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 Number:
(Exact name of Registrant as specified in its charter)
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incorporation or organization) | Identification No.) | |
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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.
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As of November 4, 2024, the registrant had
XOMA ROYALTY CORPORATION
FORM 10-Q
TABLE OF CONTENTS
2
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 | |
AAA | Assignment and Assumption Agreement | |
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 | |
Alora | Alora Pharmaceuticals, LLC | |
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 the Company 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 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 825 | ASC Topic 825, Financial Instruments | |
ASC 842 | ASC Topic 842, Leases | |
ASU | Accounting Standards Update | |
Bayer | Bayer Pharma AG | |
Bayer License Agreement | Out-license agreement to Bayer HealthCare LLC from Daré dated January 10, 2020, related to the development and commercialization of OVAPRENE | |
Bioasis | Bioasis Technologies, Inc. and certain affiliates | |
Bioasis RPA | The Company's Royalty Purchase Agreement with Bioasis dated February 25, 2019 | |
Black-Scholes Model | Black-Scholes Option Pricing Model | |
Blue Owl | Blue Owl Capital Corporation | |
Blue Owl Loan | Loan pursuant to the Blue Owl Loan Agreement | |
Blue Owl Loan Agreement | Loan agreement dated as of December 15, 2023, between XRL, the lenders from time to time party thereto and Blue Owl, as administrative agent | |
Board | The Company’s Board of Directors | |
B. Riley | B. Riley Securities, Inc. | |
Broadridge | Broadridge Corporate Issuer Solutions, LLC, rights agent under the Kinnate CVR Agreement | |
BVF | Biotechnology Value Fund, L.P. |
3
Company | XOMA Royalty Corporation (formerly, XOMA Corporation), including its subsidiaries | |
CMO | Contract manufacturing organization | |
CPPA | Commercial Payment Purchase Agreement | |
CVR | Contingent value right | |
CRO | Contract research organization | |
Daré | Daré Bioscience, Inc. | |
Daré RPAs | The Company's Traditional RPA and Synthetic RPA with Daré dated April 29, 2024 | |
Daré Organon License Agreement | Out-license agreement to Organon from Daré dated March 31, 2022, related to the development and commercialization of XACIATO, as amended on July 4, 2023 | |
Day One | Day One Biopharmaceuticals | |
DSUVIA® | sufentanil sublingual tablet (DZUVEO in European market) | |
DoD | U.S. Department of Defense | |
EIR | Effective interest rate | |
EMA | European Medicines Agency | |
ESPP | 2015 Employee Stock Purchase Plan, as amended | |
Exchange Act | U.S. Securities Exchange Act of 1934 | |
FDA | U.S. Food and Drug Administration | |
FDIC | Federal Deposit Insurance Corporation | |
Fortis | Fortis Advisors LLC, representative of the Kinnate CVR holders under the Kinnate CVR Agreement | |
GAAP | Generally accepted accounting principles | |
G&A | General and administrative | |
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 | |
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, terminated on June 3, 2024 | |
IRA | Inflation Reduction Act | |
IP | Intellectual Property | |
IPR&D | In-Process Research and Development | |
IXINITY® | coagulation factor IX (recombinant) | |
Janssen | Janssen Biotech, Inc. | |
Kinnate | Kinnate Biopharma Inc. | |
Kinnate CVR Agreement | The Contingent Value Rights Agreement by and between the Company, Broadridge, and Fortis dated April 3, 2024 | |
Kinnate Merger Agreement | The Agreement and Plan of Merger by and among the Company, XRA, and Kinnate dated February 16, 2024 | |
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 |
4
LadRx RPA | The Company’s Royalty Purchase Agreement with LadRx dated June 21, 2023 and subsequently amended on June 3, 2024 | |
Medexus | Medexus Pharmaceuticals, Inc. | |
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) | |
MIPLYFFA™ | arimoclomol | |
NDA | New Drug Application | |
Novartis | Novartis Pharma AG, Novartis International Pharmaceutical Ltd., Novartis Institutes for Biomedical Research, Inc. and/or Novartis Vaccines and Diagnostics, Inc. | |
ObsEva | ObsEva SA | |
ObsEva IP Acquisition Agreement | Company's IP Acquisition Agreement with ObsEva dated November 21, 2022 | |
OJEMDA™ | tovorafenib | |
Organon | Organon International GmbH | |
OVAPRENE® | An investigational hormone-free monthly intravaginal contraceptive | |
Palo | Palobiofarma, S.L. | |
Palo RPA | The Company's Royalty Purchase Agreement with Palo dated September 26, 2019 | |
Pfizer | Pfizer, Inc. | |
Pierre Fabre | Pierre Fabre Médicament, SAS | |
PSU | Performance stock unit | |
R&D | Research and development | |
Regeneron | Regeneron Pharmaceuticals, Inc. | |
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 | |
RSU | Restricted stock unit | |
SEC | U.S. Securities and Exchange Commission | |
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 | |
Series X Preferred Stock | The Series X Convertible Preferred Stock | |
Sildenafil Cream | Sildenafil Cream, 3.6% | |
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 | |
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 | |
Talphera | Talphera, Inc. (formerly AcelRx Pharmaceuticals, Inc. or “AcelRx”) | |
Talphera APA | Asset Purchase Agreement dated March 12, 2023 between AcelRx (now Talphera) and Vertical related to the sale of DSUVIA from Talphera to Vertical |
5
Talphera CPPA | The Company’s Payment Interest Purchase Agreement with Talphera dated January 11, 2024, referred to herein as “Talphera Commercial Payment Purchase Agreement” or “Talphera CPPA” | |
Talphera Marketing Agreement | Marketing Agreement dated April 3, 2023 between AcelRx (now Talphera) and Vertical | |
TGFβ | transforming growth factor beta | |
U.S. | United States | |
VABYSMO® | faricimab-svoa | |
Vertical | Vertical Pharmaceuticals, LLC, a wholly-owned subsidiary of Alora | |
Viracta | Viracta Therapeutics, Inc. | |
Viracta RPA | The Company's Royalty Purchase Agreement with Viracta dated March 22, 2021, as amended March 4, 2024 | |
XACIATO™ | Clindamycin phosphate vaginal gel 2% | |
XOMA | XOMA Royalty Corporation (formerly, XOMA Corporation), a Delaware corporation, including subsidiaries | |
XRA | XRA 1 Corp. a wholly-owned subsidiary of the Company | |
XRL | XRL 1 LLC, a wholly-owned subsidiary of the Company | |
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) |
6
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
XOMA ROYALTY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
September 30, | December 31, | |||||
2024 | 2023(1) | |||||
ASSETS | (unaudited) | |||||
Current assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Short-term restricted cash | | | ||||
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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Long-term restricted cash | |
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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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Exarafenib milestone asset (Note 4) |
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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 | | | ||||
Current portion of long-term debt | | | ||||
Total current liabilities |
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Unearned revenue recognized under units-of-revenue method – long-term |
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Exarafenib milestone contingent consideration (Note 4) | | — | ||||
Long-term operating lease liabilities | | | ||||
Long-term debt | | | ||||
Total liabilities |
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Commitments and Contingencies (Note 10) | ||||||
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 other comprehensive income | | — | ||||
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.
(1)The condensed consolidated balance sheet as of December 31, 2023 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, 2023.
7
XOMA ROYALTY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2024 |
| 2023 | 2024 |
| 2023 | |||||||
Income and revenues: | ||||||||||||
Income from purchased receivables | $ | | $ | — | $ | | $ | — | ||||
Revenue from contracts with customers | | | | | ||||||||
Revenue recognized under units-of-revenue method |
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Total income and 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 |
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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): |
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Gain on the acquisition of Kinnate |
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Change in fair value of embedded derivative related to RPA | — | — | | — | ||||||||
Interest expense |
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Other income (expense), net |
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Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss attributable to common stockholders (Note 3): | ||||||||||||
Basic | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per share attributable to common stockholders: | ||||||||||||
Basic | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Weighted-average shares used in computing net loss per share attributable to common stockholders: | ||||||||||||
Basic | | | | | ||||||||
Diluted | | | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
XOMA ROYALTY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
(in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2024 |
| 2023 | 2024 |
| 2023 | |||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net unrealized gain on available-for-sale debt securities | | — | | — | ||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
The accompanying notes are an integral part of these condensed consolidated financial statements.
9
XOMA ROYALTY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited)
(in thousands)
Series A | Series B | Convertible | Additional | Accumulated | Total | ||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Paid-In | Other Comprehensive | Accumulated | Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income | Deficit | Equity | ||||||||||||||||||||
Balance, December 31, 2023 | | $ | | | $ | — | | $ | — |
| | $ | | $ | | $ | — | $ | ( | $ | | ||||||||||
Exercise of stock options | — |
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Issuance of common stock related to 401(k) contribution | — |
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Stock-based compensation expense | — |
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Preferred stock dividends | — |
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Repurchase of common stock | — |
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Net loss | — |
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Balance, March 31, 2024 | | $ | | | $ | — | | $ | — |
| | $ | | $ | | $ | — | $ | ( | $ | | ||||||||||
Exercise of stock options | — |
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Issuance of common stock related to ESPP | — |
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Stock-based compensation expense | — |
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Preferred stock dividends | — |
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| — | — | — | — | — | ( | — | — | ( | |||||||||||||||||
Net income | — |
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| — | — | — | — | — | — | — | | | |||||||||||||||||
Balance, June 30, 2024 | | $ | | | $ | — | | $ | — |
| | $ | | $ | | $ | — | $ | ( | $ | | ||||||||||
Exercise of stock options | — | — | — | — | — | — | | | | — | — | | |||||||||||||||||||
Stock-based compensation expense | — |
| — | — |
| — | — | — | — | — | | — | — | | |||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||
Net unrealized gain on available-for-sale debt securities | — | — | — | — | — | — | — | — | — | | — | | |||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||
Balance, September 30, 2024 | | $ | | | $ | — | | $ | — |
| | $ | | $ | | $ | | $ | ( | $ | |
10