The company expects an annualized reduction of $27 million in cash expenditures when changes are completed in the second quarter of 2009.
The company remains staffed with 197 employees to develop XOMA 052, its anti-inflammatory antibody drug candidate for the treatment of type 2 diabetes, develop and license technology and continue fully funded antibody discovery and development with its pharmaceutical partners in collaborations and the US government in biodefense.
The company said that it has manufactured sufficient quantities of XOMA 052 for planned studies. Based on encouraging clinical results in type 2 diabetes, the company expects to start a Phase II study of XOMA 052 in the second quarter of 2009. The company will maintain its pilot scale manufacturing plant and the potential to resume large-scale manufacturing in the future.
The company will record a charge in the first quarter of approximately $3 million for severance and other costs related to workforce reductions.
Steven Engle, chairman and CEO of Xoma, said: We have made a difficult, but necessary, decision driven by extremely challenging market conditions. Although manufacturing was fully utilized in the fourth quarter, forecasted manufacturing demand in 2009 will not meet expectations. The reductions are focused on manufacturing and related areas and associated general and administrative support. Today’s actions will bring operating expenses more in line with expected revenue.