BERKELEY, Calif.--(BUSINESS WIRE)--March 11, 2003--XOMA Ltd. (Nasdaq:XOMA - News), a biopharmaceutical development company, today announced consolidated financial results for the year ended December 31, 2002.
For the year ended December 31, 2002, the Company recorded a net loss of $33.2 million or $0.47 per share, compared with $28.0 million or $0.41 per share for 2001. Total revenues for the year ended December 31, 2002 increased by 73 percent to $29.9 million compared to $17.3 million in 2001. License fee revenue in 2002 increased to $16.8 million from $4.8 million in 2001, reflecting license fees from agreements with MorphoSys AG, Dyax Corp. and Cambridge Antibody Technology Limited signed in 2002. Contract revenues and product sales increased to $13.1 million in 2002 from $12.5 million in 2001, and related mainly to arrangements with Baxter Healthcare Corporation and Onyx Pharmaceuticals, Inc.
Research and development expenses for the year ended December 31, 2002 increased 19 percent to $42.6 million compared with $35.9 million in 2001. Spending in 2002 reflected increased costs related to collaborations with Genentech, Inc. on Raptiva(TM), Millennium Pharmaceuticals, Inc. on MLN01 and CAB2, and Onyx Pharmaceuticals, Inc. on ONYX-015.
Marketing, general and administrative expenses for the year ended December 31, 2002 increased to $19.4 million compared to $8.7 million for 2001. The most significant components of the increase were legal expenses related to licensing and intellectual property litigation (that was settled in 2002) and increased marketing spending related to pre-launch activities for Raptiva(TM).
The Company anticipates a higher loss in 2003, as compared with 2002. This includes:
* lower service revenues from Onyx and Baxter;
* higher research and development expenses related to clinical testing of Raptiva(TM) in psoriasis, rheumatoid arthritis and psoriatic arthritis, and MLN01 and CAB2, subject to successful completion of preclinical testing; and
* higher marketing, general and administrative expenses, as savings on litigation expense are expected to be more than offset by increased marketing expenses related to pre-launch activities for Raptiva(TM).
As of December 31, 2002, XOMA held $38.2 million in cash, cash equivalents and short-term investments compared with $67.6 million at December 31, 2001. This included $1.5 million in restricted cash, which subsequent to year-end has been released. The Company estimates that it has sufficient cash resources, together with funding available to it under its collaboration agreements, to meet its currently anticipated operational needs through at least the end of 2004.
"Despite the challenging environment we faced in 2002, we ended the year on a high note with Genentech and XOMA announcing the submission of Raptiva(TM) to the FDA for approval," said John L. Castello, XOMA's chairman, president, and chief executive officer. "We're off to a good start in 2003 with the recent news that the Raptiva(TM) BLA submission was accepted for review by the FDA. Genentech's marketing partner, Serono S.A., has filed for marketing approval in the European Union and expects to make additional filings in Australia, Canada, and Switzerland yet this quarter."
"We are also pleased to report that XOMA's financial position remained strong in 2002," said Peter B. Davis, XOMA's chief financial officer. "Our collaborations have reduced our burn rate by providing partner funding that supports an increasing share of our development spending. At the same time, we have expanded our manufacturing capacity and other capabilities to better position the Company to continue development of our own products and to attract additional collaborations bringing other companies' products into our development pipeline."
Product Collaboration Highlights in 2002
Raptiva(TM) (Efalizumab) with Genentech, Inc.: In September 2002, XOMA and Genentech announced positive results from a third Phase III study testing Raptiva(TM) in patients suffering from moderate-to-severe plaque psoriasis. In December, this data and two previous successful Phase III studies were included in a Biologics License Application (BLA) submitted to the U.S. Food and Drug Administration (FDA) for marketing approval of Raptiva(TM). The BLA submission is based on efficacy and safety data from over 2,100 psoriasis patients. In February 2003, the FDA formally acknowledged receipt of the BLA submission. Genentech has projected a 10-month regulatory review period for Raptiva(TM) in the U.S. with FDA action expected in late 2003.
Serono S.A., Genentech's marketing partner outside the U.S. and Japan, announced in February 2003 that it had submitted a Marketing Authorization Application (MAA) to the European Agency for the Evaluation of Medicinal Products (EMEA) for European Union Approval of Raptiva(TM) in psoriasis. It also announced plans to submit Raptiva(TM) for approval in Australia, Canada and Switzerland during the first quarter of 2003.
In clinical trials, Raptiva(TM) showed fast onset of clinical response and continuous control of plaque psoriasis over a one-year period of treatment. The most common adverse events seen with Raptiva(TM) treatment included mild-to-moderate headache, general aches and pains, chills, nausea and fever.
In January 2002, XOMA and Genentech announced plans to conduct a Phase II clinical study of Raptiva(TM) in patients suffering from rheumatoid arthritis. The 240-patient trial has completed enrollment and results will be evaluated after a 24-week treatment period. In January 2003, Genentech and XOMA also announced the initiation of a Phase II study to evaluate Raptiva(TM) as a possible treatment for patients with psoriatic arthritis. Genentech and XOMA continue to assess additional indications for Raptiva(TM).
MLN01 and CAB2 with Millennium Pharmaceuticals, Inc.: CAB2 and MLN01 are two biotherapeutic agents in development for certain vascular inflammation indications. Current plans call for completion of preclinical testing and, if successful, commencement of clinical testing in 2003.
ONYX-015 with Onyx Pharmaceuticals, Inc.: ONYX-015 is a therapeutic, tumor-selective modified adenovirus genetically engineered to destroy cancer cells. In 2002, under a strategic process development and manufacturing alliance with Onyx, XOMA has scaled up production to 500-liter fermentation scale and improved the manufacturing process for ONYX-015. In January 2003, Onyx announced the suspension of development activities related to ONYX-015 until it successfully engages a marketing partner. XOMA's agreement with Onyx remains in effect, but at this time, it is difficult to estimate the impact on results of future operations.
NEUPREX® with Baxter Healthcare Corporation: NEUPREX® is an injectable formulation of rBPI(21), a genetically engineered fragment of human bactericidal/permeability-increasing protein (BPI). A Phase II study in Crohn's disease completed enrollment in November 2002 but results are not yet known. Plans for further development, including potentially gaining access to additional resources by collaborating with another pharmaceutical company, are being pursued with Baxter to provide additional resources for development.
Additional Ongoing Development Programs
ING-1: ING-1 is a recombinant monoclonal antibody that binds with high affinity to an antigen expressed on epithelial cell cancers (breast, colorectal, prostate and others) and is designed to destroy cancer cells by recruiting a patient's own immune system. Enrollment has been completed in two Phase I studies testing intravenous administration in adenocarcinoma patients. An additional Phase I study is in progress to further evaluate the safety, subcutaneous administration and other features of ING-1 in cancer patients and to document any observed anti-tumor activity. Further development will be determined based on the results of these studies, and potentially, on future collaborative arrangements.
BPI-derived compounds for retinal disorders: Results of in vitro and in vivo studies conducted by Joslin Diabetes Center at Harvard University, presented in April of 2001 and published in February of 2002, showed that compounds derived from BPI inhibit abnormal growth of blood vessels (angiogenesis) in the retina while sparing key retinal cells (pericytes). These data suggest that these compounds may have the potential for treating eye diseases such as diabetic retinopathy or macular degeneration, both leading causes of adult blindness, and other retinal diseases. XOMA is conducting further research together with Joslin.
A BPI-derived compound for acne: XOMA is currently evaluating a topical anti-bacterial formulation of BPI-derived compound for the possible treatment of acne. Acne is triggered by a common human pathogen, Propionibacterium acnes -- bacteria that are considered the primary cause of inflammatory lesions associated with acne and are often isolated from various topical infections. The emergence of resistant strains to current antibiotics used to treat acne has encouraged XOMA researchers to review the anti-P. acnes properties of this product for this dermatological indication. Pending positive results of upcoming toxicology testing, the Company intends to initiate clinical testing in the second half of 2003.
Process Development and Manufacturing: 2002 Milestones
XOMA completed the transfer of its technical development function to a new pilot facility and also added a third 2,750-liter fermentation suite for biologicals manufacturing in 2002. This expansion of XOMA's development capabilities, which includes over 20 years of experience in preclinical, process development, manufacturing, quality and clinical development, provides the Company with more capacity to bring in additional product candidates in collaboration with other biopharmaceutical companies. XOMA strengthened its business development team in 2002 to support the ongoing execution of this collaborative strategy.
Enabling Technologies: 2002 License Agreement Milestones
Bacterial Cell Expression Systems: In 2002, XOMA entered into seven additional antibody-related license arrangements. Four of these were cross-license arrangements related to the use of XOMA's bacterial cell expression system technology in phage display. Under the agreements, MorphoSys AG, Biosite Incorporated, Dyax Corp., and Cambridge Antibody Technology Limited, receive licenses to use XOMA's antibody expression technology for developing products using phage display-based antibody libraries. XOMA, in exchange, will receive license and other fees as well as access to these companies' antibody display libraries and intellectual property that will complement XOMA's existing development capabilities and help support the company's own antibody product development pipeline.
XOMA has scheduled an investor conference call regarding this announcement today, March 11, 2003 beginning at 5:00 PM EST (2:00 P.M. PST). Investors are invited to listen to the conference call by phone or via XOMA's website, xoma.com. The domestic dial-in number (U.S./Canada) for the live call is 1-877-356-2902 and the conference ID number is 7945672. The international dial-in number is 1-706-643-3700 and uses the same dial-in conference I.D. number. To listen to the call via the Internet, go to XOMA's website a few minutes before the start of the call to register, download, and install any necessary audio software.
The audio replay of the call will be available beginning two hours following the conclusion of the webcast through 6:00 p.m. EST (3:00 p.m. PST) on March 18, 2003. Access numbers for the replay are 1-800-642-1687 (U.S./Canada) or 1-706-645-9291(International); Conference I.D. 7945672.
About XOMA
XOMA develops and manufactures antibody and other protein-based biopharmaceuticals for disease targets that include cancer, immunological and inflammatory disorders, and infectious diseases. XOMA's programs include collaborations: with Genentech, Inc. on the Raptiva(TM) antibody for psoriasis (BLA submission), rheumatoid arthritis (Phase II), psoriatic arthritis (Phase II) and other indications; with Baxter Healthcare Corporation to develop NEUPREX® (rBPI(21)) for Crohn's disease (Phase II) and other indications; with Millennium Pharmaceuticals, Inc. on two biotherapeutic agents, CAB2 and MLN01, for certain vascular inflammation indications (preclinical); and with Onyx Pharmaceuticals, Inc. on its ONYX-015 product for various cancers (current activities suspended, pending partnership discussions). Earlier-stage development programs include compounds to treat cancer, retinopathies, autoimmune diseases and infections.
For more information about XOMA's pipeline and activities, please visit XOMA's website at xoma.com.
Certain statements contained herein related to the relative size of the Company's loss for 2002, the sufficiency of its cash resources and the BLA review time frame, as well as other statements related to the progress and timing of product development and present or future licensing or collaborative arrangements, or that otherwise relate to future periods, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions that may not prove accurate. Actual results could differ materially from those anticipated due to certain risks inherent in the biotechnology industry and for companies engaged in the development of new products in a regulated market. Among other things, the actual loss for 2003 could be higher depending on revenues from licensees and collaborators, the size and timing of expenditures and whether there are unanticipated expenditures; the sufficiency of cash resources could be shortened if expenditures are made earlier or in larger amounts than anticipated or are unanticipated or if funds are not available; and regulatory approval could be delayed or denied based on safety or efficiency issues relating to the products being tested; action, inaction or delays by the FDA or European regulators; or analysis, interpretation or submission of scientific data. These and other risks, including those related to changes in the status of the existing collaborative relationships, availability of additional licensing or collaboration opportunities, the timing or results of pending and future clinical trials, the ability of collaborators and other partners to meet their obligations, market demand for products, actions by the Food and Drug Administration or the U.S. Patent and Trademark Office, uncertainties regarding the status of biotechnology patents, uncertainties as to the cost of protecting intellectual property and risks associated with XOMA's status as a Bermuda company, are described in more detail in the Company's most recent annual report on Form 10K and in other SEC filings.
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XOMA Ltd.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par and per share amounts)
December 31,
-------------------
2002 2001
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $36,262 $67,320
Short-term investments 391 320
Restricted cash 1,500 --
Receivables 8,656 1,662
Related party receivables - current 206 418
Inventory 1,306 1,299
Prepaid expenses and other 449 249
--------- ---------
Total current assets 48,770 71,268
Property and equipment, net 22,650 14,645
Related party receivables - long term 190 --
Deposits and other 172 194
--------- ---------
Total Assets $71,782 $86,107
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LIABILITIES AND SHAREHOLDERS' EQUITY
(Net Capital Deficiency)
CURRENT LIABILITIES:
Accounts payable $ 3,201 $ 3,520
Accrued liabilities 7,096 4,422
Short-term loan 763 --
Capital lease obligations - current 667 673
Deferred revenue - current 1,729 5,017
Convertible note - current 5,146 5,013
--------- ---------
Total current liabilities 18,602 18,645
Capital lease obligations - long-term 729 1,393
Deferred revenue - long-term 800 1,470
Convertible note - long-term 63,016 50,980
--------- ---------
Total Liabilities 83,147 72,488
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (Net Capital Deficiency):
Preference shares, $.05 par value,
1,000,000 shares authorized, no shares
issued and outstanding -- --
Common shares, $.0005 par value,
135,000,000 shares authorized, and
71,793,647 and 70,184,693 shares
outstanding at December 31, 2002 and
2001, respectively 36 35
Paid-in-capital 529,354 521,163
Accumulated comprehensive income (loss) 121 50
Accumulated deficit (540,876) (507,629)
--------- ---------
Total Shareholders' Equity
(Net Capital Deficiency) (11,365) 13,619
--------- ---------
$71,782 $86,107
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XOMA Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Year Ended December 31,
------------------------------
2002 2001 2000
--------- --------- ---------
REVENUES:
License and collaborative fees $ 16,850 $ 4,821 $ 3,194
Contract revenue 13,050 10,078 3,400
Product sales 49 2,380 65
--------- --------- ---------
Total revenues 29,949 17,279 6,659
--------- --------- ---------
OPERATING COSTS AND EXPENSES:
Research and development 42,621 35,929 30,006
Marketing, general and
administrative 19,405 8,681 6,069
--------- --------- ---------
Total operating costs and
expenses 62,026 44,610 36,075
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Loss from operations (32,077) (27,331) (29,416)
OTHER INCOME (EXPENSE):
Investment and other income 846 1,959 2,684
Interest and other expense (2,016) (2,668) (2,680)
--------- --------- ---------
Net loss available to
common shareholders $(33,247) $(28,040) $(29,412)
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BASIC AND DILUTED NET LOSS PER
COMMON SHARE $ (0.47) $ (0.41) $ (0.45)
========= ========= =========
SHARES USED IN COMPUTING BASIC AND
DILUTED NET LOSS PER COMMON SHARE 70,355 68,159 64,719
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