8,296,489 Shares
XOMA CORPORATION
COMMON STOCK
This Prospectus relates to 8,296,489 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
or their permitted transferees or successors (the "Selling
Stockholders"). Any or all of the Common Stock being regis-
tered hereby may be sold from time to time to purchasers
directly by the Selling Stockholders. Alternatively, the Sell-
ing Stockholders may from time to time offer the Common Stock
through underwriters, dealers or agents who may receive compen-
sation 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. To the extent
required, the names of the Selling Stockholders, the number of
shares of Common Stock to be sold, purchase price, public
offering price, the name of any agent, dealer or underwriter
and any applicable commission or discount or other items con-
stituting compensation or indemnification arrangements with
respect to a particular offering will be set forth in an accom-
panying Prospectus Supplement. The Company will receive no
proceeds from the sale by the Selling Stockholders of the Com-
mon Stock offered hereby. The shares of Common Stock to which
this Prospectus relates were issued to the Selling Stockholders
either in the Section 4(2) Private Placement (as defined
herein) or from time to time upon conversion of, as dividends
on or upon exercise of certain securities received in the Regu-
lation D Private Placement (as defined herein). All Registra-
tion Expenses (as defined herein) incurred in connection with
the registration of the Common Stock to which this Prospectus
relates will be borne by the Company. The Company has agreed
to indemnify the Selling Stockholders against certain liabili-
ties, 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 Distribution."
The Common Stock is traded on the Nasdaq National
Market under the symbol "XOMA." The last reported sale price
of the Common Stock as reported by the Nasdaq National Market
on August 31, 1996 was $5 15/16 per share.
The Common Stock offered hereby involves a high
degree of risk. See "Risk Factors" beginning on page 6 for a
discussion of certain factors that should be considered by pro-
spective investors.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COM-
MISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADE-
QUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
____________________
The date of this Prospectus is September 26, 1996.
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AVAILABLE INFORMATION
The Company is subject to the informational require-
ments 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 information may be inspected and copied at
the public reference facilities maintained by the SEC at Judi-
ciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the SEC located at 500 West Mad-
ison Street, Suite 1400, Chicago, Illinois 60661 and at Seven
World Trade Center, 13th Floor, New York, New York 10048. Cop-
ies of such material can also be obtained from the SEC at pre-
scribed 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 informa-
tion 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. Copies of the
Registration Statement and its exhibits may be inspected with-
out charge at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W. Washington, D.C. 20549,
and copies of this material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, the
SEC maintains a Web site on the World Wide Web, and copies of
the Registration Statement and its exhibits may be accessed at
this Web site (http://www.sec.gov). 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 docu-
ment 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 per-
son 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
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the documents incorporated herein by reference (other than
exhibits to such documents, unless such exhibits are specifi-
cally incorporated by reference in such documents). Requests
for such copies should be directed to Director, Corporate Com-
munications, XOMA Corporation, 2910 Seventh Street, Berkeley,
California 94710, (510) 644-1170.
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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 and Amendment No. 2 on Form 10-K/A (File No. 0-14710);
(2) Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 1996 and June 30, 1996 (File
No. 0-14710);
(3) Current Report on Form 8-K dated April 22, 1996
(File No. 0-14710); and
(4) 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
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that the information contained herein is correct as of any date
subsequent to the date hereof.
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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
("CBER"). 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~, 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~ product as a treatment
for the following indications: infectious complications of severe
accidental blood loss (hemorrhagic trauma), meningococcemia (a
potentially deadly bacterial infection principally of children)
and complications following partial hepatectomy (a type of major
liver surgery). A fourth trial, testing the product in combina-
tion with antibiotics to treat severe intra-abdominal infections,
started in the first quarter of 1996. In July 1996, the Company
announced that an independent data safety monitoring bord ("DSMB")
had completed the first interim analysis for the hemorrhagic
trauma trial and concluded that results were consistent with XOMA
proceeding with the trial, and that a separate DSMB had completed
its review of data for the partial hepatectomy trial and found no
safety concerns. In August 1996, the Company announced that it
had been granted a Subpart E designation for its Neuprex~ product
for the treatment of severe meningococcemia in pediatric patients
by CBER. No assurance can be given, however, that product
approval for Neuprex~ or any other BPI product will be obtained.
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In March 1989, XOMA filed a product license application
("PLA") for approval of E5\, a monoclonal antibody product, for
the treatment of gram-negative sepsis. XOMA has completed several
clinical trials of E5\, 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\ data presentations but made no recommendations regarding
the safety or efficacy of the product. In June 1992, the FDA
informed XOMA that E5\ was not approvable without further clinical
testing. In June 1993, a third Phase III clinical trial of the
E5\ product commenced with narrower entry criteria than the pre-
vious trials. The trial is being managed and co-funded by Pfizer
Inc. ("Pfizer"). In December 1995, the Company announced that a
DSMB had completed the first of two planned interim analyses for
the ongoing trial and concluded that the results met the predeter-
mined criteria for continuing the trial. There can be no assur-
ance that the continuing trial will yield data that will result in
licensure of the product in the United States. In October 1993,
Pfizer submitted an application for approval to market E5\ for
endotoxin reduction to regulatory 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\ 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\ has been approved for sale. Additionally,
FDA licensure of XOMA's manufacturing facilities for Neuprex~ will
be required prior to any commercial use or sale of Neuprex~. No
assurance can be given that approval of the manufacturing facili-
ties for E5\ or Neuprex~ will be obtained.
The antibodies currently used by XOMA in its E5\
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
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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\. 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\ 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."
In September 1996, the Company and Genentech, Inc.
("Genentech") announced that the Company had filed an IND with the
FDA for clinical testing of hu1124 in patients with moderate to
severe psoriasis. The hu1124 product, previously referred to as
anti-CD11a, is a humanized monoclonal antibody product XOMA is
developing in collaboration with Genentech for treatment of pso-
riasis and for organ transplant rejection. No assurance can be
given that product approval for hu1124 in this or any other indi-
cation will be obtained.
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 middle of 1998. The Company continues to evalu-
ate strategic alliances, potential partnerships and financing
arrangements which would further strengthen its competitive posi-
tion and provide additional funding. However, no assurance can be
given that operations will generate meaningful funds, that
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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 avail-
able, the business of the Company will be materially adversely
affected.
History of Losses and Accumulated Deficit
XOMA has experienced significant losses and, as of
June 30, 1996, had an accumulated deficit of approximately $318.5
million.
For the year ended December 31, 1995 and the six months
ended June 30, 1996, XOMA had net losses of approximately $22.5
million, or $0.95 per share, and $12.0 million, or $0.40 per
share, respectively. The Company expects to incur additional
losses in the future. Its ability 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 commercialization, and making a transition to a
manufacturing and marketing company. XOMA's ability to fund its
ongoing operations is dependent on the foregoing factors and on
its ability to secure additional funds. There can be no assurance
that the Company will ever achieve a profitable level of opera-
tions or that cash flow 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~ 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~ 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\ product, which provide Pfizer with exclu-
sive rights to E5\ 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
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certain 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\ 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
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
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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 June 1996, the
Patent Office issued ten patents to the Company related to its
BPI-based products, including novel compositions, their manufac-
turer, formulation, assay and use. In addition, the Company is
the exclusive licensee of three BPI-related patents owned by NYU.
The Company and NYU have also received eight more U.S. Notices of
Allowance, and the Company has more than twenty pending patent
applications for its BPI-based products.
The Company is aware of an agreement between Genentech
and Incyte Pharmaceuticals Inc. ("Incyte") pursuant 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 under certain circum-
stances. 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.
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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 com-
panies have enhanced their capabilities by entering into arrange-
ments with, or acquiring, biotechnology companies. Substantially
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. More-
over, 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\) designed to treat gram-negative
sepsis. These actions may have a material adverse effect on the
regulatory review of E5\, and there can be no assurance that E5\
will receive regulatory approval in the United States or that
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Pfizer will be able to market E5\ 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\ 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\.
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~.
No Assurance of Supply of Monoclonal Antibodies
XOMA obtains the unpurified ascites containing the
monoclonal antibodies used in its E5\ 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\. Among the requirements for FDA licensure of E5\
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\.
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
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pharmaceutical product manufacturer's prices, the Company's busi-
ness 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
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
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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~, 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~, 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~, a potent fungicidal peptide compound derived
from BPI that is currently in preclinical product
development.
- hu1124, a humanized monoclonal antibody product that
XOMA is developing in collaboration with Genentech for
treatment of psoriasis and for organ transplant
rejection.
- E5\, 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 middle of
1998. 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~ 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.
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In September 1996, the Company received a notice from
the U.S. Environmental Protection Agency ("EPA") that the Company
may have incurred or may incur liability under the Comprehensive
Environmental Response, Compensation and Liability Act in connec-
tion with the RAMP Industries, Inc. site in Denver, Colorado. The
notice indicates that the Company is one of approximately 690 par-
ties to receive the same notice and that, to date, EPA has identi-
fied between 1 and 3 barrels of the approximately 6,000 barrels
located at the site when EPA began clean up as being attributable
to the Company. The notice also states that EPA does not antici-
pate proposing this site for listing on the National Priorities
List of Superfund Sites. Although the Company has not yet com-
pleted its review of this matter, it has no reason to believe at
this time that the outcome of this matter will have a material
adverse effect on its financial condition or results of
operations.
Certain statements contained herein that are not
related
to historical facts may contain "forward looking" information, as
that term is defined in the Private Securities Litigation Reform
Act of 1995. Such statements are based on the Company's current
beliefs as to the outcome and timing of future events, and actual
results may differ materially from those projected or implied in
the forward looking statements. Further, certain forward looking
statements are based upon assumptions of future events which may
not prove to be accurate. The forward looking statements involve
risks and uncertainties including, but not limited to, the risks
and uncertainties referred to under "Risk Factors" and elsewhere
herein and in other of the Company's Securities and Exchange Com-
mission filings.
-17-
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 $3
7/8
Second Quarter ................... 4 2
5/8
Third Quarter .................... 3 1/2 2
1/4
Fourth Quarter ................... 4 2
1/2
1995:
First Quarter .................... $3 $1
5/16
Second Quarter ................... 2 5/8 1
5/16
Third Quarter .................... 3 7/8 1
11/16
Fourth Quarter ................... 3 15/16 1
29/32
1996:
First Quarter .................... $5 3/16 $3
5/8
Second Quarter ................... 8 3
7/8
Third Quarter
(through August 30, 1996) ........ 7 4
5/8
On August 30, 1996 the last reported sale price of the
Common Stock as reported on the Nasdaq National Market was
$5 15/16 per share. On August 30, 1996, there were approximately
2,679 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.
-18-
SELLING STOCKHOLDERS
The following table sets forth certain information
regarding the beneficial ownership of Common Stock by the Selling
Stockholders as of September 24, 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 Stockholders to the Offering
_Offered Hereby_
Number of Percent
Shares of Class
Genentech, Inc.
460 Point San Bruno Boulevard
South San Francisco, CA 94080 1,500,000(1) 4.4%
1,500,000
Och-Ziff Capital Management, L.P.
153 East 53rd Street
43rd Floor
New York, NY 10022 1,768,609(2) 4.9%
4,179,219(3)
Stockwell Corporation S.A.
c/o Baly Fehlmann
Case Postale 6259
1211 Geneva 6
Switzerland 386,361(2) 1.1%
835,844(3)
Drakefield Corporation
Vanterpool Plaza
2nd Floor
Wickhams Cay I
Road Town Tortola
British Virgin Islands 318,748(2) *
689,571(3)
Alpha Global Fund, Ltd.
c/o International Fund
Administration, Ltd.
Suite 464
48 Par La Ville Road
Hamilton HM11
Bermuda 193,181(2) *
417,922(3)
-19-
Alpha Atlas Holdings, LDC
c/o International Fund
Administration, Ltd.
Suite 464
48 Par La Ville Road
Hamilton HM11
Bermuda 96,590(2) *
208,961(3)
Owen, Diaz, Altschul Fund I,
Ltd.
c/o International Fund
Administration, Ltd.
Suite 464
48 Par La Ville Road
Hamilton HM11
Bermuda 106,249(2) *
229,857(3)
The Hudson Partnership, L.P.
450 Lexington Avenue
New York, NY 10022 57,954(2) *
125,376(3)
Carlyle International Securi-
ties(5) 31,914 *
31,914(6)
Mr. Arthur G. Altschul, Jr.(5) 126,422(4) *
20,173(6)
Mr. Reinaldo M. Diaz(5) 126,422(4) *
20,173(6)
Mr. Ted B. Owen(5) 126,422(4) *
20,173(6)
Dr. Michael Sorell(5) 17,306 *
17,306(6)
_________________________
* Indicates less than 1%.
(1) Does not include an indeterminate number of shares of Com-
mon Stock issuable upon conversion of the $5 million
aggregate principal amount of the convertible note out-
standing under the Convertible Subordinated Note Agreement
dated as of April 22, 1996, as amended, between the Com-
pany and Genentech (the "Convertible Note") into shares of
the Company's Series E Preferred Stock (as defined below
under "Description of Equity Securities"), at the conver-
sion price of $10,000 per share, and the further conver-
sion of such shares of Series E Preferred Stock into
shares of Common Stock. See "Description of Equity Secu-
rities - Series E Preferred Stock." The Convertible Note
-20-
and 1,500,000 of the shares of Common Stock being regis-
tered hereby were issued to Genentech in April 1996 in a
transaction exempt from registration under the Securities
Act pursuant Section 4(2) thereof (the "Section 4(2) Pri-
vate Placement"). The collaboration agreement to which
the Section 4(2) Private Placement relates is described in
the Company's Current Report on Form 8-K, dated April 22,
1996, filed with the SEC and incorporated herein by refer-
ence and has been filed with the SEC as an exhibit to the
Registration Statement of which this Prospectus is a part.
(2) Represents the maximum number of shares of Common Stock
issuable upon conversion of shares of the Company's
Series F Preferred Stock (as defined below under "Descrip-
tion of Equity Securities"), assuming conversion at the
formula price in effect on September 24, 1996 (which price
could fluctuate from time to time based on changes in the
market price of the Common Stock), and giving effect to
applicable contractual restrictions on conversion. Cer-
tain of the Series F Holders (as defined below) have
agreed that in no event shall any such Series F Holders 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 such Series F
Holder or any associate or affiliate of or adviser to such
Series F Holder (collectively, the "Restricted Persons")
(other than shares so owned through ownership of Series F
Preferred Stock), would result in a Restricted Person ben-
eficially owning more than 4.9% of the outstanding shares
of Common Stock. See "Description of Equity Securities --
The Series F Preferred Stock." Without giving effect to
the foregoing restriction, the "Number of Shares" and
"Percent of Class" appearing in the table above for Och-
Ziff Capital Management, L.P. would be 1,931,807 and 5.3%,
respectively. None of the other Series F Holders who have
agreed to such restriction would currently be limited by
it. The Series F Preferred Stock was issued by the Com-
pany to the Series F Holders in September 1996 in a trans-
action exempt from the registration requirements of the
Securities Act pursuant to Regulation D thereunder (the
"Regulation D Private Placement").
(3) Represents each holder's pro rata portion of the maximum
number of shares of Common Stock issuable upon conversion
of 1,600 shares of the Series F Preferred Stock held by
Och-Ziff Capital Management, L.P.; Stockwell Corporation
-21-
S.A.; Drakefield Corporation; Alpha Global Fund, Ltd.;
Alpha Atlas Holdings, LDC; Owen, Diaz, Altschul Fund I,
Ltd.; and The Hudson Partnership, L.P. (collectively, the
"Series F Holders"), respectively, without regard to any
contractual restrictions on conversion.
(4) Includes 106,249 shares attributable to Owen, Diaz,
Altschul Fund I, Ltd., beneficial ownership of which is
shared by this Selling Stockholder with other persons.
(5) The address of these entities and individuals is Carlyle
International Securities, 6 East 43rd Street, 18th Floor,
New York, NY 10175.
(6) Represents shares of Common Stock issuable upon exercise
of warrants to purchase Common Stock issued in the Regula-
tion D Private Placement. See "Description of Equity
Securities -- Warrants."
-22-
DESCRIPTION OF EQUITY SECURITIES
The authorized capital stock of the Company consists
of 70,000,000 shares of Common Stock, $.0005 par value, of
which 34,325,456 shares were outstanding on September 24, 1996,
and 1,000,000 shares of preferred stock, $.05 par value, of
which 650,000 have been designated Series A Cumulative Pre-
ferred Stock (the "Series A Preferred Stock"), of which none
were outstanding on such date, 7,500 have been designated Con-
vertible Preferred Stock, Series E (the "Series E Preferred
Stock"), of which none were outstanding on such date, and 1,600
have been designated Non-Voting Cumulative Convertible Pre-
ferred Stock, Series F (the "Series F 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 D Preferred Stock or any other series of preferred
stock that may then be outstanding. 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
-23-
(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.
-24-
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 D 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
-25-
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 18,775 shares of Senior Convertible Preferred
Stock, Series B, issued by the Company in a private placement
consummated in December 1993 in reliance upon the exemption
contained in Section 4(2) of the Securities Act, have been con-
verted into an aggregate of 3,751,454 shares of Common Stock.
-26-
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 shares of Non-Voting Cumulative Convertible
Preferred Stock, Series D (the "Series D Preferred Stock"),
issued by the Company in an offering of Series D Preferred
Stock and Common Stock exempt from the registration require-
ments of the Securities Act pursuant to Regulation D thereunder
in March 1996, have been converted into an aggregate of
1,048,610 shares of Common Stock.
The Series E Preferred Stock
There are currently no shares of Series E Preferred
Stock outstanding. The 7,500 shares of Series E Preferred
Stock have been designated by the Company for issuance upon
conversion of the convertible subordinated loans to the Company
made and to be made by Genentech in connection with the funding
of the Company's development costs for anti-CD11a through 1998.
Such loans are and will be convertible into Series E Preferred
Stock upon the occurrence of certain events relating to certain
regulatory approvals, payment defaults, prepayments and other
circumstances. Pursuant to the Certificate of Designation
relating to the Series E Preferred Stock, the holders of shares
of Series E Preferred Stock will not be entitled to receive any
dividends on shares of the Series E Preferred Stock.
The Series E Preferred Stock will rank 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 E Preferred Stock will be entitled
to receive $10,000 per share of Series E Preferred Stock before
any distribution is made on the Common Stock. The holders of
shares of Series E Preferred Stock will have no voting rights,
except as required under the General Corporation Law of the
State of Delaware.
The holders of Series E Preferred Stock will have the
right to convert shares of Series E Preferred Stock into shares
-27-
of Common Stock at a conversion price equal to the current mar-
ket price of the Common Stock (determined as provided below).
The current market price will be determined (a) for shares of
Series E Preferred Stock issued in connection with a conversion
of one or more of the convertible subordinated loans upon cer-
tain regulatory approvals, payment defaults or in certain other
circumstances, as of the first date on which such a conversion
occurs, and (b) for shares of Series E Preferred Stock issued
in connection with certain prepayments of one or more of the
convertible subordinated loans or a conversion thereof in cer-
tain other circumstances, as of the date of the issuance of
such shares of Series E Preferred Stock.
The Series E Preferred Stock will be automatically
converted into Common Stock at its then effective conversion
rate immediately upon the transfer by the initial holder to any
third party which is not an affiliate of such holder.
The Company will have the right, at any time and from
time to time, to redeem any or all shares of Series E Preferred
Stock for cash in an amount equal to the conversion price mul-
tiplied by the number of shares of Common Stock into which each
such share of Series E Preferred Stock would then be
convertible.
The Series F Preferred Stock
The 1,600 outstanding shares of Series F Preferred
Stock were issued by the Company to the Series F Holders in an
offering of Series F Preferred Stock exempt from the registra-
tion requirements of the Securities Act pursuant to
Regulation D thereunder in September 1996. Pursuant to the
Certificate of Designations relating to the Series F 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, dividends at an annual
rate of $500.00 per share, payable semi-annually in arrears,
commencing March 31, 1997. Dividends are payable, at the
option of the Company, in cash, in Common Stock (subject to
certain restrictions thereon) or any combination of cash and
Common Stock. In addition, 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.
The Series F Preferred Stock ranks senior with
respect to rights on liquidation, winding-up and dissolution of
-28-
the Company to all classes of Common Stock. Upon any voluntary
or involuntary liquidation, dissolution or winding-up of the
Company, holders of Series F Preferred Stock will be entitled
to receive $10,000 per share, plus accrued and unpaid divi-
dends, before any distribution is made on the Common Stock or
any preferred stock of the Company ranking junior as to liqui-
dation rights to the Series F Preferred Stock, but only after
any payments with respect to liquidation preference of pre-
ferred stock ranking senior as to liquidation rights to the
Series F Preferred 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 F Preferred
Stock, the holders of Series F Preferred Stock are not entitled
to vote on any matter submitted to a vote of stockholders of
the Company.
The holders of Series F Preferred Stock have the
right to convert shares of Series F Preferred Stock into Common
Stock at a conversion price equal to 87% of the then current
market price of the Common Stock on or after the date the Reg-
istration Statement of which this Prospectus forms a part (the
"Registration Statement") is first declared effective by the
SEC (the "SEC Effective Date"); provided that certain of the
Series F Holders have agreed that in no event shall any such
Series F Holder be entitled to convert any shares of Series F
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 such Series F Holder or any associate or affiliate of
or adviser to such holder (collectively, the "Restricted Per-
sons") (other than shares so owned through ownership of
Series F Preferred Stock), would result in a Restricted Person
beneficially owning more than 4.9% of the outstanding shares of
Common Stock; and provided, further, that in the event that for
any five trading days during a ten consecutive trading day
period the conversion of all the outstanding shares of Series F
Preferred Stock upon surrender thereof would require the issu-
ance to any holder of Series F Preferred Stock of more than
such holder's pro rata share of 6,686,750 shares of Common
Stock in the aggregate with respect to all conversions of
Series F Preferred Stock, the Company shall, at the option of
such holder, either redeem all of such holder's shares of the
Series F Preferred Stock not convertible by reason of the limi-
tation described in this proviso at a redemption price of
$11,300 per share (plus all dividends accrued and unpaid
thereon to the applicable redemption date) or, after obtaining
stockholder approval, convert such Series F Preferred Stock
-29-
into shares of Common Stock. In addition, subject to the limi-
tation described in the proviso of the preceding sentence, the
Company has the right, so long as it is in material compliance
with its obligations to the holders of the Series F Preferred
Stock and the Registration Statement is then effective, exer-
cisable at any time on or after the date which is 365 days
after the SEC Effective Date (which period will be extended in
certain events), to require the holders thereof to convert all
or any part of their shares of Series F Preferred Stock into
Common Stock at a conversion price equal to 87% of the then
current market price of the Common Stock.
The holders of Series F Preferred Stock entitled to
the benefits of the Registration Statement are entitled to
redeem their shares of Series F Preferred Stock at the redemp-
tion price set forth in the preceding paragraph if (i) the Cor-
poration obtains the stockholder approval referred to in the
preceding paragraph but has an insufficient number of autho-
rized but unissued shares of Common Stock to effect conversion
of all outstanding shares of Series F Preferred Stock, (ii) no
closing bid price of the Common Stock is available for five
trading days, (iii) the Common Stock is no longer listed for
trading on a national securities exchange or the Nasdaq
National Market for ten days, or (iv) this Prospectus cannot be
used by such holders for a 30-day period.
The Warrants
The Company issued 109,739 warrants (the "Warrants")
to purchase shares of Common Stock in the Regulation D Private
Placement. Each Warrant entitles the holder thereof to pur-
chase one share of Common Stock, subject to anti-dilution
adjustments. The Warrants are exercisable from and after
September 24, 1996, with one-half thereof expiring March 24,
1998 and the remainder expiring on September 24, 1999, at an
exercise price of $7.29 per share.
The Warrants have not been registered under the Secu-
rities Act and may not be transferred except pursuant to an
effective registration statement under the Securities Act or
pursuant to an exception from registration thereunder. Addi-
tionally, the Warrants contain certain restrictions on their
transfer. The Company is not obligated and does not intend to
register the Warrants under the Securities Act.
-30-
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.
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."
-31-
Transfer Agent and Registrar
Wells Fargo Bank, N.A., as successor to First Inter-
state 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
any Selling Stockholder. Alternatively, any Selling Stock-
holder 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 such Selling Stockholder and/or the purchasers of Common
Stock for whom they may act as agent. Any such Selling Stock-
holder, and any such underwriters, dealers or agents that par-
ticipate 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 commis-
sions under the Securities Act. To the extent required, the
names of the Selling Stockholders, the number of shares of Com-
mon Stock to be sold, purchase price, public offering price,
the name of any agent, dealer or underwriter and any applicable
commission or discount or other items constituting compensation
or indemnification arrangements with respect to a particular
offering will be set forth in an accompanying Prospectus Sup-
plement. The Company will receive no proceeds from the sale by
any Selling Stockholder of the Common Stock offered hereby.
In connection with distributions of the Common Stock,
any Selling Stockholder may enter into hedging transactions
with broker-dealers and the broker-dealers may engage in short
sales of the Common Stock in the course of hedging the posi-
tions they assume with such Selling Stockholder. Any Selling
Stockholder also may sell the Common Stock short and deliver
the Common Stock to close out such short positions. Any Sell-
ing Stockholder also may enter into option or other transac-
tions with broker-dealers that involve the delivery of the Com-
mon Stock to the broker-dealers, which may then resell or
otherwise transfer such Common Stock. Any Selling Stockholder
also may loan or pledge the Common Stock to a broker-dealer and
the broker-dealer may sell the Common Stock so loaned or upon a
default may sell or otherwise transfer the pledged Common
Stock.
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The shares of Common Stock covered by this Prospectus
are (i) shares of Common Stock purchased by Genentech in the
Section 4(2) Private Placement, (ii) shares of Common Stock
issuable upon conversion of shares of the Series F Preferred
Stock purchased by the Series F Holders in the Regulation D
Private Placement, (iii) shares of Common Stock that may be
paid as dividends on the Series F Preferred Stock and
(iv) shares underlying the Warrants issued to Carlyle Interna-
tional Securities, the placement agent in the Regulation D Pri-
vate Placement, and its designees as compensation for services
rendered in connection with the Regulation D Private Placement.
All Registration Expenses incurred in connection with
the registration of the Common Stock to which this Prospectus
relates, estimated to be approximately $220,000, will be borne
by the Company. As and when the Company is required to update
this Prospectus, it may incur additional expenses in excess of
this estimated amount. "Registration Expenses" means (i) as to
Genentech, all expenses incurred by the Company in complying
with the registration rights granted to the Selling Stockhold-
ers pursuant to which the Registration Statement to which this
Prospectus relates has been filed and (ii) as to the other
Selling Stockholders, all reasonable expenses of registration
of the Common Stock to which this Prospectus relates (other
than fees and expenses of investment bankers, brokerage commis-
sions and the Selling Stockholders' counsel fees and expenses,
if any).
The Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including certain
liabilities under the Securities Act, or to contribute to pay-
ments 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.
-33-
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.
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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 8,296,489 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........... 2
Information Incorporated
by Reference.................. 4
Risk Factors.................... 6
The Company..................... 15
Price Range of Common Stock
and Dividend Information...... 17
Selling Stockholders............. 18
Description of Equity
Securities.................... 22
Plan of Distribution............ 31
Legal Opinions.................. 32
Experts......................... 33
September 26,
1996
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