On March 9, 2023 XOMA Corporation (NASDAQ: XOMA), the Biotech Royalty Aggregator, reported its full year 2022 financial results and provided an operational update on the Company’s actions to accelerate XOMA’s differentiated biotech royalty and milestone acquisition strategy (Press release, Xoma, MAR 9, 2023, View Source [SID1234628391]).

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"Since joining the Company in January, Brad Sitko and I have continually been impressed by the opportunities in front of XOMA. After having a significant number of royalty and milestone acquisition conversations since January, we are making decisions thoughtfully and rapidly about the opportunities on which we want to transact. We are assessing each potential opportunity with an eye to maximizing shareholder returns," stated Owen Hughes, Executive Chairman of XOMA.

"With cash receipts from Vabysmo (faricimab) and Day One’s public comments regarding filing a New Drug Application for tovorafenib in the first half of 2023, XOMA could be reporting incoming cash from two portfolio assets by the end of 2024. Our economic interests in both these assets were acquired within the past two years. In addition, we have learned from our partners’ public statements there also may be three assets entering Phase 3 development in 2023, which would further increase the value of XOMA’s portfolio. Those are just a few examples of the progression within the more than 70 royalty and milestone assets in our portfolio. With the potential incoming cash receipts from commercialized assets and anticipated milestone payments, we have the ability to accelerate our royalty acquisition strategy and continue to grow XOMA’s portfolio," said Brad Sitko, Chief Investment Officer of XOMA.

Fourth Quarter and Full Year 2022 Financial Results

Revenues for the fourth quarter and year ended December 31, 2022, were $1.5 million and $6.0 million, respectively. For the full year of 2022, XOMA’s reported revenues were related to milestone payments of $2.0 million from Rezolute, $0.8 million from Takeda, $0.8 million from Compugen, and $0.5 million from Sonnet. Revenues in the fourth quarter and year ended December 31, 2021, were $35.9 million and $38.2 million, respectively. For the full year of 2021, XOMA’s reported revenues included milestones of $35.0 million from Novartis, $0.5 million from Compugen, and $0.7 million from Janssen.

The Company’s research and development (R&D) expenses for the quarter and the full year of 2022 were $0.03 million and $0.2 million, respectively, compared to $0.04 million and $0.2 million in the corresponding periods of 2021.

General and administration (G&A) expenses were $7.6 million and $23.2 million for the fourth quarter and year-ended December 31, 2022, respectively. G&A expenses were $5.5 million and $20.5 million for the corresponding periods of 2021. The $2.7 million net increase in 2022, compared with 2021, was primarily due a $2.6 million increase in salaries and related expenses, including the $1.2 million Continuity Incentive accrued in connection with the retirement of Jim Neal, a $0.7 million increase in salaries and wages due to increased headcount and general salary increases, $0.4 million related to bonus payments to Mr. Neal pursuant to his amended employment agreement, and $0.1 million accrued in connection with the employee retention bonus. Additionally, an increase in consulting and legal costs of $2.3 million contributed to the overall increase in 2022. The totality of the increases in 2022 were partially offset by a $2.6 million reduction in stock-based compensation expense for stock options.

In the fourth quarter and full year of 2022, G&A expenses included $1.0 million and $3.6 million, respectively, in non-cash stock-based compensation expense, compared with $1.7 million and $6.2 million for the corresponding periods of 2021. XOMA’s net cash used in operations in the fourth quarter of 2022 was $3.9 million and $12.9 million for the full year of 2022, compared with net cash provided by operations in the fourth quarter of 2021 of $30.7 million and $22.7 million for the full year of 2021.

Net loss for the fourth quarter and year ended December 31, 2022, was $6.0 million and $17.1 million, respectively. Net income for the fourth quarter of 2021 was $29.8 million and $15.8 million for the full year of 2021.

On December 31, 2022, XOMA had cash and cash equivalents of $57.8 million and no debt on its balance sheet. On December 31, 2021, XOMA had cash and restricted cash of $95.4 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. The payment will be 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.

"The first year’s commercial performance of Vabysmo has demonstrated the significant impact that even a small percentage of sales from a single multi-billion-dollar product can have on XOMA’s financial outlook. Excluding any additional asset acquisitions, we believe incoming net cash of over $20 million from a combination of milestones that are expected this year together with anticipated royalties should cover our annual base operating and dividend expenses in 2023. Given the nature of our milestone and royalty agreements, we expect cash flows will be uneven on a quarterly basis over the next few years. This reflects the imprecise timing of when milestones occur and assets are commercialized. Looking at 2024, the milestones and royalties we anticipate should continue to contribute significantly towards covering our base operating expenses and dividend obligations," stated Tom Burns, Chief Financial Officer at XOMA.