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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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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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52-2154066
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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2910 Seventh Street, Berkeley,
California 94710
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(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 May 6, 2013
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Common Stock, $0.0075 par value
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82,893,328
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Page
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PART I
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FINANCIAL INFORMATION
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Item 1.
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Condensed Consolidated Financial Statements (unaudited)
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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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13
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Item 3.
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20
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Item 4.
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21
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PART II
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OTHER INFORMATION
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Item 1.
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21
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Item 1A.
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21
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Item 2.
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41
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Item 3.
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41
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Item 4.
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41
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Item 5.
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41
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Item 6.
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41
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42
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March 31,
2013
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December 31,
2012
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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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$ | 50,379 | $ | 45,345 | ||||
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Short-term investments
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19,996 | 39,987 | ||||||
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Trade and other receivables, net
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6,270 | 8,249 | ||||||
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Prepaid expenses and other current assets
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3,062 | 2,256 | ||||||
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Total current assets
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79,707 | 95,837 | ||||||
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Property and equipment, net
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7,861 | 8,143 | ||||||
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Other assets
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1,378 | 1,696 | ||||||
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Total assets
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$ | 88,946 | $ | 105,676 | ||||
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||||||||
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LIABILITIES AND STOCKHOLDERS’ (DEFICIT) 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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$ | 4,194 | $ | 3,867 | ||||
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Accrued and other liabilities
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5,410 | 13,045 | ||||||
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Deferred revenue
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3,756 | 3,409 | ||||||
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Interest bearing obligation – current
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4,085 | 3,391 | ||||||
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Accrued Interest on interest bearing obligations – current
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1,662 | 121 | ||||||
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Total current liabilities
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19,107 | 23,833 | ||||||
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Deferred revenue – long-term
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5,857 | 6,315 | ||||||
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Interest bearing obligations – long-term
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37,017 | 37,653 | ||||||
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Contingent warrant liabilities
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27,841 | 15,001 | ||||||
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Other liabilities - long term
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33 | 1,407 | ||||||
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Total liabilities
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89,855 | 84,209 | ||||||
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Stockholders’ (deficit) equity:
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||||||||
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Common stock, $0.0075 par value, 138,666,666 shares authorized, 82,887,828 and 82,447,274 shares outstanding at March 31, 2013 and December 31, 2012, respectively
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618 | 615 | ||||||
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Additional paid-in capital
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980,467 | 977,962 | ||||||
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Accumulated comprehensive income
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11 | 8 | ||||||
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Accumulated deficit
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(982,005 | ) | (957,118 | ) | ||||
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Total stockholders’ (deficit) equity
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(909 | ) | 21,467 | |||||
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Total liabilities and stockholders’ (deficit) equity
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$ | 88,946 | $ | 105,676 | ||||
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Three months ended March 31,
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||||||||
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2013
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2012
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|||||||
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Revenues:
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||||||||
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License and collaborative fees
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$ | 399 | $ | 1,014 | ||||
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Contract and other
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8,796 | 8,844 | ||||||
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Net product sales
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258 | 7 | ||||||
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Total revenues
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9,453 | 9,865 | ||||||
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Operating expenses:
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Research and development
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16,590 | 15,771 | ||||||
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Selling, general and administrative
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4,124 | 4,679 | ||||||
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Restructuring
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17 | 3,777 | ||||||
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Cost of sales
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46 | - | ||||||
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Total operating expenses
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20,777 | 24,227 | ||||||
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Loss from operations
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(11,324 | ) | (14,362 | ) | ||||
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Other income (expense):
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Interest expense
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(1,172 | ) | (1,042 | ) | ||||
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Other income (expense)
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449 | (664 | ) | |||||
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Revaluation of contingent warrant liabilities
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(12,840 | ) | (14,357 | ) | ||||
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Net loss
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$ | (24,887 | ) | $ | (30,425 | ) | ||
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Basic and diluted net loss per share of common stock
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$ | (0.30 | ) | $ | (0.69 | ) | ||
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Shares used in computing basic and diluted net loss per share of common stock
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82,595 | 44,353 | ||||||
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Other comprehensive loss:
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||||||||
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Net loss
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$ | (24,887 | ) | $ | (30,425 | ) | ||
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Net unrealized gains on available-for-sale securities
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3 | - | ||||||
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Comprehensive loss
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$ | (24,884 | ) | $ | (30,425 | ) | ||
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Three Months Ended March 31,
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||||||||
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2013
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2012
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|||||||
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Cash flows from operating activities:
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Net loss
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$ | (24,887 | ) | $ | (30,425 | ) | ||
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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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780 | 1,265 | ||||||
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Common stock contribution to 401(k)
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828 | 1,134 | ||||||
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Stock-based compensation expense
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1,619 | 674 | ||||||
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Accrued interest on interest bearing obligations
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1,542 | 394 | ||||||
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Revaluation of contingent warrant liabilities
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12,840 | 14,357 | ||||||
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Restructuring charge related to long-lived assets
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- | 1,707 | ||||||
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Amortization of debt discount, final payment fee on debt, and debt issuance costs
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603 | 467 | ||||||
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Unrealized (gain) loss on foreign currency exchange
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(440 | ) | 376 | |||||
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Unrealized loss (gain) on foreign exchange options
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189 | 276 | ||||||
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Other non-cash adjustments
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(4 | ) | (43 | ) | ||||
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Changes in assets and liabilities:
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Trade and other receivables, net
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1,997 | 2,168 | ||||||
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Prepaid expenses and other assets
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(802 | ) | (1,651 | ) | ||||
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Accounts payable and accrued liabilities
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(7,128 | ) | (3,221 | ) | ||||
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Deferred revenue
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(111 | ) | 884 | |||||
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Other liabilities
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(1,554 | ) | (37 | ) | ||||
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Net cash used in operating activities
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(14,528 | ) | (11,675 | ) | ||||
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Cash flows from investing activities:
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||||||||
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Proceeds from maturities of investments
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20,000 | - | ||||||
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Net purchase of property and equipment
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(498 | ) | (548 | ) | ||||
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Net cash provided by (used in) investing activities
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19,502 | (548 | ) | |||||
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Cash flows from financing activities:
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Proceeds from issuance of common stock, net of issuance costs
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60 | 39,480 | ||||||
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Principal payments of debt
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- | (714 | ) | |||||
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Net cash provided by financing activities
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60 | 38,766 | ||||||
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Net increase in cash and cash equivalents
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5,034 | 26,543 | ||||||
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Cash and cash equivalents at the beginning of the period
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45,345 | 48,344 | ||||||
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Cash and cash equivalents at the end of the period
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$ | 50,379 | $ | 74,887 | ||||
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Supplemental Cash Flow Information:
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||||||||
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Cash paid for:
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Interest
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$ | 333 | $ | 195 | ||||
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Non-cash investing and financing activities:
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Issuance of warrants
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$ | - | $ | 6,386 | ||||
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Interest added to principal balances on long-term debt
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$ | 290 | $ | 398 | ||||
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Three Months Ended March 31,
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||||||||
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2013
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2012
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|||||||
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Common stock options and restricted stock units
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6,459 | 5,722 | ||||||
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Warrants for common stock
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16,176 | 5,457 | ||||||
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Total
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22,635 | 11,179 | ||||||
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March 31,
2013
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December 31,
2012
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|||||||
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Accrued payroll and other benefits
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$ | 2,169 | $ | 2,461 | ||||
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Accrued management incentive compensation
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1,086 | 3,978 | ||||||
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Accrued clinical trial costs
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746 | 4,702 | ||||||
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Other
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1,409 | 1,904 | ||||||
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Total
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$ | 5,410 | $ | 13,045 | ||||
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Fair Value Measurements at March 31, 2013 Using
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||||||||||||||||
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Quoted Prices in Active Markets for Identical Assets
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Significant Other Observable Inputs
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Significant Unobservable Inputs
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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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|||||||||||||
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Assets:
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||||||||||||||||
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Money market funds
(1)
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$ | 37,951 | $ | - | $ | - | $ | 37,951 | ||||||||
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U.S. treasury securities
(2)
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19,996 | - | - | 19,996 | ||||||||||||
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Foreign exchange options
(3)
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- | 299 | - | 299 | ||||||||||||
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Total
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$ | 57,947 | $ | 299 | $ | - | $ | 58,246 | ||||||||
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Liabilities:
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||||||||||||||||
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Contingent warrant liabilities
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$ | - | $ | - | $ | 27,841 | $ | 27,841 | ||||||||
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Fair Value Measurements at December 31, 2012 Using
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||||||||||||||||
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Quoted Prices in Active Markets for Identical Assets
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Significant Other Observable Inputs
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Significant Unobservable Inputs
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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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Money market funds
(1)
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$ | 37,461 | $ | - | $ | - | $ | 37,461 | ||||||||
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U.S. treasury securities
(2)
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39,987 | - | - | 39,987 | ||||||||||||
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Foreign exchange options
(3)
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- | 488 | - | 488 | ||||||||||||
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Total
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$ | 77,448 | $ | 488 | $ | - | $ | 77,936 | ||||||||
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Liabilities:
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||||||||||||||||
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Contingent warrant liabilities
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$ | - | $ | - | $ | 15,001 | $ | 15,001 | ||||||||
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March 31,
2013
|
December 31,
2012
|
|||||||
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Expected volatility
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40 | % | 40 | % | ||||
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Risk-free interest rate
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0.3% - 0.4 | % | 0.3% - 0.7 | % | ||||
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Expected term
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1.7 - 3.9 years
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1.9 - 4.2 years
|
||||||
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Contingent warrant liabilities
|
March 31,
2013
|
|||
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Balance at December 31, 2012
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$ | 15,001 | ||
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Net increase in fair value of contingent warrant liabilities upon revaluation
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12,840 | |||
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Balance at March 31, 2013
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$ | 27,841 | ||
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Three Months Ended March 31,
|
||||||||
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2013
|
2012
|
|||||||
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Interest expense
|
||||||||
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GECC term loan
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$ | 545 | $ | 417 | ||||
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Servier loan
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525 | 516 | ||||||
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Novartis note
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91 | 99 | ||||||
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Other
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11 | 10 | ||||||
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Total interest expense
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$ | 1,172 | $ | 1,042 | ||||
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Three Months Ended March 31,
|
||||||||
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2013
|
2012
|
|||||||
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Dividend yield
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0 | % | 0 | % | ||||
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Expected volatility
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92 | % | 92 | % | ||||
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Risk-free interest rate
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0.78 | % | 1.05 | % | ||||
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Expected term
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5.6 years
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5.6 years
|
||||||
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Options
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Weighted Average Exercise Price Per Share
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Weighted Average Remaining Contractual Life (in years)
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Aggregate Intrinsic Value (in thousands)
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Options outstanding at December 31, 2012
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6,788,383 | $ | 8.99 | 7.36 | $ | 1,531 | ||||||||||
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Granted
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994,053 | 2.92 | ||||||||||||||
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Exercised
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(19,090 | ) | 1.97 | |||||||||||||
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Forfeited, expired or cancelled
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(54,930 | ) | 31.12 | |||||||||||||
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Options outstanding at March 31, 2013
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7,708,416 | $ | 8.07 | 7.54 | $ | 4,502 | ||||||||||
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Options exercisable at March 31, 2013
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4,473,529 | $ | 11.70 | 6.39 | $ | 2,245 | ||||||||||
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Number of
Shares
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Weighted-
Average Grant-
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|||||||
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Unvested balance at December 31, 2012
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1,459,853 | $ | 2.75 | |||||
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Granted
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895,860 | 2.87 | ||||||
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Vested
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(164,998 | ) | 2.50 | |||||
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Forfeited
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(4,835 | ) | 2.06 | |||||
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Unvested balance at March 31, 2013
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2,185,880 | $ | 2.65 | |||||
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Three Months Ended March 31,
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||||||||
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2013
|
2012
|
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Research and development
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$ | 997 | $ | 385 | ||||
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Selling, general and administrative
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622 | 289 | ||||||
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Total stock-based compensation expense
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$ | 1,619 | $ | 674 | ||||
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·
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In January 2013, we announced encouraging preliminary top-line data from an interim analysis of our Phase 2 proof-of-concept study to evaluate the safety and efficacy of gevokizumab for the treatment of moderate-to-severe inflammatory acne. Preliminary data from the 125-patient trial demonstrated clear activity according to the Investigator’s Global Assessment (“IGA”) parameter. Gevokizumab was well-tolerated in this trial, with no significant differences in adverse events between gevokizumab and placebo and no serious drug-related adverse events were reported.
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·
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On March 18, 2013, the Company announced Tom Klein has joined the Company as Vice President, Chief Commercial Officer, a newly created position reporting to John Varian, Chief Executive Officer.
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Three Months Ended March 31,
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||||||||||||
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2013
|
2012
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Increase (Decrease)
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||||||||||
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License and collaborative fees
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$ | 399 | $ | 1,014 | $ | (615 | ) | |||||
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Contract and other
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8,796 | 8,844 | (48 | ) | ||||||||
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Product sales
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258 | 7 | 251 | |||||||||
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Total revenues
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$ | 9,453 | $ | 9,865 | $ | (412 | ) | |||||
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Three Months Ended March 31,
|
||||||||||||
|
2013
|
2012
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Increase
(Decrease)
|
||||||||||
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Servier
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$ | 7,027 | $ | 3,649 | $ | 3,378 | ||||||
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NIAID
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1,695 | 4,837 | (3,142 | ) | ||||||||
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Other
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74 | 358 | (284 | ) | ||||||||
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Total contract and other
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$ | 8,796 | $ | 8,844 | $ | (48 | ) | |||||
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Three Months Ended March 31,
|
||||||||||||
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2013
|
2012
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Increase
(Decrease)
|
||||||||||
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Net product sales
(1)
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258 | 7 | 251 | |||||||||
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Cost of sales
(2)
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46 | - | 46 | |||||||||
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Product gross margin
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82 | % | 93 | % | ||||||||
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(1)
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Product sales are recorded net of prompt pay discounts, volume rebates and product returns.
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(2)
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Cost of sales includes raw materials, third-party manufacturing and production costs, and royalties payable to Servier for ACEON® sales.
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Three Months Ended March 31,
|
||||||||
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2013
|
2012
|
|||||||
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Earlier stage programs
|
$ | 9,217 | $ | 8,333 | ||||
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Later stage programs
|
7,373 | 7,438 | ||||||
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Total
|
$ | 16,590 | $ | 15,771 | ||||
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Three Months Ended March 31,
|
||||||||
|
2013
|
2012
|
|||||||
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Internal projects
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$ | 9,825 | $ | 6,682 | ||||
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Collaborative and contract arrangements
|
6,765 | 9,089 | ||||||
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Total
|
$ | 16,590 | $ | 15,771 | ||||
|
Three Months Ended March 31,
|
||||||||||||
|
2013
|
2012
|
Increase
(Decrease)
|
||||||||||
|
Interest expense
|
||||||||||||
|
GECC term loan
|
$ | 545 | $ | 417 | $ | 128 | ||||||
|
Servier loan
|
525 | 516 | 9 | |||||||||
|
Novartis note
|
91 | 99 | (8 | ) | ||||||||
|
Other
|
11 | 10 | 1 | |||||||||
|
Total interest expense
|
$ | 1,172 | $ | 1,042 | $ | 130 | ||||||
|
Three Months Ended March 31,
|
||||||||||||
|
2013
|
2012
|
Increase
(Decrease)
|
||||||||||
|
Other income (expense)
|
||||||||||||
|
Unrealized foreign exchange gain (loss)
(1)
|
$ | 515 | $ | (402 | ) | $ | 917 | |||||
|
Unrealized loss on foreign exchange options
|
(189 | ) | (276 | ) | 87 | |||||||
|
Other
|
123 | 14 | 109 | |||||||||
|
Total other income (expense)
|
$ | 449 | $ | (664 | ) | $ | 1,113 | |||||
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(1)
|
Unrealized foreign exchange gain (loss) for the three months ended March 31, 2013 and 2012 primarily relates to the re-measurement of the €15 million Servier loan.
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|
Contingent warrant liabilities
|
March 31,
2013
|
|||
|
Balance at December 31, 2012
|
$ | 15,001 | ||
|
Net increase in fair value of contingent warrant liabilities upon revaluation
|
12,840 | |||
|
Balance at March 31, 2013
|
$ | 27,841 | ||
|
March 31, 2013
|
December 31, 2012
|
Change
|
||||||||||
|
Cash and cash equivalents
|
$ | 50,379 | $ | 45,345 | $ | 5,034 | ||||||
|
Short-term investments
|
$ | 19,996 | $ | 39,987 | $ | (19,991 | ) | |||||
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Working Capital
|
$ | 60,600 | $ | 72,004 | $ | (11,404 | ) | |||||
|
Three Months Ended March 31,
|
||||||||||||
| 2013 | 2012 |
Change
|
||||||||||
|
Net cash used in operating activities
|
$ | (14,528 | ) | $ | (11,675 | ) | $ | (2,853 | ) | |||
|
Net cash provided by (used in) investing activities
|
19,502 | (548 | ) | 20,050 | ||||||||
|
Net cash provided by financing activities
|
60 | 38,766 | (38,706 | ) | ||||||||
|
Net increase in cash and cash equivalents
|
$ | 5,034 | $ | 26,543 | $ | (21,509 | ) | |||||
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LEGAL PROCEEDINGS
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RISK FACTORS
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terminate or delay clinical trials for one or more of our product candidates;
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further reduce our headcount and capital or operating expenditures; or
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curtail our spending on protecting our intellectual property.
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operations will generate meaningful funds;
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additional agreements for product development funding can be reached;
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strategic alliances can be negotiated; or
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adequate additional financing will be available for us to finance our own development on acceptable terms, or at all.
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In December 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 cardiovascular disease and diabetes indications and rights outside the United States and Japan to all other indications, including Behçet’s uveitis and other inflammatory and oncology indications. In late 2011, we announced Servier agreed to include the NIU Phase 3 trials under the terms of the collaboration agreement for Behçet’s uveitis. We retain development and commercialization rights for NIU and other inflammatory disease and oncology indications in the United States and Japan and have an option to reacquire rights to cardiovascular disease and diabetes indications from Servier in these territories. Should we exercise this option, we will be required to pay an option fee to Servier and partially reimburse a specified portion of Servier’s incurred development expenses. The agreement contains mutual customary termination rights relating to matters, such as material breach by either party. Servier may terminate for safety issues, and we may terminate the agreement, with respect to a particular country or the European Patent Organization (“EPO”) member states, for any challenge to our patent rights in that country or any EPO member state, respectively, by Servier. Servier also has a unilateral right to terminate the agreement for the European Union (“EU”) or for non-EU countries, on a country-by-country basis, or in its entirety, in each case with six months’ notice.
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In December 2010, we entered into a loan agreement with Servier (the “Servier Loan Agreement”), which provides for an advance of up to €15.0 million and was funded fully in January 2011 with the proceeds converting to approximately $19.5 million at the January 13, 2011, Euro-to-U.S.-dollar exchange rate of 1.3020. This loan is secured by an interest in our intellectual property rights to all gevokizumab indications worldwide, excluding the United States 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 (1) 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 (2) 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 United States and/or Japan. In addition, the loan becomes immediately due and payable upon certain customary events of default. At March 31, 2013, the €15.0 million outstanding principal balance under this Servier Loan Agreement would have equaled approximately $19.2 million using the March 31, 2013 Euro-to-U.S.-dollar exchange rate of 1.2816.
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·
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Effective in January 2012, we entered into an amended and restated agreement with Servier for the United States commercialization rights to ACEON and, upon exercise by us of an option with respect to each product, a portfolio of additional FDC product candidates where perindopril is combined with another active ingredient(s), such as a calcium channel blocker. To date we have exercised this option with respect to one FDC product. This agreement, together with a related trademark license agreement, provides us with exclusive U.S. rights to ACEON and FDC1, and options on additional FDCs. The arrangement also provides that Servier will supply to us, and we will purchase exclusively from Servier, the active ingredients in ACEON and the FDCs, in some cases for a limited period. The agreement contains customary termination rights relating to matters, such as material breach by, or insolvency of, either party or, as to particular licensed products, for safety issues arising with respect to such products. Each party also has the right to terminate the arrangement if FDC1 does not receive FDA approval by December 31, 2014. Servier also has the right to terminate the arrangement if certain aspects of our commercialization strategy are not successful and Servier does not consent to an alternative strategy, or as to the FDCs, if we breach our obligations to certain of our service providers. Further, Servier also may terminate the agreement if we fail to achieve certain levels of sales of products and do not make a specified payment in such circumstances to maintain our license, or under certain circumstances upon our change in control, if we fail to take certain actions or make certain payments. We are working to identify a third-party organization that could sublicense this FDC and move it forward toward commercialization in the U.S. market.
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our future filings will be delayed;
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our preclinical and clinical studies will be successful;
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we will be successful in generating viable product candidates to targets;
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we will be able to provide necessary additional data;
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results of future clinical trials will justify further development; or
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we ultimately will achieve regulatory approval for any of these product candidates.
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clinical development and testing;
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manufacturing;
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labeling;
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storage;
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record keeping;
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promotion and marketing; and
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importing and exporting.
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results of preclinical studies and clinical trials;
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information relating to the safety or efficacy of products or product candidates;
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developments regarding regulatory filings;
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announcements of new collaborations;
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failure to enter into collaborations;
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developments in existing collaborations;
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our funding requirements and the terms of our financing arrangements;
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technological innovations or new indications for our therapeutic products and product candidates;
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introduction of new products or technologies by us or our competitors;
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sales and estimated or forecasted sales of products for which we receive royalties, if any;
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government regulations;
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developments in patent or other proprietary rights;
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the number of shares issued and outstanding;
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the number of shares trading on an average trading day;
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announcements regarding other participants in the biotechnology and pharmaceutical industries; and
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market speculation regarding any of the foregoing.
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In March 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 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 2005, we announced the initiation of the second clinical trial of HCD122 in patients with multiple myeloma. In November 2008, we announced the restructuring of this product development collaboration, which involved 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, as well as the right to expand the development of these programs into additional indications outside of oncology.
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In March 2005, we entered into a contract with the National Institute of Allergy and Infectious Diseases (“NIAID”) to produce three monoclonal antibodies designed to protect U.S. citizens against the harmful effects of botulinum neurotoxin used in bioterrorism. In July 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 2008, we announced we had been 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 2011, we announced we had been awarded an additional contract with NIAID to develop broad-spectrum antitoxins for the treatment of human botulism poisoning.
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In December 2011, we entered into a loan agreement with GECC (the “GECC Loan Agreement”), under which GECC agreed to make a term loan in an aggregate principal amount of $10 million to XOMA (US) LLC, our wholly owned subsidiary, and upon execution of the GECC Loan Agreement, GECC funded the term loan. The term loan is guaranteed by us and our two other principal subsidiaries, XOMA Ireland Limited and XOMA Technology Ltd. As security for our obligations under the GECC Loan Agreement, we, XOMA (US) LLC, XOMA Ireland Limited and XOMA Technology Ltd. each granted a security interest pursuant to a guaranty, pledge and security agreement in substantially all of our existing and after-acquired assets, excluding our intellectual property assets (such as those relating to our gevokizumab and anti-botulism products). We were required to repay the principal amount of the Term Loan over a period of 42 installments of principal and accrued interest, but we amended the GECC Loan Agreement on September 27, 2012, as described below. The GECC Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants, including restrictions on the ability to incur indebtedness, grant liens, make investments, dispose of assets, enter into transactions with affiliates and amend existing material agreements, in each case subject to various exceptions. In addition, the GECC Loan Agreement contains customary events of default that entitle GECC to cause any or all of the indebtedness under the GECC Loan Agreement to become immediately due and payable. The events of default include any event of default under a material agreement or certain other indebtedness. We may prepay the term loan in full voluntarily, but not in part, and any voluntary and certain mandatory prepayments are subject to a prepayment premium of 3% in the first year of the loan, 2% in the second year and 1% thereafter, with certain exceptions. We also will be required to pay the final payment fee in connection with any voluntary or mandatory prepayment. Pursuant to the GECC Loan Agreement, we issued to GECC unregistered stock purchase warrants, which entitle GECC to purchase up to an aggregate of 263,158 unregistered shares of XOMA common stock at an exercise price equal to $1.14 per share, are exercisable immediately and expire on December 30, 2016.
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·
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On September 27, 2012, we entered into an amendment to the GECC Loan Agreement providing for an additional term loan in the amount of $4.6 million and an interest-only monthly repayment period with respect to the aggregate loan obligation of $12.5 million outstanding following the effective date of the amendment through March 1, 2013, at a stated interest rate of 10.9% per annum. Thereafter, we are obligated to make monthly principal payments of $0.3 million, plus accrued interest, at a stated interest rate of 10.9% per annum, over a 27-month period commencing on April 1, 2013, and through June 15, 2015, at which time the remaining outstanding principal amount of $3.1 million, plus accrued interest, shall be due. A final payment fee in the amount of $0.9 million is payable on the date upon which the outstanding principal amount is required to be repaid in full. Any mandatory or voluntary prepayment of the $12.5 million will accelerate the due date of the final payment fee and trigger a prepayment penalty equal to 3% of the outstanding principal amount being prepaid if prepaid on or before September 27, 2013, 2% if prepaid on or before September 27, 2014, and 1% if prepaid after September 27, 2014, but prior to the maturity date. In connection with the amendment, on September 27, 2012, we issued GE a warrant to purchase up to 39,346 shares of our common stock, which warrant is exercisable immediately, has a five-year term and has an exercise price of $3.54 per share.
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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 May 6, 2013, 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.
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On July 24, 2012, Servier and we entered into an agreement with Boehringer Ingelheim to transfer XOMA's technology and processes for the manufacture of gevokizumab to Boehringer lngelheim for Boehringer Ingelheim's implementation and validation in preparation for the commercial manufacture of gevokizumab. Upon the successful completion of the transfer and the establishment of biological comparability, including validation of the XOMA processes as implemented by Boehringer Ingelheim, we intend Boehringer Ingelheim will produce gevokizumab for XOMA's commercial use at its facility in Biberach, Germany. Servier and we retain all rights to the development and commercialization of gevokizumab. Transferring of our technology to Boehringer Ingelheim exposes us to numerous risks, including the possibility that Boehringer Ingelheim may not perform under the agreement as anticipated, and that we will need to successfully conduct a comparability trial demonstrating to the FDA’s satisfaction the similarity between XOMA-manufactured and Boehringer Ingelheim-manufactured product.
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significantly greater financial resources;
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larger research and development and marketing staffs;
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larger production facilities;
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entered into arrangements with, or acquired, biotechnology companies to enhance their capabilities; or
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extensive experience in preclinical testing and human clinical trials.
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Novartis markets and is developing Ilaris (canakinumab, ACZ885), a fully human monoclonal antibody that selectively binds to and neutralizes IL-1 beta. Since 2009, canakinumab has been approved in over 50 countries for the treatment of children and adults suffering from Cryopyrin-Associated Periodic Syndrome (“CAPS”). Novartis has filed for regulatory approval of canakinumab in the United States and Europe for the treatment of acute attacks in gouty arthritis. On March 1, 2013, Novartis announced that they received EU approval for Ilaris in patients suffering acute gouty arthritis attacks which cannot gain relief from current treatments. It is administered as a single 150 mg subcutaneous injection. In September 2011, Novartis announced positive results of a pivotal Phase 3 trial of canakinumab in patients with systemic juvenile idiopathic arthritis and it plans to seek regulatory approval for this indication in 2012. Novartis also is pursuing other diseases in which IL-1 beta may play a prominent role, such as systemic secondary prevention of cardiovascular events.
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·
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Eli Lilly and Company (“Lilly”) is developing a monoclonal antibody to IL-1 beta in Phase 1 studies for the treatment of cardiovascular disease. In June 2011, Lilly reported results from a Phase 2 study of LY2189102 in 106 patients with Type 2 diabetes, showing a significant (p<0.05), early reduction in C reactive protein (“CRP”), moderate reduction in HbA1c and anti-inflammatory effects. We do not know whether LY2189102 remains in development.
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·
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In 2008, Swedish Orphan Biovitrum obtained from Amgen the global exclusive rights to Kineret® (anakinra) for rheumatoid arthritis as currently indicated in its label. In November 2009, the agreement regarding Swedish Orphan Biovitrum’s Kineret license was expanded to include certain orphan indications. Kineret is an IL-1 receptor antagonist (IL-1ra) that has been evaluated 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 2010, Biovitrum announced the FDA had granted orphan drug designation to Kineret for the treatment of CAPS, and in January 2013 they obtained FDA approval for NOMID, a severe form of CAPS.
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·
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In February 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 2009, Regeneron announced rilonacept was approved in the EU for CAPS. In June 2010 and February 2011, Regeneron announced positive results of two Phase 3 clinical trials of rilonacept in gout. In November 2011, Regeneron announced the FDA had accepted for review Regeneron’s supplemental BLA for ARCALYST for the prevention and treatment of gout. A meeting of an FDA advisory panel to review this supplemental BLA was held in May 2012 with a recommendation against approval of the new use in gout. In July 2012, the FDA issued a Complete Response Letter that states the FDA cannot approve the application in its current form and has requested additional clinical data, as well as additional CMC information related to a proposed new dosage form. Regeneron is reviewing the complete response letter from the FDA and will determine appropriate next steps.
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·
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Amgen has been developing AMG 108, a fully human monoclonal antibody that targets inhibition of the action of IL-1. In April 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 2011, MedImmune, the worldwide biologics unit for AstraZeneca PLC, announced Amgen granted it rights to develop AMG 108 worldwide except in Japan.
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·
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In June 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.
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·
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The following companies have completed or are conducting or planning Phase 3 clinical trials of the following products for the treatment of noninfectious intermediate, posterior or pan-uveitis: Abbott - HUMIRA® (adalimumab); Lux Biosciences, Inc. – LUVENIQ® (voclosporin); Novartis - Myfortic® (mycophenalate sodium) and Santen Pharmaceutical Co., Ltd. – Sirolimus® (rapamycin).
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·
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The leading product (based on annual sales) in the United States within the ACE inhibitor category is lisinopril, formerly marketed by Astra-Zeneca Pharmaceuticals LP under the brand ZESTRIL® and by Merck & Co. under the brand Prinivil
®
.
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·
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There are multiple options in the FDC market combining ACE inhibitors with diuretics, and two options combining an ACE inhibitor with a calcium channel blocker. Current options with a calcium channel blocker are benazepril/amlodipine, formerly marketed by Novartis Pharmaceuticals as Lotrel®, and trandolapril/verapamil, formerly marketed by Abbot Laboratories as Tarka
®
.
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Cangene Corporation has a contract with the U.S. Department of Health & Human Services, expected to be worth $423.0 million, to manufacture and supply an equine heptavalent botulism anti-toxin; and
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Emergent BioSolutions, Inc., is currently in development of a botulism immunoglobulin candidate that may compete with our anti-botulinum neurotoxin monoclonal antibodies.
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imposition of government controls;
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export license requirements;
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political or economic instability;
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trade restrictions;
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changes in tariffs;
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restrictions on repatriating profits;
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exchange rate fluctuations;
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withholding and other taxation; and
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difficulties in staffing and managing international operations.
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prevent our competitors from duplicating our products;
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prevent our competitors from gaining access to our proprietary information and technology; or
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·
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permit us to gain or maintain a competitive advantage.
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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;
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·
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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
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·
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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.
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require certain procedures to be followed and time periods to be met for any stockholder to propose matters to be considered at annual meetings of stockholders, including nominating directors for election at those meetings; and
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·
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authorize our Board of Directors to issue up to 1,000,000 shares of preferred stock without stockholder approval and to set the rights, preferences and other designations, including voting rights, of those shares as the Board of Directors may determine.
|
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
|
DEFAULTS UPON SENIOR SECURITIES
|
|
MINE SAFETY DISCLOSURES
|
|
OTHER INFORMATION
|
|
EXHIBITS
|
|
|
XOMA Corporation
|
|
|
Date: May 8, 2013
|
By:
|
/s/ JOHN VARIAN
|
|
|
John Varian
Chief Executive Officer (principal executive officer) and Director
|
|
|
Date: May 8, 2013
|
By:
|
/s/ FRED KURLAND
|
|
|
Fred Kurland
Vice President, Finance, Chief Financial Officer and Secretary
(principal financial and principal accounting officer)
|
|
|
Incorporation By Reference
|
||||||||||
|
Exhibit
Number
|
Exhibit Description
|
Form
|
SEC File
No.
|
Exhibit
|
Filing Date
|
|||||
|
3.1
|
Certificate of Incorporation of XOMA Corporation
|
8-K
|
000-14710
|
3.1
|
01/03/2012
|
|||||
|
3.2
|
Certificate of Amendment of Certificate of Incorporation of XOMA Corporation
|
8-K
|
000-14710
|
3.1
|
05/31/2012
|
|||||
|
3.3
|
By-laws of XOMA Corporation
|
8-K
|
000-14710
|
3.2
|
01/03/2012
|
|||||
|
4.1
|
Reference is made to Exhibits 3.1, 3.2 and 3.3
|
|||||||||
|
4.2
|
Specimen of Common Stock Certificate
|
8-K
|
000-14710
|
4.1
|
01/03/2012
|
|||||
|
4.3
|
Form of Certificate of Designations of Series A Preferred Stock
|
8-K
|
000-14710
|
3.1
|
01/03/2012
|
|||||
|
4.4
|
Form of Amended and Restated Warrant (June 2009 Warrants)
|
8-K
|
000-14710
|
10.6
|
02/02/2010
|
|||||
|
4.5
|
Form of Warrant (February 2010 Warrants)
|
8-K
|
000-14710
|
10.2
|
02/02/2010
|
|||||
|
4.6
|
Form of Warrant (December 2011 Warrants)
|
10-K
|
000-14710
|
4.9
|
03/14/2012
|
|||||
|
4.7
|
Form of Warrant (March 2012 Warrants)
|
8-K
|
000-14710
|
4.1
|
03/07/2012
|
|||||
|
4.8
|
Form of Warrant (September 2012 Warrants)
|
8-K
|
000-14710
|
4.10
|
10/03/2012
|
|||||
|
Officer Employment Agreement by and between XOMA Corporation and Thomas Klein dated March 18, 2013
|
||||||||||
|
Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)
|
||||||||||
|
Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)
|
||||||||||
|
Certification of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350)
(1)
|
||||||||||
|
Press Release dated May 8, 2013
|
||||||||||
|
101.INS
+
|
XBRL Instance Document
(2)
|
|||||||||
|
101.SCH
+
|
XBRL Taxonomy Extension Schema Document
(2)
|
|||||||||
|
101.CAL
+
|
XBRL Taxonomy Extension Calculation Linkbase Document
(2)
|
|||||||||
|
101.DEF
+
|
XBRL Taxonomy Extension Definition Linkbase Document
(2)
|
|||||||||
|
Incorporation By Reference
|
||||||||||
|
Exhibit
Number
|
Exhibit Description
|
Form
|
SEC File
No.
|
Exhibit
|
Filing Date
|
|||||
|
101.LAB
+
|
XBRL Taxonomy Extension Labels Linkbase Document
(2)
|
|||||||||
|
101.PRE
+
|
XBRL Taxonomy Extension Presentation Linkbase Document
(2)
|
|||||||||
|
+
|
Filed herewith
|
|
(1)
|
This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.
|
|
(2)
|
Pursuant to applicable securities laws and regulations, the Registrant is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Registrant has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. These interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections
.
|
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 |
|---|