Business Model and Revenue Streams - XOMA's royalty aggregator business model was implemented in 2017, focusing on early to mid-stage clinical assets primarily in Phase 1 and 2 development [26]. - The company expects future revenue to be based on milestone and royalty payments associated with its portfolio, which includes assets with long market exclusivity [26]. - In 2024, XOMA received commercial payments totaling $16.9 million from Roche's VABYSMO and $1.6 million from IXINITY [36][44]. - The company made an upfront payment of $6.0 million for VABYSMO and is eligible for 0.5% of future net sales for ten years [35]. - XOMA acquired rights to OJEMDA with an upfront payment of $13.5 million, with potential milestone payments of up to $54.0 million and high-single-digit royalties on sales [37]. - In October 2023, XOMA earned a $5.0 million milestone payment related to the FDA's acceptance of Day One's NDA for tovorafenib [38]. - The company is eligible to receive mid-single-digit royalties on sales of OJEMDA, earning $2.7 million in royalties in 2024 [39]. - XOMA entered into agreements for MIPLYFFA with potential milestone payments of up to $52.5 million and low single-digit royalty payments [40]. - The company paid an upfront payment of $5.0 million for the LadRx Agreements and earned a net milestone payment of $2.2 million upon FDA approval of MIPLYFFA [42]. - In April 2024, the company entered into the Daré Royalty Purchase Agreements, paying $22.0 million for 100% of remaining royalties related to XACIATO, with royalties ranging from low to high-single-digits [45]. - The company acquired an economic interest in DSUVIA for $8.0 million, retaining a 15% royalty on commercial sales, while receiving $0.1 million in commercial payments in 2024 [49][50]. - In November 2024, the company acquired Pulmokine for $20.0 million, gaining rights to net royalties ranging from low to mid-single-digits on commercial sales of seralutinib [51]. - The company acquired Kinnate in April 2024, paying $2.5879 per share and obtaining rights to IPR&D assets related to KIN-3248, currently in Phase 1 clinical study [52][53]. - In October 2024, the company entered into the Twist Royalty Purchase Agreement for $15.0 million, eligible to receive up to $0.5 billion in milestone payments and low-single-digit royalties on future sales [55]. Financial Performance and Risks - The company generated net losses of $13.8 million and negative cash flows from operations of $13.7 million for the year ended December 31, 2024, with an accumulated deficit of $1.2 billion [131]. - The company has financed operations primarily through the sale of equity securities, debt, and royalty interests, and payments received under collaboration and licensing arrangements [132]. - The company may need to raise additional funds to acquire milestone and royalty interests, with a risk of not obtaining sufficient funds on acceptable terms [137]. - The company has an obligation to pay cumulative cash dividends at the rate of 8.625% on Series A Preferred Stock and 8.375% on Series B Preferred Stock, which may limit borrowing capabilities [141][142]. - The company recorded credit losses of $7.9 million on purchased receivables under the Talphera CPPA, indicating no probable payments to be received as of December 31, 2024 [50]. - The company recorded credit losses of $14.0 million on purchased receivables under the Agenus RPA, determining no probable payments to be received as of September 30, 2024 [59]. - Significant reductions in potential milestone or royalty payments compared to expectations could materially adversely affect the company's financial condition and results of operations [149]. - A large percentage of the calculated net present value of the company's portfolio is represented by a limited number of products, and the failure of any one product could have a material adverse effect on financial conditions [150]. Competition and Market Challenges - The company faces significant competition in the biotechnology and pharmaceutical industries, including from companies with greater financial and technical resources [83]. - The company’s royalty aggregator model is challenged by competitors seeking to aggregate royalties or provide alternative financing, potentially impacting acquisition opportunities [83]. - Regulatory changes in the U.S. and EU are increasingly limiting or regulating the pricing of medical products, which could result in lower royalties for the company [87]. - The biopharmaceutical industry is highly competitive, and new products or improvements could render existing products obsolete, affecting potential royalty revenues [118]. - Competition from generic drugs may adversely affect sales of products, impacting potential milestones and royalties [185]. - New products and technologies from competitors may render the company's product candidates obsolete or noncompetitive [189]. - Positive developments in competing products may adversely impact the company's potential revenue from development milestones and royalties [191]. Regulatory and Legal Risks - The company is subject to various government regulations that could materially affect its operations and financial condition if compliance is not maintained [84]. - The company’s royalty aggregator strategy may require registration as an "investment company" under the Investment Company Act of 1940, which could impose significant operational changes and costs [125][126]. - The regulatory approval process for product candidates is lengthy and expensive, and there is no guarantee that approvals will be obtained in a timely manner or at all [159]. - The timing of clinical trials may be subject to significant delays due to various factors, including patient enrollment challenges and regulatory requirements [166]. - The company relies on patent protection and other legal means to safeguard proprietary technology, but these protections may be limited [202]. - Ongoing litigation regarding intellectual property rights can be costly and may divert management's attention from other business aspects [216]. - An adverse arbitration decision resulted in a $4.1 million payment for costs incurred by a licensee, impacting financial condition [217]. - Uncertainties from litigation and arbitration could materially affect the company's competitive position and market perception [219]. Acquisitions and Strategic Growth - The company’s strategy includes expanding its portfolio through acquisitions to diversify across therapeutic areas and development stages [27]. - The company may seek additional equity or debt financing to facilitate acquisitions, which could dilute existing stockholders and affect the market price of its common stock [106]. - The company intends to expand market opportunities by acquiring securities from other companies, which may face risks and uncertainties that could adversely affect financial performance [107]. - Regulatory challenges may block or delay acquisitions, and failure to integrate acquired employees could lead to retention risks [108]. - The company may not realize expected benefits from acquisitions, such as those of Kinnate and Pulmokine, due to integration challenges and operational disruptions [105]. - Acquisitions may expose the company to credit risks, particularly in the event of defaults or bankruptcies of licensors or licensees, potentially affecting future royalty and milestone payments [104]. - The company faces significant costs and reputational risks associated with competition for future asset acquisitions, which may increase prices and reduce potential targets [103]. Dependency on Third Parties - The company relies on third parties achieving specified development milestones for potential royalty payments, with a significant portion of net present value tied to a limited number of products [95]. - The company is dependent on third parties for the enforcement of rights related to acquired royalties, and their failure could negatively impact financial results [109]. - The company relies heavily on third-party collaborations, making it vulnerable to disputes and terminations that could reduce financial resources [220]. - Future potential royalties and milestone payments are at risk due to the reliance on the performance of licensees and collaborators [223]. - The company may face challenges in finding new partners to continue product development and commercialization after a termination of agreements [221]. Stock and Shareholder Matters - In January 2024, the Board authorized a stock repurchase program allowing the purchase of up to $50.0 million of common stock through January 2027 [78]. - As of December 31, 2024, the company had purchased a total of 660 shares of common stock for $13,000 under the stock repurchase plan [81]. - As of December 31, 2024, the company had 984,000 shares of Series A Preferred Stock with a liquidation preference of $25.00 per share, and 1,600,000 depositary shares of Series B Preferred Stock with a liquidation preference of $25,000 per share [146].

Financial Performance - Total cash receipts for 2024 amounted to $46.3 million, including $20.0 million in royalties and commercial payments[17] - The company recorded total income and revenues of $28.5 million for the full year 2024, a significant increase from $4.8 million in 2023[7] - Total income and revenues for 2024 reached $28,487,000, a significant increase from $4,758,000 in 2023, representing a growth of approximately 498%[24] - The company reported a significant increase in revenue, reaching $1.2 billion, representing a 15% year-over-year growth[29] Expenses and Losses - R&D expenses increased to $2.9 million for the full year 2024, up from $0.1 million in 2023, primarily due to clinical trial costs related to KIN-3248[9] - G&A expenses for the full year 2024 were $34.5 million, compared to $25.6 million in 2023, largely due to acquisition-related costs[10] - Net loss for the full year 2024 was $13.8 million, a reduction from a net loss of $40.8 million in 2023[16] - The net loss for 2024 was $13,821,000, a reduction from a net loss of $40,831,000 in 2023, indicating an improvement of about 66%[24] - Total operating expenses rose to $68,463,000 in 2024, up from $46,606,000 in 2023, marking an increase of approximately 47%[24] Cash and Assets - XOMA Royalty had cash and cash equivalents of $106.4 million as of December 31, 2024, down from $159.6 million in 2023[17] - Cash and cash equivalents decreased to $101,654,000 in 2024 from $153,290,000 in 2023, a decline of about 34%[26] - Total assets decreased to $221,277,000 in 2024 from $234,301,000 in 2023, a decline of about 6%[26] Acquisitions and Portfolio Growth - XOMA Royalty doubled its royalty and milestone portfolio to over 120 assets through five transactions in 2024[1] - The company completed two whole company acquisitions in 2024, adding approximately $7.8 million in cash and five assets to its portfolio[3] - The company reported a gain of $19,316,000 from the acquisition of Kinnate, contributing positively to the financial results[24] Credit Losses - Credit losses totaled $30.9 million for the full year 2024, significantly higher than $1.6 million in 2023[12] - The company recognized $30,904,000 in credit losses on purchased receivables in 2024, compared to $1,575,000 in 2023, indicating a significant increase in credit risk[24] Future Outlook and Strategies - The company anticipates substantial milestone and royalty proceeds from its portfolio of partnered programs and licensed technologies over time[19] - The company provided an optimistic outlook for the next quarter, projecting revenue growth of 10% to 12%[29] - New product launches are expected to contribute an additional $200 million in revenue over the next fiscal year[29] - The company is investing $50 million in research and development for new technologies aimed at enhancing user experience[29] - Market expansion efforts are underway in Europe, targeting a 20% increase in market share by the end of the year[29] - The company is considering strategic acquisitions to bolster its product offerings and market presence[29] - A new marketing strategy has been implemented, aiming to increase brand awareness by 30% within the next six months[29] - The company plans to enhance its customer support services, allocating an additional $10 million to improve response times and service quality[29] Regulatory Approvals - FDA approvals were received for Day One's OJEMDA™ and Zevra's MIPLYFFA™, contributing to milestone payments of $9.0 million and $8.1 million, respectively[4] User Growth - User data showed a total of 5 million active users, up from 4 million in the previous quarter, indicating a 25% increase[29] Gross Margin - The gross margin improved to 45%, up from 42% in the previous quarter, reflecting better cost management[29]

Financial Performance - XOMA Royalty reported total income and revenues of $7.2 million for Q3 2024, a significant increase from $0.8 million in Q3 2023[6] - The company recorded a net loss of $17.2 million in Q3 2024, compared to a net loss of $5.5 million in Q3 2023, primarily due to a $14.0 million non-cash impairment charge[13] - The company reported a net loss of $9,853 thousand for the three months ended September 30, 2024, compared to a net loss of $20,722 thousand for the same period in 2023, indicating an improvement of approximately 52.4%[24] - The company recognized a gain of $19,316 thousand on the acquisition of Kinnate, contributing positively to the financial results[24] Cash Flow and Assets - Cash receipts totaled $9.9 million in Q3 2024, and $42.3 million for the first nine months of 2024[2] - On September 30, 2024, XOMA Royalty had cash and cash equivalents of $146.8 million, down from $159.6 million at the end of 2023[14] - Cash, cash equivalents, and restricted cash decreased from $159,550 thousand at the beginning of the period to $146,816 thousand at the end of the period, a decrease of about 8.3%[24] - Total current assets decreased from $169,313 thousand as of December 31, 2023, to $159,021 thousand as of September 30, 2024, representing a decline of approximately 6.4%[22] Expenses - General and administrative expenses increased to $8.0 million in Q3 2024 from $6.4 million in Q3 2023, largely due to costs associated with the Kinnate acquisition[9] - Research and development expenses were $0.8 million in Q3 2024, up from $25,000 in Q3 2023, reflecting costs related to the KIN-3248 clinical trial[7] - Total interest expense for Q3 2024 was $3.5 million, related to the Blue Owl Loan established in December 2023[11] - Stock-based compensation expense increased from $6,450 thousand in the nine months ended September 30, 2023, to $8,136 thousand in the same period of 2024, an increase of approximately 26.1%[24] Liabilities and Equity - Total liabilities decreased from $145,580 thousand as of December 31, 2023, to $138,531 thousand as of September 30, 2024, reflecting a reduction of approximately 4.8%[22] - Total stockholders' equity decreased from $88,721 thousand as of December 31, 2023, to $84,809 thousand as of September 30, 2024, a decline of about 4.5%[22] Acquisitions and Approvals - XOMA Royalty acquired a 50% economic interest in TWIST Bioscience's portfolio of over 60 licensed early-stage assets[2] - The FDA approved Zevra's MIPLYFFA™ (arimoclomol), adding to XOMA's commercial royalty portfolio[4] - Cash flows from investing activities included net cash acquired in the Kinnate acquisition amounting to $18,926 thousand[24] Future Outlook - The company anticipates significant future developments, including ongoing clinical trials and potential regulatory approvals for its partnered programs[16] - The company made principal payments of $6,902 thousand on debt during the financing activities[24]

Financial Performance - XOMA reported a net loss of $17.2 million for the three months ended September 30, 2024, and an accumulated deficit of $1.2 billion as of the same date [285]. - Total income and revenues for the three months ended September 30, 2024, were $7.2 million, a significant increase of $6.4 million compared to $830,000 in the same period of 2023 [297]. - For the nine months ended September 30, 2024, total income and revenues were $19.8 million, up from $2.9 million in the same period of 2023, reflecting a change of $16.8 million [297]. - The accumulated deficit as of September 30, 2024, was $1.2 billion, indicating significant operating losses since inception [321]. Revenue Sources - Income from purchased receivables for the three months ended September 30, 2024, included $5.4 million related to sales of VABYSMO [298]. - Revenue from contracts with customers for the nine months ended September 30, 2024, included a milestone payment of $5.0 million from Rezolute [301]. - XOMA expects future income related to VABYSMO to increase as sales are anticipated to grow [300]. Expenses - R&D expenses for Q3 2024 were $0.8 million, a significant increase from $25,000 in Q3 2023, primarily due to clinical trial costs related to KIN-3248 [303]. - G&A expenses for Q3 2024 were $8.0 million, up from $6.4 million in Q3 2023, with $1.4 million attributed to costs incurred from the Kinnate acquisition [304]. - G&A expenses for the nine months ended September 30, 2024, totaled $27.5 million, compared to $18.3 million in the same period of 2023, reflecting a $9.2 million increase mainly due to Kinnate acquisition costs [305]. Acquisitions and Agreements - XOMA entered into a royalty purchase agreement with Twist Bioscience for a $15.0 million upfront payment, potentially receiving up to $0.5 billion in milestone payments [286]. - The company recognized a $2.2 million milestone payment upon FDA approval of MIPLYFFA, with eligibility for mid-single-digit royalties on net sales [289]. - A $19.3 million gain was recognized on the acquisition of Kinnate during the nine months ended September 30, 2024, due to the fair value of net assets acquired exceeding the purchase consideration [309]. Cash Flow and Liquidity - Cash and cash equivalents as of September 30, 2024, were $142.1 million, down from $153.3 million as of December 31, 2023, reflecting a decrease of $11.2 million [317]. - Net cash used in operating activities for the nine months ended September 30, 2024, was $10.8 million, a decrease of $3.4 million compared to the same period in 2023 [318]. - Net cash provided by investing activities was $8.2 million for the nine months ended September 30, 2024, compared to a net cash used of $6.2 million in the same period of 2023, marking a $14.4 million change [319]. Future Obligations and Liabilities - The company has 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 repurchases as of September 30, 2024 [328]. - Future R&D and G&A expenditures related to the Kinnate acquisition are expected to be funded by cash received upon the merger's close [327]. - The company has recorded $4.0 million of contingent consideration related to RPAs, AAAs, and CPPAs on its balance sheets as of September 30, 2024 [332]. - The company expects to make additional milestone payments of up to $6.0 million under the Affitech CPPA and $1.0 million under the LadRx Agreements [332]. - The company recognized a $1.0 million liability for a commercial milestone payment following FDA approval of MIPLYFFA on September 20, 2024 [339]. - Based on reported 2024 sales of VABYSMO through September 30, 2024, the company recognized $3.0 million in liabilities for sales-based milestone payments [340]. - Holders of Series A Preferred Stock are entitled to cumulative cash dividends at a rate of 8.625% per year, while Series B Depositary Shares have a rate of 8.375% per year [335]. - The company is obligated to pay an additional $11.0 million for each successive $22.0 million received under the Daré RPAs after achieving a return threshold of $88.0 million [338]. - The company has potential future milestone payments aggregating up to $6.3 million that have not been recorded on the balance sheet as of September 30, 2024 [334].

Financial Performance - XOMA generated net income of $16.0 million and $7.4 million for the three and six months ended June 30, 2024, respectively, with an accumulated deficit of $1.2 billion as of June 30, 2024[283]. - Total income and revenues for the three months ended June 30, 2024, were $11.1 million, a significant increase of $9.4 million compared to $1.7 million in the same period of 2023[313]. - Investment income increased by $1.2 million and $2.5 million for the three and six months ended June 30, 2024 compared to the same periods in 2023, respectively, due to higher balances and higher market interest rates[325]. - Net cash used in operating activities decreased by $9.9 million for the six months ended June 30, 2024 compared to the same period in 2023, primarily driven by an increase of $13.6 million in operating cash receipts from partners and licensees[333]. - As of June 30, 2024, the accumulated deficit was $1.2 billion, with cash and cash equivalents of $143.9 million and restricted cash of $6.0 million[336]. Acquisitions and Agreements - The Kinnate acquisition was completed on April 3, 2024, with a cash payment of $2.5879 per share and potential milestone payments totaling $30.5 million[284][285]. - The company recognized a $19.3 million gain on the acquisition of Kinnate during the three and six months ended June 30, 2024, due to the fair value of net assets acquired exceeding the total purchase consideration[322]. - The company entered into the Kinnate CVR Agreement on April 3, 2024, with a potential obligation to pay up to $30.5 million upon achieving specified milestones related to the sale of exarafenib[353]. - The company acquired rights to royalty and milestone payments related to XACIATO, OVAPRENE, and Sildenafil Cream on April 29, 2024, with an additional obligation of $11.0 million for every $22.0 million received after reaching a return threshold of $88.0 million[354]. Revenue Sources - XOMA earned a $9.0 million milestone payment upon FDA approval of Day One's NDA for OJEMDA and is eligible for mid-single-digit royalties on net sales[286]. - Day One sold its priority review voucher for $108.0 million, resulting in an $8.1 million payment to XOMA[287]. - XOMA received $7.4 million in commercial payments from Roche for sales of VABYSMO during the last six months of 2023[291]. - A $5.0 million milestone payment was earned by XOMA when Rezolute dosed the first patient in its Phase 3 trial of RZ358[296]. - Revenue from contracts with customers included a $5.0 million milestone payment from a license agreement with Rezolute for the three months ended June 30, 2024[316]. - The company expects income from VABYSMO and royalties on OJEMDA to increase in future periods as sales are anticipated to grow[315]. Expenses - R&D expenses increased to $1.2 million for the three months ended June 30, 2024, compared to $39,000 in the same period of 2023, primarily due to clinical trial costs related to KIN-3248[318]. - G&A expenses for the three months ended June 30, 2024, were $11.0 million, up from $5.8 million in the same period of 2023, largely due to $5.4 million in costs associated with the Kinnate acquisition[319]. - Interest expense for the three months ended June 30, 2024, was $3.4 million, representing interest incurred on the Blue Owl Loan since December 31, 2023[324]. Impairments and Charges - An impairment charge of $9.0 million was recorded due to Bayer's termination of its license agreement with Aronora[295]. - The company recorded a $9.0 million impairment related to the Aronora royalty purchase agreement for the three and six months ended June 30, 2024[320]. Cash Flow and Financing - Net cash used in investing activities for the six months ended June 30, 2024 was $1.4 million, primarily consisting of a $22.0 million payment to Daré for the acquisition of payment rights[334]. - Net cash used in financing activities for the six months ended June 30, 2024 was $6.1 million, primarily consisting of principal payments of $3.6 million on the Blue Owl Loan and dividends of $2.8 million on Series A and Series B Preferred Stock[335]. - The Board authorized a stock repurchase program allowing the company to purchase up to $50.0 million of its common stock through January 2027, with a total of 660 shares purchased for $13,000 as of June 30, 2024[343]. - Under the Blue Owl Loan Agreement, the outstanding principal balance will bear interest at an annual rate of 9.875%[344]. Future Expectations - XOMA's royalty aggregator business model focuses on early to mid-stage clinical assets with significant commercial sales potential[281]. - The company expects most future revenue to be based on milestone and royalty payments from acquired programs[282]. - The carrying value of receivables for VABYSMO is classified as a current receivable, indicating probable and reliably estimable payments to be received in the next twelve months[304]. - Sublease income increased by $67,000 for the three and six months ended June 30, 2024 compared to the same periods in 2023 due to the lease assignment agreement acquired under the Kinnate acquisition[328]. - The company has potential sales-based milestone payments that may become due under agreements with Aronora and Kuros, with contingencies aggregating up to $6.3 million not recorded on the balance sheet as of June 30, 2024[350].

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].

Financial Performance - For the three months ended June 30, 2023, total revenues were $1.658 million, a decrease of $675,000 compared to $983,000 for the same period in 2022[252]. - For the six months ended June 30, 2023, total revenues were $2.095 million, down $1.995 million from $4.090 million in the same period in 2022[252]. - The company reported a net loss of $5.4 million for the three months ended June 30, 2023, and an accumulated deficit of $1.2 billion as of June 30, 2023[241]. - G&A expenses for the six months ended June 30, 2023, were $12.0 million, an increase of $1.2 million compared to $10.8 million for the same period in 2022[257]. - The company incurred arbitration settlement costs of $4.1 million for the six months ended June 30, 2023[259]. - Other income (expense), net for the three months ended June 30, 2023, was $557,000, an increase of 97% compared to $460,000 in 2022[260]. - Investment income increased by $0.4 million and $0.8 million for the three and six months ended June 30, 2023, respectively, due to higher market interest rates[260]. - Net cash used in operating activities for the six months ended June 30, 2023, was $12.1 million, compared to $5.3 million in 2022, reflecting increased operating expenses[264]. - Net cash used in investing activities for the six months ended June 30, 2023, was $11.7 million, primarily due to a $9.6 million payment for the acquisition of payment rights[265]. - As of June 30, 2023, cash and cash equivalents were $31.4 million, a decrease of $26.4 million from $57.8 million as of December 31, 2022[262]. - The company has an accumulated deficit of $1.2 billion as of June 30, 2023[267]. Business Development - In June 2023, the company acquired rights related to arimoclomol with potential regulatory and commercial milestones of up to $52.5 million and royalty payments in low single-digit percentages[242]. - The company earned a $0.5 million milestone from Janssen in April 2023 upon dosing of the first patient in a Phase 3 clinical trial[246]. - The company began receiving a mid-single digit percentage payment stream on all IXINITY sales from January 1, 2023, into the first quarter of 2035[244]. - Potential contingent consideration of $1.0 million is recorded for milestone payments due under the agreement with LadRx as of June 30, 2023[274]. - The company has committed to potential future milestone payments and legal fees aggregating up to $6.3 million, contingent on the achievement of certain milestones[276]. Future Commitments - The company expects to incur incremental undiscounted costs of $0.5 million associated with the new lease agreement for its headquarters, expected to commence in Q4 2023[272]. Preferred Stock Dividends - Holders of Series A Preferred Stock are entitled to cumulative cash dividends at the rate of 8.625% per year, while Series B Preferred Stock dividends are at 8.375% per year[277]. Research and Development - R&D expenses were $39,000 for the three months ended June 30, 2023, consistent with the same period in 2022[255].

Financial Performance - For the three months ended March 31, 2023, total revenues were $437,000, a decrease of $2.67 million compared to $3.1 million in the same period in 2022[228]. - The company reported a net loss of $9.8 million for the three months ended March 31, 2023, with negative cash flows from operations of $4.9 million[222]. - As of March 31, 2023, the company had an accumulated deficit of $1.2 billion[222]. - Cash and cash equivalents decreased to $44.3 million as of March 31, 2023, down from $57.8 million as of December 31, 2022[237]. - Net cash used in operating activities was $4.9 million for the three months ended March 31, 2023, compared to $1.0 million for the same period in 2022[238]. - The company incurred arbitration settlement costs of $4.1 million during the three months ended March 31, 2023[234]. - As of March 31, 2023, the company had an accumulated deficit of $1.2 billion and $44.3 million in cash and cash equivalents, indicating significant operating losses since inception[241]. Expenses - General and administrative expenses increased to $6.2 million for the three months ended March 31, 2023, compared to $5.1 million in the same period in 2022, primarily due to increased stock-based compensation and consulting costs[233]. - Research and development expenses remained low at $54,000 for the three months ended March 31, 2023, consistent with $56,000 for the same period in 2022[231]. - The company incurred a cost of $4.1 million in April 2023 due to an adverse arbitration ruling, which required it to cover the counter-party's costs[245]. Investments and Income - Investment income increased to $381,000 for the three months ended March 31, 2023, compared to $15,000 in the same period in 2022, due to higher market interest rates[235]. - The company has potential contingent consideration of $0.1 million recorded for milestone and one-time payments due under agreements with Bioasis and Aptevo as of March 31, 2023[249]. Future Outlook - Future revenues from licenses, milestones, and royalties depend on the achievement of milestones or product sales by existing licensees, with no guarantee of future milestone payments[243]. - The company plans to continue deploying capital towards acquiring rights to potential future milestone and royalty streams in the near and long term[248]. - Potential future milestone payments and legal fees under licensing agreements could aggregate up to $6.3 million, contingent on the achievement of specific milestones[251]. Capital and Financing - The company may seek additional capital through its 2018 Common Stock ATM Agreement or 2021 Series B Preferred Stock ATM Agreement, depending on market conditions[243]. - Holders of Series A Preferred Stock are entitled to cumulative cash dividends at a rate of 8.625%, while Series B Preferred Stock holders receive dividends at 8.375%, both payable quarterly[252]. Operational Considerations - The company is evaluating its office space needs as its amended headquarters lease expires in July 2023, but does not expect significant incremental costs[247]. - The company had approximately $4.5 million in cash and cash equivalents in accounts with SVB at the time of its closure on March 10, 2023, and regained access to $3.7 million by March 31, 2023[242].