XOMA Reports 2009 First Quarter Financial Results
BERKELEY, Calif., May 7, 2009 (GLOBE NEWSWIRE) -- XOMA Ltd. (Nasdaq:XOMA), a leader in the discovery and development of therapeutic antibodies, today announced its financial results for the quarter ended March 31, 2009.
"XOMA has made excellent progress in advancing our lead proprietary product candidate, XOMA 052, achieving a significant milestone with the completion of enrollment in our Phase 1 trials," said Steven Engle, Chairman and Chief Executive Officer of XOMA. "We generated cash by signing a $29 million collaboration agreement with Takeda while taking actions to reduce operating costs through a restructuring and other expense reductions.
"Our priorities for the remainder of 2009 are to enter into a partnership for the worldwide development and commercialization of XOMA 052; provide preliminary top line results from the XOMA 052 Phase 1 trials; present our results at major meetings including the American Diabetes Association Scientific Sessions in June; and pursue additional revenue-generating licenses and alliances that utilize our broad antibody technologies and expertise," said Mr. Engle.
Recent Highlights and Developments
* Completed enrollment in XOMA 052 Phase 1 program in Type 2
diabetes: Nearly 100 Type 2 diabetes patients were enrolled
in the Phase 1 trials, which were designed to evaluate a wide
range of dose levels, single and multiple dose regimens, and
intravenous and subcutaneous routes of administration. Interim
results from the single dose intravenous trials, presented in
September 2008, demonstrated that XOMA 052 was well-tolerated
across all doses and demonstrated biological activity, including
reduced levels of glycosylated hemoglobin, increased insulin
production and decreased levels of C-reactive protein (CRP), a
marker of cardiovascular risk. These interim results support the
potential for XOMA 052 as a novel anti-inflammatory approach to
diabetes treatment and XOMA's plan to initiate a Phase 2 program
in the third quarter of 2009.
* Expanded Takeda collaboration, which provided XOMA with a $29
million fee and potential future milestones and royalties: In
February 2009, Takeda Pharmaceutical Company Limited (Takeda) and
XOMA expanded an existing collaboration to provide Takeda with
access to multiple antibody technologies, including a suite of
integrated information and data management systems. XOMA has
paid $5.8 million of an estimated $7.5 million for taxes and
other costs related to the expanded collaboration, resulting in
net cash proceeds received in February 2009 of $23.2 million.
* Reduced operating costs: XOMA has undertaken multiple cost
reduction measures that have allowed the company to focus
research and development spending on the most promising
proprietary development programs, including XOMA 052 in Type 2
diabetes. The company expects an annualized reduction of $27
million in cash expenditures when reductions are completed in
the current quarter.
First Quarter 2009 Financial Results
XOMA had net income of $6.2 million, or $0.04 per share, for the quarter ended March 31, 2009, compared with a net loss of $14.2 million, or $0.11 per share, for the first quarter of 2008. The changes in revenue and net income (loss) were primarily due to the completion in February 2009 of a $29.0 million collaboration expansion with Takeda.
XOMA's total revenues in the first quarter of 2009 were $39.7 million, compared with $12.1 million in the 2008 first quarter. Net license and collaborative fee revenues were $27.7 million in the first quarter of 2009, compared with $25,000 in the same period of 2008. This increase is primarily related to the revenue recognized from Takeda for expansion of the companies' collaboration. Contract revenues for the first quarter of 2009 totaled $7.4 million compared with $7.1 million for the same period of 2008. Royalties were $4.6 million for first quarter of 2009 compared with $4.9 million for the same period in 2008. The decrease in royalty revenue was due to decreased worldwide sales of RAPTIVA(r).
XOMA is entitled to royalties based on worldwide sales of LUCENTIS(r), RAPTIVA(r) and CIMZIA(r). According to Genentech, Inc. (now a wholly owned member of the Roche Group) and Novartis AG, who are responsible for U.S. and international sales of LUCENTIS(r), respectively, worldwide sales in the first quarter of 2009 were approximately $473 million compared with approximately $393 million in the 2008 first quarter.
According to Genentech/Roche and Merck Serono SA, who are responsible for U.S. and international sales of RAPTIVA(r), respectively, worldwide sales in the first quarter of 2009 were approximately $41 million compared with approximately $58 million in the 2008 first quarter. Due to the announced cessation of RAPTIVA(r) sales, XOMA does not anticipate receiving RAPTIVA(r) royalty revenue after the second quarter of 2009.
CIMZIA(r) is marketed in the U.S. and Switzerland by UCB SA for the treatment of moderate to severe Crohn's disease in adult patients who have not responded to conventional therapy. Royalties on sales in the first quarter of 2009 were not material. UCB has applied for regulatory approval to market CIMZIA(r) for the treatment of rheumatoid arthritis in the U.S and Europe.
XOMA's research and development expense for the first quarter of 2009 was $16.5 million, compared with $19.2 million in the same period 2008. This decrease is primarily related to the company's focus on the development of XOMA 052 in Type 2 diabetes and deferral of certain research activities. Selling, general and administrative expense for the first quarter of 2009 was $6.1 million compared with $5.9 million for the same period last year.
In January 2009, XOMA announced a workforce reduction of approximately 42%, or 144 employees, primarily in manufacturing and related support positions. In the first quarter of 2009, XOMA recorded a one-time charge of $3.3 million related to severance costs for the restructuring.
Interest expense for the first quarter of 2009 was $1.8 million compared with $1.5 million for the same period of 2008. This increase is due to a higher principal balance in 2009 associated with the loan from Goldman Sachs.
Debt Obligations
At March 31, 2009, XOMA had an outstanding principal balance of $50.4 million on a 5-year term loan from Goldman Sachs from a refinancing completed in May 2008. The principal amount of this loan was reduced by $8.4 million to $42.0 million in April 2009 as a result of a payment made from XOMA's restricted cash. The company also has $12.9 million of long-term debt due to Novartis.
As previously disclosed, XOMA is in discussions with its lenders to restructure the terms of its loan from Goldman Sachs Specialty Lending Holdings, Inc. (Goldman Sachs), which is secured by the company's royalty revenue, including revenue from sales of LUCENTIS(r), RAPTIVA(r), and CIMZIA(r). In the first quarter of 2009, RAPTIVA(r) was recommended for withdrawal by regulatory authorities in ex-U.S. markets. In April 2009, Genentech/Roche announced a phased voluntary withdrawal of RAPTIVA(r) from the U.S. market. As a voluntary action not mandated by the FDA, the U.S. market withdrawal was particularly unexpected. As a result of RAPTIVA(r) sales levels in the