UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to__________

Commission File No. 001-39801

XOMA Corporation

(Exact name of registrant as specified in its charter)


Delaware		52-2154066
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

2200 Powell Street, Suite 310
Emeryville, California		94608
(Address of principal executive offices)		(Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading symbol(s):	Name of each exchange on which registered:
Common Stock, $0.0075 par value	XOMA	The Nasdaq Global Market
8.625% Series A Cumulative Perpetual Preferred Stock, par value $0.05	XOMAP	The Nasdaq Global Market
Depositary Shares (each representing 1/1000^th interest in a share of 8.375% Series B Cumulative Perpetual Preferred Stock, par value $0.05)	XOMAO	The Nasdaq Global Market

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 ☒ No ☐

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). Yes ☒ No ☐

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	☐
Non-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 ☐ No ☒

As of November 2, 2023, the registrant had 11,487,808 shares of common stock, $0.0075 par value per share, outstanding.

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

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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

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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)

Table of Contents

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	$	33,472	$	57,826
Short-term equity securities		214		335
Trade and other receivables, net		43		1
Short-term royalty and commercial payment receivables		—		2,366
Prepaid expenses and other current assets		776		725
Total current assets		34,505		61,253
Property and equipment, net		5		7
Operating lease right-of-use assets		—		29
Long-term royalty and commercial payment receivables		74,696		63,683
Intangible assets, net		14,477		15,150
Other assets - long term		411		260
Total assets	$	124,094	$	140,382

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	728	$	524
Accrued and other liabilities		2,160		2,918
Contingent consideration under RPAs, AAAs and CPPAs		4,000		75
Operating lease liabilities		—		34
Unearned revenue recognized under units-of-revenue method		2,078		1,899
Preferred stock dividend accrual		1,368		1,368
Total current liabilities		10,334		6,818
Unearned revenue recognized under units-of-revenue method – long-term		7,796		9,550
Total liabilities		18,130		16,368

Commitments and Contingencies (Note 9)

Stockholders’ equity:
Preferred Stock, $0.05 par value, 1,000,000 shares authorized:
8.625% Series A cumulative, perpetual preferred stock, 984,000 shares issued and outstanding at September 30, 2023 and December 31, 2022		49		49
8.375% Series B cumulative, perpetual preferred stock, 1,600 shares issued and outstanding at September 30, 2023 and December 31, 2022		—		—
Convertible preferred stock, 5,003 shares issued and outstanding at September 30, 2023 and December 31, 2022		—		—
Common stock, $0.0075 par value, 277,333,332 shares authorized, 11,472,808 and 11,454,025 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		86		86
Additional paid-in capital		1,308,943		1,306,271
Accumulated deficit		(1,203,114)		(1,182,392)
Total stockholders’ equity		105,964		124,014
Total liabilities and stockholders’ equity	$	124,094	$	140,382

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.

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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	$	225	$	25	$	1,350	$	3,300
Revenue recognized under units-of-revenue method		605		426		1,575		1,241
Total revenues		830		451		2,925		4,541

Operating expenses:
Research and development		25		29		118		125
General and administrative		6,368		4,794		18,341		15,620
Royalty purchase agreement asset impairment		—		—		1,575		—
Arbitration settlement costs (Note 3)		—		—		4,132		—
Amortization of intangible assets		224		—		673		—
Total operating expenses		6,617		4,823		24,839		15,745

Loss from operations		(5,787)		(4,372)		(21,914)		(11,204)
Other income (expense), net		278		194		1,192		76
Net loss and comprehensive loss	$	(5,509)	$	(4,178)	$	(20,722)	$	(11,128)
Less: accumulated dividends on Series A and Series B preferred stock		(1,368)		(1,368)		(4,104)		(4,104)
Net loss and comprehensive loss attributable to common stockholders, basic and diluted	$	(6,877)	$	(5,546)	$	(24,826)	$	(15,232)
Basic and diluted net loss per share attributable to common stockholders	$	(0.60)	$	(0.48)	$	(2.17)	$	(1.34)
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders		11,473		11,447		11,466		11,400

The accompanying notes are an integral part of these condensed consolidated financial statements.

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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	984	$	49	2	$	—	5	$	—	11,454	$	86	$	1,306,271		(1,182,392)	$	124,014
Issuance of common stock related to 401(k) contribution	—		—	—		—	—		—	7		—		123		—		123
Stock-based compensation expense	—		—	—		—	—		—	—		—		1,570		—		1,570
Preferred stock dividends	—		—	—		—	—		—	—		—		(1,368)		—		(1,368)
Net loss and comprehensive loss	—		—	—		—	—		—	—		—		—		(9,813)		(9,813)
Balance, March 31, 2023	984	$	49	2	$	—	5	$	—	11,461	$	86	$	1,306,596	$	(1,192,205)	$	114,526
Exercise of stock options	—		—	—		—	—		—	8		—		153		—		153
Issuance of common stock related to ESPP	—		—	—		—	—		—	3		—		50		—		50
Stock-based compensation expense	—		—	—		—	—		—	—		—		2,163		—		2,163
Preferred stock dividends	—		—	—		—	—		—	—		—		(1,368)		—		(1,368)
Net loss and comprehensive loss	—		—	—		—	—		—	—		—		—		(5,400)		(5,400)
Balance, June 30, 2023	984	$	49	2	$	—	5	$	—	11,472	$	86	$	1,307,594	$	(1,197,605)	$	110,124
Stock-based compensation expense	—		—	—		—	—		—	—		—		2,717				2,717
Preferred stock dividends	—		—	—		—	—		—	—		—		(1,368)				(1,368)
Net loss and comprehensive loss	—		—	—		—	—		—	—		—		—		(5,509)		(5,509)
Balance, September 30, 2023	984	$	49	2	$	—	5	$	—	11,472	$	86	$	1,308,943	$	(1,203,114)	$	105,964

Table of Contents


	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	984	$	49	2	$	—	5	$	—	11,315	$	85	$	1,307,030	$	(1,165,288)	$	141,876
Exercise of stock options	—		—	—		—	—		—	91		1		632		—		633
Issuance of common stock related to 401(k) contribution	—		—	—		—	—		—	4		—		85		—		85
Stock-based compensation expense	—		—	—		—	—		—	—		—		978		—		978
Preferred stock dividends	—		—	—		—	—		—	—		—		(1,368)		—		(1,368)
Net loss and comprehensive loss	—		—	—		—	—		—	—		—		—		(2,280)		(2,280)
Balance, March 31, 2022	984	$	49	2	$	—	5	$	—	11,410	$	86	$	1,307,357	$	(1,167,568)	$	139,924
Exercise of stock options	—		—	—		—	—		—	11		—		189		—		189
Issuance of common stock related to ESPP	—		—	—		—	—		—	3		—		45		—		45
Stock-based compensation expense	—		—	—		—	—		—	—		—		836		—		836
Preferred stock dividends	—		—	—		—	—		—	—		—		(1,368)		—		(1,368)
Net loss and comprehensive loss	—		—	—		—	—		—	—		—		—		(4,670)		(4,670)
Balance, June 30, 2022	984	$	49	2	$	—	5	$	—	11,424	$	86	$	1,307,059	$	(1,172,238)	$	134,956
Exercise of stock options	—		—	—		—	—		—	27		—		109		—		109
Stock-based compensation expense	—		—	—		—	—		—	—		—		806		—		806
Preferred stock dividends	—		—	—		—	—		—	—		—		(1,368)		—		(1,368)
Net loss and comprehensive loss	—		—	—		—	—		—	—		—		—		(4,178)		(4,178)
Balance, September 30, 2022	984	$	49	2	$	—	5	$	—	11,451	$	86	$	1,306,606	$	(1,176,416)	$	130,325

The accompanying notes are an integral part of these condensed consolidated financial statements.


		Page
Glossary of Terms and Abbreviations		1

PART I	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements	4

	Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022	4

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)	8

	Notes to Condensed Consolidated Financial Statements (unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47

Item 4.	Controls and Procedures	47

PART II	OTHER INFORMATION	48

Item 1.	Legal Proceedings	48

Item 1A.	Risk Factors	48

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.	78

Item 3.	Defaults Upon Senior Securities	79

Item 4.	Mine Safety Disclosure	79

Item 5.	Other Information	79

Item 6.	Exhibits	80

Signatures		82


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(20,722)	$	(11,128)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		6,450		2,620
Royalty purchase agreement asset impairment		1,575		—
Change in fair value of contingent consideration under RPAs, AAAs, and CPPAs		(75)		—
Common stock contribution to 401(k)		123		85
Amortization of intangible assets		673		—
Depreciation		2		7
Non-cash lease expense		115		127
Change in fair value of equity securities		121		330
Changes in assets and liabilities: