Good afternoon ladies and gentlemen and welcome to the XOMA Corporation’s Corporate Update and Third Quarter 2013 Financial Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions following at that time. (Operator Instructions) As a reminder this call is being recorded. I would now like to turn the conference over to your host for today, Ashleigh Barreto, Investor Relations at XOMA. You may begin.

Thank you, operator and good afternoon everyone. Joining us on the call today are John Varian, Chief Executive Officer; Paul Rubin, Senior Vice President, Research & Development and Chief Medical Officer; and Fred Kurland, Vice President, Finance and Chief Financial Officer. Before we begin, I’d like to remind everyone this conference call will contain forward-looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Factors that could cause our actual results or outcome to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings of Form 10-K and in other SEC filings. I’d now like to turn the call over to John. John?

Thanks Ashleigh and good afternoon everyone. We covered a great deal during last week’s call so we’ll keep today’s call relatively short and focused on the EYEGUARD program, our financial results and the XMet program. For anyone who is new to the XOMA story our lead indication for gevokizumab is in non-infectious uveitis and is known as the as the EYEGUARD program. It is composed of three separate Phase 3 studies called EYEGUARD-A, EYEGUARD-B and EYEGUARD-C. EYEGUARD-A is a global study and 300 non-infectious uveitis patients who are experiencing acute disease and have a vitreous haze score of greater than or equal to two on a scale known as the SUN scale. EYEGUARD-C is our global study in 300 non-infectious uveitis patients who are controlled with corticosteroids and immunosuppressants at the time they come into the study. EYEGUARD-B is a SERVIER run study outside U.S. which will enroll up to a 110 non-infectious uveitis patients we have the shift as an underlying disease. We launched each of these studies with significant inside and input from the key opinion leaders and non-infectious uveitis core NIU. As we said from the beginning the key to getting the EYEGUARD studies enrolled is to get the sites up and running. We purposely targeted 140 sites in EYEGUARD-A and EYEGUARD-C to enroll the 300 patients needed in each study. Designing the study to only require an average of two patients per site for study makes it very doable. During our last quarterly call, we told you we had 63 of the targeted 70 clinical sites for EYEGUARD-A and C up in running in the U.S. we also said that enrollment was slower than originally anticipated, but moving along steadily enough that we should have the projected number of U.S. patients in the study to deliver…

Thanks John. Good afternoon everyone and thanks for attending our call. In the third quarter ended September 30, 2013, we reported total revenues of $6.3 million, compared with $7.3 million in the third quarter of 2012, the decrease reflects lower contract and other revenues. During the 2013 third quarter we reached the point at which SERVIER had met its initial $50 million investment in gevokizumab development activities both for NIU and Behçet's uveitis indications. We now split the cost of these development activities on a 50-50 basis going forward. This split and the timing of its occurrence was as predicted in our financial guidance. I’d like to remind everyone that each company has been and will continue to pay for its own proof-of-concept programs separately. Our research and development expenses for the third quarter of 2013 were $18.2 million which was essentially flat when compared with the $18.4 million reported in the 2012 third quarter. Selling, general and administrative expenses were $5.2 million in the third quarter of 2013 as compared to $4.7 million in the corresponding quarter of 2012. For the third quarter of 2013, we had a net loss of $29.6 million or $0.34 per share. In the third quarter of 2012, we reported net loss of $26.9 million or $0.39 a share. The net loss for both of the third quarters include a non-cash charge of $11.1 million or $0.13 a share and $9.2 million or $0.13 a share related to the revaluation of contingent warrant liabilities, which resulted primarily from the appreciation of our stock price. Excluding these non-cash charges, net loss in the quarters ended September 30, 2013 and 2012 was $18.5 million or $0.21 a share and $17.6 million or $0.26 per share. In August, we raised $31.6 million through the sale of 8.7…

Hello everyone. I will begin my remarks with a couple of follow-up points on the EYEGUARD studies and then expand a conversation to include the other programs we’re working on. As John said, EYEGUARD-A patients are more typical to find in the US. In the State known NIU patients are being treated aggressively before they reach the severity that would qualify them for entering into our study. So there are eligible patients for our study. In addition when investigators here in the States do see patients with more severe disease patients are often not on underlying medication. The protocol mandates that patients could only be enrolled in the trial if they exacerbate while on either corticosteroids or other immunosuppressants or a combination of both. As John stated, we launched EYEGUARD-C with significant insight and input from the key opinion leaders in NIU. As prolonged exposure to the high dose corticosteroids causes significant toxicity, it is no wonder to take urgently want an alternative for their patient’s treatment regiments or reserve them to treat disease exacerbations. This study is enrolling as we had anticipated in the US. Yet to achieve full enrolment, we do require significant number of patients to come from outside of the US. We have targeted 140 centers globally for each 300 patient study specifically because these patients are difficult to find. Based upon present enrolment data, we believe the enrolment of at least two patients per site is clearly achievable in the times discussed. Until the majority of SERVIER sites are enrolling patients we will not have the data on enrolment rates required to predict when data from EYEGUARD-A and EYEGUARD-C will be available in 2014. We continue to believe that data from both will be available in 2014 and we will more specifically as we gain…

(Operator Instructions) Your first question is from Ritu Baral of Canaccord. Your line is open.

Thanks for taking the questions this is Kevin for Ritu. I have a couple of questions on the timing of the new two POC studies. Can you give us more color on what’s usually seen quantitatively and qualitatively? And also can you let us know what’s the timing that you expect on EYEGUARD-A and C in 2014, how does that correlate with timing for EYEGUARD-B in H1 ‘14?

Okay. By the other POCs you mean the ones that SERVIERs are undertaking?

Yes.

We can’t really comment on what SERVIER is actually doing. I can talk a bit about the diseases and certainly polymyositis/dermatomyositis is a highly debilitating disease that will result in both muscle pain and muscle weakness and the treatments are fairly unsatisfactory. So my belief is that if we can see any improvement compared to placebo this will be a useful tool in treatment of these indications. Schnitzler disease is an interesting disease and other IL-1 modulators have been studied both gevokizumab as well as (inaudible) have been looked at in trials. It was very interesting about the disease is that these patients are exclusively sensitive to modulation or in the patient of IL-1 data production. So the expectation is that you will see very profound improvement if gevokizumab is successful in the treatment. So virtually all the patients with the disease that are (inaudible) should respond to our drug, but that’s ultimately why we are doing the trials. And then the XMet program and I will let John to answer that.

Yeah, so as we said for EYEGUARD-B we expect the top line results from that in the first half of 2014, and we are probably more specific about when in 2014 EYEGUARD-A and C will read out. We feel confident to read out in 2014 but we can’t be more specific until the sites that survey has gotten up have enough history for us to be predictive of when the enrolment will hit the 300 mark for each of those studies. So we are really encouraged by in the last 90 days how much progress survey has made in both getting countries up and running and the progress they have made around this additional six where they got the full approval, now just getting the drug shift and getting it to the clinical sites. So we are really encouraged by what they are doing but until we see those sites up and running for a period of time it’s difficult to be more specific to win in 2014 A and C should be done.

I see. And could you also comment on the MRI data that's coming. What do you expect from the EOA baseline, what do you think it would be meaningful at least?

This has never really been looked at to this extent in this population and I haven't seen the data yet. So I can only tell you that we are hopeful that we see something but I can't tell you what the expectations are, we just need to report the data when we get it.

Yeah. And just one thing to be clear on that, what we really want to do in the EOA program is gather all the data, the data from not only the three months end point in the elevated CRP study, but the six month data on payment function that sort of thing and all of the data that's going to come out of the EOA study in patients who don't have elevated CRP and all these MRI and X-ray data. So we don't expect to piece me it let out, but we expect to have all that, what we expect to have all that data in the first quarter of next year and we report all of that once, because that's what we really need to make our decision about should this go to Phase 3 and with those data in hand, we will have to plan to take to the regulatory authority each year in U.S. to get there and put on and also. So, it's not going to be a slow fleet of data, it's going to be really a comprehensive look on everything else we learn and so we can actually talk to you about the whole picture.

Alright. Thanks so much for taking the question.

Thank you. And the next question is from Simos Simeonidis of Cowen & Company. Your line is open. imos Simeonidis - Cowen & Company: Hi, thanks for taking the questions. Would it possible to give us a number or maybe a rough idea of how many patients have been either enrolled or treated in each of the EYEGUARD studies?

So, again we hesitate to do that Simos, because it becomes it's much clear to talk about when we expect to be done in the rates of enrollment which we have. And so if we go into any exact enrollment numbers we have to then qualify by how long centers have been up and enrolling. What we've seen is the same thing we saw even last quarter is the rate of enrollment in the U.S. for EYEGUARD-C is approximately two patients per site per year, in EYEGUARD-A it’s about one patient per site per year and already outside of the U.S. when EYEGUARDs-A or C come up, it’s better than that two patients per site per year. So the rates we're seeing are pretty good but to give an enrollment number for either study start then breaking it down by country and that’s why we end up having to go through the fact that for instance here in U.S. over 50 of our sites have only been opened for an average of six months so then we start qualifying everything. So we think it’s much more informative to be predictive and give you rates of enrollment and again the whole key to the study is getting up the sites that we can get our two patients per site per study and we're on a I think a good path towards doing that. And again SERVIER’s progress these last three months has given us more confidence that we're on the right path. imos Simeonidis - Cowen & Company: Okay. Do you know if SERVIER is going to make their data in a polymyositis public and when if yes when that might be?

So it’s Paul, right we hesitated. We do not and shouldn’t speak for them on doing this phase we're really happy they’re investing the amount of money and effort they are in this drug and all you’re hearing about so far the ones that they publicly announced in their publicly known that’s up and running but there is a whole POC program which would more in it than what we've already talked about. So we cannot and should not be predictive of when they’ll be done and what they’re going to see and that sort of thing, that’s really for them to discuss. But again we're really happy that they’re making the level of effort they are around gevokizumab in these other indications. Paul anything you want to add on that?

No, no that’s exactly right. So as John suggested there is just a large amount of effort and resource on SERVIER’s part to expand the knowledge as to where gevokizumab will be successful. imos Simeonidis - Cowen & Company: And for XOMA investors, I mean the way they would find out about data from SERVIER’s program would be, what would be the conduits for that, would they -- would SERVIER at some point notify you and there at that point you would issue a press release or it would be at medical meeting, how do you think that might occur?

Simos I think the underlying concept is if it’s material to XOMA, we will disclose right. And so as they get results from some of the bigger indications and they disclose those results, we hear those, we speak, I won’t quite say daily but probably is, every week we are talking about progress. So we have see no quite a bit. Once we get to the point where we know enough that it’s material that's we have to disclose and we’ll do so. So if some of the smaller studies that may not be material we can wait for them to present and we would honor that and wait for them to present, but if something becomes material to XOMA, we will disclose it with their permission they understand that something we have to do. imos Simeonidis - Cowen & Company: Okay. It sounds good. Thank you for taking the questions.

The next question is from Ted Tenthoff of Piper Jaffray. Your line is open.

Just one quick follow-up on the PG study, how large should we anticipate that to be and when will they be, when do you think we might be able to get some preliminary data from that?

Well, what we’re hopeful that FDA follows president for diseases of this severity and prevalence. So I can’t say about this study, but there are other studies that kind of form the same category with a total patient rate, some of the patient numbers in 30 to 50 range. So that’s we are hoping we’ll see. And then if we are careful with our entry criteria and we look at the frequency of response we are really hopeful that that number would be enough to show a significant difference. So we are waiting for that. We are in the process of putting together our package to submit to FDA and that will take a few months. And then once we have had that ready to go, we will submit it which takes another couple of months to get the meeting. And then after that meeting we’ll know where we are.

So just one thing to add on that is that it’s not just President we in May actually interacting with FDA before we launched our pilot study and if we had got this sense that this would not possible or would be an absolute no, we would probably, in fact I know we would not have gone for with the pilot study. So again no promises, but at the same time we had an interaction that made us feel like that President might apply to what we are doing.

Okay, cool. Excellent, thanks guys.

Thank you. And the next question from Matt Kaplan of Ladenburg Thalmann. Your line is open.

Hi guys. Couple of questions, first just, I guess a number of questions for Fred. In terms of now you hit the, I guess $50 million number with respect to SERVIER. How should we think of the contract revenues kind of going forward, should those start to tail down or how should that work?

Well, Matt you are quite right. This means, for the rest of the audience, what it means is that we are now in a position where we are sharing the cost of the NUI, the EYEGUARD studies equally going forward. So when you look at our contract revenue which is the place where all of the reimbursements from SERVIER incurred, you would expect to see all other things being equal that those revenues would decrease a bit for the obvious reason. So directionally that is correct. But the only thing -- one thing that could start moving in the opposite direction to a small degree is having to do with the total, the overall cost, and we don’t think they are going to change much. So I think we should expect to see that going down slightly.

Okay, fair enough. And just going to back the BLA program, I just want to make sure I understand the study with the patients left below CRP, when should we expect data from that study, is that a first quarter event as well?

Yeah. And so what we announced last week as you heard was that that study was full enrolled. It was a targeted 90 patients study, it was fully enrolled we announce at last week. There is an 84 day endpoint on that. And so as you can just do the map, it’s basically around three months from that, but what we want to do just to say that we want to have the data from that study and again in patients are now low CRP, they just don’t have elevated TRP.

Okay.

The other study, the six month endpoint and the MRI and x-ray data as a whole. But that one will definitely be on time because it’s just, the clock just has to run out as fully enrolled.

Sure. Sounds good. And in terms of just following up on some of the other questions, in terms of the proof-of-concept studies that are not in our control, that SERVIER is running, should we expect a number of data points for half a next year from those studies?

So we just don’t want to start predicting when data will come out. That’s really up to them as to when -- how they run their studies. And again once we have material information, we will have to disclose it, but for us to start predicting, I think would be inappropriate, it’s a fair question. I just don’t really feel like we should answer it any differently.

And one of your answers, you said that the number of studies that they have ongoing is a lot more than you have touched on. Can you give us a sense in terms of the total number?

It's quite set a lot probably, Matt where do you --. It's a couple few.

Okay. Great. Thank you.

Thank you.

Thank you. And the next question is from Graig Suvannavejh of MLV & Company. Your line is open. Graig Suvannavejh - MLV & Company : Hi it's Graig. Thanks for taking my questions. I just have a couple if you don't mind. I just want to revisit the EOA study and the six months data. And if you could just provide some final clarification for me, just around expectations around the six months data, you have some interesting three months data. I think you are hoping to see a wider separation at six months, but if I'm correct, there is no powering around that. So it's just kind of qualitative, instead of quantitative. And then just a follow up to that question, is there a way for us to think about, if you see a greater separation, but you don't see proof of radiographic data that you are looking for or vice versa anyway for us, so you should be able to done context for us.

Now in terms of your second question I think all drugs presently on the market for the treatment of osteoarthritis are approved for the treatment of symptoms. So in fact it’s our believe and obviously this will have to be tested in communication with FDA that if we only see changes in these AUSCAN scale there is a possibility of getting and approved application. And then the second indication might be for modification or improvement in the disease itself or disease modification, so that’s kind of a second bite at the apple. So I think if we see symptomatic control, there is not only a role, but a regulatory pathway forward if we see improvement in the disease aspects that’s the second regulatory pathway going forward. Graig Suvannavejh - MLV & Company: Okay, great.

And just one other thing to point out is we do have, there is precedent to believe that the three months data on the AUSCAN scoring will be even better six months, but we don’t know that. Right what we do know is that the three months data if we show this continued 9 percentage points separation, it would require a study of about 230 patients per arm to show statistical significance. So if we do have a better effect of six months it would reduce that amount. Graig Suvannavejh - MLV & Company: Okay. Just your latest thoughts around the acne potential indication.

Yeah. So it really is where it stands, we’re in the middle of our market research on all these different indications. And what's interesting for us here at XOMA dealing with gevokizumab where it deliver pretty much the same way subcu once a month at the same or similar doses different indications. Because of that it’s important that our pricing for each of the indications ultimately in the long-term have to fit together pretty well. So there could be staging of how the drug rolls out in different pricing as it rolls out, but ultimately in the marketplace it needs to fit together in all these different indications. What we know from our primary market research already is, there is a desire and a need for drug that will work in patients who failed oral antibiotics which is exactly what we tested the drug in and the study that we reported out on and before they go to Accutane. And so there is a need for a drug like ours that could be used in those patients. What we need to figure out is how the pricing for that drug fit with the pricing in the other indications we’re looking at and that's the work we’re doing now. So again it’s a kind of good and fun and interrupting puzzle to layout all these different indications where the drug could be launched, but we need to make sure that we do it in a way that we actually benefit the drug as a whole and the overall revenue potential for the drug. So that work is ongoing again there is a need, but doesn’t fit together with the other things we’re thinking about doing that's what we don’t know yet. Graig Suvannavejh - MLV & Company: Okay. And if I may just two questions for Fred, Fred the share count came in a little lower than what I anticipated, is anything noteworthy there?

No it’s just a weighted average calculation. It probably has to do with the fact that in August we sold shares and so that changes the calculation. So there is nothing other than doing a weighted average calculation using those additional shares that came in the second half of August.

Lower, so maybe the timing maybe the calculation the timing as those shares are only in the weighted average from the date they were issued.

That’s right. Graig Suvannavejh - MLV & Company: Great. And last question, Fred you’ve got this potential XMet trial in PG and I am just trying to get a sense of has funding for that potential trial already been included and how you are budgeting for 2014?

So one thing to say, this is John actually, so one thing to say, one of the nice things about the indication we picked and even if we go more broadly through neutrophilic dermatosis, the cost of those studies we are prepared to bear with the cash that we have on hand today. So we are not in a position where when we look forward in our funds that we have, the funds that we’ll need we can actually cover all the things we’re doing now and add this pyoderma gangrenosum even it expand more broadly. We have the funds in place that we don’t need to be raise money too aggressively to pursue that. Graig Suvannavejh - MLV & Company: It’s great position to be in. Alright, thank you for taking my questions.

Thank you. And the next question is from Liana Moussatos of Wedbush Securities. Your line is open.

Thank you. This is for Fred and kind of a follow-up to Matt Kaplan’s questions on projection, financial projections. With the cash used in operations going up $2 million to $4 million and we saw a little bit of a drop in revenues in Q3 in Q4 and presumably a little bit more in Q4 anything going to happen with R&D that’s involved in that $2 million to $4 million, is that going to go up?

No, we think it’s going to be steady. I should mention that one of the things that we noted in the third quarter is that when we compared R&D in Q3 of 2013 to that of the year ago quarter, it was pretty much flat. But one thing is interesting as you peel the earning is you may recall that a year ago in 2012 and we were finishing up and had a fair amount of expense associated with the cardiology product that assist and divested through our agreement with [supplement]. And that was about $2 million and so the spending on gevokizumab continuous to be robust, I don’t see any major changes.

Thank you.

Thank you. There are no further questions at this time. I will turn the call back over to John Varian for closing remarks.

Thanks, operator. Well thank you everyone for joining today’s call and even more so for joining our call last week when we had some really important announcements and we appreciate all the time and attention that you’ve given us on that important set of announcements. So just to close today, we are very happy with the progress our partner SERVIER has made on the EYEGUARD study. And we feel very good about the progress that we are making kind of across the board clinically on gevokizumab because it is our focus and will remain such. So thanks again everyone.

Ladies and gentlemen, this concludes today’s conference. You may now disconnect. Good day.