Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q 2200 Powell Street, Suite 310 Emeryville, California 94608 (Address of principal executive offices) (Zip Code) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period from __________to__________ Commission File No. 001-39801 XOM ...

[Part I](index=4&type=section&id=PART%20I) [Business](index=8&type=section&id=Item%201.%20Business) XOMA Corporation aggregates biotech royalties from pre-commercial drug candidates, dependent on partner success and facing COVID-19 related delays - XOMA's business model is a **biotech royalty aggregator**, focusing on acquiring economic rights to future milestones and royalties from partnered, pre-commercial drug candidates[20](index=20&type=chunk)[22](index=22&type=chunk) - The company's strategy is to **expand its pipeline** by **acquiring potential milestone and royalty streams** for pre-commercial drug candidates, ideally those partnered with large pharmaceutical companies[23](index=23&type=chunk) - The **COVID-19 pandemic** poses a risk to XOMA's business by potentially **delaying clinical trials** conducted by its partners, which could **defer milestone revenue** and lead to **impairment charges**[24](index=24&type=chunk) Key Royalty Purchase Agreements | Counterparty | Agreement Date | Key Terms | | :--- | :--- | :--- | | **Agenus, Inc.** | Sep 2018 | Purchased rights to 33% of future royalties and 10% of milestones from six Incyte immuno-oncology assets and one Merck asset for $15.0 million. Earned a $1.0 million milestone in Nov 2020. | | **Bioasis Tech.** | Feb 2019 & Nov 2020 | Purchased rights to potential milestones and royalties from product candidates licensed to Prothena and Chiesi for upfront payments totaling $1.5 million. | | **Aronora, Inc.** | Apr 2019 | Purchased rights to royalties and milestones for five anti-thrombotic drug candidates for payments totaling $9.0 million. | | **Palobiofarma, S.L.** | Sep 2019 | Acquired rights to potential royalties on six drug candidates targeting the adenosine pathway for $10.0 million. | Key Out-Licensing Agreements & 2020 Milestones | Partner | Program | 2020 Milestone Event & Payment | | :--- | :--- | :--- | | **Novartis** | Anti-TGFβ (NIS793) | First patient dosed in Phase 2 trial, earning XOMA a **$25.0 million** milestone. | | **Takeda** | Mezagitamab | First patient dosed in Phase 2 study, earning XOMA a **$2.0 million** milestone. | - As of March 5, 2021, the company employed **10 full-time employees**, primarily in executive, business development, legal, finance, and administrative roles[89](index=89&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from its royalty aggregator model, including COVID-19 impacts, revenue uncertainty, and reliance on third-party drug development - The **COVID-19 pandemic** could materially impact licensees and royalty-agreement counterparties, causing **delays or cancellations of drug development efforts and clinical trials**, which would negatively affect XOMA's receipt of potential milestones and royalties[94](index=94&type=chunk)[96](index=96&type=chunk) - The company's **royalty aggregator strategy** is subject to significant risks, including that acquired royalty/milestone payments may not produce anticipated revenues, and many are associated with drug products still in clinical development that may not be successfully commercialized[105](index=105&type=chunk)[109](index=109&type=chunk) - A large percentage of the portfolio's calculated **net present value is concentrated in a limited number of products**, and the failure of any one of these could materially harm the company's financial condition[145](index=145&type=chunk) - The company has a history of significant **operating losses**, with an accumulated deficit of **$1.2 billion** as of December 31, 2020, and expects to sustain losses in the foreseeable future[127](index=127&type=chunk) - XOMA has a continuing obligation to pay quarterly cash dividends at a rate of **8.625%** on its **Series A Preferred Stock**, which is an ongoing expenditure that may limit its ability to borrow additional funds[137](index=137&type=chunk) - The company's ability to use its **net operating loss (NOL) carry-forwards** is substantially limited by Section 382 of the U.S. Internal Revenue Code due to past ownership changes in 2009, 2012, and 2017[257](index=257&type=chunk)[261](index=261&type=chunk) [Unresolved Staff Comments](index=88&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[267](index=267&type=chunk) [Properties](index=88&type=section&id=Item%202.%20Properties) XOMA leases its corporate headquarters in Emeryville, California, with the lease expiring in February 2023 - The company leases its corporate headquarters in Emeryville, California, with the lease expiring in **February 2023**[268](index=268&type=chunk) [Legal Proceedings](index=88&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings, though future matters could have an adverse effect - The company is not currently involved in any material legal proceedings[269](index=269&type=chunk) [Mine Safety Disclosures](index=88&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[270](index=270&type=chunk) [Part II](index=89&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=89&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) XOMA's common stock trades on Nasdaq, with no common stock dividends planned, but Series A preferred stock dividends are obligated - The company's common stock trades on **The Nasdaq Global Market** under the symbol "**XOMA**"[273](index=273&type=chunk) - XOMA has not paid dividends on its common stock and does not plan to in the foreseeable future, but is required to pay cumulative cash dividends on its **Series A preferred stock**[274](index=274&type=chunk) [Selected Financial Data](index=89&type=section&id=Item%206.%20Selected%20Financial%20Data) As a smaller reporting company, XOMA is not required to provide selected financial data - The company is a **smaller reporting company** and is not required to provide selected financial data[276](index=276&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=90&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) XOMA's 2020 revenues increased to $29.4 million, driven by milestone payments, resulting in a net income of $13.3 million and strengthened liquidity Results of Operations (2020 vs. 2019) | Metric | 2020 ($M) | 2019 ($M) | Change ($M) | | :--- | :--- | :--- | :--- | | **Total Revenues** | **$29.4M** | **$18.4M** | **+$11.0M** | | R&D Expenses | $0.2M | $1.3M | -$1.1M | | G&A Expenses | $16.8M | $21.0M | -$4.2M | | **Net Income (Loss)** | **$13.3M** | **($2.0M)** | **+$15.3M** | - The primary driver of the 2020 revenue increase was a **$25.0 million milestone payment from Novartis** related to the NIS793 anti-TGFβ program and a **$2.0 million milestone from Takeda**[282](index=282&type=chunk)[283](index=283&type=chunk)[307](index=307&type=chunk) - General and Administrative (G&A) expenses decreased by **$4.2 million** in 2020, mainly due to a **$3.9 million reduction in facilities costs** from terminating legacy leases[313](index=313&type=chunk) Liquidity and Cash Flow Summary | Metric | Dec 31, 2020 ($M) | Dec 31, 2019 ($M) | | :--- | :--- | :--- | | Cash | $84.2M | $56.7M | | Working Capital | $75.8M | $51.1M | | Net Cash from Operating Activities | $10.1M | ($0.3M) | | Net Cash from Financing Activities | $19.8M | $30.5M | - In December 2020, the company raised **$22.6 million in net proceeds** from a public offering of **984,000 shares of 8.625% Series A cumulative, perpetual preferred stock**[279](index=279&type=chunk)[332](index=332&type=chunk) - The company's critical accounting estimates include **revenue recognition**, **amortization of unearned revenue** from the sale of future revenue streams, and **stock-based compensation**[292](index=292&type=chunk)[293](index=293&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=109&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, XOMA is not required to provide quantitative and qualitative disclosures about market risk - The company is a **smaller reporting company** and is not required to provide quantitative and qualitative disclosures about market risk[353](index=353&type=chunk) [Financial Statements and Supplementary Data](index=109&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the consolidated financial statements, notes, and the independent auditor's report, located from page F-1 - The consolidated financial statements, notes, and auditor's report are located starting on **page F-1** of the Form 10-K[354](index=354&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=111&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable to the company - Not applicable[357](index=357&type=chunk) [Controls and Procedures](index=111&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2020 - Management concluded that the company's **disclosure controls and procedures were effective** as of the end of the period covered by the report[358](index=358&type=chunk) - Based on an assessment using the COSO framework, management believes the company's **internal control over financial reporting was effective** as of December 31, 2020[360](index=360&type=chunk) [Other Information](index=111&type=section&id=Item%209B.%20Other%20Information) On March 10, 2021, the company amended its ATM agreement, increasing the common stock sale limit to $50.0 million - On March 10, 2021, the company increased its ATM agreement with H.C. Wainwright & Co. to allow for the sale of up to **$50.0 million in common stock**[363](index=363&type=chunk) [Part III](index=113&type=section&id=PART%20III) [Directors, Executive Officers, Corporate Governance](index=113&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20Corporate%20Governance) The company's board consists of seven members, including CEO James Neal and CFO Thomas Burns, with a majority of independent directors - The board of directors consists of **seven members**: James Neal (CEO), W. Denman Van Ness (Chairman), Joseph M. Limber, Jack L. Wyszomierski, Matthew Perry, Barbara Kosacz, and Natasha Hernday[366](index=366&type=chunk)[367](index=367&type=chunk) - Thomas Burns serves as the **Senior Vice President, Finance and Chief Financial Officer**[378](index=378&type=chunk) - The Audit Committee consists of Messrs. Limber (Chair), Van Ness, and Wyszomierski, all of whom are **independent** and qualify as "**audit committee financial experts**"[386](index=386&type=chunk) [Executive Compensation](index=121&type=section&id=Item%2011.%20Executive%20Compensation) For fiscal year 2020, CEO James Neal's total compensation was approximately $1.7 million, and CFO Thomas Burns' was $0.8 million 2020 Summary Compensation | Name and Principal Position | Salary ($) | Option Awards ($) | Non-Equity Incentive Plan Comp ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | **James Neal** (CEO) | 533,527 | 951,201 | 187,802 | **1,693,762** | | **Thomas Burns** (CFO) | 386,168 | 316,109 | 98,861 | **811,489** | - The 2020 target bonus opportunities were **55% of base salary for CEO James Neal** and **40% for CFO Thomas Burns**[392](index=392&type=chunk) - Non-employee directors receive an annual retainer of **$40,000**, plus additional retainers for committee service and chairmanship roles. They also receive initial and annual stock option grants[417](index=417&type=chunk)[418](index=418&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=132&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of January 31, 2021, BVF Inc. was the largest beneficial owner with 37.2% of common stock, and CEO James Neal held 6.1% - **BVF Inc.** is the largest shareholder, beneficially owning **37.2%** of the company's common stock as of December 15, 2020[425](index=425&type=chunk) - CEO James Neal beneficially owned **6.1%** of common stock, and all directors and executive officers as a group owned **9.9%** as of January 31, 2021[425](index=425&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2020) | Plan Category | Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price ($) | Securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | **Approved by stockholders** | 1,827,906 | $20.66 | 560,968 | [Certain Relationships and Related Transactions, and Director Independence](index=135&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company disclosed related party transactions, primarily with largest shareholder BVF, and confirmed a majority of independent directors - In the 2019 Rights Offering, largest shareholder **BVF** acted as a full backstop and purchased **845,463 shares** of common stock[431](index=431&type=chunk) - In the December 2020 Series A Preferred Stock offering, Director Matthew Perry (President of BVF) purchased **200,000 shares for $5.0 million**, and the spouse of CEO James Neal purchased **8,000 shares for $200,000**[432](index=432&type=chunk) - Director Barbara Kosacz was a partner at Cooley LLP, the company's outside legal counsel, until July 2020. XOMA paid Cooley approximately **$0.4 million** in fees in 2020[433](index=433&type=chunk) - The Board of Directors has determined that a majority of its members qualify as "**independent**" under Nasdaq listing standards[439](index=439&type=chunk) [Principal Accountant Fees and Services](index=137&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Deloitte & Touche LLP served as the independent auditor, with total fees of $630,500 in 2020 and $588,900 in 2019 Accountant Fees | Fee Type | 2020 ($) | 2019 ($) | | :--- | :--- | :--- | | Audit Fees | $630,500 | $588,900 | | **Total Fees** | **$630,500** | **$588,900** | - The Audit Committee's policy is to pre-approve all audit and permissible non-audit services, and **100%** of services provided by Deloitte & Touche LLP in 2019 and 2020 were pre-approved[442](index=442&type=chunk)[443](index=443&type=chunk) [Part IV](index=139&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=139&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K - This section contains a list of all exhibits filed with the Form 10-K, including material contracts and corporate governance documents[446](index=446&type=chunk)[464](index=464&type=chunk) [Form 10-K Summary](index=155&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company did not provide a summary for this item - None[467](index=467&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to__________ Commission File No. 0-14710 XOMA Corporation (Exact name of registrant as specified in its charter) Delaware 52-2154066 (Sta ...

Business Model & Portfolio - XOMA acquires pre-commercial drug royalties, focusing on development-stage assets with blockbuster potential licensed to large-cap partners[8] - The company's portfolio includes 65+ assets in >30 disclosed indications and is growing[8] - XOMA's strategy involves acquiring milestone and royalty rights to high-potential, fully funded assets, focusing on mid-stage clinical assets[20] - The average royalty rate in XOMA's portfolio is approximately 2.5%, with royalty terms of 8-12 years post-commercialization[43] Transactions & Investments - XOMA's investment in Agenus' royalty interest totaled $15 million[29], securing 33% of future milestones[28] - The company invested $9 million in Aronora's royalty interest[34], gaining 100% of future milestones[33] - XOMA's investment in Palobiofarma's assets amounted to $10 million[38], acquiring 100% of clinical-stage assets[36] Financial Highlights & Strategy - In 2019, XOMA received $15.8 million from partners[80] - The company completed a $22 million Rights Offering, backstopped by BVF Partners[80] - XOMA maintains a lean cost infrastructure, with core G&A expenses of approximately $1 million per month[81] Partnered Programs - XOMA's portfolio includes 42 assets with large-cap partners[44] - >90% of XOMA's current royalty portfolio covers the next generation of emerging and novel I-O targets[48]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to__________ Commission File No. 0-14710 XOMA Corporation (Exact name of registrant as specified in its charter) Delaware 52-2154066 (State or ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR (Exact name of registrant as specified in its charter) Delaware 52-2154066 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Emeryville, California 94608 (Address of principal executive offices) (Zip Code) Registrant's tele ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 0‑14710 XOMA CORPORATION (Exact name of registrant as specified in its charter) Delaware 52‑2154066 (State or other jurisdiction o ...

Washington, D.C. 20549 UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to__________ Commission File No. 0-14710 XOMA Corporation (Exact name of registrant as specified in its charter) Delaware 52-2154066 (State or other jurisd ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to__________ Commission File No. 0-14710 XOMA Corporation (Exact name of registrant as specified in its charter) Delaware 52-2154066 (State or other jurisdictio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to__________ Commission File No. 0-14710 XOMA Corporation (Exact name of registrant as specified in its charter) Delaware 52-2154066 (State or other jurisdicti ...