On March 8, 2022 XOMA Corporation (Nasdaq: XOMA), a biotech royalty aggregator playing a distinctive role in helping companies achieve their goal of improving human health, reported its 2021 financial results and provided a recent operations update (Press release, Xoma, MAR 8, 2022, View Source [SID1234609682]).
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"XOMA’s milestone and royalty aggregator business model really began to demonstrate its potential in 2021 and in the first few months of 2022. In 2021, we received $36.2 million in milestone payments, which allowed XOMA to report positive operating cash-flow for the second consecutive year. The anti-TGFß asset we licensed to Novartis in 2015 entered Phase 3 development in 2021, a milestone that resulted in us receiving a $35 million payment. In the past two years, this asset, NIS793, has provided us with a total of $60 million in milestone revenue. Last October, we announced a significant transaction for XOMA, the purchase of rights to a 0.5% commercial payment on faricimab, a BLA-review-stage asset, for a $6 million upfront payment plus potential future milestone payments to Affitech SA. In late January 2022, the FDA gave commercialization approval to this novel bispecific antibody for the treatment of nAMD and DME. This is the first asset under our royalty aggregator model to receive commercialization approval. We recently paid $5 million in milestone payments to Affitech, triggered by these FDA approvals. Another advancement in January 2022 came as Rezolute dosed the final patient
with RZ358 in its Phase 2 congenital hyperinsulinism (CHI) study, which triggered a $2 million milestone payment to XOMA. Given our history with RZ358 and the connections we made with the CHI community, we are looking forward to seeing the clinical results when they are announced publicly," stated Jim Neal, Chairman and Chief Executive Officer of XOMA.
"These are just a few of the advances we’ve seen in our portfolio over the past year. We wish all our partners success in their clinical development efforts, as there are patients in need of additional therapeutic options.
"Our team continues to identify and acquire milestone and royalty licenses to expand and diversify XOMA’s portfolio, with eight assets added in 2021. With a strong foundation firmly established and an outstanding team in place, I decided it was the right time for the Company to proactively initiate a CEO succession plan, and we have launched a formal search. In the meantime, I will remain as CEO and continue to help shape XOMA’s future as Chairman of the Board. I believe 2021 and these first few months of 2022 are just the beginning of what’s to come," Mr. Neal concluded.
Financial Results
XOMA recorded total revenues of $35.9 million for the fourth quarter of 2021, compared with $27.6 million in the fourth quarter of 2020. The increase for the three months ended December 31, 2021, as compared to the corresponding period of 2020, was primarily due to the $35.0 million milestone earned under the Company’s Anti-TGFß Antibody License Agreement with Novartis International. For the full year of 2021, XOMA recorded revenues of $38.2 million, compared to $29.4 million for the full year of 2020. In 2021, XOMA received milestone revenue of $35.0 million earned under its Anti-TGFß Antibody License Agreement with Novartis, $0.5 million under its license agreement with Compugen, and $0.7 million under its license agreement with Janssen. Revenues for the full year of 2020 reflect $25.0 million in milestone revenue earned under the Company’s Anti-TGFß Antibody License Agreement with Novartis International and $2.0 million earned under XOMA’s collaboration agreement with Takeda.
Research and development ("R&D") expenses were $42,000 and $36,000, respectively, for the fourth quarters of 2021 and 2020. R&D expenses for the full years of 2021 and 2020 and were $0.2 million.
General and administrative ("G&A") expenses were $5.5 million for the fourth quarter of 2021, compared to $3.7 million for the fourth quarter of 2020. The increase of $1.8 million for the three months ended December 31, 2021, as compared to the corresponding period of 2020, was due primarily to a $1.1 million increase in stock compensation expense related to a grant of options in connection with Mr. Neal’s amended employment agreement and the reversal of $1.4 million in bad debt expense in the fourth quarter of 2020, partially offset by a decrease of $0.5 million in legal and consulting costs. G&A expenses were $20.5 million for the full year of 2021, compared to $16.8 million for the full year of 2020. The increase of $3.7 million in 2021 as compared with 2020 was primarily due to a $2.2 million increase in stock compensation expense, $0.8 million increase in salary and related expenses, $0.4 million increase in legal and consulting costs and $0.2 million increase in insurance costs.
In the fourth quarter of 2021, G&A expenses included $1.7 million in non-cash stock-based compensation expense, compared with $0.7 million in the fourth quarter of 2020. For the full year of 2021, G&A expenses included $6.2 million in non-cash stock-based compensation expense, compared with $3.9 million of non-cash stock-based compensation expense in 2020. XOMA’s net cash provided by operations in the fourth quarter of 2021 was $30.7 million, as compared with $17.7 million during the fourth quarter of 2020.
XOMA’s net cash provided by operations for the full year of 2021 was $22.7 million compared to $10.1 million in 2020.
In June 2021, the Company repaid its outstanding debt obligations to Silicon Valley Bank and Novartis in full. For the full year of 2021, interest expense was $0.5 million, compared with $1.8 million reported in the full year of 2020. The decrease in interest expense during 2021 reflects the extinguishment of XOMA’s debt obligations.
Other expense, net was $0.4 million for the fourth quarter of 2021, compared to other expense, net of $0.8 million in the corresponding quarter of 2020. Other expense, net was $0.9 million for the full year of 2021, compared to other income, net of $1.2 million for the corresponding period of 2020. The fluctuation in other (expense) income, net for the quarter and year ended December 31, 2021, as compared to the same periods in 2020, is primarily due to the change in the fair value of equity securities XOMA holds in Rezolute, Inc.
Net income for the fourth quarter of 2021 was $29.8 million, compared to net income of $22.7 million for the fourth quarter of 2020. For the full year of 2021, net income was $15.8 million, as compared to $13.3 million for the full year of 2020.
On December 31, 2021, XOMA had cash and restricted cash of $95.4 million. The Company ended December 31, 2020, with cash and restricted cash of $85.8 million. After paying its remaining debt obligations in the second quarter of 2021, XOMA has no debt on its balance sheet. The Company continues to believe its current cash position will be sufficient to fund XOMA’s operations for multiple years.