UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from __________to__________
Commission File No.
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
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(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
☒ | Smaller reporting company | |||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 2, 2023, the registrant had
XOMA CORPORATION
FORM 10-Q
TABLE OF CONTENTS
GLOSSARY OF TERMS AND ABBREVIATIONS
Abbreviations |
| Definition |
2010 Plan | the Company's 2010 Long Term Incentive and Stock Award Plan, as amended | |
2018 Common Stock ATM Agreement | At The Market Issuance Sales Agreement with HCW dated December 18, 2018 | |
2021 Series B Preferred Stock ATM Agreement | At The Market Issuance Sales Agreement with B. Riley dated August 5, 2021 | |
‘40 Act | Investment Company Act of 1940 | |
AAA | Assignment and Assumption Agreement | |
ACA | The Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 | |
Affimed | Affimed N.V. | |
Affitech | Affitech Research AS | |
Affitech CPPA | the Company's Commercial Payment Purchase Agreement with Affitech dated October 6, 2021 | |
Agenus | Agenus, Inc. and certain affiliates | |
Agenus RPA | the Company's Royalty Purchase Agreement with Agenus dated September 20, 2018 | |
Anti-TGFβ Antibody License Agreement | the Company's License Agreement with Novartis dated September 30, 2015 | |
April 2022 Letter Agreement | the Letter Agreement to Officer Employment Agreement dated August 7, 2017, between XOMA Corporation and Thomas Burns dated April 1, 2022 | |
Aptevo | Aptevo Therapeutics Inc. | |
Aptevo CPPA | the Company’s Payment Interest Purchase Agreement with Aptevo dated March 29, 2023, referred to herein as “Aptevo Commercial Payment Purchase Agreement” or “Aptevo CPPA” | |
Aronora | Aronora, Inc. | |
Aronora RPA | the Company's Royalty Purchase Agreement with Aronora dated April 7, 2019 | |
AstraZeneca | AstraZeneca plc | |
ASC | Accounting Standards Codification | |
ASC 326 | ASC Topic 326, Financial Instruments – Credit Losses | |
ASC 450 | ASC Topic 450, Contingencies | |
ASC 606 | ASC Topic 606, Revenue from Contracts with Customers | |
ASC 805 | ASC Topic 805, Business Combinations | |
ASC 815 | ASC Topic 815, Derivatives and Hedging | |
ASC 842 | ASC Topic 842, Leases | |
ASU | Accounting Standards Update | |
Bayer | Bayer Pharma AG | |
Bioasis | Bioasis Technologies, Inc. and certain affiliates | |
Bioasis RPA | the Company's Royalty Purchase Agreement with Bioasis dated February 25, 2019 | |
BLA | Biologic License Application | |
Black-Scholes Model | Black-Scholes Option Pricing Model | |
B. Riley | B. Riley Securities, Inc. | |
BVF | Biotechnology Value Fund, L.P. | |
CCPA | California Consumer Privacy Act of 2018, collectively the Act and its regulations | |
CARES | Coronavirus Aid, Relief, and Economic Security | |
cGMP | current Good Manufacturing Practice | |
Chiesi | Chiesi Farmaceutici S.p.A. | |
Company | XOMA Corporation, including subsidiaries | |
CPPA | Commercial Payment Purchase Agreement |
1
CPRA | California Privacy Rights Act | |
EC | European Commission | |
EMA | European Medicines Agency | |
ESPP | 2015 Employee Stock Purchase Plan, as amended | |
EU | European Union | |
FCPA | U.S. Foreign Corrupt Practices Act of 1977, as amended | |
FDA | U.S. Food and Drug Administration | |
FDIC | Federal Deposit Insurance Corporation | |
GAAP | Generally accepted accounting principles | |
G&A | General and administrative | |
GDPR | General Data Protection Regulation | |
Gevokizumab License Agreement | the Company's License Agreement with Novartis dated August 24, 2017 | |
HCRP | Healthcare Royalty Partners II, L.P. | |
HCW | H.C. Wainwright & Co., LLC | |
HIPAA | Federal Health Insurance Portability and Accountability Act of 1996 | |
ICE® | Innate cell engager | |
ImmunityBio | ImmunityBio, Inc. (formerly NantCell, Inc.) | |
ImmunityBio License Agreement | Out-license agreement to ImmunityBio from LadRx dated July 27, 2017, related to the development and commercialization of Aldoxorubicin, as amended on September 27, 2018 | |
IP | Intellectual Property | |
Janssen | Janssen Biotech, Inc. | |
Kuros | Kuros Biosciences AG, Kuros US LLC and Kuros Royalty Fund (US) LLC, collectively | |
Kuros RPA | the Company's Royalty Purchase Agreement with Kuros dated July 14, 2021 | |
LadRx | LadRx Corporation (formerly CytRx Corporation) | |
LadRx Agreements | LadRx AAA and LadRx RPA | |
LadRx AAA | the Company’s Assignment and Assumption Agreement with LadRx dated June 21, 2023 | |
LadRx RPA | the Company’s Royalty Purchase Agreement with LadRx dated June 21, 2023 | |
Medexus | Medexus Pharmaceuticals, Inc. | |
Merck | Merck Sharp & Dohme Corp | |
Merck KGaA | Ares Trading SA | |
Merck KGaA License Agreement | In-license agreement from Merck KGaA to ObsEva related to ebopiprant dated June 10, 2015 and subsequently amended on July 8, 2016 (assumed by the Company as part of the ObsEva IP Acquisition Agreement) | |
NDA | New Drug Application | |
NIH | National Institutes of Health | |
NOL | net operating loss | |
Novartis | Novartis Pharma AG, Novartis International Pharmaceutical Ltd., Novartis Institutes for Biomedical Research, Inc. and/or Novartis Vaccines and Diagnostics, Inc. | |
November 2022 Letter Agreement | November 1, 2022 amendment to the April 2022 Letter Agreement | |
ObsEva | ObsEva SA | |
ObsEva IP Acquisition Agreement | Company's IP Acquisition Agreement with ObsEva dated November 21, 2022 | |
Ology Bioservices | Ology Bioservices Inc. (formerly Nanotherapeutics Inc., now a wholly owned subsidiary of National Resilience, Inc.) | |
Organon | Organon International GmbH |
2
Organon License Agreement | Out-license agreement to Organon from ObsEva dated July 26, 2021, related to the development and commercialization of ebopiprant (assumed by the Company as part of the ObsEva IP Acquisition Agreement) | |
Palo | Palobiofarma, S.L. | |
Palo RPA | the Company's Royalty Purchase Agreement with Palo dated September 26, 2019 | |
Pfizer | Pfizer, Inc. | |
PSU | Performance stock unit | |
R&D | Research and development | |
Regeneron | Regeneron Pharmaceuticals, Inc. | |
Amended Retention Plan | October 25, 2022 amendment to the Retention Plan | |
Retention Plan | Retention and Severance Plan dated March 31, 2022 | |
Rezolute | Rezolute, Inc., formerly Antria Bio, Inc. | |
Rezolute License Agreement | the Company's License Agreement with Rezolute dated December 6, 2017, as amended in March 2018, January 2019 and March 2020 | |
RPA | Royalty Purchase Agreement | |
Roche | F. Hoffmann-La Roche AG | |
SEC | U.S. Securities and Exchange Commission | |
Second Bioasis RPA | the Company's Royalty Purchase Agreement with Bioasis dated November 2, 2020 | |
Series A Preferred Stock | the 8.625% Series A cumulative, perpetual preferred stock issued in December 2020 | |
Series B Preferred Stock | the 8.375% Series B cumulative, perpetual preferred stock issued in April 2021 | |
Series A and Series B Preferred Stock | Series A Preferred Stock and Series B Preferred Stock, collectively | |
Series B Depositary Shares | the depositary shares, each representing 1/1000th interest in a share of Series B Preferred Stock | |
Sonnet | Sonnet BioTherapeutics, Inc., formerly Oncobiologics, Inc. | |
Sonnet Collaboration Agreement | the Company's Collaboration Agreement with Sonnet dated July 23, 2012, as amended in May 2019 | |
SOX | Sarbanes-Oxley Act of 2002 | |
SVB | Silicon Valley Bank | |
Takeda | Takeda Pharmaceutical Company Limited | |
Takeda Collaboration Agreement | the Company's Collaboration Agreement with Takeda dated November 1, 2006, as amended in February 2007 and February 2009 | |
TGFβ | transforming growth factor beta | |
VABYSMO® | faricimab-svoa | |
Viracta | Viracta Therapeutics, Inc. | |
Viracta RPA | the Company's Royalty Purchase Agreement with Viracta dated March 22, 2021 | |
XOMA | XOMA Corporation, a Delaware corporation, including subsidiaries | |
Zevra | Zevra Therapeutics, Inc. (formerly KemPharm Denmark A/S) | |
Zevra APA | Asset Purchase Agreement dated May 13, 2011 between LadRx and Orphazyme ApS, and assigned to Zevra as of June 1, 2022, related to the sale of arimoclomol from LadRx to Zevra (assumed by the Company as part of LadRx AAA) |
3
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
XOMA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
September 30, | December 31, | |||||
| 2023 |
| 2022 | |||
(unaudited) | (Note 1) | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Short-term equity securities | | | ||||
Trade and other receivables, net |
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Short-term royalty and commercial payment receivables | — | | ||||
Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets | — | | ||||
Long-term royalty and commercial payment receivables |
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Intangible assets, net | | | ||||
Other assets - long term |
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Total assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | | $ | | ||
Accrued and other liabilities |
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Contingent consideration under RPAs, AAAs and CPPAs | | | ||||
Operating lease liabilities | — | | ||||
Unearned revenue recognized under units-of-revenue method |
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Preferred stock dividend accrual | | | ||||
Total current liabilities |
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Unearned revenue recognized under units-of-revenue method – long-term |
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Total liabilities |
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Commitments and Contingencies (Note 9) | ||||||
Stockholders’ equity: | ||||||
Preferred Stock, $ | ||||||
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Convertible preferred stock, |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
| ( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
(Note 1) The condensed consolidated balance sheet as of December 31, 2022, has been derived from the audited consolidated financial statements as of that date included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
4
XOMA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
Revenues: | ||||||||||||
Revenue from contracts with customers | $ | | $ | | $ | | $ | | ||||
Revenue recognized under units-of-revenue method |
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Total revenues |
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Operating expenses: |
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Research and development |
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General and administrative |
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Royalty purchase agreement asset impairment | — | — | | — | ||||||||
Arbitration settlement costs (Note 3) |
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Amortization of intangible assets | | — | | — | ||||||||
Total operating expenses |
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Loss from operations |
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Other income (expense), net |
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Net loss and comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Less: accumulated dividends on Series A and Series B preferred stock | ( | ( | ( | ( | ||||||||
Net loss and comprehensive loss attributable to common stockholders, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Basic and diluted net loss per share attributable to common stockholders | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
XOMA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited)
(in thousands)
Series A | Series B | Convertible | Additional | Total | ||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||
Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital | Deficit |
| Equity | |||||||||
Balance, December 31, 2022 | | $ | | | $ | — | | $ | — |
| | $ | | $ | | ( | $ | | ||||||||||
Issuance of common stock related to 401(k) contribution | — |
| — | — |
| — | — |
| — |
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| — |
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Stock-based compensation expense | — |
| — | — |
| — | — |
| — |
| — |
| — |
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| — |
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Preferred stock dividends | — |
| — | — |
| — | — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||||||
Net loss and comprehensive loss | — |
| — | — |
| — | — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||||||
Balance, March 31, 2023 | | $ | | | $ | — | | $ | — |
| | $ | | $ | | $ | ( | $ | | |||||||||
Exercise of stock options | — |
| — | — |
| — | — | — | | — | | — | | |||||||||||||||
Issuance of common stock related to ESPP | — |
| — | — |
| — | — | — | | — | | — | | |||||||||||||||
Stock-based compensation expense | — |
| — | — |
| — | — | — | — | — | | — | | |||||||||||||||
Preferred stock dividends | — |
| — | — |
| — | — | — | — | — | ( | — | ( | |||||||||||||||
Net loss and comprehensive loss | — |
| — | — |
| — | — | — | — | — | — | ( | ( | |||||||||||||||
Balance, June 30, 2023 | | $ | | | $ | — | | $ | — |
| | $ | | $ | | $ | ( | $ | | |||||||||
Stock-based compensation expense | — |
| — | — |
| — | — | — | — | — | | | ||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||
Net loss and comprehensive loss | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||
Balance, September 30, 2023 | | $ | | | $ | — | | $ | — |
| | $ | | $ | | $ | ( | $ | |
6
Series A | Series B | Convertible | Additional | Total | ||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||
Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital | Deficit |
| Equity | |||||||||
Balance, December 31, 2021 | | $ | | | $ | — | | $ | — |
| | $ | | $ | | $ | ( | $ | | |||||||||
Exercise of stock options | — |
| — | — |
| — | — |
| — |
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| — |
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Issuance of common stock related to 401(k) contribution | — |
| — | — |
| — | — |
| — |
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| — |
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| — |
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Stock-based compensation expense | — |
| — | — |
| — | — |
| — |
| — |
| — |
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| — |
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Preferred stock dividends | — |
| — | — |
| — | — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||||||
Net loss and comprehensive loss | — |
| — | — |
| — | — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||||||
Balance, March 31, 2022 | | $ | | | $ | — | | $ | — |
| | $ | | $ | | $ | ( | $ | | |||||||||
Exercise of stock options | — |
| — | — |
| — | — | — | | — | | — | | |||||||||||||||
Issuance of common stock related to ESPP | — |
| — | — |
| — | — | — | | — | | — | | |||||||||||||||
Stock-based compensation expense | — |
| — | — |
| — | — | — | — | — | | — | | |||||||||||||||
Preferred stock dividends | — |
| — | — |
| — | — | — | — | — | ( | — | ( | |||||||||||||||
Net loss and comprehensive loss | — |
| — | — |
| — | — | — | — | — | — | ( | ( | |||||||||||||||
Balance, June 30, 2022 | | $ | | | $ | — | | $ | — |
| | $ | | $ | | $ | ( | $ | | |||||||||
Exercise of stock options | — | — | — | — | — | — | | — | | — | | |||||||||||||||||
Stock-based compensation expense | — |
| — | — |
| — | — | — | — | — | | — | | |||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||
Net loss and comprehensive loss | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||
Balance, September 30, 2022 | | $ | | | $ | — | | $ | — |
| | $ | | $ | | $ | ( | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
XOMA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Ended September 30, | ||||||
| 2023 |
| 2022 | |||
Cash flows from operating activities: | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Stock-based compensation expense |
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Royalty purchase agreement asset impairment | | — | ||||
Change in fair value of contingent consideration under RPAs, AAAs, and CPPAs | ( | — | ||||
Common stock contribution to 401(k) |
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Amortization of intangible assets | | — | ||||
Depreciation |
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Non-cash lease expense |
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Change in fair value of equity securities |
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Changes in assets and liabilities: |