On November 5, 2019 XOMA Corporation (Nasdaq: XOMA) reported its third quarter 2019 financial results (Press release, Xoma, NOV 5, 2019, View Source [SID1234550350]).

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"XOMA’s portfolio of future potential royalty- and milestone-generating assets grew by 25% in the third quarter with the addition of 15 investigational compounds from Janssen Biotech and Palobiofarma. Since the third quarter of 2018, we have increased the number of assets in our royalty portfolio by 40%. We have firmly established XOMA as a potential source of non-dilutive, non-recourse capital among companies with partnered Phase 2 assets. We continue to assess multiple royalty monetization opportunities that could further expand and diversify our growing portfolio," said Jim Neal, Chief Executive Officer at XOMA.

Recent Updates About Partnered Assets in Development
Novartis listed on ClinicalTrials.gov a Phase 2 safety and efficacy study investigating iscalimab (CFZ533) in children and young adults recently diagnosed with Type 1 diabetes. ClincialTrials.gov Identifier: NCT04129528.

Janssen Biotech listed a Phase 1b study on ClinicalTrials.gov investigating JNJ-64407564 in patients with multiple myeloma. ClinicalTrials.gov Identifier: NCT04108195.

Takeda opened recruitment for its Phase 1 study to evaluate subcutaneous TAK-079 added to standard of care regimens in participants with newly diagnosed multiple myeloma. ClinicalTrials.gov Identifier: NCT03984097.

AVEO Pharmaceuticals listed on ClinicalTrials.gov a Phase 2 study of ficlatuzumab with high-dose cytarabine (HiDAC) and HiDAC alone in adults with relapsed or refractory acute myeloid leukemia. ClinicalTrials.gov Identifier: NCT04100330.

Business Highlights
XOMA acquired a royalty interest in six clinical-stage assets targeting the adenosine pathway for $10.0 million from Palobiofarma S.L., including NIR178, which is being developed by Novartis as a novel checkpoint inhibitor for the treatment of solid tumors. Palobiofarma is developing the other five assets.

The Company significantly increased its portfolio of potential future royalty and milestone payments with the addition of multiple Janssen Biotech, Inc., drug candidates for which XOMA could receive future milestone and royalty payments of 0.75% on net sales.

As a result of Rezolute, Inc.’s successful series of fundraising rounds, XOMA received $4.9 million in milestone payments during the third quarter. During its capital raising activities in the third quarter, Rezolute communicated its intent to commence a Phase 2b study for RZ358 during 2019.

Financial Results
XOMA recorded total revenues of $8.9 million for the third quarter of 2019, compared with $0.9 million in the third quarter of 2018. The increase was due to $6.0 million in revenue recognized from Rezolute and $2.5 million from Janssen Biotech, Inc., under our respective license agreements.

Research and development expenses were $0.1 million for the third quarter of 2019, compared to $0.6 million for the third quarter of 2018. The decrease for the three months ended September 30, 2019, compared to the same period of 2018, was primarily due to a $0.3 million pass-through license fee incurred based on the achievement of a development milestone by one of our partners in the third quarter of 2018 and a $0.2 million decrease in salary and related expenses.

General and administrative expenses were $5.8 million for the third quarter of 2019, compared to $4.7 million for the third quarter of 2018. The increase of $1.1 million for the three months ended September 30, 2019, as compared to the same period of 2018, was primarily due to executing a separation agreement with our Chief Business Officer resulting in $0.5 million in stock compensation expense associated with stock option modifications and $0.4 million in separation benefits.

Total other income, net was $0.8 million for the third quarter of 2019, compared to $0.9 million for the third quarter of 2018. The decrease of $0.1 million was primarily due to income of $0.5 million received in 2018 from Ology Bioservices related to the disposition the Company’s biodefense business in 2016, partially offset by an increase of $0.3 million in sublease income.

Net income for the third quarter of 2019 was $3.2 million, compared to net loss of $4.6 million for the third quarter of 2019.

On September 30, 2019, XOMA had cash of $39.7 million. The Company ended December 31, 2018, with cash of $45.8 million. During the third quarter of 2019, XOMA acquired a royalty interest position on six assets from Palobiofarma, including one asset being developed by Novartis. The $10.0 million Royalty Purchase Agreement with Palobiofarma, was funded with $5.0 million from XOMA’s cash balance and $5.0 million through a drawdown of XOMA’s line of credit from Silicon Valley Bank. The Company’s current cash balance is expected to be sufficient to fund its operations for multiple years.