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].
XOMA(XOMAO) - 2024 Q4 - Annual Report