Xoma Ltd has entered into amended and restated agreements relating to all aspects of its ongoing collaboration with Genentech Inc on Raptiva (efalizumab) to reflect the current understanding between the companies. The agreements include cost sharing, profit sharing and royalty arrangements, as well as detailed terms relating to participation by Genentech, Xoma and Genentech's licensees outside the U.S. in the development of all indications for Raptiva. The agreements also address the ongoing financing by Genentech of Xoma's share of development and commercialization costs. Key elements of the new financing arrangements include:
-- A loan facility to fund Xoma's share of development costs up to $80 million outstanding at any one time;
-- Repayment of the development loan, at Xoma's election, in cash, equity or through deferral of up to $40 million as an offset against Xoma's proceeds from its 25% profit share in the product;
-- A period of up to 90 days after FDA approval of Raptiva for Xoma to make its election among the repayment options (unless earlier repayment is otherwise triggered);
-- A $15 million loan facility to fund Xoma's share of U.S. marketing and sales costs to be repaid in cash within 90 days after FDA approval of Raptiva (unless earlier repayment is otherwise triggered); and
-- The grant to Genentech of a security interest in Xoma's profit share as collateral against any unpaid past due amounts of the loans.
"Much of what is in these new agreements reflects the operating principles that we and Genentech have been applying for some time," said John L. Castello, Xoma's chairman, president and chief executive officer, "but we are particularly pleased to have gained additional flexibility in the financing arrangements. This is yet another example of the collaborative nature of our relationship with Genentech."