Dear Shareholders and Friends,
As we close out 2021 and look forward to all the possibilities 2022 will bring for XOMA, it seems appropriate to reflect on how much progress has been made by both our partners and our team.
Today, within the XOMA portfolio of over 70 potential milestone and royalty assets, we have several programs that our partners have advanced into late stages of development. We are pleased to report to you that XOMA’s portfolio includes two assets that entered Phase 3 development in 2021 – NIS793 and cetrelimab. The first patient dosed in the NIS793 Phase 3 study resulted in XOMA earning a $35 million milestone.
This year we deployed approximately $27 million to acquire potential economic interests in seven very interesting royalty assets. Our most recent addition, faricimab, an ophthalmology program being developed by Roche, is in the process of regulatory review by the U.S. Food and Drug Administration. In 2021, we also acquired economic interests in Day101, vidutolimod, three assets being developed by Affimed for blood cancers, and four lysosomal storage disorder enzymes being developed by Chiesi, among others. Three of our “Class of 2021” royalty asset acquisitions are in registrational studies with strong partners.
We are looking forward to multiple data readouts in 2022. With assets in development across over 35 different indications, and many assets being studied in multiple indications, we have a significant level of diversification. Given the breadth of our portfolio, we anticipate that many of our partners will be successful in their pursuit of delivering effective therapeutics, and potentially cures, to patients – and for us that would mean the beginning of royalty-derived revenues contributing to our financials.
In late December last year and April this year, we completed two perpetual preferred stock offerings that provided us with additional capital to continue to execute on our royalty acquisition strategy. In the second quarter, we extinguished all debt from our balance sheet. Today we have almost $100 million of cash on hand to support the acquisition of additional assets and further expand our portfolio.
As our opportunity pipeline grows, we welcomed two highly experienced new members to our outstanding core team. Our Board of Directors continues to evolve to bring in fresh talent and ideas. Just recently, we announced some impending changes at the leadership level with the Board’s decision to expand my role to Chairman and CEO while at the same time kicking off a process to search for my replacement and ultimately allow for me to step back from operational responsibilities.
Family is incredibly important to me. My children blessed me with three grandchildren during COVID. With our royalty aggregator business model firmly in place, and my belief in our team’s outstanding ability to drive further growth from royalty asset acquisitions, this is the right time to begin a search for my successor. As one of XOMA’s largest shareholders and as Chairman, I plan to continue to shape the Company’s future and build shareholder value.
Thank you for your support of the Company and the team. All of us at XOMA wish you and your families a wonderful, peaceful, and blessed holiday season,
Jim Neal
Chairman & CEO
Forward-Looking Statements/Explanatory Notes
Certain statements contained in this letter are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the potential of XOMA’s portfolio of partnered programs and licensed technologies generating substantial milestone and royalty proceeds over time, and creating additional value for the stockholders. In some cases, you can identify such forward-looking statements by terminology such as “anticipate,” “believe,” “look forward,” “plan,” “potential,” “would,” “could” or “should” or, the negative of these terms or similar expressions. These forward-looking statements are not a guarantee of XOMA’s performance, and you should not place undue reliance on such statements. These statements are based on assumptions that may not prove accurate, and actual results could differ materially from those anticipated due to certain risks inherent in the biotechnology industry, including those related to the fact that our product candidates subject to out-license agreements are still being developed, and our licensees may require substantial funds to continue development which may not be available; we do not know whether there will be, or will continue to be, a viable market for the products in which we have an ownership or royalty interest; if the therapeutic product candidates to which we have a royalty interest do not receive regulatory approval, our third-party licensees will not be able to market them, and the impact to the global economy as a result of the COVID-19 pandemic. Other potential risks to XOMA meeting these expectations are described in more detail in XOMA’s most recent filing on Form 10-K and in other SEC filings. Consider such risks carefully when considering XOMA’s prospects. Any forward-looking statement in this letter represents XOMA’s beliefs and assumptions only as of the date of this letter and should not be relied upon as representing its views as of any subsequent date. XOMA disclaims any obligation to update any forward-looking statement, except as required by applicable law.
EXPLANATORY NOTE: Any references to “portfolio” in this letter refer strictly to milestone and/or royalty rights associated with a basket of drug products in development. Any references to “assets” in this letter refer strictly to milestone and/or royalty rights associated with individual drug products in development.
As of the date of this letter, all assets in XOMA’s milestone and royalty portfolio are investigational compounds. Efficacy and safety have not been established with any of these investigational assets, and there is no guarantee that any will become commercially available.
