|Xoma CEO John Varian|
Confronted by the catastrophic failure of a key development program earlier this year that knocked Xoma into penny stock territory, the biotech has worked a deal to outlicense a cancer antibody to its longtime partners at Novartis. In the deal Xoma will get $37 million in badly needed cash upfront, some relief on $13.5 million in debt and the chance to earn $480 million in milestones, if all goes as planned.
Back in July Xoma's shares ($XOMA) were eviscerated after the company reported that its Servier-partnered drug for Behcet's disease flunked a late-stage study. The biotech--which reportedly laid off staff in a reorganization--was left with a share price that had shrunk 80%, making any kind of new raise difficult at best.
In addition to the development deal, Novartis ($NVS) is also providing some debt relief, extending the maturity date on a $13.5 million secured note.
Xoma's shares shot up 32% as news of the pact spread, with shares trading around $1.00.
In helping extricate Berkeley, CA-based Xoma from the mess it's in, Novartis acquired rights to the biotech's anti-transforming growth factor-beta (TGFb) antibody program, which targets cell growth and immune suppression in fighting cancer.
"We had said we did not plan to raise equity capital at our recent stock price in order to fund the development of our very exciting endocrine portfolio," noted CEO John Varian in a statement. "With this non-dilutive liquidity of essentially $50.5 million, we currently project this capital, in combination with our planned cost savings measures, will fund operations into 2017. We remain on track to begin our XOMA 358 Phase 2 clinical program this fall and fully anticipate we will have the data from these studies during that timeframe."
- here's the release