Xoma offering $21 million in stock and warrants, amends outstanding warrant terms

Xoma offering $21 million in stock and warrants

BERKELEY, Calif. — Biotechnology company Xoma Ltd. said Tuesday it is publicly offering about $21 million in stock and warrants.

The company is offering 42 million units at 50 cents per unit. That marks a 23 percent discount to the stock’s closing price of 65 cents Monday.

Shares fell 20 cents, or 30 percent, to 45 cents in morning trading Tuesday. The stock has traded between 37 cents and $1.34 over the last 52 weeks.

Each unit consists of one common share and a warrant to purchase just under a half-share of stock. The common shares and warrants are separable immediately after issuance and will be issued separately. Also, the warrants are exercisable beginning six months and one day after issuance and have a five-year term and an exercise price of 70 cents.

The company expects to use net proceeds of $19.3 million to fund research and development. The offering is expected to close on or about Friday.

Lazard Capital Markets LLC is acting as the sole book-running manager for the offering.

Xoma also said it agreed to amend the terms of its outstanding warrants to buy a total of just under 11.1 million shares, issued in May and June of 2009. That will eliminate the provisions that would have required reduction of the warrant exercise price and an increase in the number of shares issuable on exercise of the warrants each time the company sold common shares at a price less than the exercise price of such warrants.

The exercise price of the May 2009 warrants has also been reduced to less than a penny per share from $1.02. The exercise price of the June 2009 warrants remains unchanged at $1.30 per share.