As filed with the Securities and Exchange Commission on April 12, 1996
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------
XOMA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2756657
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2910 Seventh Street
Berkeley, California 94710
(510) 644-1170
(Address, including ZIP code, and telephone number, including
area code, of registrant's principal executive offices)
--------------------------
CHRISTOPHER J. MARGOLIN, ESQ.
XOMA CORPORATION
2910 Seventh Street
Berkeley, California 94710
(510) 644-1170
(Name, address, including ZIP code, and telephone number, including
area code, of agent for service)
------------------
Copy to:
GEOFFREY E. LIEBMANN, ESQ.
CAHILL GORDON & REINDEL
80 Pine Street
New York, New York 10005
(212) 701-3000
------------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant_
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offer- ing. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
- - ------------------------------------------------------------------------------------
Title of Each Class Proposed Proposed
of Securities Amount Maximum Maximum Amount of
To Be To Be Offering Price Aggregate Registration
Registered Registered per Unit(1) Offering Price(1) Fee
Common Stock,
par value $.0005
per share...... 3,012,122(2)(3) $4.00 $12,048,488 $4,155
- - ------------------------------------------------------------------------------------
(1) Estimated solely for purposes of computing the registration fee pursuant to
Rule 457(c).
(2) Includes a like number of Preferred Stock Purchase Rights (the "Rights").
Since no separate consideration is paid for the Rights, the registration
fee is included in the fee for the Common Stock.
(3) Pursuant to Rule 416 under the Securities Act of 1933, any additional
shares of Common Stock issued as a result of the anti-dilution provisions
of the Cer- tificate of Designation relating to the Preferred Stock or of
the Option Agreement pursuant to which the Common Stock will be issued are
deemed to be registered herewith.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a fur- ther amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
SUBJECT TO COMPLETION, DATED APRIL 12, 1996
3,012,122 Shares
XOMA CORPORATION
COMMON STOCK
This Prospectus relates to 3,012,122 shares of Common
Stock, par value $.0005 per share (the "Common Stock"), of XOMA
Corporation (the "Company"), which have been registered for sale
from time to time by the selling stockholders named herein (the
"Selling Stockholders"). Any or all of the Common Stock being
registered hereby may be sold from time to time to purchasers
directly by the Selling Stockholders. Alternatively, the Selling
Stockholders may from time to time offer the Common Stock through
underwriters, dealers or agents who may receive compensation in
the form of underwriting discounts, concessions or commissions
from the Selling Stockholders and/or the purchasers of Common
Stock for whom they may act as agent. The Company will receive no
proceeds from the sale by the Selling Stockholders of the Common
Stock offered hereby. The shares of Common Stock to which this
Prospectus relates were issued to the Selling Stockholders either
in the Regulation D Offering (as defined herein) or from time to
time thereafter upon conversion of, as dividends on or upon exer-
cise of certain securities received in the Regulation D Offering.
All reasonable expenses of registration of the Common Stock to
which this Prospectus relates (other than fees and expenses of
investment bankers, brokerage commissions and the Selling Stock-
holders' counsel fees and expenses, if any) will be borne by the
Company. The Company has agreed to indemnify the Selling Stock-
holders against certain liabilities, including certain liabilities
under the Securities Act of 1933, as amended (the "Securities
Act"), or to contribute to payments which the Selling Stockholders
may be required to make in respect thereof. See "Plan of Dis-
tribution."
The Common Stock is traded on the Nasdaq National Market
under the symbol "XOMA." The last reported sales price of the
Common Stock as reported by the Nasdaq National Market on
March 29, 1996 was $4 1/4 per share.
The Common Stock offered hereby involves a high degree
of risk. See "Risk Factors."
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
SION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
--------------------
The date of this Prospectus is , 1996.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
-2-
AVAILABLE INFORMATION
The Company is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and is required to file periodic reports, proxy statements
and other information with the Securities and Exchange Commission
(the "SEC") relating to its business, financial statements and
other matters. Such reports, proxy statements and other informa-
tion may be inspected and copied at the public reference facili-
ties maintained by the SEC at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the
SEC located at 500 West Madison Street, Suite 1400, Chicago, Illi-
nois 60661 and at Seven World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material can also be obtained from
the SEC at prescribed rates from the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company has filed a Registration Statement on Form
S-3 with the SEC under the Securities Act with respect to the
Common Stock offered hereby. As permitted by the rules and
regulations of the SEC, this Prospectus omits certain information
contained in the Registration Statement. For further information,
reference is made to the Registration Statement, including the
financial schedules and exhibits incorporated therein by reference
or filed as a part thereof. Statements made in this Prospectus as
to the contents of any contract, agreement or other document
referred to are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an exhibit
to the Registration Statement or otherwise filed with the SEC.
Each such statement shall be deemed qualified in its entirety by
such reference.
--------------------
The Company will provide without charge to each person
to whom a copy of this Prospectus is delivered, upon the written
or oral request of such person, a copy of any or all of the docu-
ments incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated
by reference in such documents). Requests for such copies should
be directed to Director, Corporate Communications, XOMA Corpora-
tion, 2910 Seventh Street, Berkeley, California 94710,
(510) 644-1170.
-3-
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the SEC
pursuant to the Exchange Act are hereby incorporated by reference
in this Prospectus:
(1) Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 as amended by Amendment No.1 on Form
10-K/A (File No. 0-14710); and
(2) The description of XOMA's Common Stock in the Reg-
istration Statement on Form 8-A dated June 9, 1986 filed on
June 11, 1986 under Section 12 of the Exchange Act, including
any amendment or report for the purpose of updating such
description (Registration No. 33-4793).
All documents filed by the Company with the SEC pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of the offer-
ing of the Common Stock offered hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part
hereof from the date any such document is filed.
Any statements contained in a document incorporated by
reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus (or in any other subse-
quently filed document which also is incorporated by reference in
this Prospectus) modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed to consti-
tute a part of this Prospectus except as so modified or
superseded.
--------------------
No person has been authorized in connection with the
offering made hereby to give any information or make any represen-
tation not contained in this Prospectus and, if given or made,
such information or representation must not be relied upon as hav-
ing been authorized by the Company or any other person. This Pro-
spectus does not constitute an offer to sell or solicitation of
any offer to buy any of the securities offered hereby in any
jurisdiction in which it is unlawful to make such offer or solici-
tation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication
that the information contained herein is correct as of any date
subsequent to the date hereof.
-4-
RISK FACTORS
In addition to the other information included or incor-
porated by reference in this Prospectus, the following factors
should be considered carefully in evaluating an investment in the
shares of Common Stock offered by this Prospectus.
No Assurance of Regulatory Approvals or Additional Product
Development
XOMA's products are subject to rigorous preclinical and
clinical testing requirements and to approval processes by the
U.S. Food and Drug Administration (the "FDA") and similar author-
ities in other countries. The Company's products are primarily
regulated on a product-by-product basis under the U.S. Food, Drug
and Cosmetic Act and Section 351(a) of the Public Health Service
Act. Most of the Company's human therapeutic products are or will
be classified as biologic products and would be subject to regula-
tion by the FDA Center for Biologics Evaluation and Research.
Approval of a biologic for commercialization requires licensure of
the product and the manufacturing facilities.
In December 1992, XOMA submitted an investigational new
drug application ("IND") to the FDA to begin Phase I human testing
of Neuprex(TM), a recombinantly-derived fragment of human
bactericidal/permeability-increasing protein ("BPI"). In March
1993, the Company initiated human safety and pharmacokinetic test-
ing under the IND. In mid-1995, the Company initiated three clin-
ical efficacy trials testing the Neuprex(TM) products as a treatment
for bacterial endotoxin-related conditions. A fourth trial
started in the first quarter of 1996. No assurance can be given,
however, that product approval for Neuprex(TM) or any other BPI prod-
uct will be obtained.
In March 1989, XOMA filed a product license application
("PLA") for approval of E5(R), a monoclonal antibody product, for
the treatment of gram-negative sepsis. XOMA has completed several
clinical trials of E5(R), including two randomized, double-blind,
placebo-controlled, multicenter Phase III studies involving nearly
1,300 patients. In September 1991, an FDA advisory committee
heard E5(R) data presentations but made no recommendations regarding
the safety or efficacy of the product. In June 1992, the FDA
informed XOMA that E5(R) was not approvable without further clinical
testing. In June 1993, a third Phase III clinical trial of the
E5(R) product commenced with narrower entry criteria than the pre-
vious trials. The trial is being managed and co-funded by Pfizer
Inc. ("Pfizer"). There can be no assurance that the continuing
-5-
trial will yield data that will result in licensure of the product
in the United States. In October 1993, Pfizer submitted an appli-
cation for approval to market E5(R) for endotoxin reduction to regu-
latory authorities in Japan. There can be no assurance that such
application will be approved.
During December 1991 and January 1992 the manufacturing
facilities for E5(R) were inspected for licensure by the FDA. XOMA
believes that there are no major manufacturing issues outstanding.
Such licenses are currently pending and will not be finalized
unless and until E5(R) has been approved for sale. Additionally,
FDA licensure of XOMA's manufacturing facilities for Neuprex(TM) will
be required prior to any commercial use or sale of Neuprex(TM). No
assurance can be given that approval of the manufacturing facili-
ties for E5(R) or Neuprex(TM) will be obtained.
The antibodies currently used by XOMA in its E5(R) product
are derived from ascites produced in mice by Charles River Labora-
tories ("CRL"). If the Company must obtain ascites from other
sources, including its own facilities or a different facility of
CRL, regulatory licensure of such other sources will be required.
There can be no assurance that any such licensure will be obtained
without significant delay, expense or additional clinical testing.
The FDA has substantial discretion in both the product
approval process and manufacturing facility approval process and
it is not possible to predict at what point, or whether, the FDA
will be satisfied with the Company's submissions or whether the
FDA will raise questions which may be material and delay or pre-
clude product approval or manufacturing facility approval. As
additional clinical data are accumulated, they will be submitted
to the FDA and may have a material impact on the FDA product
approval process.
The Company has accumulated inventories of raw material
and intermediates for E5(R). Because the achievement, timing and
terms of regulatory licensures and subsequent sales of pharmaceu-
tical products are uncertain, there can be no assurance that the
inventories of raw materials and intermediates will be usable. In
connection with its October 1992 restructuring, the Company estab-
lished a $6.0 million reserve for a portion of its E5(R) inventory
and recorded a $2.5 million charge to earnings for future idle
capacity. The Company increased the reserve to $6.9 million in
1993 and to $11.1 million in 1995 to cover the entire value of the
inventory. See "-- History of Losses and Accumulated Deficit."
-6-
Other potential XOMA products will require significant
additional development, including extensive clinical testing.
There can be no assurance that any of the products under develop-
ment by the Company will be developed successfully, obtain the
requisite regulatory approval or be successfully manufactured or
marketed.
Need for Additional Funds
XOMA has expended and expects to continue to expend sub-
stantial funds in connection with research and development relat-
ing to its products and production technologies, the scale-up of
its production capabilities, extensive human clinical trials and
the protection of its intellectual property. The Company's cash
position and resulting investment income are sufficient to finance
the Company's currently anticipated needs for operating expenses,
working capital, equipment and current research projects through
approximately the second quarter of 1997. The Company continues
to evaluate strategic alliances, potential partnerships and
financing arrangements which would further strengthen its competi-
tive position and provide additional funding. However, no assur-
ance can be given that operations will generate meaningful funds,
that additional agreements for product development funding or
strategic alliances can be negotiated or that adequate additional
financing will be available for the Company to finance its own
development on acceptable terms, if at all. If adequate funds are
not available, the business of the Company will be materially
adversely affected.
History of Losses and Accumulated Deficit
XOMA has experienced significant losses and, as of
December 31, 1995, had an accumulated deficit of approximately
$307.9 million.
For the year ended December 31, 1995, XOMA had a net
loss of approximately $22.5 million, or $0.95 per share. The Com-
pany expects to incur additional losses in the future. Its abil-
ity to achieve a profitable level of operations is dependent in
large part on obtaining regulatory approval for its products,
entering into agreements for product development and commercial-
ization, and making a transition to a manufacturing and marketing
company. XOMA's ability to fund its ongoing operations is depen-
dent on the foregoing factors and on its ability to secure addi-
tional funds. There can be no assurance that the Company will
ever achieve a profitable level of operations or that cash flow
-7-
from future operations will be sufficient to meet such
obligations.
No Assurance of Effective Marketing
As of the date of this Prospectus, the Company has not
entered into any marketing agreements regarding its Neuprex(TM) prod-
uct. The Company has engaged an investment banking firm to assist
it in completing one or more strategic alliances with respect to
the Neuprex(TM) product. The Company cannot predict whether or when
any such alliance(s) will be consummated.
The Company has entered into marketing agreements with
Pfizer regarding the E5(R) product, which provide Pfizer with exclu-
sive rights to E5(R) in exchange for funding of certain clinical and
development activities. In January 1994, the territory covered by
the agreements was redefined to include only the countries of
Japan and the United States. Pfizer also has a limited first
right to negotiate for future XOMA products, other than
BPI-derived products, if they will be used for the treatment, cure
or prevention of gram-negative sepsis. The agreements can be can-
celed with appropriate notice upon reimbursement by Pfizer of cer-
tain of XOMA's research and development expenses. In the third
quarter of 1995, XOMA and Pfizer agreed to modify the funding
arrangement of the current E5(R) clinical trial and the payment
terms relating to certain patent litigation costs (see Notes 1, 3
and 6 to the Company's Financial Statements, which are incorpo-
rated herein by reference). No assurance can be given that Pfizer
will be able to market the Company's products successfully. The
Company does not currently have a marketing and sales organization
for any of its products, and no assurance can be given that XOMA
will be able to develop the marketing and sales organization nec-
essary for the successful commercialization of its products.
Assuming timely regulatory approval, which cannot be
assured, the successful commercialization of XOMA's products will
be dependent to a large extent upon the marketing capabilities of
its pharmaceutical partners. The Company believes that termina-
tion of its relationship with Pfizer could have a material adverse
effect on its future revenues and prospects.
No Assurance of Scale-up of Manufacturing Processes
The Company has never commercially introduced any phar-
maceutical products. In addition, there can be no assurance that
the Company's, CRL's or Pfizer's existing manufacturing facilities
will receive regulatory approval in a timely manner. If one or
-8-
more of the Company's products and the relevant manufacturing
facilities were to receive regulatory approval, no assurance can
be given that these existing manufacturing capabilities would be
able to produce sufficient quantities of such products to meet
market demand. Additionally, no assurance can be given that if
additional manufacturing facilities are needed to meet market
demand, such manufacturing facilities will be successfully
obtained or that the requisite regulatory approval for such facil-
ities will be obtained.
No Assurance of Patent Protection/Avoidance of Patent Infringement
Because of the length of time and the expense associated
with bringing new products through development and government
approval to the marketplace, the pharmaceutical industry has tra-
ditionally placed considerable importance on obtaining and main-
taining patent and trade secret protection for significant new
technologies, products and processes. The Company and other
biotechnology firms hold and are in the process of applying for a
number of patents in the United States and abroad to protect their
products and important processes and also have obtained or have
the right to obtain exclusive licenses to certain patents and
applications filed by others. However, the patent position of
biotechnology companies generally is highly uncertain and no con-
sistent policy regarding the breadth of allowed claims has emerged
from the actions of the U.S. Patent and Trademark Office (the
"Patent Office") with respect to biotechnology patents. Legal
considerations surrounding the validity of biotechnology patents
continue to be in transition, and no assurance can be given that
historical legal standards surrounding questions of validity will
continue to be applied or that current defenses as to issued
biotechnology patents will in fact be considered substantial in
the future. Accordingly, no assurance can be given as to the
degree and range of protection any patents will afford against
competitors with similar technologies, that patents will issue,
that others will not obtain patents claiming aspects similar to
those covered by the Company's patent applications or as to the
extent to which the Company will be successful in avoiding any
patents granted to others.
During the period from September 1994 to February 1996,
the Patent Office issued nine patents to the Company related to
its BPI-based products, including novel compositions, their manu-
facturer, formulation, assay and use. In addition, the Company is
the exclusive licensee of three BPI-related patents owned by NYU.
The Company has also received five more U.S. Notices of Allowance
-9-
and has more than twenty pending patent applications for its
BPI-based products.
The Company is aware of an agreement between Genentech
Inc. ("Genentech") and Incyte Pharmaceuticals Inc. ("Incyte") pur-
suant to which Incyte claims to hold worldwide rights to all
Incyte and Genentech technology related to BPI and through which
Genentech will receive a royalty on Incyte's BPI product sales.
Between 1992 and 1994, the Patent Office issued five patents
related to BPI to Incyte (the "Incyte BPI Patents"). While the
Company believes, based on the opinion of its patent counsel, that
it does not infringe any valid claims of any of the Incyte BPI
Patents, no assurance can be given that XOMA has not infringed or
will not infringe any valid claims of any of the Incyte BPI
Patents.
If certain patents issued to others are upheld or if
certain patent applications filed by others issue and are upheld,
the Company may require certain licenses from others in order to
develop and commercialize certain potential products incorporating
the Company's technology. There can be no assurance that such
licenses, if required, will be available on acceptable terms.
While the Company pursues patent protection, due to
uncertainty as to the future utility of patent protection for
biotechnology products or processes, the Company also relies upon
trade secrets, know-how and continuing technological advancement
to develop and maintain its competitive position. All Company
employees have signed confidentiality agreements under which they
have agreed not to use or disclose any of the Company's propri-
etary information. Research and development contracts and rela-
tionships between the Company and its scientific consultants and
potential customers provide access to aspects of the Company's
know-how that are protected generally under confidentiality agree-
ments with the parties involved. There can be no assurance that
all confidentiality agreements will be honored or are enforceable.
No Assurance of Product Efficacy or the Ability To Compete
Successfully
The biotechnology and pharmaceutical industries are sub-
ject to continuous and substantial technological change. Competi-
tion in the areas of recombinant DNA-based and monoclonal
antibody-based technologies is intense and expected to increase in
the future as a number of established biotechnology firms and
large chemical and pharmaceutical companies diversify into the
field. A number of these large pharmaceutical and chemical
-10-
companies have enhanced their capabilities by entering into
arrangements with, or acquiring, biotechnology companies. Sub-
stantially all of these companies have significantly greater
financial resources, larger research and development and marketing
staffs and larger production facilities than those of the Company.
Moreover, certain of these companies have extensive experience in
undertaking preclinical testing and human clinical trials. These
factors may enable such companies to develop products and pro-
cesses competitive with or superior to those of the Company. In
addition, a significant amount of research in biotechnology is
being carried out in universities and other non-profit research
organizations. These entities are becoming increasingly aware of
the commercial value of their work and may become more aggressive
in seeking patent protection and licensing arrangements. There
can be no assurance that developments by others will not render
the Company's products or technologies obsolete or uncompetitive.
Earlier in the 1990's, a number of corporations includ-
ing Centocor, Inc., Synergen, Inc. and Chiron, Inc. discontinued
development of products (like E5(R)) designed to treat gram-negative
sepsis. These actions may have a material adverse effect on the
regulatory review of E5(R), and there can be no assurance that E5(R)
will receive regulatory approval in the United States or that
Pfizer will be able to market E5(R) effectively. The Company
believes that research and human testing is being conducted with
other products, some of which are designed to treat a broader pop-
ulation of sepsis patients, including patients with gram-positive
as well as gram-negative sepsis. E5(R) is intended to treat only
patients with severe gram-negative sepsis. There can be no assur-
ance that products currently unknown to the Company will not prove
to be more effective than or receive regulatory approval prior to
E5(R).
In addition, it is possible that Incyte or some other
company is developing one or more products based on BPI, and there
can be no assurance that such product(s) will not prove to be more
effective than Neuprex(TM).
No Assurance of Supply of Monoclonal Antibodies
XOMA obtains the unpurified ascites containing the
monoclonal antibodies used in its E5(R) product from a single sup-
plier, CRL, which has multiple manufacturing sites. XOMA and CRL
entered into a supply agreement in 1989 and renewed the agreement
in 1991, committing CRL to supply and the Company to purchase
XOMA's anticipated ascites needs for five years after FDA
licensure of E5(R). Among the requirements for FDA licensure of E5(R)
-11-
is that the CRL manufacturing facilities be licensed by the FDA.
If the Company must obtain ascites from other sources, including
its own facilities or a different facility of the same supplier,
regulatory approval of such other sources will be required.
Although the Company believes that it currently has sufficient
quantities of ascites for product launch and the first few years
of sales, any significant future interruption in supply could
materially and adversely affect the Company's business relating to
E5(R).
Potential Impact of Healthcare Reform
The successful commercialization of the Company's prod-
ucts will depend upon, among other things, the Company's marketing
arrangements for its products. The Company's ability to enter
into marketing arrangements on acceptable terms and/or the terms
of its existing arrangements could be materially adversely
affected if legislation were to be enacted or regulations adopted
which mandates or otherwise results in the reduction or contain-
ment of the cost of pharmaceutical products to consumers. In
addition, if legislation were to be enacted or regulations adopted
which mandates or otherwise results in the reduction of pharmaceu-
tical product manufacturer's prices, the Company's business could
be materially adversely affected.
Uncertainties in Attracting and Retaining Qualified Personnel
The Company's success in developing marketable products
and achieving a competitive position will depend, in part, on its
ability to attract and retain qualified scientific and management
personnel. Competition for such personnel is intense, and no
assurances can be given that the Company will be able to attract
or retain such personnel. The loss of a significant group of key
personnel would adversely affect the Company's product development
efforts.
Risk of Product Liability Claims
The testing and marketing of medical products entails an
inherent risk of allegations of product liability. The Company
believes it currently has adequate levels of insurance for its
clinical trials. The Company will seek to obtain additional
insurance, if needed, if and when the Company's products are com-
mercialized; however, there can be no assurance that adequate
insurance coverage will be available or be available at acceptable
costs or that a product liability claim would not materially
-12-
adversely affect the business or financial condition of the
Company.
Certain Provisions Relating to Changes in Control
The Stockholder Rights Agreement, dated as of
October 27, 1993 (the "Rights Agreement"), between the Company and
First Interstate Bank of California, as Rights Agent, and the Com-
pany's Amended and Restated By-Laws contain provisions that may
have the effect of making more difficult an acquisition of control
of the Company that has not been approved by the Company's Board
of Directors. See "Description of Equity Securities -- Certain
Provisions Relating to Changes in Control of the Company."
Volatility of Stock Price
The market prices for securities of biotechnology com-
panies, including XOMA, have been highly volatile. See "Price
Range of Common Stock and Dividend Information." Announcements
regarding the results of regulatory approval filings, clinical
trials or other testing, technological innovations or new commer-
cial products by XOMA or its competitors, government regulations,
developments concerning proprietary rights or public concern as to
safety of biotechnology have historically had, and are expected to
continue to have, a significant impact on the market price of
XOMA's Common Stock.
THE COMPANY
The Company is a biopharmaceutical company developing
products for the treatment of infectious diseases and major com-
plications due to infections, traumatic injury and surgery. The
Company's current product development programs include:
- Neuprex(TM), a recombinantly-derived fragment of BPI and
XOMA's lead BPI product, which is currently in efficacy
clinical trials for four different indications.
- I-PREX(TM), a proprietary topical formulation of BPI for
the treatment of ophthalmic disorders, which is undergo-
ing preclinical testing as a treatment for corneal
ulcerations and transplants.
- Mycoprex(TM), a potent fungicidal peptide compound derived
from BPI that is currently in preclinical product
development.
-13-
- E5(R), XOMA's monoclonal antibody product, which is in a
Phase III trial in the United States as a treatment for
gram-negative sepsis and has been submitted for approval
in Japan as a treatment for endotoxemia.
The Company's cash position and resulting investment
income are sufficient to finance the Company's currently antici-
pated needs for operating expenses, working capital, equipment and
current research projects through approximately the second quarter
of 1997. The Company continues to evaluate strategic alliances,
potential partnerships, and financing arrangements which would
further strengthen its competitive position and provide additional
funding. The Company has engaged an investment banking firm to
assist in completing one or more strategic alliances with respect
to the Neuprex(TM) product. The Company cannot predict whether or
when any such alliance(s) will be consummated or whether addi-
tional funding will be available when required.
In November 1995, the Company issued $6.5 million aggre-
gate principal amount of 4% Convertible Subordinated Debentures
due 1998 to foreign investors in an offering exempt from registra-
tion under the Securities Act in reliance on Regulation S thereun-
der. As of March 31, 1996, the entire principal amount of, plus
accrued interest on, these debentures had been converted into
2,054,224 shares of Common Stock.
In the lawsuit entitled Warshaw et al. v. XOMA Corpora-
tion, et al. described in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995 incorporated herein by
reference, the defendants' petition for rehearing and suggestion
for rehearing en banc was denied by the U.S. Court of Appeals for
the Ninth Circuit on March 25, 1996.
-14-
PRICE RANGE OF COMMON STOCK AND DIVIDEND INFORMATION
The Company's Common Stock trades on the Nasdaq National
Market under the symbol "XOMA." The following table sets forth
the quarterly range of high and low reported sale prices of the
Company's Common Stock on the Nasdaq National Market for the peri-
ods indicated.
High Low
---- ---
1994:
First Quarter .................... $6 1/4 $3 3/4
Second Quarter ................... 4 1/4 2 1/2
Third Quarter .................... 3 5/8 2 1/4
Fourth Quarter ................... 4 1/8 2 3/16
1995:
First Quarter .................... $3 1/16 $1 1/8
Second Quarter ................... 2 7/8 1 9/32
Third Quarter .................... 4 1/4 1 11/16
Fourth Quarter ................... 4 1/8 1 7/8
1996:
First Quarter .................... 5 3/4 3 3/8
On March 29, 1996 the last reported sale price of the
Common Stock as reported on the Nasdaq National Market was $4 1/4
per share. On March 31, 1996, there were approximately 2,642
record holders of XOMA's Common Stock.
The Company has not paid cash dividends on its Common
Stock. The Company currently intends to retain earnings for use
in the development and expansion of its business and, therefore,
does not anticipate paying cash dividends on its Common Stock in
the foreseeable future.
-15-
SELLING STOCKHOLDERS
The following table sets forth certain information
regarding the beneficial ownership of Common Stock by the Sell-
ing Stockholders as of March 31, 1996, and the number of shares
of Common Stock covered by this Prospectus.
Beneficial Ownership Number of Shares
Name and Address of of Common Stock prior of Common Stock
Selling Shareholder to the Offering Registered Hereby
- - ------------------- ---------------------- ------------------
Number of Percent
Shares of Class
--------- --------
Genesee Fund Limited -
Portfolio B ("GFL-B")
c/o CITCO
Kaya Flamboyan 9
Curacao, Netherlands
Antilles 1,515,152(1) 4.8% 2,272,728(2)
GFL Performance Fund
Limited
c/o CITCO
Kaya Flamboyan 9
Curacao, Netherlands
Antilles 606,061 2.0% 606,061
Michael Arnouse
Business Consulting
3 Edward Lane Less
Syosset, NY 11791 133,333(3) than 1% 133,333
(1) Represents shares of Common Stock issuable upon conversion
of 5,000 shares of the Company's Series D Preferred Stock
(as defined below) held by GFL-B, assuming conversion at
the formula price in effect on March 31, 1996. The terms
of the Series D Preferred Stock provide that in no event
shall GFL-B or GFL Performance be entitled to convert any
shares thereof if the issuance of shares of Common Stock
upon a proposed conversion, when the shares to be so
issued are counted together with other shares of Common
Stock beneficially owned by GFL-B, GFL Performance or any
associate or affiliate of or adviser to GFL-B or GFL Per-
formance (collectively, the "GFL Persons") (other than
shares so owned through ownership of Series D Preferred
Stock), would result in a GFL Person beneficially owning
more than 4.9% of the outstanding shares of Common Stock.
-16-
See "Description of Equity Securities -- The Series D Pre-
ferred Stock".
(2) Includes the shares of Common Stock currently beneficially
owned (as reflected in this table under "Number of
Shares") plus up to 757,576 additional shares which may be
issued from time to time upon conversion of or as divi-
dends on the Series D Preferred Stock held by GFL-B.
(3) Represents shares of Common Stock issuable upon exercise
of an option held by Mr. Arnouse. See "Plan of
Distribution."
-17-
DESCRIPTION OF EQUITY SECURITIES
The authorized capital stock of the Company consists
of 40,000,000 shares of Common Stock, $.0005 par value, of
which 30,071,920 shares were outstanding on March 31, 1996, and
1,000,000 shares of preferred stock, $.05 par value, of which
650,000 have been designated Series A Cumulative Preferred
Stock (the "Series A Preferred Stock"), of which none were out-
standing on such date, 30,000 have been designated Senior Con-
vertible Preferred Stock, Series B (the "Series B Preferred
Stock"), of which 7,807 shares were outstanding on such date,
and 5,000 have been designated Non-Voting Cumulative Convert-
ible Preferred Stock, Series D (the "Series D Preferred
Stock"), all of which were outstanding on such date.
Common Stock
Holders of shares of Common Stock are entitled to one
vote per share on all matters to be voted on by stockholders.
The holders of Common Stock are entitled to receive such divi-
dends, if any, as may be declared from time to time by the Com-
pany's Board of Directors out of funds legally available there-
for. Upon liquidation or dissolution of the Company, the hold-
ers of the Common Stock are entitled to share ratably in the
distribution of assets, subject to the rights of the holders of
the Series B Preferred Stock and Series D Preferred Stock or
any other series of preferred stock that may then be outstand-
ing. There are no redemption or sinking fund provisions with
respect to the Common Stock. All of the outstanding shares of
Common Stock are validly issued, fully paid and nonassessable.
Preferred Stock Purchase Rights
On October 27, 1993, the Board of Directors of the
Company declared a dividend distribution of one Preferred Stock
Purchase Right (a "Right") for each outstanding share of Common
Stock. Each Right entitles the holder to purchase from the
Company a unit consisting of one one-hundredth of a share (a
"Unit") of Series A Preferred Stock at a cash exercise price of
$30.00 per Unit, subject to adjustment.
The Rights are attached to all outstanding shares of
Common Stock, including the shares of Common Stock offered
hereby. The Rights will separate from the Common Stock and
will be distributed to holders of Common Stock upon the ear-
liest of (i) ten business days after the first public announce-
ment that a person or group of affiliated or associated persons
-18-
(an "Acquiring Person") has acquired beneficial ownership of
20% or more of the Common Stock then outstanding (the date of
said announcement being referred to as the "Stock Acquisition
Date"), (ii) ten business days following the commencement of a
tender offer or exchange offer that would result in a person or
group of persons becoming an Acquiring Person or (iii) the dec-
laration by the Board of Directors of the Company that any per-
son is an "Adverse Person" (the earliest of such dates, the
"Distribution Date").
The Board of Directors of the Company may generally
declare a person to be an Adverse Person after a declaration
that such person has become the beneficial owner of 10% or more
of the outstanding shares of Common Stock and a determination
that (a) such beneficial ownership by such person is intended
to cause or is reasonably likely to cause the Company to repur-
chase the Common Stock owned by such Person or to cause the
Company to enter into other transactions not in the best
long-term interests of the Company or (b) such beneficial own-
ership is reasonably likely to cause a material adverse impact
on the business or prospects of the Company. The Rights are
not exercisable until the Distribution Date and will expire on
December 31, 2002, unless previously redeemed or exchanged by
the Company.
In the event that a person becomes an Acquiring Per-
son or the Board of Directors determines that a person is an
Adverse Person, each holder of a Right will thereafter have the
right (a "Subscription Right") to receive upon exercise that
number of Units of Series A Preferred Stock having a market
value of two times the exercise price of the Rights. In the
event that, at any time following the Stock Acquisition Date,
(i) the Company consolidates with, or merges with and into, any
person, and the Company is not the surviving corporation;
(ii) any person consolidates with the Company, or merges with
and into the Company and the Company is the continuing or sur-
viving corporation of such merger and, in connection with such
merger, all or part of the shares of Common Stock are changed
into or exchanged for other securities of any other person or
cash or any other property, or (iii) 50% or more of the Compa-
ny's assets are sold or otherwise transferred, each holder of a
Right shall thereafter have the right (a "Merger Right") to
receive, upon exercise, common stock of the acquiring company
having a market value equal to two times the exercise price of
the Rights. Rights that are beneficially owned by an Acquiring
or Adverse Person may, under certain circumstances, become null
and void.
-19-
At any time after a person becomes an Acquiring Per-
son or the Board of Directors of the Company determines that a
person is an Adverse Person, the Board of Directors of the Com-
pany may exchange all or any part of the then outstanding and
exercisable Rights for shares of Common Stock or Units of
Series A Preferred Stock at an exchange ratio of one share of
Common Stock or one Unit of Series A Preferred Stock per Right.
Notwithstanding the foregoing, the Board of Directors of the
Company generally will not be empowered to effect such exchange
at any time after any person becomes the beneficial owner of
50% or more of the Common Stock then outstanding.
The Rights may be redeemed in whole, but not in part,
at a price of $.001 per Right by the Board of Directors of the
Company at any time prior to the date on which a person is
declared to be an Adverse Person, the tenth business day after
the Stock Acquisition Date, the occurrence of an event giving
rise to the Merger Right or the expiration date of the Rights
Agreement.
The Series A Preferred Stock
There are currently no shares of Series A Preferred
Stock outstanding. Pursuant to the Certificate of Designation
relating to the Series A Preferred Stock, subject to the rights
of holders of any shares of any series of preferred stock rank-
ing prior and superior (such as the Series B Preferred Stock),
the holders of Series A Preferred Stock are entitled to
receive, when, as and if declared by the Board of Directors of
the Company out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March,
June, September and December in each year (a "Dividend Payment
Date"), commencing on the first Dividend Payment Date after the
first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share equal to the greater of
(a) $1.00 or (b) 100 times the aggregate per share amount of
all cash dividends, plus 100 times the aggregate per share
amount of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock, declared on
the Common Stock since the immediately preceding Dividend Pay-
ment Date, or, with respect to the first Dividend Payment Date,
since the first issuance of Series A Preferred Stock.
In addition to any other voting rights required by
law, holders of Series A Preferred Stock shall have the right
to vote on all matters submitted to a vote of stockholders of
the Company with each share of Series A Preferred Stock
-20-
entitled to 100 votes. Except as otherwise provided by law,
holders of Series A Preferred Stock and holders of Common Stock
shall vote together as one class on all matters submitted to a
vote of stockholders of the Company.
Unless otherwise provided in a Certificate of Desig-
nation relating to a subsequently designated series of pre-
ferred stock of the Company, the Series A Preferred Stock shall
rank junior to any other series of preferred stock as to the
payment of dividends and distribution of assets on liquidation,
dissolution or winding-up and shall rank senior to the Common
Stock. Upon any liquidation, dissolution or winding-up of the
Company, no distributions shall be made to holders of shares of
stock ranking junior to the Series A Preferred Stock unless,
prior thereto, the holders of Series A Preferred Stock shall
have received an amount equal to accrued and unpaid dividends
and distributions, whether or not declared, to the date of such
payment, plus an amount equal to the greater of (1) $100.00 per
share or (2) an aggregate amount per share equal to 100 times
the aggregate amount to be distributed per share to holders of
Common Stock or to the holders of stock ranking on parity with
the Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all other such parity stock
in proportion to the total amount to which the holders of all
such shares are entitled upon such liquidation, dissolution or
winding-up.
If the Company shall enter into any consolidation,
merger, combination or other transaction in which shares of
Common Stock are exchanged for or changed into cash, other
securities and/or any other property, then any shares of
Series A Preferred Stock outstanding shall at the same time be
similarly exchanged or changed in an amount per share equal to
100 times the aggregate amount of cash, securities and/or other
property, as the case may be, into which or for which each
share of Common Stock is changed or exchanged.
The shares of Series A Preferred Stock shall not be
redeemable.
The Series B Preferred Stock
The 7,807 outstanding shares of Series B Preferred
Stock were issued by the Company in a private placement consum-
mated on December 21, 1993 in reliance upon the exemption con-
tained in Section 4(2) of the Securities Act (the "1993 Private
Placement"). Pursuant to the Certificate of Designation
-21-
relating to the Series B Preferred Stock, the holders of
Series B Preferred Stock are entitled to receive, when, as and
if declared by the Board of Directors of the Company, out of
funds legally available therefor, dividends at an annual rate
equal to $50.00 per share, payable semi-annually in arrears,
commencing on June 30, 1994. Dividends are payable, at the
option of the Company, in cash, in Common Stock or any combina-
tion of cash and Common Stock.
The Series B Preferred Stock ranks senior in right of
payment to all classes of Common Stock and to any other class
or series of preferred stock of the Company including the
Series D Preferred Stock, whether now outstanding or issued
hereafter. Except as required by the General Corporation Law
of the State of Delaware, holders of Series B Preferred Stock
shall not be entitled to vote on any matter submitted to a vote
of stockholders of the Company. Upon any voluntary or involun-
tary liquidation, dissolution or winding-up of the Company,
holders of Series B Preferred Stock will be entitled to receive
$1,000 per share in cash before any distribution is made on any
Common Stock or other preferred stock of the Company.
Each holder of Series B Preferred Stock has the right
at any time, or from time to time, to convert each share of
Series B Preferred Stock into 211.1073 shares of Common Stock,
subject to adjustment.
The Series B Preferred Stock may be redeemed at the
option of the Company, in whole or, from time to time, in part
(provided that no less than 25% of the shares of Series B Pre-
ferred Stock then outstanding may be redeemed at any one time)
(i) at any time after December 31, 1996 or (ii) on or prior to
December 31, 1996 if the price per share of the Common Stock is
at least $9.08 for at least ten trading days selected by the
Company within a period of any twenty consecutive trading days.
If on the date prior to the determination of the Board of
Directors to redeem any shares of Series B Preferred Stock the
price per share of Common Stock is equal to or greater than
$5.45, then the Series B Preferred Stock to be redeemed may be
redeemed by the Company for any combination of (i) shares of
Common Stock, each share of Series B Preferred Stock to be
redeemed for 211.1073 shares of Common Stock and (ii) $1,000 in
cash per share of Series B Preferred Stock. If on the date
prior to the determination of the Board of Directors of the
Company to redeem Series B Preferred Stock the price per share
of Common Stock is less than $5.45, then the Series B Preferred
-22-
Stock to be redeemed shall be redeemed by the Company for
$1,000 in cash per share.
The Series B Preferred Stock has not been registered
under the Securities Act and may not be transferred except pur-
suant to an effective registration statement under the Securi-
ties Act or pursuant to an exemption from registration thereun-
der. Additionally, the Certificate of Designation relating to
the Series B Preferred Stock contains certain restrictions on
the transfer of the Series B Preferred Stock. The Company is
not obligated and does not intend to register the Series B Pre-
ferred Stock under the Securities Act. The Common Stock into
which the outstanding shares of Series B Preferred Stock is
convertible, for which such shares are redeemable and payable
as dividends on such shares has been registered under the Secu-
rities Act for sale from time to time by the holders of the
outstanding shares of Series B Preferred Stock.
The Series C Preferred Stock
The 4,799 shares of Convertible Preferred Stock,
Series C, issued by the Company in an offering made to foreign
investors in reliance on Regulation S under the Securities Act
in August 1995, have been converted into an aggregate of
2,728,190 shares of Common Stock.
The Series D Preferred Stock
The 5,000 outstanding shares of Series D Preferred
Stock were issued by the Company to GFL-B in an offering of
Series D Preferred Stock and Common Stock exempt from the reg-
istration requirements of the Securities Act pursuant to Regu-
lation D thereunder in March 1996 (the "Regulation D Offer-
ing"). Pursuant to the Certificate of Designations relating to
the Series D Preferred Stock, the holders thereof are entitled
to receive, when, as and if declared by the Board of Directors
of the Company, out of funds legally available therefor, divi-
dends at an annual rate of $40.00 per share, payable
semi-annually in arrears, commencing June 30, 1996. Dividends
are payable, at the option of the Company, in cash, in Common
Stock or any combination of cash and Common Stock. In addi-
tion, the Company may elect not to declare or make payment of
any dividend, in which event the accrued and unpaid dividends
shall be taken into account at the time of conversion, as
described below.
-23-
The Series D Preferred Stock ranks senior with
respect to rights on liquidation, winding-up and dissolution of
the Company to all classes of Common Stock. Upon any voluntary
or involuntary liquidation, dissolution or winding-up of the
Company, holders of Series D Preferred Stock will be entitled
to receive $1,000 per share, plus accrued and unpaid dividends,
before any distribution is made on the Common Stock or any pre-
ferred stock of the Company ranking junior as to liquidation
rights to the Series D Preferred Stock, but only after any pay-
ments with respect to liquidation preference of preferred stock
ranking senior as to liquidation rights to the Series D Pre-
ferred Stock are fully met. Except as may be required by law
and except with respect to certain actions which may adversely
affect the holders of Series D Preferred Stock, the holders of
Series D Preferred Stock are not entitled to vote on any matter
submitted to a vote of stockholders of the Company.
The holders of Series D Preferred Stock have the
right to convert shares of Series D Preferred Stock into Common
Stock at a conversion price equal to 80% of the then current
market price of the Common Stock on or after the 75th day fol-
lowing the first date of original issuance of any shares of
Series D Preferred Stock; provided that in no event shall GFL-B
or GFL Performance be entitled to convert any shares of Series
D Preferred Stock if the issuance of shares of Common Stock
upon a proposed conversion, when the shares to be so issued are
counted together with other shares of Common Stock beneficially
owned by GFL-B, GFL Performance or any associate or affiliate
of or adviser to GFL-B or GFL Performance (collectively, the
"GFL Persons") (other than shares so owned through ownership of
Series D Preferred Stock), would result in a GFL Person benefi-
cially owning more than 4.9% of the outstanding shares of
Common Stock; and provided, further, that in the event that for
any 15 trading days during a 20 consecutive trading day period
the conversion of all the outstanding shares of Series D
Preferred Stock upon surrender thereof would require the
issuance of more than approximately 4.5 million shares of
Common Stock in the aggregate with respect to all conversions
of Series D Preferred Stock, the Company will have the option
to either redeem the Series D Preferred Stock at a redemption
price of $1,250 per share or, with stockholder approval,
convert such Series D Preferred Stock into shares of Common
Stock. In addition, subject to the proviso of the immediately
preceding sentence, the Corporation has the right, so long as
it is in material compliance with its obligations to the
holders of the Series D Preferred Stock, exercisable at any
time on or after January 15, 1998, to require the holders
thereof to convert their shares of Series D
-24-
Preferred Stock into Common Stock at a conversion price equal
to 80% of the then current market price of the Common Stock.
Each share of Series D Preferred Stock may be
redeemed at the option of the Company at any time on or after
October 1, 1996 at a redemption price of $1,250 per share.
Certain Provisions Relating to Changes in Control of the
Company
Certain provisions of the Amended and Restated
By-Laws of the Company (the "By-Laws") and the Rights (summa-
rized above) may delay, defer or prevent a change in control of
the Company that a stockholder might consider to be in his or
her best interest, including those applicable to a change in
control of the Company that might result in a premium over the
market price for the shares of Common Stock held by
stockholders.
Special Meeting of Stockholders. The By-Laws provide
that meetings of stockholders of the Company may be called only
by the Chief Executive Officer or the Board of Directors of the
Company. This provision may make it more difficult for stock-
holders to take action opposed by management or the Board of
Directors of the Company.
Advance Notice Requirements for Stockholder Proposals
and Director Nominations. The By-Laws provide that stockhold-
ers seeking to bring business before an annual meeting of
stockholders or to nominate candidates for election as direc-
tors at an annual meeting of stockholders, must provide timely
notice thereof in writing. To be timely, a stockholder's
notice must be received by the Secretary of the Company not
less than sixty nor more than ninety days prior to the first
anniversary of the preceding year's annual meeting, or in the
case of an annual meeting that is called for a date that is
more than thirty days or delayed by more than sixty days from
such anniversary, notice by the stockholder to be timely must
be so received not earlier than the ninetieth day prior to such
annual meeting and not later than the close of business on the
later of (1) the sixtieth day prior to such annual meeting or
(2) the tenth day following the day on which such notice of the
date of the annual meeting was mailed or publicly disclosed.
These provisions may preclude some stockholders from bringing
matters before an annual meeting of stockholders or making nom-
inations for directors at an annual meeting of stockholders.
-25-
Preferred Stock Purchase Rights. The provisions of
the Rights and the Series A Preferred Stock may make it more
difficult or more costly for a person or group of persons to
acquire control of the Company in a transaction opposed by the
Board of Directors of the Company. See "-- Preferred Stock
Purchase Rights" and "-- The Series A Preferred Stock."
Transfer Agent and Registrar
First Interstate Bank of California is the transfer
agent and registrar of the Common Stock.
PLAN OF DISTRIBUTION
Any or all of the Common Stock being registered
hereby may be sold from time to time to purchasers directly by
the Selling Stockholders. Alternatively, the Selling Stock-
holders may from time to time offer the Common Stock through
underwriters, dealers or agents who may receive compensation in
the form of underwriting discounts, concessions or commissions
from the Selling Stockholders and/or the purchasers of Common
Stock for whom they may act as agent. The Selling Stockhold-
ers, and any such underwriters, dealers or agents that partici-
pate in the distribution of Common Stock, may be deemed to be
underwriters, and any profit on the sale of the Common Stock by
them and any discounts, commissions or concessions received by
them may be deemed to be underwriting discounts and commissions
under the Securities Act. At the time a particular offer of
Common Stock is made, to the extent required, a supplement to
this Prospectus will be distributed which will set forth the
terms of the offering, including the name or names of any
underwriters, dealers or agents, the purchase price paid by any
underwriter for Common Stock purchased from the Selling Stock-
holders and any discounts, commissions and other items consti-
tuting compensation from the Selling Stockholders and any dis-
counts, commissions or concessions allowed or reallowed or paid
to dealers, including the proposed selling price to the public.
The Company will receive no proceeds from the sale by the Sell-
ing Stockholders of the Common Stock offered hereby.
The shares of Common Stock covered by this Prospectus
are (i) shares of Common Stock into which the Series D Common
Stock may be converted, (ii) shares of Common Stock that may be
paid as dividends on the Series D Preferred Stock, (iii) the
shares of Common Stock purchased by GFL Performance in the Reg-
ulation D Offering and (iv) shares underlying the option to
purchase shares of Common Stock granted to Mr. Michael Arnouse
-26-
in connection with the Regulation D Offering. Mr. Arnouse's
option is exercisable at any time, in whole or in part, at
$5.00 per share and expires in March 1999.
All reasonable expenses of registration of the Common
Stock to which this Prospectus relates (other than fees and
expenses of investment bankers, brokerage commissions and the
Selling Stockholders' counsel fees and expenses, if any), esti-
mated to be approximately $110,000, will be borne by the Com-
pany. As and when the Company is required to update this Pro-
spectus, it may incur additional expenses in excess of this
estimated amount.
The Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including certain
liabilities under the Securities Act, or to contribute to
payments which the Selling Stockholders may be required to make
in respect thereof.
LEGAL OPINIONS
The validity of the shares of Common Stock to which
this Prospectus relates has been passed upon for the Company by
Cahill Gordon & Reindel, a partnership including a professional
corporation, located in New York, New York. Opinions regarding
certain legal matters with respect to patents and patent law
have been provided to the Company by Marshall, O'Toole,
Gerstein, Murray & Borun, located in Chicago, Illinois.
EXPERTS
The financial statements of XOMA incorporated by ref-
erence in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance
upon the authority of said firm as experts in giving said
report.
===================================== ===================================
No dealer, salesman or other per-
son has been authorized to give
any information or to make representa-
tions other than those contained in
this Prospectus, and, if given or 3,012,122 Shares
made, such information or representa-
tions must not be relied upon as having XOMA Corporation
been authorized by the Company or the
Selling Stockholders. Neither the Common Stock
delivery of this Prospectus nor any
sale made hereunder shall, under any
circumstances, create an implication
that the information herein is correct
as of any time subsequent to its date. __________
This Prospectus does not constitute an
offer or solicitation by anyone in any PROSPECTUS
jurisdiction in which such offer __________
or solicitation is not authorized or in
which the person making such offer or
solicitation is not qualified to do so
or to anyone to whom it is unlawful to
make such offer or solicitation.
------------------
TABLE OF CONTENTS
Page
Available Information...........
Information Incorporated
by Reference..................
Risk Factors....................
The Company.....................
Price Range of Common Stock
and Dividend Information......
Selling Stockholders............
Description of Equity
Securities....................
Plan of Distribution............
Legal Opinions..................
Experts.........................
, 1996
===================================== ===================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses in connection with this offer-
ing are as follows:
Amount
to be Paid
SEC registration fee .............................. $ 4,155
Nasdaq fee ........................................ 17,500
Legal fees and expenses (including
Blue Sky fees and expenses) ..................... 75,000
Accounting fees and expenses ...................... 3,000
Miscellaneous ..................................... 10,345
---------
Total ............................................. $ 110,000
Item 15. Indemnification of Directors and Officers
The Delaware General Corporation Law provides for
indemnification of directors, officers, employees and agents,
subject to certain limitations (Del. Code, Title 8 Sec. 145).
Article VII of the Company's Bylaws provides that expenses
incurred by an officer or director of the Company in defending
a civil or criminal action, suit or proceeding shall be paid by
the Company in advance of a final disposition of the action,
suit or proceeding upon receipt by the Company of an undertak-
ing by the officer or director that he or she will repay such
expenses if it is ultimately determined that he or she is not
entitled to indemnification under the Delaware General Corpora-
tion Law.
As permitted by Section 102 of the Delaware General
Corporation Law, the Company's Certificate of Incorporation
contains provisions eliminating a director's personal liability
for monetary damages to the Company and its stockholders aris-
ing from a breach of a director's fiduciary duty except for
liability under Section 174 of the Delaware General Corporation
Law or liability for any breach of the director's duty of loy-
alty to the Company or its stockholders, for acts or omissions
not in good faith or which involve intentional misconduct or a
knowing violation of law or for any transaction by which the
director derived an improper personal benefit. The Company has
also entered into indemnification agreements with its directors
II-1
and officers providing for indemnification and advancements of
expenses to the fullest extent permitted under Delaware law.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
Exhibit
Number
-------
4.1 Restated Certificate of Incorporation(1)
4.2 Amended and Restated By-Laws(2)
4.3 Stockholder Rights Agreement dated October 27,
1993 by and between the Company and First
Interstate Bank of California as Rights
Agent(3)
4.4 Certificate of Designations of Non-Voting
Cumulative Convertible Preferred Stock,
Series D
5.1 Opinion of Cahill Gordon & Reindel
10.1 Preferred Stock Subscription Agreement, dated
as of March 27, 1996, by and between the Com-
pany and Genesee Fund Limited - Portfolio B
10.2 Subscription Agreement, dated as of March 27,
1996, by and between the Company and GFL Per-
formance Fund Limited
10.3 Registration Rights Agreement, dated as of
March 29, 1996, by and between the Company and
Genesee Fund Limited - Portfolio B
- - -------------------------
(1) Incorporated by reference to the Company's Registration Statement on
Form S-3 (File No. 33-59379).
(2) Incorporated by reference to the Company's Registration Statement on
Form S-3 (File No. 33-74982).
(3) Incorporated by reference to the Company's Current Report on Form 8-K
dated October 27, 1993.
II-2
10.4 Registration Rights Agreement, dated as of
March 29, 1996, by and between the Company and
GFL Performance Limited
10.5 Option Agreement, dated as of March 27, 1996,
between the Company and Michael Arnouse
24.1 Consent of Arthur Andersen LLP
24.2 Consent of Marshall, O'Toole, Gerstein, Murray
& Borun
24.3 Consent of Cahill Gordon & Reindel is con-
tained in their opinion (Exhibit 5.1).
25.1 Power of Attorney is set forth on the signa-
ture page hereof.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this regis-
tration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, repre-
sent a fundamental change in the information set forth in
the registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in
the registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii)
do not apply if the registration statement is on Form S-3 or
Form S-8, and the information required to be included in the
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
II-3
(2) That, for the purpose of determining any lia-
bility under the Securities Act of 1933, each post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pur-
suant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Com-
mission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the regis-
trant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such direc-
tor, officer or controlling person in connection with the secu-
rities being registered, the registrant will, unless in the
opinion of counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to
deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest
annual report to security holders that is incorporated by ref-
erence in the prospectus and furnished pursuant to and meeting
the requirements of Rule 14a-3 or Rule 14c-3 under the Securi-
ties Exchange Act of 1934; and, where interim financial infor-
mation required to be presented by Article 3 of Regulation S-X
II-4
is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incor-
porated by reference in the prospectus to provide such interim
financial information.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly autho-
rized, in the City of Berkeley, State of California, on April
12, 1996.
XOMA CORPORATION
By: ________________________
John L. Castello
Chairman of the Board,
President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints John L.
Castello and Christopher J. Margolin, and each of them, as his
true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) and supple-
ments to this registration statement, and to file the same,
with the Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or
any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
II-6
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below by the
following persons on behalf of the registrant and in the capac-
ities and on the dates indicated.
Signature Title Date
- - --------- ----- ----
_____________________ Chairman of the Board,
John L. Castello President and Chief
Executive Officer
(Principal Executive
Officer) April 12, 1996
_____________________ Chief Scientific and
Patrick J. Scannon Medical Officer and
Director April 12, 1996
_____________________ Vice President,
Peter B. Davis Finance and Chief
Financial Officer
(Principal Financial
and Accounting Officer) April 12, 1996
_____________________ Director April 12, 1996
James G. Andress
_____________________ Director April 12, 1996
William K. Bowes, Jr.
_____________________ Director April 12, 1996
Arthur Kornberg
_____________________ Director April 12, 1996
Steven C. Mendell
_____________________ Director April 12, 1996
W. Denman Van Ness
_____________________ Director April 12, 1996
Gary Wilcox
II-7
EXHIBIT INDEX
Exhibit
Number Page
4.1 Restated Certificate of Incorporation(1)
4.2 Amended and Restated By-Laws(2)
4.3 Stockholder Rights Agreement dated Octo-
ber 27, 1993 by and between the Company
and First Interstate Bank of California
as Rights Agent(3)
4.4 Certificate of Designations of
Non-Voting Cumulative Convertible Pre-
ferred Stock, Series D
5.1 Opinion of Cahill Gordon & Reindel
10.1 Preferred Stock Subscription Agreement,
dated as of March 27, 1996, by and
between the Company and Genesee Fund
Limited - Portfolio B
10.2 Subscription Agreement, dated as of
March 27, 1996, by and between the Com-
pany and GFL Performance Fund Limited
10.3 Registration Rights Agreement, dated as
of March 29, 1996, by and between the
Company and Genesee Fund Limited - Port-
folio B
10.4 Registration Rights Agreement, dated as
of March 29, 1996, by and between the
Company and GFL Performance Limited
10.5 Option Agreement, dated as of March 27,
1996, between the Company and Michael
Arnouse
24.1 Consent of Arthur Andersen LLP
24.2 Consent of Marshall, O'Toole, Gerstein,
Murray & Borun
24.3 Consent of Cahill Gordon & Reindel is
contained in their opinion (Exhibit
5.1).
Exhibit
Number Page
25.1 Power of Attorney is set forth in the
signature page hereof.
- - -------------------------
(1) Incorporated by reference to the Company's Registration
Statement on Form S-3 (File No. 33-59379).
(2) Incorporated by reference to the Company's Registration
Statement on Form S-3 (File No. 33-74982).
(3) Incorporated by reference to the Company's Current Report
on Form 8-K dated October 27, 1993.