Financial Performance - The company reported a net loss of $8.6 million and net cash used in operating activities of $4.9 million for the three months ended March 31, 2024, with an accumulated deficit of $1.2 billion as of the same date [259]. - The company generated a net loss of $40.8 million and net cash used in operating activities of $18.2 million for the year ended December 31, 2023 [259]. - Total revenues for Q1 2024 were $1.49 million, a significant increase of 241% compared to $437,000 in Q1 2023 [278]. - Revenue from contracts with customers included $1.0 million in milestone payments from AVEO in Q1 2024, while there was no revenue from contracts in Q1 2023 [279]. - Net cash used in operating activities was $4.95 million in Q1 2024, slightly higher than $4.92 million in Q1 2023 [289]. Acquisitions and Agreements - In February 2024, the company acquired Kinnate for $2.5879 in cash per share plus one non-transferable contingent value right (CVR) per share, with the merger closing on April 3, 2024 [260]. - Kinnate sold exarafenib and related IP for an upfront cash consideration of $0.5 million and contingent consideration of $30.5 million upon achieving specified milestones [261]. - The company entered into Daré Royalty Purchase Agreements for $22.0 million, acquiring royalties and potential commercial milestones related to XACIATO™ [266]. - The company earned a $9.0 million milestone payment from the Viracta Royalty Purchase Agreement following FDA approval of OJEMDA [267]. - The company made a $1.0 million milestone payment to LadRx in January 2024 following FDA acceptance of NDA resubmission for arimoclomol [273]. - The company earned a $5.0 million milestone from Rezolute after the first patient was dosed in its Phase 3 trial of RZ358 [274]. Expenses and Financial Obligations - R&D expenses decreased to $33,000 in Q1 2024 from $54,000 in Q1 2023, with expectations of increased costs in 2024 due to ongoing clinical trials [281]. - G&A expenses rose to $8.5 million in Q1 2024, up from $6.2 million in Q1 2023, primarily due to a $1.3 million increase in stock-based compensation [282]. - Interest expense for Q1 2024 was $3.55 million, reflecting costs associated with the Blue Owl Loan initiated in December 2023 [284]. - The outstanding principal balance of the Blue Owl Loan is $120.6 million as of March 31, 2024, with an interest rate of 9.875% [299]. Cash Position - Cash and cash equivalents decreased to $136.2 million as of March 31, 2024, down from $153.3 million at the end of 2023 [288]. - The company authorized a stock repurchase program allowing for the purchase of up to $50.0 million of common stock through January 2027, with $13,000 spent on 660 shares as of March 31, 2024 [265]. - The company authorized a stock repurchase program of up to $50 million, with $13,000 spent on repurchasing 660 shares by March 31, 2024 [298]. Future Expectations - The company expects to continue acquiring rights to future milestone payments and royalty streams as part of its business model [300]. - Potential future milestone payments and legal fees related to licensing and development programs could aggregate up to $6.3 million, contingent on achieving specific milestones [303]. Dividends - Series A Preferred Stock holders are entitled to cumulative cash dividends at a rate of 8.625%, equating to $2.15625 per share annually [304]. - Series B Depositary Shares holders are entitled to cumulative cash dividends at a rate of 8.375%, equating to $2,093.75 per year per share [304]. - All dividends on Series A and Series B Preferred Stock have been paid as scheduled since original issuance, with expectations to continue these payments using existing capital resources [304]. Regulatory and Reporting - There have been no material changes in commitments and contingencies since the Annual Report on Form 10-K for the year ended December 31, 2023 [305]. - The company is classified as a smaller reporting company and is not required to provide additional market risk disclosures [306].

Revenue and Payments - XOMA's royalty aggregator business model focuses on early to mid-stage clinical assets, primarily in Phase 1 and 2, with significant commercial sales potential[26]. - The company expects most future revenue to be based on milestone and royalty payments from partnered therapeutic candidates[26]. - In 2023, XOMA received commercial payments totaling $7.3 million from Roche's VABYSMO, up from $0.5 million in 2022[34]. - XOMA paid $6.0 million in milestone payments related to VABYSMO's marketing approvals in 2022 and may pay an additional $6.0 million based on future sales thresholds[34]. - The company acquired the full commercial payment stream for IXINITY® with an upfront payment of $9.6 million and expects mid-single-digit percentage payments on sales until Q1 2035[35]. - XOMA's acquisition of DSUVIA® includes a 15% royalty on commercial net sales and a 75% royalty on net sales to the DoD, with potential milestone payments up to $116.5 million[37]. - The LadRx Agreements include potential regulatory and commercial milestone payments of up to $52.5 million for arimoclomol and up to $342.7 million for aldoxorubicin[38]. - XOMA entered into the Kuros RPA for potential royalties from CMP-001, with tiered royalties from high single-digit to low double-digits and up to $25.5 million in pre-commercial milestone payments[40]. - The company has rights to receive 33% of future royalties from Incyte and Merck under the Agenus RPA, with potential development and regulatory milestones up to $59.5 million[44]. - XOMA's acquisition of rights to six product candidates targeting the adenosine pathway includes an upfront payment of $10.0 million for potential low single-digit royalty payments[48]. - In November 2022, the company acquired ObsEva's intellectual property related to ebopiprant for a $15.0 million upfront payment and potential earn-out payments of up to $97.5 million[49]. - The company earned a $2.0 million milestone payment from Takeda in November 2020 and is eligible for remaining milestone payments totaling up to $16.0 million[60]. - In 2023, the company earned a total of $1.5 million in milestone payments from Janssen, including payments for IND filings and a Phase 3 trial[70]. - Rezolute is required to make milestone payments to the company of up to $232.0 million based on pre-specified criteria for RZ358, along with royalties ranging from high single-digits to mid-teens on annual net sales[63]. - Rezolute initiated a Phase 3 clinical study for RZ358 in December 2023, triggering a $2.0 million milestone payment due to the company[68]. Regulatory and Compliance Risks - Regulatory compliance is critical for the company and its partners, as failure to meet requirements can lead to delays and potential sanctions[73]. - In the U.S., new legislation is regulating drug pricing, including a requirement for manufacturers to refund CMS for discarded drug amounts starting in 2023 and eliminating the Medicaid rebate cap in 2024[75]. - The Inflation Reduction Act of 2022 mandates Medicare price negotiations for certain drugs and imposes inflation-based rebates on Medicare Part B and D, affecting future revenue streams[75]. - The process of obtaining regulatory approval for product candidates is lengthy and expensive, often taking several years, and there is no guarantee of approval[143]. - The FDA and other regulatory agencies have substantial discretion in the approval process, which can lead to unpredictable delays and increased costs[146]. - Changes in regulatory policies or the enactment of new regulations may cause delays in the approval process for product candidates[145]. - The FDA provides a five-year non-patent exclusivity period for new drugs containing a new chemical entity (NCE) before ANDAs can be submitted[163]. - The company’s potential royalty providers may face significant delays in clinical trials due to various factors, including patient enrollment challenges and regulatory requirements[150]. - The company may encounter challenges in integrating acquired employees and maintaining relationships with customers and partners post-acquisition[96]. Financial Performance and Risks - The company generated net losses of $40.8 million and negative cash flows from operations of $18.2 million for the year ended December 31, 2023, with an accumulated deficit of $1.2 billion as of the same date[116]. - The company faces competition from other firms seeking to aggregate royalties and provide financing to biotechnology companies, which may impact its acquisition strategy[72]. - Recent volatility in capital markets may limit licensees' ability to secure funding, impacting the company's revenue from royalties and milestones[92]. - The company has financed operations primarily through equity securities, debt, and collaboration payments, with future net losses dependent on expenditure rates and revenue generation capabilities of partners[117]. - The company has an obligation to pay cumulative cash dividends of 8.625% on Series A Preferred Stock and 8.375% on Series B Preferred Stock, which may limit borrowing capabilities[124][127]. - As of December 31, 2023, the company had 984,000 shares of Series A Preferred Stock and 1,600,000 depositary shares of Series B Preferred Stock outstanding, indicating significant obligations to preferred shareholders[129]. - The company’s asset portfolio is not fully diversified, with a large percentage of net present value tied to a limited number of products, increasing financial risk[134]. - The company may face adverse effects on financial condition if any payor of future potential milestones or royalties declines to make payments[135]. - The company’s royalty aggregator strategy may be adversely affected by economic downturns or unstable market conditions, impacting growth strategy and financial performance[118][122]. - The company has sustained significant operating losses and negative cash flows since inception, raising concerns about future profitability[116]. Intellectual Property and Legal Risks - The company emphasizes the importance of intellectual property, with potential disputes over rights that could affect its financial condition[81]. - The company relies on patent protection and trade secrets to maintain competitive advantage, but these protections may be limited[178]. - Non-compliance with patent maintenance requirements could result in loss of patent rights, adversely affecting the business[186]. - Enforcement of intellectual property rights in foreign jurisdictions may be challenging, leading to potential infringement issues[187]. - The termination of the Organon License Agreement will result in no milestone payments for achievements post-notice, leading to an impairment charge of $14.2 million as of December 31, 2023[197]. - The company incurred $4.1 million in costs related to an adverse arbitration decision regarding a license agreement, which was paid in April 2023[192]. - Significant patents in the company's portfolio are expected to expire in the coming years, potentially affecting financial condition and operational results[190]. - The company is exposed to risks from litigation regarding intellectual property, which can be costly and time-consuming[191]. - License agreements may be unilaterally terminated, adversely affecting potential milestone and royalty payments[196]. Operational Structure and Employee Risks - The company employs 13 full-time employees as of March 4, 2024, primarily in executive and administrative roles, indicating a lean operational structure[87]. - The company relies heavily on third-party service providers for product candidate development, and inadequate performance by these providers could delay development programs[203]. - The company relies on outsourcing arrangements for significant portions of its activities, including financial reporting and accounting[216]. - The company is exposed to risks related to employee misconduct, which could include noncompliance with regulatory standards[217]. - Cybersecurity threats have increased in sophistication, and the company’s systems are vulnerable to data breaches and unauthorized access[221]. - Data breaches could result in significant financial and operational impacts, including system disruptions and remediation costs[222]. - Compliance with data privacy and security obligations is resource-intensive, and failure to comply could lead to regulatory actions and penalties[224]. - The California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA) impose additional data protection obligations on the company[225]. Market and Competitive Landscape - The biopharmaceutical industry is highly competitive, and the company may face challenges from new products or improvements that could render its products obsolete[104]. - The company is actively seeking acquisition opportunities for future royalties and milestone payments, facing competition that could increase costs and reduce potential targets[90]. - The company plans to continue business development efforts to acquire potential milestone and royalty streams or companies, but competition is fierce from larger pharmaceutical and biotechnology companies[138]. - Changes in the royalty acquisition market or reduced growth in the biopharmaceutical industry could diminish opportunities for acquiring significant milestones and royalties[123]. - The ability to obtain adequate reimbursement for products is uncertain, which may prevent potential royalty providers from achieving profitability[170]. - Third-party payors are increasingly challenging pharmaceutical pricing, impacting the sales of medical products and treatments[171]. - The introduction of generic or biosimilar versions can alter market acceptance of branded products, potentially leading to decreased sales[175]. - New developments in biotechnology may render existing product candidates obsolete, increasing competition in antibody-based technologies[166].

Revenue Performance - For the three months ended September 30, 2023, total revenues were $830,000, an increase of $379,000 compared to $451,000 in the same period of 2022[257]. - For the nine months ended September 30, 2023, total revenues were $2.925 million, a decrease of $1.616 million compared to $4.541 million in the same period of 2022[257]. - The company expects most future revenue to be based on payments from milestones and royalties related to partnered clinical assets[245]. Net Loss and Deficit - The company reported a net loss of $5.5 million for the three months ended September 30, 2023, and an accumulated deficit of $1.2 billion as of September 30, 2023[246]. - The company had an accumulated deficit of $1.2 billion as of September 30, 2023[273]. Expenses - G&A expenses for the three months ended September 30, 2023, were $6.4 million, an increase of $1.6 million compared to $4.8 million in the same period of 2022[261]. - R&D expenses were $25,000 for the three months ended September 30, 2023, consistent with $29,000 for the same period in 2022[260]. - Arbitration settlement costs amounted to $4.1 million for the nine months ended September 30, 2023[265]. Cash Flow - Cash and cash equivalents decreased by $24.4 million from $57.8 million as of December 31, 2022, to $33.5 million as of September 30, 2023[268]. - Net cash used in operating activities for the nine months ended September 30, 2023, was $14.2 million, an increase of $5.2 million compared to $8.9 million for the same period in 2022[270]. - Net cash used in investing activities for the nine months ended September 30, 2023, was $6.2 million, primarily due to a $9.6 million payment for the acquisition of payment rights[271]. Milestones and Agreements - The company earned a $5.0 million milestone related to the FDA's acceptance of Day One Biopharmaceuticals' NDA for tovorafenib on October 30, 2023[247]. - The company acquired rights to potential regulatory and commercial milestones of up to $52.5 million related to arimoclomol and up to $342.7 million related to aldoxorubicin[248]. - The company may pay up to an additional $6.0 million in regulatory and commercial milestones related to the LadRx Agreements[289]. - The Organon License Agreement is set to terminate on January 21, 2024, with no material early termination penalties payable by either party[290]. Other Income and Investment - Investment income increased by $0.1 million and $0.9 million for the three and nine months ended September 30, 2023, respectively, due to higher market interest rates[266]. - Total other income (expense), net was $278,000 for the three months ended September 30, 2023, compared to $194,000 for the same period in 2022, reflecting an increase of $84,000[266]. Contingent Consideration - The company has potential contingent consideration of $4.0 million recorded on its consolidated balance sheets as of September 30, 2023[281]. - The company expects to incur incremental undiscounted costs of $0.5 million associated with the new lease expected to commence in the fourth quarter of 2023[279].

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 For the quarterly period ended June 30, 2023 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 XOMA Corporation (Exact name of registrant as specified in its charter) Delaware 52-2154066 (State or other jurisdi ...

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 For the quarterly period ended March 31, 2023 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 XOMA Corporation (Exact name of registrant as specified in its charter) Delaware 52-2154066 (State or other jurisd ...

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, 2022 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 001-39801 XOMA CORPORATION (Exact name of registrant as specified in its charter) Delaware 52-2154066 (State or other jurisdiction ...