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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Bermuda
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52-2154066
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
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2910 Seventh Street, Berkeley,
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| California 94710 | (510) 204-7200 | |
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(Address of principal executive offices,
including zip code)
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(Telephone Number)
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Class
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Outstanding at November 7, 2011
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Common Shares, U.S. $0.0075 par value
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34,246,279
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Page
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PART I FINANCIAL INFORMATION
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Item 1.
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1
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2
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3
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4
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Item 2.
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15
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Item 3.
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24
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Item 4.
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25
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PART II OTHER INFORMATION
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Item 1.
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25
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Item 1A.
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26
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Item 2.
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44
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Item 3.
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44
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Item 4.
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44
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Item 5.
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44
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Item 6.
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45
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46
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September 30,
2011
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December 31,
2
010
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|||||||
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(unaudited)
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(Note 1)
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|||||||
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ASSETS
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||||||||
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Current assets:
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||||||||
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Cash and cash equivalents
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$ | 45,707 | $ | 37,304 | ||||
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Trade and other receivables, net
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14,900 | 20,864 | ||||||
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Prepaid expenses and other current assets
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1,341 | 712 | ||||||
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Total current assets
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61,948 | 58,880 | ||||||
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Property and equipment, net
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13,357 | 14,869 | ||||||
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Other assets
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1,880 | 503 | ||||||
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Total assets
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$ | 77,185 | $ | 74,252 | ||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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||||||||
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Current liabilities:
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||||||||
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Accounts payable
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$ | 3,083 | $ | 3,581 | ||||
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Accrued and other liabilities
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10,434 | 10,658 | ||||||
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Deferred revenue
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6,006 | 17,044 | ||||||
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Warrant liabilities
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896 | 4,245 | ||||||
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Total current liabilities
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20,419 | 35,528 | ||||||
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Deferred revenue – long-term
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8,016 | 1,086 | ||||||
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Interest bearing obligations – long-term
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26,649 | 13,694 | ||||||
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Other long-term liabilities
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440 | 353 | ||||||
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Total liabilities
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55,524 | 50,661 | ||||||
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Shareholders’ equity:
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||||||||
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Preference shares, $0.05 par value, 1,000,000 shares authorized
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||||||||
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Series B, 8,000 designated, 0 and 2,959 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively
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- | 1 | ||||||
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Common shares, $0.0075 par value, 92,666,666 shares authorized, 33,412,263 and 28,491,318 shares outstanding at September 30, 2011 and December 31, 2010, respectively
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250 | 214 | ||||||
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Additional paid-in capital
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895,729 | 876,686 | ||||||
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Accumulated deficit
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(874,318 | ) | (853,310 | ) | ||||
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Total shareholders’ equity
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21,661 | 23,591 | ||||||
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Total liabilities and shareholders’ equity
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$ | 77,185 | $ | 74,252 | ||||
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Three months ended September 30,
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Nine months ended September 30,
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|||||||||||||||
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2011
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2010
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2011
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2010
|
|||||||||||||
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Revenues:
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||||||||||||||||
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License and collaborative fees
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$ | 4,859 | $ | 1,410 | $ | 16,725 | $ | 1,749 | ||||||||
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Contract and other revenue
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11,349 | 5,733 | 31,477 | 18,025 | ||||||||||||
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Royalties
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21 | 3,754 | 147 | 4,267 | ||||||||||||
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Total revenues
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16,229 | 10,897 | 48,349 | 24,041 | ||||||||||||
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Operating expenses:
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||||||||||||||||
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Research and development
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15,851 | 21,345 | 51,479 | 58,278 | ||||||||||||
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Selling, general and administrative
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7,296 | 6,197 | 18,779 | 16,776 | ||||||||||||
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Total operating expenses
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23,147 | 27,542 | 70,258 | 75,054 | ||||||||||||
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Loss from operations
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(6,918 | ) | (16,645 | ) | (21,909 | ) | (51,013 | ) | ||||||||
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Other income (expense):
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||||||||||||||||
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Interest expense
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(652 | ) | (104 | ) | (1,818 | ) | (281 | ) | ||||||||
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Other income
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1,027 | 3,117 | 2,734 | 313 | ||||||||||||
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Net loss before taxes
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(6,543 | ) | (13,632 | ) | (20,993 | ) | (50,981 | ) | ||||||||
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Provision for income tax expense
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- | (1 | ) | (15 | ) | (17 | ) | |||||||||
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Net loss
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$ | (6,543 | ) | $ | (13,633 | ) | $ | (21,008 | ) | $ | (50,998 | ) | ||||
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Basic and diluted net loss per common share
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$ | (0.20 | ) | $ | (0.69 | ) | $ | (0.69 | ) | $ | (2.87 | ) | ||||
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Shares used in computing basic and diluted net loss per common share
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32,761 | 19,802 | 30,623 | 17,742 | ||||||||||||
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Nine Months Ended September 30,
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||||||||
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2011
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2010
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|||||||
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Cash flows from operating activities:
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Net loss
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$ | (21,008 | ) | $ | (50,998 | ) | ||
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Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation
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4,052 | 4,349 | ||||||
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Common shares contribution to 401(k)
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1,046 | 905 | ||||||
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Share-based compensation expense
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5,598 | 3,743 | ||||||
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Accrued interest on interest bearing obligations
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762 | 260 | ||||||
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Revaluation of warrant liabilities
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(3,349 | ) | (4,811 | ) | ||||
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Warrant modification expense
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- | 4,500 | ||||||
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Amortization of discount on long-term debt
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1,019 | - | ||||||
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Unrealized loss on foreign currency exchange
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1,136 | - | ||||||
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Unrealized gain on foreign exchange options
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(157 | ) | - | |||||
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Other non-cash adjustments
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47 | 19 | ||||||
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Changes in assets and liabilities affecting cash:
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||||||||
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Trade and other receivables, net
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5,964 | (713 | ) | |||||
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Prepaid expenses and other assets
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(1,850 | ) | (615 | ) | ||||
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Accounts payable and accrued liabilities
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(1,305 | ) | 2,217 | |||||
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Deferred revenue
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(13,008 | ) | (1,510 | ) | ||||
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Other liabilities
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78 | (256 | ) | |||||
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Net cash used in operating activities
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(20,975 | ) | (42,910 | ) | ||||
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Cash flows from investing activities:
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Purchase of property and equipment
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(2,586 | ) | (277 | ) | ||||
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Net cash used in investing activities
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(2,586 | ) | (277 | ) | ||||
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Cash flows from financing activities:
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||||||||
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Proceeds from issuance of long-term debt
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20,102 | - | ||||||
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Proceeds from issuance of common shares
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12,435 | 40,638 | ||||||
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Payment for modification of warrants
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- | (4,500 | ) | |||||
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Net cash provided by financing activities
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32,537 | 36,138 | ||||||
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Effect of exchange rate changes on cash
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(573 | ) | - | |||||
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Net increase (decrease) in cash and cash equivalents
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8,976 | (7,049 | ) | |||||
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Cash and cash equivalents at the beginning of the period
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37,304 | 23,909 | ||||||
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Cash and cash equivalents at the end of the period
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$ | 45,707 | $ | 16,860 | ||||
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Supplemental Cash Flow Information:
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||||||||
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Cash paid for income taxes
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$ | 15 | $ | 16 | ||||
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Non-cash investing and financing activities:
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Discount on long-term debt
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$ | (8,899 | ) | $ | - | |||
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Issuance and extinguishment of warrant liabilities
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$ | - | $ | 1,767 | ||||
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Interest added to principal balance on Novartis note
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$ | 170 | $ | 164 | ||||
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Interest added to principal balance on Servier loan
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$ | 330 | $ | - | ||||
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Three Months Ended September 30,
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Nine Months Ended September 30,
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|||||||||||||||
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2011
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2010
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2011
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2010
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|||||||||||||
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Options for common shares
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4,036 | 2,332 | 3,837 | 2,138 | ||||||||||||
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Convertible preference shares
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- | 254 | 90 | 254 | ||||||||||||
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Warrants for common shares
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1,608 | 1,608 | 1,608 | 1,677 | ||||||||||||
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Total
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5,644 | 4,194 | 5,535 | 4,069 | ||||||||||||
| September 30, 2011 | ||||||||||||||||
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Cost
Basis
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Unrealized
Gains
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Unrealized
Losses
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Estimated Fair
Value
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|||||||||||||
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Cash
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$ | 15,062 | $ | - | $ | - | $ | 15,062 | ||||||||
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Cash equivalents
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30,645 | - | - | 30,645 | ||||||||||||
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Total cash and cash equivalents
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$ | 45,707 | $ | - | $ | - | $ | 45,707 | ||||||||
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December 31, 2010
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||||||||||||||||
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Cost
Basis
|
Unrealized
Gains
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Unrealized
Losses
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Estimated
Fair Value
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|||||||||||||
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Cash
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$ | 29,536 | $ | - | $ | - | $ | 29,536 | ||||||||
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Cash equivalents
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7,768 | - | - | 7,768 | ||||||||||||
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Total cash and cash equivalents
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$ | 37,304 | $ | - | $ | - | $ | 37,304 | ||||||||
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September 30,
2011
|
December 31,
2010
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|||||||
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Trade receivables, net
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$ | 14,107 | $ | 20,309 | ||||
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Other receivables
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793 | 555 | ||||||
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Total
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$ | 14,900 | $ | 20,864 | ||||
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September 30,
2011
|
December 31,
2010
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|||||||
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Furniture and equipment
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$ | 33,483 | $ | 31,700 | ||||
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Buildings, leasehold and building improvements
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21,490 | 21,463 | ||||||
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Construction-in-progress
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420 | 203 | ||||||
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Land
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310 | 310 | ||||||
| 55,703 | 53,676 | |||||||
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Less: Accumulated depreciation and amortization
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(42,346 | ) | (38,807 | ) | ||||
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Property and equipment, net
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$ | 13,357 | $ | 14,869 | ||||
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September 30,
2011
|
December 31,
2010
|
|||||||
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Accrued payroll and other benefits
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$ | 2,906 | $ | 2,752 | ||||
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Accrued management incentive compensation
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2,864 | 4,982 | ||||||
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Accrued clinical trial costs
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1,349 | 1,020 | ||||||
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Accrued severance payments
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1,076 | - | ||||||
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Accrued professional fees
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816 | 1,020 | ||||||
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Other
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1,423 | 884 | ||||||
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Total
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$ | 10,434 | $ | 10,658 | ||||
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·
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Level 1: Quoted prices in active markets for identical assets or liabilities;
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·
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Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by readily observable market data for substantially the full term of the assets or liabilities; or
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|
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·
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Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
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|
Fair Value Measurements at September 30, 2011 Using
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||||||||||||||||
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Quoted Prices in
Active Markets
for Identical
Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
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(Level 1)
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(Level 2)
|
(Level 3)
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Total
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|||||||||||||
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Assets:
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||||||||||||||||
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Money market funds
(1)
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$ | 30,645 | $ | - | $ | - | $ | 30,645 | ||||||||
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Foreign exchange options
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- | 1,371 | - | 1,371 | ||||||||||||
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Total
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$ | 30,645 | $ | 1,371 | $ | - | $ | 32,016 | ||||||||
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Liabilities:
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Warrant liabilities
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$ | - | $ | - | $ | 896 | $ | 896 | ||||||||
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Fair Value Measurements at December 31, 2010 Using
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||||||||||||||||
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Quoted Prices in
Active Markets
for Identical
Assets
|
Significant
Other
Observable
Inputs
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Significant
Unobservable
I
nputs
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||||||||||||||
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(Level 1)
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(Level 2)
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(Level 3)
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Total
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Assets:
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Repurchase agreements
(1)
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$ | 1,428 | $ | - | $ | - | $ | 1,428 | ||||||||
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Money market funds
(1)
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6,340 | - | - | 6,340 | ||||||||||||
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Total
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$ | 7,768 | $ | - | $ | - | $ | 7,768 | ||||||||
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Liabilities:
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||||||||||||||||
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Warrant liabilities
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$ | - | $ | - | $ | 4,245 | $ | 4,245 | ||||||||
|
September 30,
2011
|
December 31,
2010
|
|||||||
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Expected volatility
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105.4 - 106.8 | % | 93.5 - 94.9 | % | ||||
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Risk-free interest rate
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0.4 | % | 2.0 | % | ||||
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Expected term
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3.2 - 3.4 years
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3.9 - 4.1 years
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||||||
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Warrant
Liabilities at
September 30,
2011
|
||||
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Balance at December 31, 2010
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$ | 4,245 | ||
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Net decrease in fair value of warrant liabilities on revaluation
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(3,349 | ) | ||
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Balance at September 30, 2011
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$ | 896 | ||
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Three Months Ended September 30,
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Nine Months Ended September 30,
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|||||||||||||||
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2011
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2010
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2011
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2010
|
|||||||||||||
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Interest expense
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||||||||||||||||
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Novartis note
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$ | 85 | $ | 95 | $ | 254 | $ | 260 | ||||||||
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Servier loan
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564 | - | 1,544 | - | ||||||||||||
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Other
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3 | 9 | 20 | 21 | ||||||||||||
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Total interest expense
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$ | 652 | $ | 104 | $ | 1,818 | $ | 281 | ||||||||
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Three Months Ended September 30,
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Nine Months Ended September 30,
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|||||||||||||||
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2011
|
2010
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2011
|
2010
|
|||||||||||||
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Research and development
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$ | 458 | $ | 742 | $ | 2,404 | $ | 1,829 | ||||||||
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Selling, general and administrative
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1,084 | 920 | 3,194 | 1,914 | ||||||||||||
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Total share-based compensation expense
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$ | 1,542 | $ | 1,662 | $ | 5,598 | $ | 3,743 | ||||||||
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Three Months Ended September 30,
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Nine Months Ended September 30,
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|||||||||||||||
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2011
|
2010
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2011
|
2010
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|||||||||||||
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Dividend yield
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0 | % | 0 | % | 0 | % | 0 | % | ||||||||
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Expected volatility
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89 | % | 79 | % | 87 | % | 79 | % | ||||||||
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Risk-free interest rate
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0.96 | % | 1.27 | % | 1.86 | % | 1.67 | % | ||||||||
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Expected term
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5.6 years
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5.6 years
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5.3 years
|
5.3 years
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||||||||||||
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Options
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contractual
Life (in years)
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||||||||||
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Options outstanding at December 31, 2010
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2,331,450 | $ | 25.36 | 7.71 | $ | 99 | ||||||||||
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Granted
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1,811,840 | 5.23 | ||||||||||||||
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Forfeited, expired or cancelled
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(134,204 | ) | 37.35 | |||||||||||||
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Options outstanding at September 30, 2011
|
4,009,086 | $ | 15.86 | 7.90 | $ | - | ||||||||||
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Options exercisable at September 30, 2011
|
2,500,259 | $ | 21.58 | 7.27 | $ | - | ||||||||||
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·
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In December of 2010, we entered into an agreement with Servier to jointly develop and commercialize gevokizumab in multiple indications, which provided for a non-refundable upfront payment of $15.0 million that we received in January of 2011. In connection with this agreement, Servier will fully fund the first $50.0 million of future gevokizumab global clinical development and chemistry and manufacturing controls (“CMC”) expenses, and 50% of further expenses for the Behcet’s uveitis indication. Servier has agreed to include the NIU Phase 3 trial under the terms of the collaboration agreement for Behcet’s uveitis discussed above so long as input from the European Medicines Agency enables the results to be useful for the European commercialization of gevokizumab. Based upon the timing of anticipated regulatory interactions, we anticipate initiating the NIU Phase 3 trial in the second quarter of 2012.
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·
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In January of 2011, we received the full €15.0 million advance allowed under our loan agreement with Servier dated December 30, 2010, converting to U.S. dollar proceeds of approximately $19.5 million.
|
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·
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In March of 2011, we announced that our Phase 2b trial of gevokizumab in Type 2 diabetes in 421 patients did not achieve the primary endpoint of reduction in hemoglobin A1c (“HbA1c”) after six monthly treatments with gevokizumab compared to placebo. Significant decreases were observed in C-reactive protein (“CRP”), a biomarker for the risk of heart attack, stroke and other cardiovascular diseases, in all dose groups versus placebo. In addition, significant improvements in high-density lipoprotein (“HDL”), or “good” cholesterol, were observed in two of four gevokizumab dose groups versus placebo. Gevokizumab was well-tolerated in this trial, with no serious drug-related adverse events and a safety profile consistent with previous trials.
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·
|
In June of 2011, we announced top line trial results from our six-month Phase 2a trial in 74 patients where gevokizumab was shown to be well-tolerated with no significant differences in adverse events between gevokizumab and placebo. Evidence of biological activity was observed including a reduction in CRP. There were no differences in glycemic control between the drug and placebo groups as measured by HbA1c levels.
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·
|
In May of 2011, the National Institute of Allergy and Infectious Diseases (“NIAID”), part of the National Institutes of Health (“NIH”), informed us that it is initiating a Phase 1 trial of XOMA 3AB, a novel formulation of three antibodies designed to prevent and treat botulism poisoning. This double-blind, dose-escalation study in approximately 24 healthy volunteers is designed to assess the safety and tolerability, and determine the pharmacokinetic profile, of XOMA 3AB.
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·
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In October of 2011, we announced that NIAID had awarded us a new contract under Contract No. HHSN272201100031C for up to $28.0 million over 5 years to develop broad-spectrum antitoxins for the treatment of human botulism poisoning.
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|
|
·
|
In June of 2011, we announced our discovery of two new classes of fully-human monoclonal antibodies, XMetA and XMetS, which activate or sensitize the insulin receptor in vivo, each representing a distinct new therapeutic approach to the treatment of patients with diabetes. Studies of XMetA demonstrated that it reduced fasting blood glucose levels and improved glucose tolerance in a mouse model of diabetes. After six weeks of treatment, there was a statistically significant reduction in HbA1c levels, a standard measure of average blood glucose levels over time, in mice treated with XMetA compared to a control group, and there was a statistically significant reduction in elevated non-HDL cholesterol levels. Studies of XMetS showed enhanced insulin sensitivity and statistically significant improvements in fasting blood glucose levels and glucose tolerance in mice treated with XMetS as compared to a control group, and there was a statistically significant reduction in elevated non-HDL cholesterol levels. These data were presented at the American Diabetes Association’s 71
st
Scientific Sessions.
|
|
|
·
|
On August 31, 2011, we announced that Steven B. Engle resigned as Chief Executive Officer, President and Chairman of the Board of the Company. The Company’s Board of Directors has appointed John Varian, a current Board member, as Interim Chief Executive Officer and W. Denman Van Ness, the Company’s Lead Independent Director, as Chairman of the Board. The Board has initiated a search for a permanent Chief Executive Officer and has formed a committee to carry out the search.
|
|
|
·
|
In the first nine months of 2011, we sold 821,386 common shares through Wm Smith & Co. (“Wm Smith”) and McNicoll, Lewis & Vlak LLC (“MLV”) under our At Market Issuance Sales Agreement dated October 26, 2010 (the “2010 ATM Agreement”), for aggregate gross proceeds of $4.4 million, and 3,603,422 common shares through MLV under our At Market Issuance Sales Agreement dated February 4, 2011 (the “2011 ATM Agreement”), for aggregate gross proceeds of $8.5 million.
|
|
|
·
|
In April of 2011, the 2,959 Series B convertible preference shares previously issued to Genentech, Inc. were converted by Genentech into 254,560 common shares, and the associated liquidation preference of $29.6 million was eliminated.
|
|
|
·
|
In May of 2011, we entered into two foreign exchange options contracts in order to manage our foreign currency exposure relating to principal and interest payments on our €15.0 million loan from Servier. Upfront premiums paid on these contracts totaled $1.5 million.
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
License and collaborative fees
|
$ | 4,859 | $ | 1,410 | $ | 16,725 | $ | 1,749 | ||||||||
|
Contract and other revenue
|
11,349 | 5,733 | 31,477 | 18,025 | ||||||||||||
|
Royalties
|
21 | 3,754 | 147 | 4,267 | ||||||||||||
|
Total revenues
|
$ | 16,229 | $ | 10,897 | $ | 48,349 | $ | 24,041 | ||||||||
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||||||||||
|
2011
|
2010
|
Increase
(Decrease)
|
2011
|
2010
|
Increase
(Decrease)
|
|||||||||||||||||||
|
NIAID
|
$ | 5,069 | $ | 4,803 | $ | 266 | $ | 17,321 | $ | 13,097 | $ | 4,224 | ||||||||||||
|
Servier
|
5,916 | - | 5,916 | 12,590 | - | 12,590 | ||||||||||||||||||
|
Takeda
|
317 | 263 | 54 | 901 | 3,289 | (2,388 | ) | |||||||||||||||||
|
Other
|
47 | 667 | (620 | ) | 665 | 1,639 | (974 | ) | ||||||||||||||||
|
Total revenues
|
$ | 11,349 | $ | 5,733 | $ | 5,616 | $ | 31,477 | $ | 18,025 | $ | 13,452 | ||||||||||||
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
Earlier stage programs
|
$ | 10,103 | $ | 14,056 | $ | 36,408 | $ | 37,796 | ||||||||
|
Later stage programs
|
5,748 | 7,289 | 15,071 | 20,482 | ||||||||||||
|
Total
|
$ | 15,851 | $ | 21,345 | $ | 51,479 | $ | 58,278 | ||||||||
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
Internal projects
|
$ | 8,348 | $ | 17,332 | $ | 29,285 | $ | 45,856 | ||||||||
|
Collaborative and contract arrangements
|
7,503 | 4,013 | 22,194 | 12,422 | ||||||||||||
|
Total
|
$ | 15,851 | $ | 21,345 | $ | 51,479 | $ | 58,278 | ||||||||
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||||||||||
|
2011
|
2010
|
Increase
(Decrease)
|
2011
|
2010
|
Increase
(Decrease)
|
|||||||||||||||||||
|
Other income
|
||||||||||||||||||||||||
|
Gain on revaluation of warrant liabilities
|
$ | 499 | $ | 3,120 | $ | (2,621 | ) | $ | 3,349 | $ | 4,811 | $ | (1,462 | ) | ||||||||||
|
Unrealized foreign exchange gain (loss)
(1)
|
760 | - | 760 | (1,114 | ) | - | (1,114 | ) | ||||||||||||||||
|
Realized foreign exchange gain
(2)
|
(1 | ) | (1 | ) | - | 555 | (3 | ) | 558 | |||||||||||||||
|
Unrealized loss on foreign exchange options
|
(285 | ) | - | (285 | ) | (128 | ) | - | (128 | ) | ||||||||||||||
|
Warrant modification expense
|
- | - | - | - | (4,500 | ) | 4,500 | |||||||||||||||||
|
Other
|
45 | (7 | ) | 52 | 35 | (8 | ) | 43 | ||||||||||||||||
|
Total other income
|
$ | 1,018 | $ | 3,112 | $ | (2,094 | ) | $ | 2,697 | $ | 300 | $ | 2,397 | |||||||||||
|
|
(1)
|
Unrealized foreign exchange gain (loss) for the three and Nine Months ended September 30, 2011 primarily relates to gains (losses) on the re-measurement of the €15 million Servier loan.
|
|
|
(2)
|
Realized foreign exchange gain for the Nine Months ended September 30, 2011 primarily relates to the conversion into U.S. dollars of the €15 million cash proceeds received from Servier in January of 2011.
|
|
September 30,
2011
|
December 31,
2010
|
Change
|
||||||||||
|
Cash and cash equivalents
|
$ | 45,707 | $ | 37,304 | $ | 8,403 | ||||||
|
Working Capital
|
$ | 41,529 | $ | 23,352 | $ | 18,177 | ||||||
|
Nine Months Ended September 30,
|
||||||||||||
| 2011 | 2010 |
Change
|
||||||||||
|
Net cash used in operating activities
|
$ | (20,975 | ) | $ | (42,910 | ) | $ | 21,935 | ||||
|
Net cash used in investing activities
|
$ | (2,586 | ) | $ | (277 | ) | $ | (2,309 | ) | |||
|
Net cash provided by financing activities
|
$ | 32,537 | $ | 36,138 | $ | (3,601 | ) | |||||
|
Effect of exchange rate changes on cash
|
$ | (573 | ) | $ | - | $ | (573 | ) | ||||
|
Maturity
|
Carrying
Amount
(in thousands)
|
Fair Value
(in thousands)
|
Average
Interest Rate
|
||||||||||
|
September 30, 2011
|
|||||||||||||
|
Cash and cash equivalents
|
Daily to 90 days
|
$ | 45,707 | $ | 45,707 | 0.07 | % | ||||||
|
December 31, 2010
|
|||||||||||||
|
Cash and cash equivalents
|
Daily to 90 days
|
$ | 37,304 | $ | 37,304 | 0.09 | % | ||||||
|
|
·
|
research and development relating to our product candidates and production technologies,
|
|
|
·
|
various human clinical trials, and
|
|
|
·
|
protection of our intellectual property.
|
|
|
·
|
operations will generate meaningful funds,
|
|
|
·
|
additional agreements for product development funding can be reached,
|
|
|
·
|
strategic alliances can be negotiated, or
|
|
|
·
|
adequate additional financing will be available for us to finance our own development on acceptable terms, or at all.
|
|
|
·
|
results of preclinical studies and clinical trials,
|
|
|
·
|
information relating to the safety or efficacy of products or product candidates,
|
|
|
·
|
developments regarding regulatory filings,
|
|
|
·
|
announcements of new collaborations,
|
|
|
·
|
failure to enter into collaborations,
|
|
|
·
|
developments in existing collaborations,
|
|
|
·
|
our funding requirements and the terms of our financing arrangements,
|
|
|
·
|
technological innovations or new indications for our therapeutic products and product candidates,
|
|
|
·
|
introduction of new products or technologies by us or our competitors,
|
|
|
·
|
sales and estimated or forecasted sales of products for which we receive royalties, if any,
|
|
|
·
|
government regulations,
|
|
|
·
|
developments in patent or other proprietary rights,
|
|
|
·
|
the number of shares issued and outstanding,
|
|
|
·
|
the number of shares trading on an average trading day,
|
|
|
·
|
announcements regarding other participants in the biotechnology and pharmaceutical industries, and
|
|
|
·
|
market speculation regarding any of the foregoing.
|
|
|
·
|
our future filings will be delayed,
|
|
|
·
|
our preclinical and clinical studies will be successful,
|
|
|
·
|
we will be successful in generating viable product candidates to targets,
|
|
|
·
|
we will be able to provide necessary additional data,
|
|
|
·
|
results of future clinical trials will justify further development, or
|
|
|
·
|
we will ultimately achieve regulatory approval for any of these product candidates.
|
|
|
·
|
testing,
|
|
|
·
|
manufacturing,
|
|
|
·
|
promotion and marketing, and
|
|
|
·
|
exporting.
|
|
|
·
|
In April of 1996, we entered into an agreement with Genentech whereby we agreed to co-develop Genentech’s humanized monoclonal antibody product RAPTIVA
®
. In April of 1999, March of 2003, and January of 2005, the companies amended the agreement. In October of 2003, RAPTIVA
®
was approved by the FDA for the treatment of adults with chronic moderate-to-severe plaque psoriasis who are candidates for systemic therapy or phototherapy and, in September of 2004, Merck Serono announced the product’s approval in the European Union. In January of 2005, we entered into a restructuring of our collaboration agreement with Genentech which ended our existing cost and profit sharing arrangement related to RAPTIVA
®
in the United States and entitled us to a royalty interest on worldwide net sales. In February of 2009, the EMA announced that it had recommended suspension of the marketing authorization of RAPTIVA
®
in the European Union and EMD Serono announced that, in consultation with Health Canada, it would suspend marketing of RAPTIVA
®
in Canada. In March of 2009, Merck Serono Australia, following a recommendation from the TGA, announced that it was withdrawing RAPTIVA
®
from the Australian market. In the second quarter of 2009, Genentech announced and carried out a phased voluntary withdrawal of RAPTIVA
®
from the U.S. market, based on the association of RAPTIVA
®
with an increased risk of PML. As a result, sales of RAPTIVA
®
ceased in the second quarter of 2009.
|
|
|
·
|
In March of 2004, we announced we had agreed to collaborate with Chiron Corporation (now Novartis) for the development and commercialization of antibody products for the treatment of cancer. In April of 2005, we announced the initiation of clinical testing of the first product candidate out of the collaboration, HCD122, an anti-CD40 antibody, in patients with advanced chronic lymphocytic leukemia. In October of 2005, we announced the initiation of the second clinical trial of HCD122 in patients with multiple myeloma. In November of 2008, we announced the restructuring of this product development collaboration, which involves six development programs including the ongoing HCD122 and LFA102 programs. In exchange for cash and debt reduction on our existing loan facility with Novartis, Novartis has control over the HCD122 and LFA102 programs and the additional ongoing program, as well as the right to expand the development of these programs into additional indications outside of oncology.
|
|
|
·
|
In March of 2005, we entered into a contract with the National Institute of Allergy and Infectious Diseases (“NIAID”) to produce three monoclonal antibodies designed to protect United States citizens against the harmful effects of botulinum neurotoxin used in bioterrorism. In July of 2006, we entered into an additional contract with NIAID for the development of an appropriate formulation for human administration of these three antibodies in a single injection. In September of 2008, we announced that we were awarded an additional contract with NIAID to support our on-going development of drug candidates toward clinical trials in the treatment of botulism poisoning. In October of 2011, we announced we had been awarded an additional contract with NIAID to develop broad-spectrum antitoxins for the treatment of human botulism poisoning.
|
|
|
·
|
In December of 2010, we entered into a license and collaboration agreement with Servier, to jointly develop and commercialize gevokizumab in multiple indications. Under the terms of the agreement, Servier has worldwide rights to diabetes and cardiovascular disease indications and rights outside the U.S. and Japan to Behcet’s uveitis and other inflammatory and oncology indications. We retain development and commercialization rights for Behcet’s uveitis and other inflammatory disease and oncology indications in the U.S. and Japan, and has an option to reacquire rights to diabetes and cardiovascular disease indications from Servier in these territories. Should we exercise this option, we will be required to pay Servier an option fee and partially reimburse their incurred development expenses. The agreement contains customary termination rights relating to matters such as material breach by either party, safety issues and patents. Servier also has a unilateral right to terminate the agreement on a country-by-country basis or in its entirety on six months’ notice.
|
|
|
·
|
In December of 2010, we also entered into a loan agreement with Servier, which provides for an advance of up to €15.0 million and was fully funded in January of 2011 with the proceeds converting to approximately $19.5 million using the January 13, 2011 Euro to USD exchange rate. This loan is secured by an interest in our intellectual property rights to all gevokizumab indications worldwide, excluding the U.S. and Japan. The loan has a final maturity date in 2016; however, after a specified period prior to final maturity, the loan is required to be repaid (i) at Servier’s option, by applying up to a significant percentage of any milestone or royalty payments owed by Servier under our collaboration agreement and (ii) using a significant percentage of any upfront, milestone or royalty payments we receive from any third party collaboration or development partner for rights to gevokizumab in the U.S. and/or Japan. In addition, the loan becomes immediately due and payable upon certain customary events of default. At September 30, 2011, the €15.0 million outstanding principal balance under this loan agreement would have equaled approximately $20.4 million using the September 30, 2011 Euro to USD exchange rate.
|
|
|
·
|
We have licensed our bacterial cell expression technology, an enabling technology used to discover and screen, as well as develop and manufacture, recombinant antibodies and other proteins for commercial purposes, to over 60 companies. As of September 30, 2011, we were aware of two antibody products manufactured using this technology that have received FDA approval, Genentech’s LUCENTIS
®
(ranibizumab injection) for treatment of neovascular wet age-related macular degeneration and UCB’s CIMZIA
®
(certolizumab pegol) for treatment of Crohn’s disease and rheumatoid arthritis. In the third quarter of 2009, we sold our LUCENTIS
®
royalty interest to Genentech. In the third quarter of 2010, we sold our CIMZIA
®
royalty interest.
|
|
|
·
|
In September of 2006, we entered into an agreement with Taligen Therapeutics, Inc. (“Taligen”) which formalized an earlier letter agreement, which was signed in May of 2006, for the development and cGMP manufacture of a novel antibody fragment for the potential treatment of inflammatory diseases. In May of 2007, we and Taligen entered into a letter agreement which provided that we would not produce a cGMP batch at clinical scale pursuant to the terms of the agreement entered into in September of 2006. In addition, the letter agreement provided that we would conduct and complete the technical transfer of the process to Avecia Biologics Limited or its designated affiliate (“Avecia”). The letter agreement also provided that, subject to payment by Taligen of approximately $1.7 million, we would grant to Avecia a non-exclusive, worldwide, paid-up, non-transferable, non-sublicensable, perpetual license under our owned project innovations. We received $0.6 million as the first installment under the payment terms of the letter agreement but not the two additional payments totaling approximately $1.1 million to which we were entitled upon fulfillment of certain obligations. In May of 2009, the matter was resolved by agreement of the parties in a manner that had no further impact on our financial position.
|
|
|
·
|
significantly greater financial resources,
|
|
|
·
|
larger research and development and marketing staffs,
|
|
|
·
|
larger production facilities,
|
|
|
·
|
entered into arrangements with, or acquired, biotechnology companies to enhance their capabilities, or
|
|
|
·
|
extensive experience in preclinical testing and human clinical trials.
|
|
|
·
|
In June of 2009, Novartis announced it had received U.S. marketing approval for Ilaris
®
(canakinumab), a fully-human monoclonal antibody targeting IL-1 beta, to treat children and adults with Cryopyrin-Associated Periodic Syndromes (“CAPS”). In October of 2009, Novartis announced that Ilaris
®
had been approved in the European Union for CAPS. In September of 2011, Novartis announced that Ilaris
®
had been approved in Japan for CAPS. Ilaris
®
is also being studied in other diseases such as systemic juvenile rheumatoid arthritis (known as SJIA), gouty arthritis and secondary prevention of cardiovascular events. In January of 2011, Novartis announced that it had filed for EMA approval of Ilaris
®
for the treatment and prevention of gout. In June of 2011, Novartis announced that an advisory committee of the FDA voted in favor of the overall efficacy but not the overall safety of canakinumab to treat gouty arthritis attacks in patients who cannot obtain adequate relief with non-steroidal anti-inflammatory drugs or colchicine. In August of 2011, Novartis announced that the FDA had issued a Complete Response letter requesting additional information, including clinical data to evaluate the benefit risk profile of canakinumab in refractory gouty arthritis patients. In September of 2011, Novartis announced positive results of a pivotal Phase 3 trial of canakinumab in patients with SJIA and that it plans to seek regulatory approval for this indication in 2012.
|
|
|
·
|
Eli Lilly and Company (“Lilly”) is developing LY2189102, an investigational IL-1 beta antibody, for subcutaneous injection for the treatment of Type 2 diabetes. In June of 2011, Lily disclosed at a scientific conference that, in a double-blind, placebo controlled Phase 2 study of 106 patients with Type 2 diabetes, a significant (p<0.05), early reduction in C reactive protein occurred, HbA1c was moderately reduced and anti-inflammatory effects were shown.
|
|
|
·
|
In 2008, Biovitrum AB (now called Swedish Orphan Biovitrum, “Biovitrum”) obtained a worldwide exclusive license to Amgen Inc.’s (“Amgen”) Kineret
®
(anakinra) for its current approved indication. Kineret
®
is an IL-1 receptor antagonist (IL-1ra) currently marketed to treat rheumatoid arthritis and has been evaluated over the years in multiple IL-1 mediated diseases, including indications we are considering for gevokizumab. In addition to other on-going studies, a proof-of-concept clinical trial in the United Kingdom investigating Kineret
®
in patients with a certain type of myocardial infarction, or heart attack, has been completed. In August of 2010, Biovitrum announced that the FDA had granted orphan drug designation to Kineret
®
for the treatment of CAPS.
|
|
|
·
|
In February of 2008, Regeneron Pharmaceuticals, Inc. (“Regeneron”) announced it had received marketing approval from the FDA for ARCALYST
®
(rilonacept) Injection for Subcutaneous Use, an interleukin-1 blocker or IL-1 Trap, for the treatment of CAPS, including Familial Cold Auto-inflammatory Syndrome and Muckle-Wells Syndrome in adults and children 12 and older. In September of 2009, Regeneron announced that rilonacept was approved in the European Union for CAPS. In June of 2010 and February of 2011, Regeneron announced positive results of two Phase 3 clinical trials of rilonacept in gout. In March of 2011, Regeneron disclosed that it intends to file a supplemental BLA for ARCALYST
®
for the prevention and treatment of gout.
|
|
|
·
|
Amgen has been developing AMG 108, a fully-human monoclonal antibody that targets inhibition of the action of IL-1. In April of 2008, Amgen discussed results from a Phase 2 study in rheumatoid arthritis. AMG 108 showed statistically significant improvement in the signs and symptoms of rheumatoid arthritis and was well tolerated. In January of 2011, MedImmune, the worldwide biologics unit for AstraZeneca PLC, announced that Amgen granted it rights to develop AMG 108 worldwide except in Japan.
|
|
|
·
|
In June of 2009, Cytos Biotechnology AG announced the initiation of an ascending dose Phase 1/2a study of CYT013-IL1bQb, a therapeutic vaccine targeting IL-1 beta, in Type 2 diabetes. In 2010, this study was extended to include two additional groups of patients.
|
|
·
|
We are aware that the following companies have completed or are conducting or planning Phase 3 clinical trials of the following products for the treatment of uveitis: Abbott - HUMIRA
®
(adalimumab); Lux Biosciences, Inc. - LUVENIQ (voclosporin); Novartis - Myfortic
®
(mycophenalate sodium) and Santen Pharmaceutical Co., Ltd. - Sirolimus (rapamycin).
|
|
|
·
|
In May of 2006, the U.S. Department of Health & Human Services (“DHHS”) awarded Cangene Corporation (“Cangene”) a five-year, $362.0 million contract under Project Bioshield. The contract requires Cangene to manufacture and supply 200,000 doses of an equine heptavalent botulism anti-toxin to treat individuals who have been exposed to the toxins that cause botulism. In May of 2008, Cangene announced significant product delivery under this contract. In March of 2010, this contract was extended for an additional two years, until May of 2013. In June of 2011, Cangene announced that DHHS will exercise options under the supply contract which are expected to increase the total contract to $423.0 million and to extend the delivery schedule to 2018.
|
|
|
·
|
Emergent BioSolutions, Inc. (“Emergent”) is currently in development of a botulism immunoglobulin candidate that may compete with our anti-botulinum neurotoxin monoclonal antibodies.
|
|
|
·
|
We are aware of additional companies that are pursuing biodefense-related antibody products. PharmAthene, Inc. and Human Genome Sciences, Inc. are developing anti-anthrax antibodies. Cangene and Emergent are developing anti-anthrax immune globulin products. These products may compete with our efforts in the areas of other monoclonal antibody-based biodefense products and the manufacture of antibodies to supply strategic national stockpiles.
|
|
|
·
|
imposition of government controls,
|
|
|
·
|
export license requirements,
|
|
|
·
|
political or economic instability,
|
|
|
·
|
trade restrictions,
|
|
|
·
|
changes in tariffs,
|
|
|
·
|
restrictions on repatriating profits,
|
|
|
·
|
exchange rate fluctuations,
|
|
|
·
|
withholding and other taxation, and
|
|
|
·
|
difficulties in staffing and managing international operations.
|
|
|
·
|
prevent our competitors from duplicating our products,
|
|
|
·
|
prevent our competitors from gaining access to our proprietary information and technology, or
|
|
|
·
|
permit us to gain or maintain a competitive advantage.
|
|
|
·
|
whether any pending or future patent applications held by us will result in an issued patent, or that if patents are issued to us, that such patents will provide meaningful protection against competitors or competitive technologies,
|
|
|
·
|
whether competitors will be able to design around our patents or develop and obtain patent protection for technologies, designs or methods that are more effective than those covered by our patents and patent applications, or
|
|
|
·
|
the extent to which our product candidates could infringe on the intellectual property rights of others, which may lead to costly litigation, result in the payment of substantial damages or royalties, and/or prevent us from using technology that is essential to our business.
|
|
|
·
|
“blacklisting” of our common shares by certain pension funds,
|
|
|
·
|
legislation restricting certain types of transactions, and
|
|
|
·
|
punitive tax legislation.
|
|
|
·
|
require certain procedures to be followed and time periods to be met for any shareholder to propose matters to be considered at annual meetings of shareholders, including nominating directors for election at those meetings; and
|
|
|
·
|
authorize our Board of Directors to issue up to 1,000,000 preference shares without shareholder approval and to set the rights, preferences and other designations, including voting rights, of those shares as the Board of Directors may determine.
|
|
Exhibit
Number
|
||
| 10.1 | Form of Restricted Share Unit Agreement for 2010 Long Term Incentive and Share Award Plan | |
|
Certification of John Varian, filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
|
Certification of Fred Kurland, filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
|
Certification of John Varian, furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
|
Certification of Fred Kurland, furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
|
Earnings Press Release dated November 9, 2011, furnished herewith
|
||
| 99.2 |
Gevokizumab Press Release dated November 9, 2011, furnished herewith
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Schema Document
|
|
|
101.CAL
|
XBRL Calculation Linkbase Document
|
|
| 101.DEF | XBRL Definition Linkbase Document | |
|
101.LAB
|
XBRL Label Linkbase Document
|
|
|
101.PRE
|
XBRL Presentation Linkbase Document
|
|
|
XOMA Ltd.
|
|
|
Date: November 9, 2011
|
By:
|
/s/ JOHN VARIAN
|
| John Varian | ||
| Interim Chief Executive Officer | ||
| (principal executive officer) | ||
|
|
|
|
|
Date: November 9, 2011
|
By:
|
/s/ FRED KURLAND
|
| Fred Kurland | ||
| Vice President, Finance and Chief Financial Officer | ||
|
(principal financial officer and chief accounting officer)
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No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|