Quarterly report pursuant to Section 13 or 15(d)

Description of Business

Description of Business
9 Months Ended
Sep. 30, 2016
Description Of Business [Abstract]  
Description of Business

1. Description of Business

XOMA Corporation (“XOMA” or the “Company”), a Delaware corporation, is a development stage biotechnology company with a portfolio of therapeutic antibodies 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.

XOMA has licensed assets and technologies that it does not intend to commercialize.  The Company has existing agreements in place that may generate revenue to fund operations through upfront payments, development milestones and/or royalties.

Liquidity and Management Plans

The Company has incurred operating losses since its inception and had an accumulated deficit of $1.2 billion at September 30, 2016. Management expects operating losses and negative cash flows to continue for the foreseeable future. As of September 30, 2016, the Company had $20.6 million in cash and cash equivalents, 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 September 30, 2016, without the receipt of additional funds from license and collaboration agreements or additional equity or debt financing, the Company will be unable to fund its operations through the next 12 months. Based on the Company’s current projections, the Company expects its current cash and cash equivalents will be sufficient to fund its operations into the first quarter of 2017. The Company may not be able to obtain sufficient additional funding through monetizing certain of its existing assets, entering into new license and collaboration agreements, issuing additional equity or debt instruments or any other means, and if it is able to do so, they may not be on satisfactory terms. Based on discussions to date, equity financings are primarily dependent on positive clinical data and the Company may not be able to generate adequate favorable clinical data to obtain funding. Consistent with the actions the Company has taken in the past, it will take steps intended to enable the continued operation of the business which may include out-licensing or sale of 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 may have a material 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.

Reverse Stock Split

In October 2016, the Company’s stockholders voted at a special meeting of stock holders to approve a series of alternate amendments to the Company’s Amended Certificate of Incorporation to effect a reverse stock split of the Company’s issued and outstanding common stock. The Company’s Board of Directors then approved a specific ratio of 1-for-20. The financial statements have been retroactively adjusted to reflect the reverse stock split for all periods presented. See Note 12 for further discussion of the reverse stock split.