On March 7, 2019 XOMA Corporation (Nasdaq: XOMA) reported its fourth quarter and full-year 2018 financial results and business highlights (Press release, Xoma, MAR 7, 2019, View Source [SID1234534112]).

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"In 2018, we completed the first transaction under our royalty-aggregator business model, adding seven assets being developed by Merck and Incyte, bringing our royalty license portfolio to 45 assets. We added $20 million of capital and established a $20 million credit facility to strengthen our balance sheet and to continue building our royalty portfolio. We believe XOMA is in a healthy financial position, and we are focused on delivering shareholder value," stated Jim Neal, Chief Executive Officer of XOMA. "In early 2019, we added Barbara Kosacz to our Board of Directors; her legal expertise in analyzing, structuring, and negotiating pharmaceutical and biotechnology license agreements will be invaluable as we execute on our business strategy."

Business Highlights

XOMA continued making significant progress to position the Company for long-term growth, while strengthening its balance sheet in multiple ways during 2018.

Acquired a milestone and royalty interest in seven immuno-oncology assets being developed by Merck and Incyte.

Completed a $20 million rights offering with XOMA stockholders including BVF Partners, LP.

Secured $20 million credit facility with Silicon Valley Bank.

Reduced operating expenses to historic lows, reflecting our new low-cost infrastructure.

Strengthened the Board of Directors and leadership team.

2018 Updates About Partnered Assets in Development

"During its R&D Update on November 25, 2018, Novartis highlighted 26 potential blockbuster drug candidates from their 340 programs under development. XOMA has up to double-digit royalty interests on two of those potential blockbuster assets," concluded Mr. Neal.

Novartis-licensed assets:

Novartis announced gevokizumab will enter oncology clinical studies.

Novartis has listed Phase 2 trials for CFZ533 in four separate indications on ClinicalTrials.gov.

Financial Results

XOMA recorded total revenues of $1.7 million for the fourth quarter of 2018, compared to $5.4 million for the fourth quarter of 2017. For the full year of 2018, XOMA recorded revenues of $5.3 million, compared to $52.7 million for the full year of 2017. Revenues for the full year of 2017 reflect $40.2 million of licenses and collaborative fee revenue received in connection with the Company’s 2017 license agreements with Novartis and a $10.0 million clinical development milestone payment from Novartis related to another therapeutic candidate.

Research and development (R&D) expenses were $0.2 million for the fourth quarter of 2018, compared to $0.7 million for the fourth quarter of 2017. Research and development expenses for the full year of 2018 were $1.7 million, compared to $7.9 million for the same period in 2017. The decrease in R&D expenses for the full year of 2018, as compared with 2017, was primarily due to the implementation of our royalty-aggregator business model during the first quarter of 2017, at which time the Company ceased substantially all development activities. The decrease primarily consisted of $1.9 million in clinical trial costs, $1.4 million in consulting costs, $1.2 million in the allocation of facilities costs, $0.5 million in stock-based compensation, and $0.4 million in salaries and related expenses. The decrease in allocation of facilities costs is a result of a decreased proportion of R&D employees due to our restructuring activities in late 2016 and June 2017.

General and administrative (G&A) expenses were $4.3 million for the fourth quarter of 2018, compared to $6.7 million for the fourth quarter of 2017. General and administrative expenses were $18.6 million for the full year of 2018, compared to $24.3 million for the full year of 2017. The decrease of $5.7 million for the full year of 2018, as compared with the full year of 2017, was primarily due to decreases of $2.9 million in stock-based compensation, $2.1 million in consulting services, and $0.5 million in information technology costs, partially offset by an increase of $1.2 million in the allocation of facilities costs due to a greater proportion of G&A personnel compared to R&D personnel after our restructuring activities.

For the years ended December 31, 2018 and 2017, XOMA recorded $1.9 million and $3.4 million, respectively in charges related to severance, other termination benefits, outplacement services, and lease-related charges associated with restructuring activities.

For the years ended December 31, 2018 and 2017, XOMA recorded other income of $4.3 million and $1.1 million, respectively. Other income in both periods included income received in relation to the Company’s disposition of its biodefense business to Ology Bioservices in March 2015. During the year ended December 31, 2018, XOMA also received $1.8 million in sublease income. This was partially offset by a loss of $0.6 million for the decrease in fair value of long-term equity securities that consisted of shares of Rezolute’s common stock. For the year ended December 31, 2017, XOMA realized a foreign exchange loss of $1.6 million related to re-measurement of the Servier Loan which was paid in 2017 and a sublease loss of $0.8 million, offset by a $1.2 million gain on the sale and disposal of equipment located in one of its leased facilities.

Net loss for the fourth quarter of 2018 was $3.0 million, compared to net loss of $1.3 million for the fourth quarter of 2017. Net loss for the full year of 2018 was $13.3 million, compared to net income of $14.6 million for the full year of 2017. The significant net income for the full year of 2017 was due primarily to the increase in total revenues as previously discussed.

On December 31, 2018, XOMA had cash and cash equivalents of $45.8 million. The Company ended December 31, 2017, with cash and cash equivalents of $43.5 million. The Company’s current cash and cash equivalents are expected to be sufficient to fund its operations for multiple years.