On May 9, 2023 XOMA Corporation (NASDAQ: XOMA), the biotech royalty aggregator, reported its first quarter 2023 financial results and highlighted recent operational achievements as the Company accelerates XOMA’s differentiated biotech royalty and milestone acquisition strategy (Press release, Xoma, MAY 9, 2023, View Source [SID1234631303]).

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"We are increasing our efforts to be a provider of capital to emerging biotech companies, often enabling these companies to unlock value in the face of a challenging market backdrop for innovative, early stage companies," stated Owen Hughes, Executive Chairman of XOMA. "In the first quarter, the team acted rapidly and decisively to add a second cashflow-generating, long-duration asset to XOMA’s milestone and royalty portfolio. We will continue to reinvest our incoming cashflows and milestone payments to accelerate our royalty monetization strategy."

"The first five months of 2023 have demonstrated both the royalty potential within and the opportunities to grow our royalty and milestone aggregator business model. In February, we received a payment related to the commercial sales of Vabysmo (faricimab) during the second half of 2022. In March, we acquired the IXINITY [coagulation factor IX (recombinant)] commercial payment stream held by Aptevo and will begin recording those commercial payments in the second quarter of 2023," said Brad Sitko, Chief Investment Officer of XOMA. "The team and I are actively identifying additional royalty and milestone acquisition agreements that can deliver significant value to XOMA and our shareholders."

First Quarter 2023 Financial Results

XOMA recorded total revenues of $0.4 million for the first quarter of 2023, compared with $3.1 million in the first quarter of 2022. In the first quarter of 2022, XOMA recognized $2.0 million in revenue related to a milestone event under the Company’s license agreement with Rezolute and a $0.8 million milestone earned pursuant to its Takeda Collaboration Agreement. XOMA did not recognize milestone revenue during the three months ended March 31, 2023.

Research and development ("R&D") expenses were $54,000 and $56,000, respectively, for the first quarters of 2023 and 2022.

General and administrative ("G&A") expenses were $6.2 million for the first quarter of 2023, compared to $5.1 million for the first quarter of 2022. The increase of $1.1 million for the three months ended March 31, 2023, as compared to the corresponding period of 2022, was primarily due to a $0.6 million increase in stock-based compensation expense and a $0.3 million increase in consulting and legal costs.

In the first quarter of 2023, the Company reported arbitration settlement costs of $4.1 million, consisting of the costs incurred related to the arbitration proceeding settlement with one of its licensees.

In the first quarter of 2023, G&A expenses included $1.6 million in non-cash stock-based compensation expense, compared with $1.0 million in the first quarter of 2022. XOMA’s net cash used in operating activities during the first quarter of 2023 was $4.9 million, as compared with $1.0 million during the first quarter of 2022.

The Company reported total other income, net, of $0.4 million in the first quarter of 2023, as compared to total other expense, net, of $0.2 million in the corresponding period of 2022. The $0.6 million variation between the corresponding quarters reflects a $0.4 million increase in investment income and a $0.2 million change in fair value of equity securities XOMA holds in Rezolute, Inc.

Net loss for the first quarter of 2023 was $9.8 million, compared to a net loss of $2.3 million for the first quarter of 2022.

On March 31, 2023, XOMA had cash and cash equivalents of $44.3 million and no debt on its balance sheet. On December 31, 2022, XOMA had cash and cash equivalents of $57.8 million. On January 17, 2023, the Company paid cash dividends on the 8.625% Series A Cumulative Perpetual Preferred Stock (Nasdaq: XOMAP) equal to $0.53906 per share and cash dividends on the 8.375% Series B Cumulative Perpetual Preferred Stock (Nasdaq: XOMAO) equal to $0.52344 per depositary share. In February 2023, XOMA received a cash payment from Roche, representing the second commercial payment from XOMA’s 0.5% commercial interest in the sales of Vabysmo. This payment is reflected in the Company’s condensed consolidated balance sheet as of March 31, 2023, as a reduction of short-term royalty and commercial payment receivables.