XOMA Completes Full Repayment of Goldman Sachs Loan
2:52p ET September 24, 2009 (GlobeNewswire)
XOMA Ltd. (Nasdaq:XOMA) today announced that it has fully repaid its loan from Goldman Sachs Specialty Holdings, Inc. Repayment of the loan discharged all of XOMA's obligations to the lenders. The repayment resolves the uncertainty about the loan that arose from the sudden and unexpected withdrawal of RAPTIVA(R) from the market earlier this year, which triggered XOMA to begin to renegotiate the loan that was secured by royalties from RAPTIVA(R), LUCENTIS(R) and CIMZIA(R).
"We are pleased to have successfully concluded this matter. We have strengthened our financial condition by removing a burden on our balance sheet, eliminating interest costs and improving XOMA's freedom to operate," said Steven B. Engle, XOMA's Chairman and Chief Executive Officer. "Using the LUCENTIS(R) royalty buyout payment to help fund the loan repayment is non-dilutive to shareholders and removes potential uncertainties related to LUCENTIS's(R) future. Eliminating the loan overhang will also strengthen our position in negotiating future collaborations, including our antibody technology collaborations and a corporate partnership for XOMA 052."
XOMA repaid the entire $44.3 million in principal and interest on the loan with proceeds from: a $25 million buyout by Genentech of XOMA's royalty interest in LUCENTIS(R); an equity offering of $12.3 million; the restricted cash account reserved for loan repayment containing $6.1 million; and $0.9 million from XOMA's cash reserves. In addition, XOMA was required to pay a prepayment penalty of 6% of the loan balance, or $2.5 million, from its cash reserves.
"Based on estimated revenues and expenses and without including an anticipated corporate partnership for XOMA 052, we estimate our cash resources after full payment of the loan are sufficient to fund operations into the first quarter of 2010," said Fred Kurland, XOMA's Vice President, Finance and Chief Financial Officer. "As a result of the loan repayment, we have eliminated future interest charges that would have totaled $5.1 million in 2009, freed up the future flow of royalty income from CIMZIA(R) sales for use in funding company operations and avoided restructuring costs and future loan constraints."
XOMA receives royalties from UCB, S.A. based on U.S. and Swiss sales of CIMZIA(R), which is being launched in the U.S. for the treatment of rheumatoid arthritis and is approved for treatment of Crohn's disease.
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