Q2 2003 XOMA Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good day, ladies and gentlemen, and welcome to XOMA's second quarter 2003 conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and I will give you more instructions at that time. If anyone requires assistance during the conference, please press star 0 on your touch-tone phone. As a reminder, ladies and gentlemen, this conference call is being recorded. An audio replay of this call will be available beginning two hours following the conclusion of the webcast through 6:00 p.m. Eastern, 3:00 p.m. Pacific, on August 20, 2003. Access numbers for the replay are 1-800-642-1687 for U.S. and Canada, or 1-706-645-9291 for international. The conference ID Number is 1427242.

I would like to introduce your host for today's call, Laura Zobkiw, Corporate Communications. Please go ahead, Ms. Zobkiw.

LAURA ZOBKIW, CORPORATE COMMUNICATIONS & INVESTOR RELATIONS, XOMA: Thank you. Good afternoon. Thank you all for joining us today for XOMA's 2003 second quarter conference call. We have filed our second quarter 2003 Form 10-Q with the SEC and have posted today's news release on the XOMA website, www.xoma.com. If you would like us to add you to our e-mail distribution list, please send an e-mail to investorrelations@xoma.com. Speaking today will be Jack Castello, our Chief Executive Officer; Peter Davis, our Chief Financial Officer; and Dr. Pat Scannon, our Chief Scientific and Medical Officer.

Before we begin I would like to point out that as usual certain statements made in this presentation may be forward-looking, and we have based those statements on assumptions that may not prove to be accurate. Actual results could differ materially from those anticipated due to risks inherent in the biotechnology industry as well as for companies engaged in product development in a regulated market. These risks, including the timing of clinical trials and other events, the results of clinical trials, changes in collaborative relationships, and actions by the Food and Drug Administration and the U.S. Patent and Trademark Office are discussed in XOMA's most recent annual report on Form 10-K and in other SEC filings. Please consider such risks carefully in evaluating the company's prospects. Jack Castello, XOMA's CEO, will be speaking first this afternoon. Jack?

JOHN L. CASTELLO, CHAIRMAN, PRESIDENT & CEO, XOMA: Thank you, Laura. I will start by reviewing our 2003 accomplishments to date with emphasis on the most recent events. Peter Davis will summarize XOMA's second quarter financial results. Dr. Pat Scannon will update you on the progress of our various clinical and preclinical development programs. I will finish with a brief summary of coming events for the rest of 2003 and then we'll answer your questions.

First let me highlight some important events since our last call. Raptiva continues to make progress and is on schedule. As you know, Genentech and XOMA hope to soon provide psoriasis patients and their doctors with a new treatment option. We recently announced that an FDA advisory panel is scheduled to review our biologic license application on September 9, 2003. We are both focusing a lot of management attention on preparing for this launch in a market where there is room and need for new, safe, and efficacious therapies to treat patients with moderate to severe psoriasis. More than 2700 treated patients treated with Raptiva are now included in the BLA, which we believe provides a robust database to support the safety and efficacy of the product.

Serono, Genentech's marking partner outside the U.S., has submitted a marketing authorization application for European union approval of Raptiva; and it has also filed for approval in Australia, Canada, and Switzerland. XOMA will receive royalty on all sales outside the United States. This is in addition to our profit sharing arrangement with Genentech for Raptiva sales within the United States.

Genentech and XOMA continue to educate and raise the awareness of psoriasis as an immunological disease within the dermatology community. Genentech has sponsored presentation and exhibit booths at both AAD meetings this year in March and most recently in July at the summer meeting in Chicago, where investigators announced additional data supporting the safety and the increased efficacy of Raptiva when administered continuously for up to 21 months. Pat Scannon will provide more detail about these data a bit later. Raptiva is an important proof of concept for our collaboration strategy also. This strategy is to continue to seek collaborations that leverage our core competencies and bring new product candidates into our pipeline.

Moving on to other collaborations, in May we amended certain terms of our financing agreement with Millennium. In June we announced the start of a Phase I safety study on schedule of the MLN2201 monoclonal antibody. In July we announced the termination of our NEUPREX agreement with Baxter. They will pay us a one-time fee of $10 million, and we get back all rights to NEUPREX. We are working to get this program moving forward again, so stay tuned for future developments.

We also continue to work on some earlier stage programs. XMP.629 is a compound that has been formulated as a topical treatment for acne. It was derived from BPI by XOMA scientists and has shown very promising antibacterial activity. We are presently completing toxicology studies and plan to begin clinical testing this fall.

Our human engineered ING-1 …