On August 6, 2019 XOMA Corporation (Nasdaq: XOMA), reported its second quarter 2019 royalty asset portfolio highlights and financial results (Press release, Xoma, AUG 6, 2019, View Source [SID1234538182]).
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"The second quarter began with our latest acquisition of rights to future milestones and royalties associated with five development-stage anti-thrombotic hematology assets from Aronora, Inc. Of the five assets, three are being developed under a collaboration with Bayer, a global leader in hematology therapeutics," stated Jim Neal, Chief Executive Officer at XOMA. "We believe we are well-positioned to continue executing on our royalty-aggregator strategy to create near- and long-term value for shareholders."
Second Quarter 2019 Updates About Partnered Assets in Development
"The quarter also was marked with three notable developments within XOMA’s portfolio of partnered assets. Novartis made two important iscalimab data presentations and began dosing patients in a gevokizumab oncology study. Sesen Bio announced its agreement with the U.S. Food and Drug Administration to move forward on a Biologics License Application for Vicinium," Mr. Neal added. "As well, we received notification that clinical programs are being launched for several additional assets to which XOMA holds a royalty interest."
Novartis and iscalimab
During a late-breaker session at the American Transplant Congress held in June, Novartis presented data on iscalimab (CFZ533) that showed 60% of iscalimab-treated transplant patients have normal kidney histology at least one year after transplant, compared with 0% with tacrolimus (current standard of care)1. Less than half of donated kidneys last 10 years, so durability is a significant unmet need for patients who are living with or waiting for a transplant2. More than 100,000 patients are on the U.S. kidney transplant waiting list with a chronic shortfall of donors3. Iscalimab could prove to be a valuable new option for these transplant patients.
Data from a separate iscalimab study were presented at the European Congress of Rheumatology 2019. The presentation, titled Subcutaneous Dosing of the Novel Anti-CD40 Antibody Iscalimab Achieves Target Drug Exposure and Clinical Efficacy in Primary Sjögren’s Syndrome; Results of a Phase IIa Randomized Open Label Two Arm Parallel Group Trial, concluded the study results further support the safety and efficacy of iscalimab in primary Sjögren’s syndrome and the suitability of subcutaneous dosing for future development. From a clinical point of view, the ability to treat patients with a subcutaneous formulation would help reduce the ever-increasing demands on infusion clinics.
Novartis and gevokizumab
Gevokizumab (VPM087), an anti-IL1β monoclonal antibody that XOMA discovered and initially developed, is now actively progressing in a Novartis oncology development program. Recently the first patient was dosed with gevokizumab in the dose-finding portion of a study in combination with standard of care anti-cancer therapies in patients with metastatic colorectal cancer, metastatic gastroesophageal cancer, and metastatic renal cell carcinoma.
Sesen Bio, Inc.
Sesen Bio had a successful pre-Biologics License Application (BLA) meeting with the U.S. Food and Drug Administration (FDA) regarding Vicinium for the treatment of patients with high-risk, Bacillus Calmette-Guérin unresponsive, non-muscle invasive bladder cancer. Sesen has stated it intends to begin filing its BLA in the fourth quarter of 2019.
Other partnered assets in development
Multiple clinical studies were initiated with assets for which XOMA holds a royalty interest. Takeda expanded its TAK-079 development program with a Phase 1 study to evaluate subcutaneous TAK-079 added to standard of care regimens in participants with newly diagnosed multiple myeloma. Molecular Templates announced the FDA accepted its Investigational New Drug application for TAK-169, an engineered toxin body targeting CD38. Molecular Templates and its partner, Takeda, expect to initiate an open-label Phase 1 dose escalation and expansion study in relapsed/refractory multiple myeloma patients. Rezolute, Inc., disclosed it has resumed its Phase 1 study for AB101 and dosed the first patient in the study’s second cohort. Aronora initiated a new study to evaluate the safety and efficacy of ProCase (AB002) in patients with end stage renal disease on chronic hemodialysis.
Additionally, AVEO Oncology announced positive results from the investigator-initiated Phase Ib Ficlatuzumab-Cytarabine Trial In Patients With Relapsed And Refractory Acute Myeloid Leukemia study. Data showed six of 12 patients who received ficlatuzumab and cytarabine at the maximally tolerated dose achieved a complete response. Study results were presented in a poster session at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting 2019.
Business Highlights
Acquired the rights to potential royalty payments and a portion of the potential milestone payments associated with five anti-thrombotic hematology assets from Aronora, Inc. Three of the assets are covered by a collaboration with Bayer, a global leader in hematology therapeutics. Two of the collaboration assets are in early to mid-stages of development and the third is a Phase 2 candidate that is subject to an option. The Company also agreed to acquire the rights to potential royalty payments and a portion of the potential upfront and milestone payments associated with two unpartnered hematology programs from Aronora. XOMA made a $6 million payment and will make an additional payment of up to $3 million to Aronora upon fulfillment of certain other conditions. In return, XOMA will receive, on average, low single-digit royalties on future sales of these five products and 10% of the milestones associated with each of the assets. In addition, the Company could pay Aronora sales-based milestones on each asset if XOMA’s royalty receipts related to each program exceed certain thresholds.
"From our legacy history with our phage display platform, we understand the value of a technology platform. It serves as an engine that can generate multiple product candidates, all of which have the potential to produce milestone and royalty revenues. During the second quarter, we added a second technology platform relationship to our royalty interest portfolio. Sonnet BioTherapeutics, Inc., has a platform and pipeline that were developed using XOMA’s phage display technology," concluded Mr. Neal. Sonnet has developed a Fully Human Albumin Binding platform focused on enhancing half-life and tumor targeting to enhance immune response to improve cancer survival. Its approach is unique in that their team is developing bi- and tri-functional therapies to stimulate and/or block immune-modulating targets. Sonnet believes its technology can activate and sustain an immune response selectively against the targeted tumor. XOMA will receive milestones and a low single-digit royalty on future commercial sales of any therapeutic product that utilizes licensed XOMA intellectual property.
Financial Results
XOMA recorded total revenues of $1.0 million for the second quarter of 2019, compared with $2.3 million recorded for the second quarter of 2018. The decrease for the three months ended June 30, 2019, as compared to the same period in 2018, was due primarily to $1.8 million recognized under the Company’s license agreement with Rezolute in the second quarter of 2018.
Research and development expenses were $0.7 million for the second quarter of 2019, compared to $0.4 million for the second quarter of 2018. The increase of $0.3 million for the three months ended June 30, 2019, compared to the same period of 2018, was primarily due to a $0.5 million pass-through license fee incurred based on the achievement of a development milestone by one of our partners, partially offset by a $0.1 million decrease in salary and related expenses.
General and administrative expenses were $4.9 million for the second quarter of 2019, compared to $4.4 million for the second quarter of 2018. The increase of $0.5 million for the three months ended June 30, 2019, as compared to the same period of 2018, was primarily due to increases of $0.3 million in stock-based compensation expenses and $0.2 million in legal and accounting expenses.
In the second quarter of 2019, XOMA recorded $0.4 million in total interest expense, as compared to $0.2 million in the corresponding period of 2018. The increase in interest expense compared with 2018 is primarily due to the outstanding Silicon Valley Bank (SVB) loan balance. In the second quarter, XOMA borrowed an additional $3.0 million under the SVB loan agreement, and as of June 30, 2019, a total of $10.5 million was outstanding.
Total other income, net was $1.1 million for the second quarter of 2019, compared to other expense of $1.2 million for the second quarter of 2018. During the three months ended June 30, 2019, the fair value of the long-term equity securities held by XOMA increased by $31,000. During the three months ended June 30, 2019, XOMA was party to four sublease agreements, compared with two sublease agreements for the same period in 2018, resulting in $0.8 million in sublease income during the second quarter of 2019 and $0.4 million in the corresponding period of 2018. In the second quarter of 2018, XOMA recognized $1.0 million of other income under the agreement with Ology Bioservices related to the disposition of XOMA’s biodefense business in March 2016; no further payments are due.
Net loss for the second quarter of 2019 was $4.1 million, compared to $1.9 million for the second quarter of 2018.
On June 30, 2019, XOMA had cash and cash equivalents of $42.3 million. The Company ended December 31, 2018, with cash and cash equivalents of $45.8 million. The Company’s current cash and cash equivalents are expected to be sufficient to fund its operations for multiple years.
Tom Burns, Chief Financial Officer of XOMA, commented, "XOMA congratulates Rezolute for its recent announcement that its investors have exercised their full combined $20 million option to purchase shares of Rezolute common stock. In conjunction with this, we recently received $2.9 million from Rezolute."