XOMA Reports Third Quarter 2005 Financial Results; Highlights: Multiple Myeloma Phase I with Chiron, New Cubist Contract and BCE Licenses.BERKELEY, Calif. -- XOMA Ltd. (Nasdaq:XOMA), a leader in discovery and development of antibody therapeutics for cancer and immunological disorders, today announced its financial results for the quarter and year to date ended September 30, 2005. For the third quarter of 2005, the Company reported a net loss of ($9.0) million or ($0.10) per share on a fully diluted basis, compared with a net loss of ($20.1) million or ($0.24) per share in the third quarter of 2004. These results reflect higher revenues, reduced R&D expenses and the elimination of losses from the RAPTIVA(R) collaboration agreement with Genentech, Inc. (NYSE NYSE See: New York Stock Exchange : DNA DNA: see nucleic acid. DNA or deoxyribonucleic acid One of two types of nucleic acid (the other is RNA); a complex organic compound found in all living cells and many viruses. It is the chemical substance of genes. ) that was restructured in January of 2005. For the first nine months of 2005, XOMA recorded net income of $12.5 million or $0.13 per share (fully diluted), a figure that includes a non-recurring gain of $40.9 million, recognizing the extinguishment of a long-term loan due to Genentech as part of the January 2005 restructuring. As of September 30, 2005, XOMA held $45.8 million in cash, cash equivalents and short-term investments, compared with $24.3 million at December 31, 2004, primarily due to proceeds of a financing completed in February of 2005. A more detailed discussion of XOMA's financial results is provided below and in XOMA's third quarter 2005 Form 10-Q Form 10-Q See 10-Q. filing. "The new contract with Cubist, along with the NIAID NIAID National Institute of Allergy and Infectious Diseases. agreement, increases utilization of our antibody development and manufacturing infrastructure and brings in revenues," said David Boyle David Boyle can refer to several people:
The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. to less than half of levels for the same period in 2004, demonstrating continued progress towards our goal of sustainable profitability." Third Quarter 2005 highlights --Chiron Corporation (Nasdaq: CHIR CHIR Chiricahua National Monument (US National Park Service) ) and XOMA commenced Phase I clinical testing of CHIR-12.12 in multiple myeloma multiple myeloma A malignant proliferation of abnormal plasma cells that populate the marrow-containing bones of the body. The affected plasma cells produce myeloma protein, a monoclonal antibody that replaces normal antibodies in the blood, thereby increasing susceptibility subjects. A Phase I study in chronic lymphocytic leukemia chronic lymphocytic leukemia n. Abbr. CLL Lymphocytic leukemia occurring mainly in older adults, characterized by slow onset and gradual progression of symptoms. (CLL CLL abbr. chronic lymphocytic leukemia CLL, n.pr See leukemia, chronic lymphocytic. CLL 1. Chronic lymphocytic leukemia 2. Cholesterol-lowering lipid ) is ongoing. XOMA and Chiron are evaluating CHIR-12.12 for additional B-cell malignancies. --Wyeth (NYSE: WYE) was granted a non-exclusive worldwide license to XOMA's bacterial cell expression (BCE BCE abbr. 1. Bachelor of Chemical Engineering 2. Bachelor of Civil Engineering BCE Abbreviation for before the Common Era. ) system. Crucell expanded their existing BCE license to include certain phage display phage display n. A technique using recombinant DNA technology to create bacteriophages with a desired peptide embedded in the surface of their protein shells. applications. XOMA has now granted BCE licenses to approximately 40 companies, two of which have products in Phase III Noun 1. phase III - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the FDA trials; if these products are approved, XOMA would be due royalties. --Cubist and XOMA established a strategic antibody manufacturing relationship with an initial agreement under which XOMA will develop new processes to manufacture a novel two-antibody biologic (HepeX-B(TM)) in quantities sufficient to conduct Phase III clinical trials. --As disclosed by Genentech on October 10th, RAPTIVA(R) sales for the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. were $20.9 million for the third quarter of 2005 compared to $16.3 million for the same quarter of 2004. International sales for the third quarter of 2005 increased to $10.0 million as disclosed by Serono S.A A. (virt-x: SEO (Search Engine Optimization, Search Engine Optimizer) See search engine optimization. and NYSE: SRA SrA abbr. senior airman ) on October 25th. XOMA is entitled to a royalty on worldwide sales of RAPTIVA(R) in all indications. --XOMA is developing several compounds under its internal product development programs. In the BPI program, NEUPREX(R) is undergoing investigator sponsored studies and XOMA is evaluating its use for biodefense indications. --Another molecule in internal development, XMA XMA Xtreme Martial Arts XMA X-Ray Micro Analyser XMA Extended Memory Area 005.2, a novel, high-affinity antibody, is in preclinical evaluation for arthritis indications. --Alan M Solinger, MD, joined XOMA as vice president of clinical immunology Clinical immunology A branch of clinical pathology concerned with the role of the immune defense system in disease. The subject encompasses diseases where a malfunction of the immune system itself is the basic cause, together with diseases where some external , bringing extensive medical and development experience to support XOMA's internal and collaborative clinical programs. "I'm pleased with the progress of our two multiple-antibody collaborations, with Chiron and Lexicon, as well as with signing a second antibody development and manufacturing contract, with Cubist," said John L. Castello, president, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of XOMA. "Through such strategic collaborations and manufacturing contracts, XOMA continues to fill the product development pipeline and strengthen our financial position." Financial Discussion Revenues Revenues for the three months ended September 30, 2005 were $4.4 million, compared with $0.6 million for the three months ended September 30, 2004. Revenues for the first nine months of 2005 increased to $12.6 million from $1.5 million in the first nine months of 2004. License and collaborative fee revenues increased to $0.9 million in the third quarter, compared with $0.5 million for the same period of 2004. These include upfront and milestone payments related to the outlicensing of XOMA products and technologies and other collaborative arrangements. Contract revenues increased to $1.9 million for the third quarter of 2005, compared with zero in the third quarter of 2004, primarily due to clinical trial services performed on behalf of Genentech and recognition of revenues for contract manufacturing services performed under the NIAID contract that began in March of 2005. Royalties recorded for the three months ended September 30, 2005 increased to $1.7 million, compared with $29,000 for the 2004 quarter, primarily reflecting RAPTIVA(R) royalties earned under the restructured arrangement with Genentech. Beginning on January 1, 2005, XOMA earns a mid-single digit royalty on sales of RAPTIVA(R) worldwide. Revenues for the next several years will be largely determined by the timing and extent of royalties generated by worldwide sales of RAPTIVA(R) and by the establishment and nature of future manufacturing, outlicensing and collaborative arrangements. Expenses Research and development expenses for the three months ended September 30, 2005 decreased to $9.4 million from $12.6 million for the third quarter of 2004. This reflects reduced spending on MLN MLN Million MLN Modern Language Notes (literary journal) MLN Management & Leadership Network (Northern Ireland) MLN Missouri League for Nursing MLN Main Listed Number 2222, XMP (X/Open Management Protocol) A high-level network management protocol governed by X/Open. Network management software written to the XMP interface is shielded from the details of the underlying SNMP or CMIP protocols. .629, RAPTIVA(R), the TPO-mimetic and new product research, partially offset by increased spending on the Chiron oncology, Aphton anti-gastrin antibody collaborations, the NIAID contract and the Lexicon collaboration. General and administrative expenses decreased to $3.2 million and $10.7 million for the third quarter and first nine months of 2005 as compared with $4.0 million and $11.5 million the same periods in 2004. Collaborative arrangement expenses, which related exclusively to RAPTIVA(R), were zero for the three and nine months ended September 30, 2005. These expenses were $3.9 million and $12.3 million for the three and nine months ended September 30, 2004, respectively. The 2004 amount represents XOMA's 25% share of commercialization costs for RAPTIVA(R), in excess of Genentech's revenues, less cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold and R&D cost-sharing arrangements. Under the restructured arrangement with Genentech, effective January 1, 2005, XOMA is no longer responsible for a share of operating costs operating costs npl → gastos mpl operacionales or R&D expenses, but receives royalties on worldwide sales. Genentech is responsible for all development costs and will compensate XOMA for any development support for RAPTIVA(R). Long-term Debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. At December 31, 2004, XOMA's balance sheet reflected a $40.9 million long-term note due to Genentech, which was extinguished under the restructuring of the Genentech agreement announced in January 2005. In February of 2005, XOMA issued $60 million of 6.5% convertible senior notes due in 2012, which is shown on the September 30, 2005 balance sheet as convertible long-term debt. Under its collaborative arrangement with XOMA, Chiron has made available a $50.0 million credit facility under which XOMA can receive financing for up to 75% of its share of development expenses. In June of 2005, XOMA drew down an initial $8.8 million under this facility. Liquidity and Capital Resources Cash, cash equivalents and short-term investments at September 30, 2005 were $45.8 million, compared with $24.3 million at December 31, 2004. The $21.5 million increase primarily reflects cash proceeds of $56.6 million from the February 2005 financing plus a June 2005 drawdown Drawdown The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough. Notes: of $8.8 million under the Chiron loan, partially offset by cash used in operations of $41.1 million. Cash used in operations for the nine months ending September 30, 2005 include a $14.3 million decrease in accrued liabilities and a $3.5 million increase in accounts receivables. Product Highlights RAPTIVA(R) (Efalizumab): Collaboration with Genentech, Inc. This anti-CD11a antibody therapeutic, developed through a collaboration between Genentech and XOMA, received US Food and Drug Administration (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ) approval in October of 2003 for the treatment of adults with chronic moderate-to-severe plaque psoriasis who are candidates for systemic therapy systemic therapy Therapeutics Any therapy that reaches target tissues via the systemic circulation or phototherapy Phototherapy Definition Phototherapy, or light therapy, is the administration of doses of bright light in order to normalize the body's internal clock and/or relieve depression. . Outside the United States and Japan, RAPTIVA(R) is sold by Serono SA, which received European Commission Marketing Authorisation in September of 2004 to treat patients with moderate-to-severe chronic plaque psoriasis for whom other systemic treatments or phototherapy have been inadequate or inappropriate. RAPTIVA(R) is now approved in 44 countries worldwide. In the third quarter of 2005, Genentech reported US sales increased 28% to $20.9 million, from $16.3 million in the third quarter of 2004. Serono reported international sales of $10.0 million, an increase of 932.6% over the third quarter of 2004. For the first nine months of 2005, US sales of RAPTIVA(R) were reported to be $58.8 million compared to approximately $37.7 million for the same period last year. Sales of RAPTIVA(R) outside of the US for the first nine months of 2005 were reported to be $21.9 million compared to $1.2 million for the same period in 2004. Oncology Therapeutic Antibodies Collaboration with Chiron In October 2005, Chiron and XOMA initiated a second clinical trial of CHIR 12.12, a fully human, antagonist antibody that targets the CD40 antigen. This single agent, open-label Phase I study will evaluate the drug's safety, dose tolerability and pharmacokinetic profile in up to 40 subjects with multiple myeloma, using translational medicine translational medicine Molecular medicine The constellation of activities which seek to translate the science of gene discovery, gene transfer, and functional genomics into gene-targeted therapies to monitor biomarkers and correlate them with responses to therapy, guiding the dose regimen and selection of subjects. Multiple myeloma (MM) is a progressive cancer of plasma cells Plasma cells A type of white blood cell. Mentioned in: Bence Jones Protein Test (B-lymphocytes), key components of the human immune system immune system Cells, cell products, organs, and structures of the body involved in the detection and destruction of foreign invaders, such as bacteria, viruses, and cancer cells. Immunity is based on the system's ability to launch a defense against such invaders. that produce antibodies to fight infection. As the second most prevalent blood cancer after non-Hodgkin's lymphoma non-Hodg·kin's lymphoma n. Any of various malignant lymphomas characterized by the absence of Reed-Sternberg cells. Non-Hodgkin's lymphoma , nearly 16,000 new MM cases are expected in 2005 and 50,000 Americans currently live with the disease. A similar Phase I study is already underway at three leading cancer centers in the United States in up to 40 subjects with advanced CLL. Chiron and XOMA are also evaluating clinical testing of CHIR-12.12 in patients with other B-cell cancers. Under an agreement announced in March of 2004, the companies are jointly researching and developing multiple antibody product candidates, sharing expenses and revenues, generally on a 70-30 basis, with XOMA's share being 30%. Lexicon Genetics Collaboration This three-year collaboration, announced in June of 2005, combines Lexicon's biotherapeutics target discovery capabilities with XOMA's antibody generation platform to speed the development of novel therapeutic antibodies. Lexicon selects targets from its Genome 5000(TM) gene knockout technology program; XOMA generates and engineers antibody candidates for development using its phage display libraries and Human Engineering(TM) technology, and will be principally responsible for manufacturing antibodies for clinical trials and commercialization. Costs and profits will be allocated 65/35 between Lexicon and XOMA, respectively. As an initial target, XOMA and Lexicon have already selected a secreted protein involved in metabolic functions such as insulin sensitivity insulin sensitivity The systemic responsiveness to glucose, which can be measured by 1. The insulin sensitivity index–measures the ability of endogenous insulin to ↓ glucose in extracellular fluids by inhibiting glucose release from the liver and and weight gain in response to diet. Antibodies to this target may be developed to treat obesity, type 2 diabetes type 2 diabetes n. See diabetes mellitus. and other metabolic diseases. Antibody Process Development and Manufacturing Contracts In September, XOMA established a strategic antibody manufacturing relationship with Cubist Pharmaceuticals. Under this agreement, XOMA will develop new processes to manufacture a novel two-antibody biologic (HepeX-B(TM)) in quantities sufficient to conduct Phase III clinical trials. HepeX-B(TM) is a combination of two fully human monoclonal antibodies that target the hepatitis B Hepatitis B Definition Hepatitis B is a potentially serious form of liver inflammation due to infection by the hepatitis B virus (HBV). It occurs in both rapidly developing (acute) and long-lasting (chronic) forms, and is one of the most common chronic virus (HBV HBV hepatitis B virus. HBV abbr. hepatitis B virus ) surface. The product, which has been granted Orphan Drug orphan drug, drug developed under the U.S. Orphan Drug Act (1983) to treat a disease that affects fewer than 200,000 people in the United States. The orphan drug law offers tax breaks and a seven-year monopoly on drug sales to induce companies to undertake the Status in both the U.S. and the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community , is currently in evaluation in Phase III trials for the prevention of HBV re-infection in liver transplant liver transplant Hepatic transplant Transplant surgery A procedure that replaces a cancer conquered, metabolically defeated, or substance subjugated liver with one no longer required by its owner, many of whom donate same after an MVA Diseases requiring transplant patients. If these trials are successful, the companies may extend the relationship to a commercial supply agreement for product launch. Already in progress is a $15.0 million, 18-month contract to develop and manufacture three monoclonal antibodies as biodefense agents against botulinum bot·u·li·num or bot·u·li·nus n. An anaerobic, rod-shaped bacterium (Clostridium botulinum) that secretes botulin and inhabits soils. neurotoxin neurotoxin /neu·ro·tox·in/ (noor´o-tok?sin) a substance that is poisonous or destructive to nerve tissue. neu·ro·tox·in n. See neurolysin. . XOMA was awarded this contract in March of 2005 by the National Institute of Allergy and Infectious Diseases (NIAID), a part of the National Institutes of Health, and it is 100% funded with federal funds Federal Funds Funds deposited to regional Federal Reserve Banks by commercial banks, including funds in excess of reserve requirements. Notes: These non-interest bearing deposits are lent out at the Fed funds rate to other banks unable to meet overnight reserve from NIAID under Contract No. HHSN HHSN Harper Hospital School of Nursing 266200500004C. XOMA Internal Programs: BPI XOMA remains committed to the future development of drugs from its BPI platform, including its NEUPREX(R) formulation. The safety profile of NEUPREX(R) continues to be an attractive clinical feature evidenced by ongoing investigator-sponsored studies. Several clinical investigators are conducting or plan to conduct studies in target indications including pediatric pediatric /pe·di·at·ric/ (pe?de-at´rik) pertaining to the health of children. pe·di·at·ric adj. Of or relating to pediatrics. open-heart surgery, burns and bone marrow transplant bone marrow transplant: see bone marrow. (BMT BMT bone marrow transplantation. BMT, n.pr See bone marrow transplant. BMT Bone marrow transplant, see there ). The BMT studies may provide proofs of concept for acute radiation syndrome radiation syndrome Any condition induced by radiation Examples Radiation arthropathy, radiation carditis, radiation cytitis, radiation dermatitis, radiation enteropathy, radiation fibrosis, radiation hepatitis, radiation nephritis, radiation pneumonitis. for possible biodefense application. XOMA has decided to cease investigating at this time the use of NEUPREX(R) as a possible treatment for plague. XMA005.2 This Human-Engineered(TM) monoclonal antibody monoclonal antibody, an antibody that is mass produced in the laboratory from a single clone and that recognizes only one antigen. Monoclonal antibodies are typically made by fusing a normally short-lived, antibody-producing B cell (see immunity) to a fast-growing is a high-affinity molecule, with potent inhibitory activity against its inflammatory target. This high potency means that it may be suitable for use as a monthly-dose injectable therapeutic. XOMA is currently evaluating XMA005.2 in preclinical studies preclinical studies, n.pl a term used to describe research done before a clinical study. May be laboratory or epidemiologic research. targeting multiple indications, including osteoarthritis osteoarthritis or osteoarthrosis or degenerative joint disease Most common joint disorder, afflicting over 80% of those who reach age 70. It does not involve excessive inflammation and may have no symptoms, especially at first. and rheumatoid arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. , where monthly dosing could be a significant marketing advantage. The company plans to start clinical testing for this molecule in the first half of 2007. Bacterial Cell Expression (BCE) System License Program XOMA has built a development infrastructure for producing antibodies in bacteria that includes proprietary capabilities and a strong patent portfolio. Bacterial cell expression (BCE) is an enabling technology used to discover and screen, as well as develop and manufacture, recombinant proteins and antibodies for commercial purposes. BCE is an essential technology used in multiple systems for high-throughput screening of antibody domains, including expression of antibodies by phage display. With a growing market for antibody therapeutics and the increasing use of phage display for antibody discovery, licenses to XOMA's BCE technology assets have become increasingly attractive to companies engaged in biopharmaceutical discovery and development. In September of 2005, XOMA announced the grant of a non-exclusive, worldwide license to Wyeth for use of XOMA's BCE technology. In October, XOMA announced that Crucell has expanded its existing BCE license to improve Crucell's ability to perform phage display in the field of infectious disease Infectious disease A pathological condition spread among biological species. Infectious diseases, although varied in their effects, are always associated with viruses, bacteria, fungi, protozoa, multicellular parasites and aberrant proteins known as prions. with third party collaborators. To date, XOMA has granted BCE licenses to approximately 40 companies, many of which are applicable to products in early phases of development. Two antibody products in late-stage clinical testing are manufactured under license using XOMA's BCE technologies. These are Celltech Group plc's CIMZIA(TM) anti-TNF alpha antibody fragment in trials for Crohn's disease Crohn's disease: see colitis. and rheumatoid arthritis, and Genentech's Lucentis(TM) (ranibizumab) antibody fragment against Vascular Endothelial Growth Factor Vascular endothelial growth factor (VEGF) is an important signaling protein involved in both vasculogenesis (the de novo formation of the embryonic circulatory system) and angiogenesis (the growth of blood vessels from pre-existing vasculature). (VEGF VEGF vascular endothelial growth factor. ) in trials for wet age-related macular degeneration Age-related macular degeneration (ARMD) Degeneration of the macula (the central part of the retina where the rods and cones are most dense) that leads to loss of central vision in people over 60. . It is XOMA's policy to disclose its license interest in such products when they reach Phase III development. Investor Conference Call XOMA has scheduled an investor conference call regarding this announcement to be held tomorrow, Thursday, November 3, 2005, beginning at 4:00 PM EST EST electroshock therapy. EST abbr. electroshock therapy (1:00 P.M. PST PST Paroxysmal supraventricular tachycardia, see there ). Investors are invited to listen to the conference call by phone or via XOMA's website, http://www.xoma.com/. The domestic dial-in number (U.S./Canada) for the live call is 1-877-869-7222 and the conference ID number is 1132738. The international dial-in number is 1-706-679-5933 and uses the same dial-in conference I.D. number. To listen to the call via the Internet, go to XOMA's website a few minutes before the start of the call to register, download, and install any necessary audio software. The audio replay of the call will be available beginning two hours following the conclusion of the webcast through 6:00 p.m. EST (3:00 p.m. PST) on December 5, 2005. Access numbers for the replay are 1-800-642-1687 (U.S./Canada) or 1-706-645-9291 (International); Conference I.D. is the same as for the call: 1132738. About XOMA XOMA is a pioneer and leader in the discovery, development and manufacture of therapeutic antibodies, with a therapeutic focus that includes cancer and immune diseases. XOMA has a royalty interest royalty interest The proportional ownership interest by the owner of oil and gas rights in income produced by the asset. See also overriding royalty interest. in RAPTIVA(R) (efalizumab), a monoclonal antibody product marketed worldwide (by Genentech, Inc. and Serono, SA) to treat moderate-to-severe plaque psoriasis. XOMA's discovery and development capabilities include antibody phage display, bacterial cell expression (BCE), and Human Engineering(TM) technologies, plus a fully integrated drug development infrastructure. XOMA's development collaborators include Aphton Corporation, Chiron Corporation and Lexicon Genetics Incorporated. The company pipeline also includes proprietary programs in preclinical and clinical development. For more information about XOMA's product pipeline and antibody product development capabilities and technologies, please visit XOMA's website at http://www.xoma.com/. Certain statements contained herein related to the sufficiency of XOMA's cash resources, its goal of sustainable profitability, future sales of RAPTIVA(R) and development of RAPTIVA(R) and CHIR 12.12, as well as other statements related to the progress and timing of product development, present or future licensing, collaborative or financing arrangements or that otherwise relate to future periods, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions that may not prove accurate. Actual results could differ materially from those anticipated due to certain risks inherent in the biotechnology industry and for companies engaged in the development of new products in a regulated market. Among other things, the sufficiency of cash resources could be shortened if expenditures are made earlier or in larger amounts than anticipated or are unanticipated or if funds are not available on acceptable terms; XOMA's ability to achieve profitability will depend on the success of the sales efforts for RAPTIVA(R), revenues related to manufacturing and development services it provides, its ability to effectively manage and anticipate its expenditures and the availability of capital market and other financing. The sales efforts for RAPTIVA(R) may not be successful if Genentech, Inc. or its partner, Serono S.A., fails to meet its commercialization goals, due to the strength of the competition, if physicians do not adopt the product as treatment for their patients or if any important remaining regulatory approvals are not obtained; and future development of RAPTIVA(R) or CHIR 12.12 may not be successful for reasons related to safety or efficacy. These and other risks, including those related to the results of pre-clinical testing, the timing or results of pending and future clinical trials (including the design and progress of clinical trials; safety and efficacy of the products being tested; action, inaction or delay by the FDA, European or other regulators or their advisory bodies; and analysis or interpretation by, or submission to, these entities or others of scientific data), changes in the status of the existing collaborative relationships, availability of additional licensing or collaboration opportunities, the ability of collaborators and other partners to meet their obligations, market demand for products, scale up and marketing capabilities, competition, international operations, share price volatility, XOMA's financing needs and opportunities, uncertainties regarding the status of biotechnology patents, uncertainties as to the cost of protecting intellectual property and risks associated with XOMA's status as a Bermuda company, are described in more detail in the Company's most recent annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , quarterly report on Form 10-Q and other SEC filings. Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Financial Statements Follow
XOMA Ltd.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2005 2004
------------- -------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 14,584 $ 23,808
Short-term investments 31,194 511
Receivables 4,366 707
Related party receivables 96 167
Prepaid expenses 2,022 1,414
------------- -------------
Total current assets 52,262 26,607
Property and equipment, net 18,549 19,306
Related party receivables - long-term 130 188
Deposits and other 3,086 159
------------- -------------
Total assets $ 74,027 $ 46,260
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
(NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable $ 2,454 $ 1,919
Accrued liabilities 5,789 19,331
Notes payable -- 116
Capital lease obligations 49 237
Deferred revenue 3,048 2,000
------------- -------------
Total current liabilities 11,340 23,603
Deferred revenue - long-term 4,833 6,333
Convertible debt - long-term 60,000 --
Interest bearing obligation - long-term 8,844 40,934
------------- -------------
Total liabilities 85,017 70,870
Commitments and contingencies
Shareholders' equity (net capital
deficiency):
Preference shares, $.05 par value,
1,000,000 shares authorized
Series A, 135,000 designated, no
shares issued and outstanding -- --
Series B, 8,000 designated, 2,959
shares issued and outstanding;
aggregate liquidation preference
of $29.6 million 1 1
Common shares, $.0005 par value,
210,000,000 shares authorized,
86,294,010 and 85,587,174 shares
outstanding at September 30, 2005 and
December 31, 2004, respectively 43 43
Additional paid-in capital 654,965 653,537
Accumulated comprehensive (loss)
income (32) 280
Accumulated deficit (665,967) (678,471)
------------- -------------
Total shareholders' equity (net
capital deficiency) (10,990) (24,610)
------------- -------------
Total liabilities and
shareholders' equity (net
capital deficiency) $ 74,027 $ 46,260
============= =============
XOMA Ltd.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2005 2004 2005 2004
------------------ ------------------
Revenues:
License and collaborative
fees $ 856 $ 530 $ 4,036 $ 1,442
Contract revenue 1,858 -- 4,050 --
Royalties 1,712 29 4,492 65
------------------ ------------------
Total revenues 4,426 559 12,578 1,507
------------------ ------------------
Operating costs and expenses:
Research and development
(including contract related
of $956 and $2,741,
respectively, for the three
and nine months ended
September 30, 2005, and
zero for the same periods
of 2004) 9,383 12,562 28,932 38,439
General and administrative 3,243 4,015 10,703 11,538
Collaboration arrangement -- 3,857 -- 12,286
------------------ ------------------
Total operating costs
and expenses 12,626 20,434 39,635 62,263
------------------ ------------------
Loss from operations (8,200) (19,875) (27,057) (60,756)
Other income (expense):
Investment and interest
income 454 158 1,441 452
Interest expense (1,236) (307) (3,014) (925)
Other income (expense) (10) (119) 41,174 (125)
------------------ ------------------
Income (loss) from
operations before
income taxes $ (8,992)$(20,143) $ 12,544 $(61,354)
Provision for income taxes 2 -- 40 --
------------------ ------------------
Net income (loss) $ (8,994)$(20,143) $ 12,504 $(61,354)
================== ==================
Basic net income (loss) per
common share $ (0.10)$ (0.24) $ 0.15 $ (0.73)
================== ==================
Diluted net income (loss) per
common share $ (0.10)$ (0.24) $ 0.13 $ (0.73)
================== ==================
Shares used in computing basic
net income (loss) per common
share 86,277 85,284 86,091 84,619
================== ==================
Shares used in computing diluted
net income (loss) per common
share 86,277 85,284 117,666 84,619
================== ==================
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