XOMA (XOMA) Announces 30% Workforce Reduction

XOMA (NASDAQ: XOMA) disclosed the following on Tuesday:

On August 19, 2015, XOMA Corporation (the “Company”), in connection with its efforts to lower operating expenses and preserve capital while continuing to focus on its product pipeline, committed to a 30% workforce reduction leading to the termination of 58 positions throughout all areas of the organization, resulting in a workforce of 134 employees. The Company completed this action on August 21, 2015. Affected employees are eligible to receive severance payments and payments of their COBRA premiums for up to 9 months. In addition, the Company is providing outplacement assistance to affected employees. This workforce reduction does not reflect changes that may occur as a result of the Company’s continuing efforts to consider strategic options for XOMA’s manufacturing and biodefense operations.

In connection with the foregoing changes to the Company’s business, the Company anticipates it will incur aggregate restructuring charges of approximately $2.3 million, of which approximately $2.1 million will be paid in cash during 2015. The aggregate projected restructuring charges consist of approximately $2.1 million related to one-time termination benefits, comprised principally of severance, benefit continuation costs and outplacement services associated with the elimination of 58 positions; and approximately $0.2 million in estimated contract termination expense. These charges are expected to be recognized in the third quarter of 2015. The Company may incur other charges and will record these expenses in the appropriate period as they are determined.

On August 21, 2015, Thomas Klein, Vice President and Chief Commercial Officer of the Company, was separated from the Company in connection with the reduction in force described in Item 2.05 of this Form 8-K, effective immediately. Pursuant to Mr. Klein’s Officer Employment Agreement with the Company, dated March 18, 2013, and previously filed with the Securities and Exchange Commission as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2013, Mr. Klein will be paid (i) a severance payment equal to 0.75 of his current annual base salary, (ii) a severance payment equal to the pro-rated portion of his current annual target bonus, (iii) payment of the full cost of health benefits coverage (i.e., medical, vision and dental) for Mr. Klein, his spouse and his eligible dependents for nine months and (iv) for six months of executive outplacement services, provided by a Company designated outplacement firm, not to exceed $8,000 in value. Pursuant to his agreement, all payments and benefits to Mr. Klein thereunder are subject to his compliance with the confidentiality and non-competition provisions thereof and his execution of a general release of claims against the Company.

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