Under the restructured agreement Novartis will make an upfront payment to Xoma of $6.2 million, fully fund all future R&D expenses, reduce existing debt by $7.5 million, pay potential milestones of up to $14 million and double-digit royalty rates for two ongoing product programs including HCD122, and provide Xoma with options to develop or receive royalties on four additional programs currently pending selection.
In exchange, Novartis will have control over the HCD122 program and the additional ongoing program, as well as the right to expand the development of these programs into additional indications outside of oncology. As part of the agreement, Novartis Vaccines and Diagnostics will pay Xoma for all project costs incurred after July 1, 2008.
Novartis will pay Xoma royalties on sales of HCD122 and one other active product program candidate, based on aggregate sales in all indications. If either Xoma or Novartis chooses to activate any or all of the four currently pending programs, the developing company will pay the other party reduced royalties on sales of any resulting products. In all cases, royalty rates are subject to certain customary adjustments.
Steven Engle, chairman and CEO of Xoma, said: “The restructured agreement with Novartis allows Xoma to focus our resources on proprietary projects like Xoma 052, an anti-inflammatory drug candidate designed for use in multiple diseases, while maintaining a share of the potential value of the product candidates resulting from the collaboration.
“Importantly, the development of HCD122 can now be expanded under Novartis’ leadership into new disease indications. We believe this expansion is a key step in realizing the full potential of this program.”