Two months after slashing 42 percent of its work force--144 jobs--Berkeley-CA-based Xoma has been slapped with a going-concern warning by its accounting firm. The antibody developer says that a decline in royalty income from Raptiva--which was used to secure a hefty loan from Goldman Sachs--helped trigger the warning. But Xoma also says that it is in talks with potential partners on Xoma 052, its promising experimental diabetes therapy.

Xoma revealed that it earned $68 million in revenue last year, well down from the $84.3 million in revenue it earned the year before. The developer suffered a net loss of $45.2 million.

The worsening financial picture pushed Xoma to launch a series of cost-cutting moves. In addition to the job cuts, the developer postponed trials for Xoma 052, delayed development of its 629 program and restructured an oncology collaboration with Novartis. No bonuses were handed out for the year and no raises were awarded for 2009.

Nevertheless, CEO Steven Engle was staying focused on the positive, keying in on the biotech's big achievements.

"For the first time," he reported, "Xoma showed that a single dose of an interleukin-1 beta inhibitor, Xoma 052, increased the ability of Type 2 diabetes patients to produce insulin over three months. These clinical results provide support for one of the most significant medical advances in diabetes in decades--adding an entirely new approach, anti-inflammatory treatment, to existing insulin focused therapy."

- check out Xoma's release covering the annual report

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