XOMA Corporation Falls 3% After Posting Q4 Loss

XOMA Co. (XOMA) released its fourth-quarter earnings report on Thursday, posting a loss on the quarter after reporting a profit in the same period a year prior.

The Berkeley, California-based company reported a loss of $2.89 per share. Revenue came in at $524,000 in the quarter.

For the fiscal year, XOMA reported that its loss widened to $53.5 million, or $8.89 per share. Revenue for the year came in at $5.6 million.

Shares of XOMA had climbed 37% since the start of the year, but have plummeted 64% over the last year.

The company incurred $4.6 million in restructuring charges for the quarter. The charges were related to XOMA's restructuring plan implemented in December 2016.

XOMA also received up $18 million in royalty stream sales through two license agreements with HealthCare Royalty Partners. The company could receive up to $4 million through future milestones.

The company also took steps to reduce its debt by repaying $10 million in January 2017. XOMA estimates a complete payoff in the near future.

XOMA's earnings come more than a week after initially anticipated.

"Our key accomplishments in 2016 included monetizing certain license assets, reducing our operating costs, reducing our debt and appointing new leadership to reflect our changed strategy," said Jim Neal, newly-appointed CEO of XOMA. "Our objective is to drive shareholder value by combining the revenue from this portfolio of collaborator-funded programs with a lean cost structure. The positive momentum began late 2016 and is growing in 2017."

While XOMA's earnings report was disappointing, the company offered reasons for investors to stay on board in its earnings call.

XOMA said it expects to receive a $10 million milestone payment under a license agreement. The company also raised $25 million in equity funding in February 2017.

The company projects it will generate more than $50 million in potential milestones over the next three years.

XOMA's partnerships with Novartis and Novo Nordisk are bright spots for the company. The Novartis anti-CD40 Antibody currently has several ongoing clinical studies. If successful, XOMA expects a tiered royalty system in the high-single to low mid-teen digits.

Novartis also has an Antibody Program in the works with $480 million in potential milestones. Tiered royalties in the mid-single to low double-digit range are expected.

Novo Nordisk's XMetA Antibody Program aimed at diabetics boasts $290 million in potential milestones. Tiered royalties in the mid- to high-single digit range are expected.

XOMA has several of its own products in the pipeline, three of which are in either Phase 2 or Phase 3. XOMA 358 for hypoglycemia and XOMA 213 for various hyperprolactinemias are both in Phase 2. Anti-IL-1 for multiple inflammatory conditions is in Phase 3.

Along with its products and partnerships, XOMA has antibody libraries that may be licensed to generate revenue. XOMA notes that several companies are performing drug discovery with their libraries.

In its earnings call presentation, XOMA outlined its business objectives for 2017. To maximize value, the company plans to out-license proprietary programs, increase phage licenses, and expand its portfolio of fully funded programs. XOMA also plans to reduce its debt and complete its restructuring initiatives.

XOMA stock was down 3.81% in mid-morning trade, trading at $5.56 per share.

Disclosure: Author does not own any shares in the companies mentioned in this article.

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