UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarterly Period Ended March 31, 2002
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Transition Period from __________ to __________
Commission File No. 0-14710
XOMA LTD.
(Exact Name of Registrant as specified in its charter)
Bermuda 52-2154066
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2910 Seventh Street, Berkeley, CA 94710
(Address of principal executive offices) (Zip Code)
(510) 644-1170
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ___
---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common shares US$.0005 par value 70,287,972
Class Outstanding at March 31, 2002
XOMA LTD.
TABLE OF CONTENTS
Page
PART I FINANCIAL INFORMATION
Item 1 Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of March 31, 2002 and
December 31, 2001................................................1
Condensed Consolidated Statements of Operations for the Three
Months Ended March 31, 2002 and 2001.............................2
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2002 and 2001.............................3
Notes to Condensed Consolidated Financial
Statements ......................................................4
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................9
Item 3 Quantitative and Qualitative Disclosures About Market Risk .....10
PART II OTHER INFORMATION
Item 1 Legal Proceedings...............................................12
Item 2 Changes in Securities and Use of Proceeds.......................13
Items 3, 4 and 5 are either inapplicable or nonexistent and
therefore are omitted from this report
Item 6 Exhibits and Reports on Form 8-K.................................13
Signatures ................................................................14
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XOMA LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2002 2001
(Unaudited) (Note 1)
-------------- --------------
Assets:
Cash and cash equivalents $ 58,183 $ 67,320
Short-term investments 320 320
Related party receivables 423 418
Receivables 6,227 1,662
Inventory 1,306 1,299
Prepaid expenses and other 189 249
-------------- --------------
Total current assets 66,648 71,268
Property and equipment, net 17,123 14,645
Deposits and other 201 194
-------------- --------------
$ 83,972 $ 86,107
============== ==============
Liabilities and Shareholders' Equity:
Accounts payable $ 6,340 $ 3,520
Accrued liabilities 4,759 4,422
Capital lease obligations-- current 673 673
Deferred revenue-- current 4,084 5,017
Convertible subordinated note-- current 5,041 5,013
-------------- --------------
Total current liabilities 20,897 18,645
Capital lease obligations-- long term 1,232 1,393
Deferred revenue-- long term 1,100 1,470
Convertible subordinated notes-- long term 52,241 50,980
-------------- --------------
Total liabilities 75,470 72,488
Shareholders' equity 8,502 13,619
-------------- --------------
$ 83,972 $ 86,107
============== ==============
Note 1 - Amounts derived from the Company's audited financial statements
appearing in the Annual Report on Form 10-K for the year ended
December 31, 2001 as filed with the Securities and Exchange
Commission.
See accompanying notes to condensed consolidated financial statements.
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XOMA LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except per share data)
Three Months Ended
March 31,
----------------------------
2002 2001
--------- -------------
Revenues:
License and collaborative fees $ 6,313 $ 1,015
Contract and other revenue 2,909 1,841
--------- -------------
9,222 2,856
--------- -------------
Operating Costs and Expenses:
Research and development 9,935 8,470
Marketing, general and administrative 4,849 1,610
14,784 10,080
--------- -------------
Loss from operations (5,562) (7,224)
Other Income (Expense):
Investment and other income 272 459
Interest and other expense (649) (810)
--------- -------------
Net loss $(5,939) $(7,575)
========= =============
Basic and diluted net loss per share $ (0.08) $ (0.11)
========= =============
Shares used in computing basic and diluted net loss per share 70,229 66,134
--------- -------------
See accompanying notes to condensed consolidated financial statements.
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XOMA LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended
March 31,
------------------------
2002 2001
----------- ----------
Cash Flows From Operating Activities:
Net cash provided by (used in) operating activities $ (6,405) $ (4,788)
----------- ----------
Cash Flows From Investing Activities:
Proceeds from sale of short-term investments -- 96
Capital expenditures (2,852) (963)
----------- ----------
Net cash provided by (used in) investing activities (2,852) (867)
----------- ----------
Cash Flows From Financing Activities:
Proceeds from issuance of common shares, net 281 618
Proceeds related to convertible notes -- 2,203
Payments under capital leases (161) (40)
----------- ----------
Net cash provided by (used in) financing activities 120 2,781
----------- ----------
Net increase (decrease) in cash and cash equivalents (9,137) (2,874)
Cash and cash equivalents at beginning of period 67,320 35,043
----------- ----------
Cash and cash equivalents at end of period $58,183 $32,169
=========== ==========
See accompanying notes to condensed consolidated financial statements.
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XOMA LTD.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Business
XOMA Ltd. ("XOMA" or the "Company"), a Bermuda company, is a
biopharmaceutical company that develops and manufactures products to treat
cancer, immunologic and inflammatory disorders, and infectious diseases. The
Company's products are presently in various stages of development and all are
subject to regulatory approval before the Company or its collaborators can
commercially introduce any products. There can be no assurance that any of the
products under development by the Company will be developed successfully, obtain
the requisite regulatory approval or be successfully manufactured or marketed.
2. Basis of Presentation
The interim information contained in this report is unaudited but, in
management's opinion, includes all normal recurring adjustments necessary for a
fair presentation of results for the periods presented. Interim results may not
be indicative of results to be expected for the full year. The unaudited
consolidated financial statements should be read in conjunction with the
Company's audited consolidated financial statements for the year ended December
31, 2001 included in its Annual Report on Form 10-K.
3. Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
4. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, if any, at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ materially from those
estimates.
5. Concentration of Risk
Cash, cash equivalents, short-term investments and accounts receivable are
financial instruments which potentially subject the Company to concentrations of
credit risk. The Company maintains and invests excess cash in money market funds
and repurchase agreements which bear minimal risk. The Company has not
experienced any significant credit
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losses and does not generally require collateral on receivables. In the first
quarter of 2002, three customers represented 54%, 28% and 16% of total revenues
and as of March 31, 2002 billed and unbilled receivables totaled $4,000,000,
$2,148,000 and $0 for these customers, respectively. In the first quarter of
2001, two customers represented 49% and 48% of total revenues.
6. Recent Accounting Pronouncements
In July of 2001, the Financial Accounting Standards Board, or FASB, issued
Statements of Financial Accounting Standards No. 141, or SFAS 141, "Business
Combinations." SFAS 141 eliminates the pooling-of-interests method of accounting
for business combinations except for qualifying business combinations that were
initiated prior to July 1, 2001. In addition, SFAS 141 further clarifies the
criteria to recognize intangible assets separately from goodwill. Specifically,
SFAS 141 requires that an intangible asset may be separately recognized only if
such an asset meets the contractual-legal criterion or the separability
criterion. The requirements of SFAS 141 are effective for any business
combination accounted for by the purchase method that is completed after June
30, 2001 (i.e., the acquisition date is July 1, 2001 or after). The adoption of
SFAS 141 on January 1, 2002 had no material impact on the Company's financial
position or results of operations.
In July of 2001, the FASB issued Statements of Financial Accounting
Standards No. 142, or SFAS 142, "Goodwill and Other Intangible Assets." Under
SFAS 142, goodwill and indefinite lived intangible assets are no longer
amortized but are reviewed annually (or more frequently if impairment indicators
arise) for impairment. For intangible assets with indefinite useful lives, the
impairment review will involve a comparison of fair value to carrying value,
with any excess of carrying value over fair value being recorded as an
impairment loss. For goodwill, the impairment test shall be a two-step process,
consisting of a comparison of the fair value of a reporting unit with its
carrying amount, including the goodwill allocated to each reporting unit. If the
carrying amount is in excess of the fair value, the implied fair value of the
reporting unit goodwill is compared to the carrying amount of the reporting unit
goodwill. Any excess of the carrying value of the reporting unit goodwill over
the implied fair value of the reporting unit goodwill will be recorded as an
impairment loss. Separable intangible assets that are deemed to have a finite
life will continue to be amortized over their useful lives (but with no maximum
life). Intangible assets with finite useful lives will continue to be reviewed
for impairment in accordance with Statements of Financial Accounting Standards
No. 121, or SFAS 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of." The amortization provisions of SFAS
142 apply to goodwill and intangible assets acquired after June 30, 2001. The
adoption of SFAS 142 on January 1, 2002 had no material impact on the Company's
financial position or results of operations.
In August of 2001, the FASB issued SFAS 143, "Accounting for Asset
Retirement Obligations." SFAS 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated retirement costs. The
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adoption of SFAS 143 on January 1, 2002 had no material impact on the Company's
financial position or results of operations.
In October of 2001, the FASB issued SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which supersedes SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of." SFAS 144 addresses financial accounting and reporting for the
impairment of long-lived assets and for long-lived assets to be disposed of.
However, SFAS 144 retains the fundamental provisions of SFAS 121 for: (1)
recognition and measurement of the impairment of long-lived assets to be held
and used; and (2) measurement of long-lived assets to be disposed of by sale.
SFAS 144 is effective for fiscal years beginning after December 15, 2001. The
adoption of SFAS 144 on January 1, 2002 had no material effect on the Company's
financial position or results of operations.
7. Revenue Recognition
Revenue is recognized when the related costs are incurred and the four
basic criteria of revenue recognition are met: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred or services rendered; (3) the fee
is fixed and determinable; and (4) collectibility is reasonably assured.
Determination of criteria (3) and (4) are based on management's judgments
regarding the nature of the fee charged for products or services delivered and
the collectibility of those fees.
License and Collaborative Fees
Revenue from non-refundable, up-front license or technology access payments
under license and collaborative agreements where the Company has a continuing
obligation to perform is recognized as revenue over the period of the continuing
performance obligation. Revenue from such payments that are not dependent on
future performance by the Company under such agreements is recognized as revenue
when the amount thereof is fixed and determinable and collectibility is
reasonably assured.
Milestone payments under collaborative arrangements are recognized as
revenue upon achievement of the incentive milestone events, which represent the
culmination of the earnings process because the Company has no future
performance obligations related to the payment. Milestone payments that require
a continuing performance obligation on the part of the Company are recognized
over the period of the continuing performance obligation. Incentive milestone
payments are triggered either by the results of our research efforts or by
events external to the Company, such as regulatory approval to market a product
or the achievement of specified sales levels by a marketing partner. Amounts
received in advance are recorded as deferred revenue until the related milestone
is achieved.
Contract Revenue
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Contract revenue for research and development involves the Company
providing research, development or manufacturing services on a best efforts
basis to collaborative partners. The Company recognizes revenue under these
arrangements as the related research and development costs are incurred.
Product Sales
The Company recognizes product revenue upon shipment when there is
persuasive evidence that an arrangement exists, delivery has occurred, the price
is fixed, and determinable and collectibility is reasonably assured. Allowances
are established for estimated uncollectible amounts, product returns, and
discounts, if any.
8. License Agreement
In February of 2002, XOMA and MorphoSys AG announced cross-licensing
agreements for antibody-related technologies. Under the agreements, XOMA will
receive license payments from MorphoSys in addition to a license to use the
MorphoSys HuCAL(R) GOLD antibody library for its target discovery and research
programs. MorphoSys and its partners receive a license to use the XOMA antibody
expression technology for developing antibody products using MorphoSys' phage
display-based HuCAL(R) antibody library. MorphoSys also receives a license for
the production of antibodies under the XOMA patents. Because there are no
continuing performance obligations on the part of the Company under the
MorphoSys agreement, the fixed and determinable portion of the license fee
provided for in that agreement was recognized as revenue in the first quarter of
2002. Under the terms of the agreement, the license fee is to be paid in two
installments. The first was due and paid in the first quarter of 2002, and the
second more significant portion is due in the foruth quarter of 2002.
9. Research and Development
The Company expenses research and development costs as incurred. Research
and development expenses consist of direct and research-related allocated
overhead costs such as facilities costs, salaries and related personnel costs
and material and supply costs. In addition, research and development expenses
include costs related to clinical trials to validate the Company's testing
processes and procedures and related overhead expenses.
10. Comprehensive Income (Loss)
Unrealized gains or losses on the Company's available-for-sale securities
are included in other comprehensive income (loss). Comprehensive loss and its
components for the three months ended March 31, 2002 and 2001 are as follows (in
thousands):
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Three Months Ended
March 31,
-------------------------------
2002 2001
----------- -------------
Net Loss $(5,939) $(7,575)
Unrealized gain on securities
available-for-sale -- --
----------- -------------
Comprehensive loss $(5,939) $(7,575)
=========== =============
11. Net Loss Per Common Share
Basic and diluted net loss per share is based on the weighted average
number of common shares outstanding during the period in accordance with SFAS
No. 128. Common share equivalents were not included because they are
antidilutive in all periods presented.
12. Inventories
Inventories are stated at the lower of standard cost (which approximates
first-in, first-out cost) or market. Inventories, which relate principally to
the Company's agreement with Baxter Healthcare Corporation, consist of the
following (in thousands):
March 31, December 31,
2002 2001
------------ ------------
Raw materials $ 202 $ 195
Finished goods 1,104 1,104
------------ ------------
$ 1,306 $ 1,299
============ ============
13. Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
March 31, December 31,
2002 2001
------------ -------------
Accrued payroll costs $ 1,936 $ 2,347
Accrued clinical trial costs 494 445
Other 2,329 1,630
------------ -------------
$ 4,759 $ 4,422
============ =============
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
Revenues in the first quarter of 2002 increased to $9.2 million, from $2.9
million in the first quarter of 2001. Licensing revenue, increased to $6.3
million in the first quarter of 2002 from $1.0 million in first quarter of 2001,
primarily reflecting a fee from our agreement with MorphoSys AG, entered into in
the first quarter of 2002. Because there are no continuing performance
obligations on the part of the Company under the MorphoSys agreement, the fixed
and determinable portion of the license fee provided for in that agreement was
recognized as revenue in the first quarter of 2002. (See Note 7 to Consolidated
Condensed Financial Statements, "Revenue Recognition.") Under the terms of the
agreement, the license fee is to be paid in two installments. The first was due
and paid in the first quarter of 2002, and the second more significant portion
is due in the foruth quarter of 2002. Contract revenue increased to $2.9 million
in the first quarter of 2002 from $1.8 million in the first quarter of 2001.
This increase was primarily the result of higher service revenues from our
agreement with Onyx Pharmaceuticals, Inc.
Research and development expenses increased to $9.9 million in the first
quarter of 2002 from $8.5 million in the comparable prior year period. Spending
in 2002 reflected increased development costs associated with Xanelim(TM),
LDP01, CAB2 and ONYX-015. This was partially offset by reduced spending on
Mycoprex and Genimune development programs, which were discontinued during 2001.
Marketing, general and administrative expenses increased to $4.8 million in
the first quarter of 2002 from $1.6 million in the same period of 2001. This
increase is primarily due to legal expenses related to litigation with Biosite
Incorporated and certain securities claims and to expenses related to the
MorphoSys cross-licensing arrangement. Spending in 2002 also included XOMA's
share of commercial development expenses related to activities in preparation
for a potential future product launch of Xanelim(TM).
Interest income of $0.3 million in the first quarter of 2002 compared to
$0.5 million for the same period of 2001 was lower due to lower interest rates
offset by higher average cash balances. Interest expense of $0.6 million in the
first quarter of 2002, compared to $0.8 million for the same period of 2001,
reflected lower interest rates on a higher average outstanding balance of the
convertible subordinated notes due to Genentech, Inc. and Millennium
Pharmaceuticals, Inc.
Liquidity and Capital Resources:
XOMA ended the quarter with $58.5 million in cash, cash equivalents and
short-term investments, compared with $67.6 million at December 31, 2001. Net
cash used in operations in the first quarter of 2002 was $6.4 million, compared
with net cash used in operations of $4.8 million in the same period of 2001. In
comparing the two periods, the 2002 period bene-
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fited from a lower net loss and increased accounts payable, but this was more
than offset by increased accounts receivable and decreased deferred revenue. The
increase in accounts receivable in the 2002 quarter was due primarily to the
licensing fee from our arrangement with MorphoSys.
Capital expenditures increased to $2.9 million in the first quarter of 2002
from $1.0 million for the same period of 2001. Current year spending included
expenditures related to capacity expansion of our Berkeley manufacturing
facility.
For the full year 2002, the Company currently expects its net loss to be
somewhat higher than in 2001, due to increased expenses on Xanelim(TM) and on
the Millennium collaboration, and the further expansion of the Company's
development infrastructure. In addition, in early April 2002, the Company
announced the initiation of testing of Xanelim(TM) for moderate-to-severe
rheumatoid arthritis.
Based on current spending levels, currently anticipated revenues, and debt
financing provided by Genentech for XOMA's share of Xanelim(TM) development
costs, the Company estimates it has sufficient cash resources to meet its
operating needs through at least the middle of 2004. Any significant revenue
shortfalls, or increases in planned spending on internal programs could shorten
this period. Any licensing arrangements or collaborations, or favorable market
conditions supporting taking advantage of financing commitments from Millennium
under the collaborative agreement between the companies, or otherwise entering
into new equity or other financing arrangements, could extend this period.
Genentech and XOMA announced in early April 2002 that a pharmacokinetic study
comparing XOMA-produced material and Genentech-produced material did not achieve
a pre-defined statistical definition for comparability. Enrollment in an
additional 500-patient efficacy study designed to confirm clinical comparability
of the XOMA and Genentech material is now complete. Subject to the successful
outcome of this study and agreement with the FDA, the companies anticipate
filing an application for marketing approval by year-end 2002.
The timeliness of this submission, subsequent review by the FDA and
progress or setbacks by potentially competing products may have an adverse
effect on the Company's plans and its ability to raise new funding on acceptable
terms. For a further discussion of the risks related to our business and their
effects on our cash flow and ability to raise new funding on acceptable terms,
see "Forward-Looking Statements And Cautionary Factors That May Affect Future
Results" included in the Company's most recent annual report on Form 10-K, as
updated by the disclosure found throughout this quarterly report on Form 10-Q.
Quantitative and Qualitative Disclosures About Market Risk:
Interest Rate Risk. The Company's exposure to market rate risk due to
changes in interest rates relates primarily to the Company's investment
portfolio. The Company does not use derivative financial instruments in its
investment portfolio. By policy, the Company places its investments with high
quality debt security issuers, limits the amount of credit expo-
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sure to any one issuer, limits duration by restricting the term and holds
investments to maturity except under rare circumstances. The Company classifies
its cash equivalents as fixed rate if the rate of return on an instrument
remains fixed over its term. As of March 31, 2002, all the Company's cash
equivalents are classified as fixed rate.
The Company also has a long-term convertible note due to Genentech in 2005.
Interest on this note of LIBOR plus 1% is reset at the end of June and December
each year and is therefore variable.
Other Market Risk. At March 31, 2002, the Company had a long-term
convertible note outstanding which is convertible into common shares based on
the market price of the Company's common shares at the time of conversion. A 10%
decrease in the market price of the Company's common shares would increase the
number of shares issuable upon conversion of either security by approximately
11%. An increase in the market price of Company common shares of 10% would
decrease the shares issuable by approximately 9%.
Forward-Looking Statements:
Certain statements contained herein related to the relative size of the
Company's loss for 2002, the estimated levels of its expenses and revenues for
the balance of 2002, the sufficiency of its cash resources and the BLA filing
time frame, as well as other statements related to the progress and timing of
product development and present or future licensing or collaborative
arrangements, or that otherwise relate to future periods, are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These statements are based
on assumptions that may not prove accurate. Actual results could differ
materially from those anticipated due to certain risks inherent in the
biotechnology industry and for companies engaged in the development of new
products in a regulated market. Among other things, the actual loss for 2002
could be higher depending on the size and timing of expenditures and whether
there are unanticipated expenditures; the sufficiency of cash resources could be
shortened if expenditures are made earlier or in larger amounts than anticipated
or are unanticipated or if funds are not available; and the BLA filing could be
delayed by unexpected safety or efficiency issues or additional time
requirements for data analysis, BLA preparation, discussions with the FDA,
additional clinical studies or manufacturing process modifications. These and
other risks, including those related to changes in the status of the existing
collaborative relationships, availability of additional licensing or
collaboration opportunities, the timing or results of pending and future
clinical trials, the ability of collaborators and other partners to meet their
obligations, market demand for products, actions by the Food and Drug
Administration or the U.S. Patent and Trademark Office, and uncertainties
regarding the status of biotechnology patents, are discussed in the Company's
most recent annual report on Form 10-K and in other SEC filings.
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PART II - OTHER INFORMATION
Item 1 Legal Proceedings. On January 7, 2002, the United States District
Court for the Northern District of California, San Francisco Division,
denied Biosite Incorporated's motion to sever the patent issues in
XOMA's ongoing case against Biosite from the license issues and to
address the license issues first. In February of 2002, Biosite
announced that it has begun implementing an antibody expression
technology intended to allow it to operate its business without using
XOMA's patents and that it is launching a licensing program. On or
about March 5, 2002, Biosite filed an amended answer to add additional
defenses that certain of the patents at issue are invalid, that
certain alleged inequitable conduct on the part of the XOMA entities
renders certain of the patents unenforceable and that alleged patent
misuse renders the patents at issue unenforceable. Discovery has
commenced as to all claims, defenses and counterclaims and is
continuing.
In March of 2002, a federal court dismissed each of the three federal
securities class action lawsuits filed last year against XOMA,
Genentech and certain of their officers. After further investigating
the issues, plaintiffs' counsel had filed with the Court a Stipulation
and Proposed Order of Voluntary Dismissal in all three actions.
Thereafter, the Court entered an order dismissing each of the lawsuits
without prejudice. No consideration was exchanged, and neither
plaintiffs nor their counsel received any compensation or
reimbursement of expenses.
In January 2002, a Complaint, which pleads many of the allegations
that had been made in the class action lawsuits referenced above, was
filed in the California Superior Court in San Diego County against
XOMA, Genentech and certain unidentified "John Doe" defendants. The
plaintiff purports to assert claims under the California Unfair
Competition Act, seeking injunctive relief and other equitable
remedies in connection with the defendants' alleged misrepresentations
and omissions concerning the anticipated timetable for the filing of
the XanelimTM BLA. On March 14, 2002, XOMA filed a demurrer and a
motion to strike the Complaint. Thereafter, Genentech filed its own
demurrer and joined in XOMA's motion to strike the Complaint. In May
2002, the plaintiff responded to the demurrers and motion to strike by
filing an Amended Complaint, which tracks in material respects the
allegations contained in the plaintiff's original Complaint, but
expands the time period at issue to include the April 5, 2002 press
release issued by Genentech and XOMA. It is anticipated that, by
agreement among the parties, the deadline by which XOMA must respond
to the Amended Complaint will be extended.
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Item 2 Changes in Securities and Use of Proceeds. The Company continues to
use the net proceeds from its June 2001 registered offering of common
shares for general corporate purposes, including leasehold
improvements, equipment acquisitions, current research and development
projects, the development of new products or technologies, general
working capital and operating expenses. Pending application of the net
proceeds as described above, the Company has invested the remaining
net proceeds of the offering in short-term, investment-grade,
interest-bearing securities.
Item 3 Defaults Upon Senior Securities. None.
Item 4 Submission of Matters to a Vote of Security Holders. None
Item 5 Other Information. None.
Item 6 Exhibits and Reports on Form 8-K.
a) Exhibits:
Exhibit 10.39A Amendment No. 1 to the Process Development and Manufacturing
Agreement by and between XOMA (US) LLC and Onyx
Pharmaceuticals, Inc., dated as of April 15, 2002 (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).
b) Reports on Form 8-K: None.
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XOMA Ltd.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
XOMA LTD.
Date: May 15, 2002 By: /s/ JOHN L. CASTELLO
------------------------------------------
John L. Castello
Chairman of the Board, President and
Chief Executive Officer
Date: May 15, 2002 By: /s/ PETER B. DAVIS
------------------------------------------
Peter B. Davis
Vice President, Finance and
Chief Financial Officer
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