XOMA has been in existence for more than 35 years. Could you provide a brief overview of the company?

Over the course of 35 years, XOMA was a traditional biotechnology company.  We built significant relationships with large pharma companies, including Novartis, Takeda Pharmaceuticals and Pfizer.  As a result of this rich legacy, XOMA has 38 partnered and fully funded programs (e.g., licensed products), which are being developed in the hands of our partners. 

In 2017, with support from the Biotechnology Value Fund (BVF), we embarked on a new strategy for the company to transform XOMA into a leading biotechnology royalty aggregator. We decided to discontinue our R&D work and focus exclusively on acquiring rights to potential milestone and royalty payments from license agreements. Under the royalty aggregator model, we completed our first transaction in September 2018, which added royalty interests on seven additional programs to our portfolio.  

Today, our portfolio holds 45 programs from which we anticipate receiving royalty payments as some of these become commercial products.  Additionally, there are many assets in the portfolio for which we are entitled to receive milestone payments as they advance in the development pipeline.

We are excited about the level of interest we are seeing from companies with licenses to partner-funded assets that they hope to monetize. 

Could you go into further detail about XOMA’s new business strategy?

XOMA is a royalty monetizer and aggregator focused on acquiring rights to potential royalties and milestones associated with partner-funded early clinical-stage pharmaceutical assets.  We are able to focus exclusively on this strategy because we organically built a portfolio of 38 potential royalty-bearing licenses on drug candidates that are being developed by other companies. All the capital investment, scientific research, and development of drug candidates are being done by our partners, and we expect to enjoy the benefits associated with the advancement of the programs into later-stage development and ultimately commercialization. We are driven by the knowledge there is the potential for tremendous value in milestone and royalty payments from drug candidates as they advance in the pipelines of pharmaceutical companies. 

This value is widely recognized, yet it requires patience to actually experience.  Companies seeking to monetize licenses to earlier-stage clinical assets find limited market interest. XOMA offers companies holding these licenses an opportunity to generate non-dilutive, non-recourse capital.  With each royalty license we acquire, we increase our revenue opportunities while further mitigating the risk associated with individual assets failing.  From an investor point of view, our value proposition is that we can provide biotech-like returns without biotech-like risk. 

XOMA has quite a diversified portfolio in terms of therapeutic areas. Are you agnostic as to which therapeutic area you focus on?

Historically, XOMA’s portfolio related to our expertise in antibodies, and our licenses span more than nine therapeutic areas. Ultimately, we will further diversify our portfolio, adding new therapeutic areas and other therapeutic classes. We believe a larger and broader portfolio of assets allows for both increasing revenue potential and mitigating risk.

Could you elaborate on XOMA’s most recent acquisition payment to Agenus for seven oncology antibodies being developed by Merck and Incyte?

We are building out our asset portfolio, and immuno-oncology [IO] is currently a very interesting area that generally tends to have shorter development timelines.  We believe these seven IO assets have great potential.  They are in mid-clinical stage development in the hands of Merck and Incyte, two extremely high-quality partners.  If any one of the assets achieves success, we will have made a great investment.  Agenus benefited from this transaction by getting cash that they could invest immediately into programs of their choice.

What is XOMA’s thought process when choosing a molecule to invest in?

It starts by applying our screening methodology: mid- to early stage clinical assets in the hands of outstanding development and commercialization partners, important therapeutic categories, long period of commercial exclusivity and sizeable royalty commitments. Many of the therapeutics we review have the possibility of becoming billion-dollar products. Ideally, we also look to have multiple assets within the transaction to mitigate risk. We are largely agnostic to geography and will look for assets across the United States, United Kingdom, Europe, Australia and Asia.  We are always on the lookout for good assets in the hands of good partners. 

What are the key advancements you expect to see within the antibody therapeutic market moving forward?

Antibodies have great properties as they are selective in terms of their biology, and we typically see positive safety and efficacy profiles. More companies have adopted antibodies as a key component of their pipelines, and the market has advanced significantly over the years.  We expect to see more developments and advancements in the areas of duality in biological activity (e.g., bi-specific antibody candidates), and antibodies as carriers of toxins for oncology use (e.g., antibody drug conjugates).   

What are XOMA’s strategy and objectives moving forward?

XOMA’s key objective is to continue expanding its portfolio and to further operationalize the strategy that we put in place in 2017. Our focus is to grow our portfolio, with the expectation that it will translate into a meaningful revenue stream.