XOMA Ltd. ( XOMA)

Q2 2011 Earnings Call

August 4, 2011 4:30 pm ET

Executives

Carol DeGuzman – IR

Steven Engle – Chairman and CEO

Fred Kurland – VP, Finance and CFO

Alan Solinger – VP, Clinical Immunology

Analysts

Liana Moussatos – Wedbush Securities

Christopher James – MLV

Ross Sweeney [ph] – RBC Capital Markets

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the XOMA second quarter 2011 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) As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Carol DeGuzman, Senior Director of Investor Relations. Ms. DeGuzman, you may begin.

Carol DeGuzman

Thank you, operator. And good afternoon, everyone. A short while ago, we issued our news release, which included financial results for the quarter ended June 30, 2011 and a 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 at xoma.com. Today’s webcast also can be accessed via our website and will be available for replay until the close of business on November 4, 2011.

Joining me on today’s call is Steven Engle, Chairman and Chief Executive Officer; and Fred Kurland, Vice President and Chief Financial Officer. Also joining us is Dr. Alan Solinger, our Vice President of Clinical Immunology. We wish to remind all listeners that certain statements concerning product, conduct or availability of results of clinical trials, entry into a O52 development partnership or potential licensing and collaboration arrangements or other aspects of product developments 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 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.

These and other risks, including the generally unstable nature of current economic condition; the results of discovery, research and pre-clinical testing; the timing or results of pending and future clinical trials, including design and progress of clinical trials; safety and efficiency of the products being tested; action, inaction or delay by the FDA, European or other regulators or their advisory bodies; and 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 cause of protecting intellectual property; changes in the status of existing collaborative and licensing arrangements; 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 when evaluating XOMA's prospects.

I'll now turn the call over to Steven Engle.

Steven Engle

Thank you, Carol. The first half of 2011 has been a very active time with a number of developments that will help shape our company’s strategic direction going forward. We are pleased to have the opportunity to discuss these with you today. To summarize, together with Servier, we continue to make progress towards launching the Phase 3 program for XOMA 052 in Behcet's uveitis by the end of this year.

At the same time, Servier is advancing toward initiation of the Phase 2 trial in cardiovascular disease based in part on the consistent and substantial reductions in C-reactive protein levels seen throughout our Phase 1 and Phase 2 diabetes trials, which enrolled more than 600 patients. Servier plans to begin the cardiovascular Phase 2 trial in the second quarter of 2012.

Next, the Phase 1 trial of our antibodies with some antitoxin XOMA 3AB for potential biodefense applications is enrolling patients. Third, at the recent American Diabetes Association Annual Scientific Sessions, we presented the first data from two new family of antibodies we discovered, which activate or sensitize the insulin receptor. These discoveries may provide entirely new approaches to treat diabetes and metabolic syndrome. Ultimately, we reduced the company’s net operating burn in the second quarter to approximately $8 million, as Freed will review in a few minutes.

I’ll begin with 052. One of the benefits we gain from the Servier agreement was their commitment to fund 100% of the first $50 million in the Behcet's uveitis development program and 50% of further expenses for this orphan indication. As you may recall, last year we successfully obtained orphan drug designation for XOMA 052 in Behcet's in both the United States and European Union. With these resources, we are working with Servier to design and implement our international Phase 3 program.

We have met with and have correspondence with the FDA and EMA, and we have obtained key influence on our proposed plans. We are also planning discussions with the regulatory authority in Japan, where there is a higher prevalence of Behcet's uveitis and many of the other developed countries. Still there is still effort in this area to be accomplished and we’re not finished with these conversations nonetheless we continue to make progress.

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