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XOMA Ltd. Q2 2010 Earnings Call Transcript

XOMA Ltd. Q2 2010 Earnings Call Transcript


Q2 2010 Earnings Call

August 10, 2010 4:30 PM EST


Fred Kurland – VP of Finance and CFO

Steven Engle – Chairman and CEO

Patrick Scannon – EVP and Chief Medical Officer


Thomas Yip [ph] – MLV

Matt Kaplan – Ladenburg Thalmann



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Good day, ladies and gentlemen, and welcome to the XOMA Ltd. second quarter 2010 financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

(Operator Instructions).

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As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s conference, Fred Kurland, Vice President of Finance and Chief Financial Officer.

Fred Kurland

Thank you, operator. Good afternoon and welcome to XOMA’s call today. A short while ago, we issued a news release which included our financial results for the quarter ended March 30, 2010 and the general business update. Our quarterly report on Form 10-Q was filed with the Securities and Exchange Commission this afternoon. Each document will be available on the XOMA website,


Today’s webcast can be accessed via our website and will be available for replay until the close of business on November 9


, 2010.

Joining me on today’s call is Steven Engle, Chairman and Chief Executive Officer; Dr. Patrick Scannon, our Executive Vice President and Chief Medical Officer.

We wish to remind all listeners that certain statements concerning conduct or availability of results of clinical trials, entry into a XOMA 052 development partnership or potential licensing and collaboration arrangements or other aspects of product development or that otherwise relate to future periods are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

These statements are based on assumptions that may not prove accurate. Actual results could differ materially from those anticipated due to certain risks inherent in the biotechnology industry and for companies engaged in the development of new products in a regulated market.

Among other things, the conduct or availability of results of clinical trials may be impacted by or delayed or may never occur as a result of unavailability of resources, actions or inaction by our present or future collaboration partners, insufficient enrollment in such trials or unanticipated safety issues, and a XOMA 052 may not be entered into in the timeframes indicated or at all.

These and other risks including those related to inability to comply with NASDAQ’s continued listing requirements, the generally unstable nature of the current economic conditions, the results of discovery, research, and preclinical testing, the timing or results of pending and future clinical trials, including the design and progress of clinical trials, safety and efficacy of the products being tested, action, inaction or delay by the FDA, European or other regulators or their advisory bodies, the analysis or interpretation by or submission to these entities or others of scientific data.

Uncertainties regarding the status of biotechnology patents, uncertainties as to the cost of protecting intellectual property, changes in the status of the existing collaborative and licensing relationships, the ability of collaborators, licensees and other third parties to meet their obligations, market demand for products, scale up and marketing capabilities, competition, international operations, share price volatility, XOMA’s financing needs and opportunities and risks associated with XOMA’s status as a Bermuda company, are described in more detail in XOMA’s most recent annual report on Form 10-K and in other SEC filings. Consider such risks carefully in considering XOMA’s prospects.

I will now turn the call over to Steven Engle, XOMA’s Chairman and Chief Executive Officer.

Steven Engle

Thank you, Fred. Three years ago, we refocused XOMA’s business model on developing high-value proprietary therapeutic products. And, to date, we’ve made significant progress in this product-focus strategy. We’ve expanded the potential indication for XOMA 052, used technology licensing and royalties to partially fund product development, have entered into new biodefense contracts and have forged more lucrative license and collaboration agreements such as those centered on our antibody phage display library expertise.

Most significantly, we have increased confidence in the potential for XOMA 052 as a multi-indication product with multi-billion dollar potential to address the underlying inflammatory cause of many human diseases.

The decision to lead our proprietary product development program with XOMA 052 has yielded better results than expected. While it has been well known for more than 20 years that IL-1 is the Master Cytokine at the top of the inflammatory cascade, what wasn’t known was whether IL-1 inhibition would prove to be a viable therapeutic target. Clinical and preclinical data generated over the past several years with XOMA 052 and other IL-1 targeting agents have convincingly demonstrated that it is.

It’s important to remember that when we made the decision to focus on XOMA 052, there was only one IL-1 inhibitor on the market, Anakinra or Kineret. Today, there are three commercially available IL-1 inhibitors and a huge increase in clinical development for an expanded number of indications for which IL-1 is known to have a role. These advances in the field directly support our XOMA 052 development efforts, enabling us to benefit from others’ investments, while we focus our resources on potential indication such as diabetes and cardiovascular disease.

For example, in the past few months, we’ve seen positive new Phase II and Phase III results in the treatment and prevention of gout, a classic auto-inflammatory disease, with the IL-1 targeting agents Canakinumab from Novartis and Rilonacept from Regeneron. These new results also affirm the positive for XOMA 052 to the gout treatment and are consistent with the clinical results we recently reported for XOMA 052 in another auto-inflammatory disease, the Behcet's Uveitis.

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