Good afternoon, ladies and gentlemen and welcome to the XOMA's Fourth Quarter and Full-Year 2016 Earnings Conference Call. [Operator Instructions]. I’d now like to turn the call over to Matt Closson, Investor Relations for XOMA. You may begin.

Thank you, Brian and good morning everyone. An accompanying slide presentation is available on the events and presentations page in the investors and media section of XOMA's website. We invite you all to take a moment to open the file and follow the presentation along with us. Before we begin, I'd like to remind everyone that this webcast, conference call and presentation will contain forward-looking statements about the Company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will 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 actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K and other SEC filings. I’d now like to turn the call over to Jim Neal, Chief Executive Officer of XOMA.

Thank you, Matt and welcome everyone. We are going to talk to you today about a new XOMA. What you will hear takes XOMA on a very different path. We hope you will appreciate what an exciting change this is to our business strategy. We hope you will also appreciate the significant efforts we are undertaking to position the company for long term growth and long term success as we seek to establish ourselves as a profitable company. During the more than 30 years of our existence XOMA has built a substantial base of assets that don't show anywhere on our balance sheet. These assets are licenses and fully funded programs that are advancing in the hands of our partners and we intend to capitalize on this portfolio in a very different way going forward. Please turn to slide 3, so what has changed, well in a word everything. We have completely recapped the company. In January 2017 we reduced our debt by $10 million and we intend to continue to focus on strengthening our balance sheet going forward. In February 2017, BVF Partners recognizing the unique opportunity and value in our portfolio of fully funded programs made a $25 million investment in the company which allows us to pursue this new strategy. We have significantly reduced our cost infrastructure. Over the course of the last year we have made changes that will decrease our operating expenses by more than 50%, but we're not stopping there. We are currently reducing costs further with ongoing initiatives and then even further after we out license our lead clinical program 358. Less than two years ago we had over 180 employees at the company. Today we have less than 20. All of these initiatives form the foundation for our new strategy going forward. Before I talk about our exciting new direction and I will turn it over to Tom Burns, our Chief Financial Officer who has played a central role in the operational and strategic reshaping of XOMA to provide a financial review. Tom?

Thanks, Jim. Good morning everyone, my comments will concentrate on a few areas that might need further explanation. rather than reviewing all the details included in the press release we issued this morning. Please do keep in mind that our financial profile will be dramatically different as we exit this quarter and move through 2017. In December 2016 we closed the transaction with Healthcare Royalty Partners or HCRP which brought us $18 million in cash. We also are eligible for potential future milestones of up to $4 million based on sales levels of Pfizer's [indiscernible] in the next three years. We received 18 million of cash in December however for GAAP purposes we will be recognizing the related revenue over time using the units of revenue method which is calculated by computing a ratio of the proceeds received from HCRP the total payments expected to be made to HCRP over the term of the acquisition agreements and applying that ratio to the periods of cash payment. In conjunction with the HCRP transaction we paid down 10 million in Hercules debt. This occurred in January 2017 leaving a balance of approximately $7 million remaining on that facility as of today. In February 2017 we raised $25 million in cash from a sale of equity to be BVF Partners. As we indicated in the prospectus supplement associated with BVF investment, we intend to pay down the remaining 7 million in Hercules debt later this month. In December of 2016 we also initiated a corporate restructuring plan to continue to reduce our operating expense and burn rate. We booked nonrecurring restructuring charges of 4.6 million in the fourth quarter of 2016 related primarily to severance, other terminations benefits, and outplacement services. Upon licensing 358 and resolving legacy expenses our end state gross operating expense structure should be less than $1.5 million per month with any revenues received offsetting this considerably reduced expense rate. Over the last several years we've had significant fluctuations on our other income, expense line related to revaluating our outstanding warrants. I'm happy to report that on a go forward basis we no longer need to adjust these as these outstanding warrants expire this month. Lastly I have stated in the recent past that we anticipate receiving a $10 million milestone payment associated with one of our many fully funded programs. I'm reiterating our expectation to receive this significant milestone in the near term yet as of today we have not received the required notification. With this 10 million milestone the anticipated proceeds from out-licensing activities as well the significant expense reductions that have occurred and will continue to occur over the course of 2017. We expect to dramatically reduce our dependence on the capital markets. With that I'll turn it back over to Jim.

Thanks, Tom. So what is our strategy going forward? Please turn to slide 5, we are here for a singular purpose to drive shareholder value in a new way. Our new corporate strategy combines revenue streams from our portfolio of partner funded programs with a lean cost infrastructure ultimately resulting in positive cash flows. We have an extensive portfolio of license agreements and programs that are fully funded by partners. These programs will generate a growing collection of milestone and royalty payments over time. Our existing portfolio could provide up to $50 million in potential milestone revenue over the next 36 months alone. Those milestones for payments are associated with programs in development across multiple indications and when combined with the license potential of our currently unpartnered programs gives us numerous shots on goal. An important element of our strategy is to optimize our portfolio by out-licensing our current clinical programs including 358 to generate additional revenue for the company. Once we are cash flow positive we intend to expand our portfolio by acquiring milestone and royalty streams associated with additional programs that are fully funded by others. Our objective is to become a cash flow positive entity over time thereby dramatically reducing our dependence on the capital markets. The next slide, slide 6, highlights the core value of the XOMA investment. We have more than 20 partner funded programs with the potential to drive milestone and royalty payments to us in the future. The program spanned multiple stages of development from preclinical through commercial and in many cases there are multiple indications within each program. The green dots on the pipeline chart represent milestones that have been achieved. The red dots denote upcoming milestones. With our significantly reduced cost infrastructure, these milestone payments are expected to make significant contributions…

[Operator Instructions]. Our first question will come from the line of Liana Moussatos with Wedbush Securities. Please proceed.

You mentioned doing a little bit more clinical work with XOMA-358 to make it more attractive to partners, for XOMA 129 and the other preclinical programs like be anti-IL-2 and PTH, do you plan to do clinical work to proof of concept or do you anticipate out-licensing them before that point and then my second question is you mentioned acquiring additional programs fully funded by others, can you give us like a theoretical example of what that might look like?

So on your first question what's the plan for investment in the preclinical assets and would we take them to the clinic. We will make that decision on a case by case basis but overall our intention would be to license earlier rather than later and we do believe that the advancement of these assets particularly the oncology assets can be done and really should be done at the preclinical stage by others rather than us doing that in the clinical setting. So overall our attitude would be to do it early rather than late, but we also would reserve in all cases the opportunity should it be necessary for us to maximize the value of the asset in a license transaction to take that asset further into development including going to the clinic but that would be case by case and it would be an important decision for us to take at really at the board level to make that kind of investment because it's really you would want to make sure that the returns you expect out of the license transaction more than pay for the additional investment we are making to go to the clinic which is not a significant -- not an insignificant undertaking in the case of an antibody asset that we would have here. So that's I think the first question, the second question was acquisition of potential programs in the future, I think the statement would be our first job is to out license what we have on-hand today and be at a seller if you like of these kinds of programs that we just talked about for example 358. If we've completely cleaned up if you like and licensed our current portfolio of assets that we have been developing on a proprietary basis here at the company the anticipation is that we could be in a position in the future to look at other assets that are being advanced by other companies and say there is a milestone and royalty stream potentially associated with Asset X, it sits at Company Y, Company Y would like to have some monetization of that future milestone and royalty stream and there could be the opportunity for a transaction in that vein. A lot depends in that case about our cost of capital and the relative value associated with the milestone and royalty stream and the risk associated with it as well but that's I think a something for the future, it's not really something we would be putting in the immediate timeframes that we're looking at for 2017 for example. Does that help?

[Operator Instructions]. Our next question will come from the line of Joseph Giordano with Cowen & Company. Please proceed.

Just two real quick for me, in terms of Q1 financial, have all the restructuring charges sort of been taken care of in Q4 '16 or is that something that we're going to see a little bit more of in Q1 and this cash burn cut, is that going to be evident immediately in Q1 or is it going to be gradual throughout the year?

Yes, so we booked 4.6 million in Q4. There is cash payments that are associated with that there's a tail that goes into 2017 as you can imagine. We don't make all the payments one lumpsum, it goes over time. Regarding Q1, yes we are in the process of eliminating a lot of what I would characterize as kind of legacy expenses that are inherent in a company that historical company like ours. So I do think you would see this trailed down over the course of the 2017, Q1 probably being the highest quarter of 2017 and then it going down from there.

Great. And then just in terms of clinical data for X213, do you anticipate releasing any data proof of concept this year or when could we see anything from that?

Yes as we've indicated that study is ongoing and we are nearing the end of it I would suggest there's actually some interaction we would like to have with investigators have been involved with that study but you should expect that the data from that, A, would be disclosed and B, it will be within the next few months that we would be disclosing that information to you.

Thank you. I'm showing no further questions in the queue at this time. So now it is my pleasure to hand the conference back over to Jim Neal, Chief Executive Officer of XOMA for closing comments or remarks. Sir?

Thank you. While I hope you have had a chance to think about and review the strategy. It's pretty exciting and we're really excited about we have going forward. We have some important activities to focus on in the short term, with 358 its the licensing activities, with the financials it’s the continued focus on cleaning up the balance sheet and we look forward to keeping you informed as we execute the strategy going forward. In the meantime please reach out if you have additional questions and we'll do our very best to answer them. We thank you for your time and attention.

Ladies and gentlemen thank you for your participation on today's conference. This does conclude the program and you all disconnect. Everybody have a wonderful day.