticity and completeness of the originals from which such copies
were taken, (b) that where a document has been examined by us in draft form, it
will be or has been executed in the form of that draft, and where a number of
drafts of a document have been examined by us all changes thereto have been
marked or otherwise drawn to our attention, (c) the capacity, power and
authority of each of the parties to the Documents, other than the Company, to
enter into and perform its respective obligations under the Documents, (d) the
due execution and delivery of the Documents by each of the parties thereto,
except the Company; (e) the accuracy and completeness of all factual
representations made in the Documents and other documents reviewed by us, (f)
that the resolutions contained in the Minutes remain in full force and effect
and have not been rescinded or amended, (g) that the Company is entering into
the Documents pursuant to its business of medical research, (h) that there are
reasonable grounds for believing that prior to and immediately following the
Company's entering into each of the Documents, the Company is and will be able
to pay its liabilities as they fall due, (i) that there is no provision of the
law of any jurisdiction, other than Bermuda, which would have any implication in
relation to the opinions expressed herein, (j) the validity and binding effect
under the laws of the State of New York of the Documents in accordance with
their respective terms, (k) that none of the parties to the Documents has
carried on or will carry on activities, other than the performance of its
obligations under the Documents, which would constitute the carrying on of
investment business in or from within Bermuda and that none of the parties to
the Documents, other than the Company, will perform its obligations under the
Documents in or from within Bermuda, (l) that the Note will be issued and paid
for in accordance with the Documents, and (m) that the Company is at all
materials times listed on National Association of Securities Dealers Automatic
Quotation System (NASDAQ).
We express no opinion as to the enforceability of any provision of the Documents
which provides for the payment of a specified rate of interest on the amount of
a judgment after the date of judgment or which purports to fetter the statutory
powers of the Company.
We have made no investigation of and express no opinion in relation to the laws
of any jurisdiction other than Bermuda. This opinion is to be governed by and
construed in accordance with the laws of Bermuda and is limited to and is given
on the basis of the current law and practice in Bermuda. This opinion is issued
solely for your benefit and is not to be relied upon by any other person, firm
or entity or in respect of any other matter.
On the basis of and subject to the foregoing, we are of the opinion that:
1. The Common Shares have been duly authorised in accordance with the
Company's memorandum of continuance and bye-laws.
2. When issued and paid for in accordance with the terms of the Investment
Agreement and the Note, as applicable, the Common Shares will be validly
issued, fully paid and non-assessable (meaning that no further sums are
required to be paid by the holders thereof in connection with the issue of
such shares).
-3-
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the headings "Risk
Factors" and "Legal Opinion" in the Registration Statement.
Yours faithfully
CONYERS DILL & PEARMAN
/s/ CONYERS DILL & PEARMAN
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of XOMA Ltd. for the
registration of 3,000,000 common shares and to the incorporation by reference
therein of our report dated February 9, 2001 with respect to the consolidated
financial statements of XOMA Ltd. included in its Annual Report (Form 10-K) for
the year ended December 31, 2000, filed with the Securities and Exchange
Commission.
/S/ ERNST & YOUNG LLP
Palo Alto, California
February 5, 2002