Quarterly report pursuant to Section 13 or 15(d)

Description of Business

Description of Business
6 Months Ended
Jun. 30, 2016
Description Of Business [Abstract]  
Description of Business

1. Description of Business

XOMA Corporation (“XOMA” or the “Company”), a Delaware corporation, combines a portfolio of five product candidates to treat diseases within the endocrine therapeutic area. The Company’s clinical development portfolio includes candidates from the XMet platform, which consists of several Selective Insulin Receptor Modulator (“SIRM”) antibodies that could offer new approaches in the treatment of metabolic diseases.  

The lead compound from the XMet platform, XOMA 358, is a fully human monoclonal negative allosteric modulating antibody that binds to insulin receptors and attenuates insulin action.  XOMA is investigating this compound as a novel treatment for non-drug-induced, endogenous hyperinsulinemic hypoglycemia (low blood glucose caused by excessive insulin produced by the body). XOMA 358 is currently in Phase 2 proof-of-concept (“POC”) studies for congenital hyperinsulinism and patients who experience hyperinsulinism following bariatric surgery. The second compound from the XMet platform is XOMA 129, a fragment derived from the XOMA 358 antibody, which could be a treatment to reverse severe acute hypoglycemia, a severe condition experienced by the insulin-dependent diabetic population. XOMA’s endocrine portfolio also includes XOMA 213, a Phase 2 product candidate targeting the prolactin receptor, as well as other preclinical or research stage programs.  The Company’s products are presently in various stages of development and are subject to regulatory approval before they can be commercially launched. XOMA intends to commercialize its endocrine antibodies itself or through collaboration agreements.

The Company announced the closure of its gevokizumab Phase 3 study in pyoderma gangrenosum in March 2016, and on March 25, 2016, the termination of XOMA’s collaboration agreement with Les Laboratories Servier (“Servier”) became effective (see Note 4).

Liquidity and Management Plans

The Company has incurred operating losses since its inception and had an accumulated deficit of $1.2 billion at June 30, 2016. Management expects operating losses and negative cash flows to continue for the foreseeable future. As of June 30, 2016, the Company had $34.3 million in cash, cash equivalents and marketable securities, which is available to fund future operations. Taking into account the repayment of its outstanding debt classified within current liabilities on the Company’s condensed consolidated balance sheet as of June 30, 2016, the Company anticipates that it will be required to obtain funds from license and collaboration agreements or seek additional equity or debt financing to fund its operations through the next 12 months. It is unclear if any such transactions will occur, and if they will be on satisfactory terms. If the Company is unable to achieve the level of funds from licensing and collaboration agreements or obtain external financing in the second half of 2016, as contemplated in its operating plan, the Company has plans to implement certain cost cutting actions to reduce its working capital requirements commencing in the fourth quarter of 2016.  Consistent with the actions the Company has taken in the past, it will take the necessary and appropriate steps to enable the continued operation of the business and preservation of the value of its assets for the next 12 months, including taking actions such as the out-licensing or sale of non-strategic assets, reducing personnel-related costs, curtailing the Company’s development activities and reducing other expenditures that are within the Company’s control. These reductions in expenditures, if implemented, may have an adverse impact on the Company’s ability to achieve certain of its planned objectives.

The Company’s ability to raise additional capital in the equity and debt markets, should the Company choose to do so, is dependent on a number of factors, including, but not limited to, the market demand for the Company’s common stock or debt, which itself is subject to a number of pharmaceutical development and business risks and uncertainties, as well as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are favorable to the Company.