Quarterly report pursuant to Section 13 or 15(d)

Description of Business

Description of Business
9 Months Ended
Sep. 30, 2017
Description Of Business [Abstract]  
Description of Business

1. Description of Business

XOMA Corporation (referred to as “XOMA” or the “Company”), a Delaware corporation, has a long history of discovering and developing innovative therapeutics derived from its unique platform of antibody technologies. The Company has historically advanced product candidates into the earlier stages of development and then sought to license product candidates to licensees who assume the responsibilities of later stage development, approval and commercialization. In 2016, XOMA focused its research and development efforts to advancing a portfolio of product candidates that have the potential to treat a variety of endocrine diseases, including the advancement of X358 for the treatment of congenital hyperinsulinism and hypoglycemia in hyperinsulinemic patients following bariatric surgery. In addition, XOMA has historically licensed antibody technologies on a non-exclusive basis to other companies who desire to access the antibody platform for their own discovery efforts. In March 2017, the Company revised its strategy to instead focus on building out its portfolio of programs that are fully funded by other biotechnology and pharmaceutical companies and for which milestone and royalty payments are potentially due.  The result is a focus by the Company on out-licensing its un-partnered product candidates to partners who will continue the development and commercialization of these assets. The Company expects that a significant portion of any future revenue will be based on payments it may receive from its licensees. In addition, the Company intends to acquire potential milestone and royalty revenue streams on additional assets.  

Liquidity and Management Plans

The Company has incurred operating losses since its inception resulting in an accumulated deficit of $1.2 billion, it has working capital of $34.9 million and $14.3 million in total outstanding debt at September 30, 2017. As of June 30, 2017, there was a substantial doubt about the Company’s ability to continue as a going concern since it did not have sufficient financial resources available to fund its operations and make scheduled loan payments beyond August 2018. The Company alleviated this concern in August 2017, when it entered into license agreements with Novartis Pharma AG (“Novartis AG”) in which the Company received total cash proceeds of $25.7 million. Concurrently, Novartis AG settled the Company’s outstanding debt with Les Laboratories Servier (“Servier Loan”) and extended the maturity date of the Company’s debt to Novartis Institutes for BioMedical Research, Inc. (“NIBR”) from September 30, 2020 to September 30, 2022 (see Notes 4 and 8).   In conjunction with the license agreements, the Company and Novartis AG also entered into a common stock purchase agreement in which the Company received total cash proceeds of $5.0 million (see Note 12). As of September 30, 2017, the Company had $47.7 million in cash and cash equivalents, which is available to fund its operations through the next 12 months from the date the condensed consolidated financial statements are issued.

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, 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.