Corporate Presentation. October 2015

Corporate Presentation

Forward-looking Statements

Certain statements contained herein including, but not limited to, expected licensing transactions, statements related to anticipated timing of initiation and completion of clinical trials, anticipated size of clinical trials, therapeutic and market potential of XOMA’s product candidates, the manufacture of our product candidates, the expansion of our endocrine program, regulatory approval of unapproved product candidates, sufficiency of our cash resources and anticipated levels of cash utilization, or that otherwise relate to future periods are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

These statements are based on assumptions that may not prove accurate, and actual results could differ materially from those anticipated due to certain risks inherent in the biotechnology industry and for companies engaged in the development of new products in a regulated market. Potential risks to XOMA meeting these expectations are described in more detail in XOMA's most recent filing on Form 10-K and in other SEC filings. Consider such risks carefully when considering XOMA's prospects. Any forward-looking statement herein represents XOMA’s views only as of the date of this presentation and should not be relied upon as representing its views as of any subsequent date. XOMA disclaims any obligation to update any forward-looking statement, except as required by applicable law.

 Enact decision regarding future gevokizumab development

 Right size XOMA to support endocrine franchise

 Out-license non-core assets to provide non-dilutive financing

 Evaluate strategic alternatives for CMC and biodefense operations

 Initiate XOMA 358 Proof-of-Concept studies

Investment Thesis –

Driving Development in Endocrine Therapeutics

 Focus resources on advancing Endocrine portfolio

• XOMA 358: Initiate Phase 2 studies in hyperinsulinemic hypoglycemia indications

• XOMA 129: Initiate IND-enabling studies • XOMA 213: Finalize protocol and launch POC

 Expand endocrine rare disease portfolio with ongoing high-value

research programs

 Continue gevokizumab Phase 3 program in pyoderma gangrenosum

XOMA’s Endocrinology Advantage

approach

• Enhances or attenuates receptor activity but doesn’t fully block essential endocrine functions

• Dramatically increases number of potential targets

 Success with GPCRs (G-protein-coupled

receptors) allows for a monoclonal approach

 6 assets with multiple potential indications

• 2 assets in the clinic, 1 could be at IND within a year

 Clinical strategy starts with severe, rare indications; expand into a larger ones

 Potential for acute, single-administration indications

• May allow simpler and faster clinical development

 Commercial synergies: common set of physician targets

XOMA’s Endocrine Portfolio

Compound Target/Potential Indications Current Stage

XOMA 358 [XMetD]

Long-acting negative allosteric modulator of

the Insulin Receptor Phase 2 launch in 2015 XOMA 129

[XMetD Fabs]

Short-acting negative allosteric modulator of

the Insulin Receptor Lead identified; preclinical testing XOMA 213

[LFA 102] Prolactin receptor antagonist

Safety established in Phase 1 study Phase 2 ready

XOMA 159 [XMetA]

Positive allosteric modulator of the Insulin Receptor

Lead identified; potential in INSR orphan diseases

XMetA Positive allosteric modulator of the Insulin

Receptor T2D licensing efforts ongoing

Anti-PTHr Parathyroid receptor antagonists Antibodies with in vitro functional activity identified

Anti-ACTH Adrenocorticotropic hormone antagonists Antibodies with in vitro functional activity identified

XOMA 358:

Down-regulates Insulin Receptor

 First-in-class, fully human, monoclonal antibody

 Allosterically binds to insulin receptor (INSR) and reduces INSR activity

 Shifts insulin response curve up to 100-fold in vitro

 Blocks hypoglycemia in multiple animal models

 Effects can be reversed with the addition of insulin

 Investigated as novel treatment for non-drug-induced, endogenous

hyperinsulinemic hypoglycemia

XOMA 358:

First-in-Human Study Overview

 Phase 1, double-blind, placebo-controlled, single ascending dose study

to assess the safety, tolerability, PK, and PD in healthy adult males

 Ascending doses of 0.1, 0.3, 1, 3, (6 & 9) mg/kg (planned)

 Inpatient safety monitoring from Baseline through 7-day treatment

period with follow up thereafter

 Pharmacodynamic (PD) markers: insulin, glucose, C-peptide

 Assessment of the prevention of hypoglycemia after intravenous

XOMA 358:

Phase 1 Study Demonstrated

 Dose-dependent increase in post-meal glucose

 Dose-dependent decrease in insulin signaling as measured by fasting

HOMA-IR values

 Dose-proportional PK profile longer than expected for a surface

receptor-targeted mAb

• Reduced insulin sensitivity from Day 2 through at least Day 5

 Extended duration of therapy while also improving insulin tolerance

• Duration of therapy (~15-26 day half life) offers differentiation

 Well-tolerated with no Serious Adverse Events

• No active intervention was needed

XOMA 358: Prevented Hypoglycemia for up to

5 Days after IV Insulin Administration

INSULIN TOLERANCE TEST (Following 3mg/kg IV infusion)

Insulin Administration

XOMA 358: Phase 2 Indication

Congenital Hyperinsulinism

 Congenital Hyperinsulinism (HI)

• Unregulated secretion of insulin leads to severe episodic hypoglycemia • Most common cause of hyperinsulinemic hypoglycemia in neonatal, infant

and childhood periods

• No approved medication; currently therapies offer inadequate efficacy and tolerability

- Disease management options are continuous ingestion of glucose or surgical removal of part or all of the pancreas

• U.S. incidence = 1:50,000 births

- Claims data reveals a prevalence in U.S. of approximately 6,000

• XOMA 358 received Orphan Drug Designation from FDA in June 2015 • Majority of patients concentrated in designated treatment centers

 Initiating Proof-of-Concept Study in 2015

XOMA 358: Phase 2 Indication

Post-Bariatric Surgery Hyperinsulinism

 Post-Bariatric Surgery Hyperinsulinism (PBS)

• Onset observed up to 3 yrs post-surgery, especially after the most common procedure (Roux-en-Y)

- 1-6% develop hypoglycemic events due to hyperinsulinism1

- Postprandial (vs fasting) hypoglycemia is more common

- Mechanism poorly understood and currently challenging to treat

XOMA 129: Potential Fast Acting Treatment for

Hypoglycemia

 Highly potent XMetD Fab fragment with negative allosteric modulation

of INSR

 Offers potential for rapid onset, improved efficacy, and tailored

duration of therapy

• Compared to IV glucose or glucagon injections

 Treatment for acute severe hypoglycemia

• Severe hypoglycemia is life-threatening

• Multiple adverse cardiovascular impacts tied to severe hypoglycemia1 • ~10% of all ER visits = insulin-related severe hypoglycemia

 For patient populations in which current therapies cannot address the

substantial unmet need

 Insulin- and sulfonylurea-induced hypoglycemia are two of the most

 Bolus insulin-treated rat models demonstrated:

• Faster onset of action and improved efficacy over variant mAbs • Encouraging potency and duration of efficacy

XOMA 129: Dose-dependently Rapidly Stabilizes

Glycemia or Reverses Hypoglycemia

XOMA 213 (LFA 102):

Phase 2 Ready Endocrine Asset

 Fully human, monoclonal antibody that potently blocks signaling at

the prolactin receptor

 Developed under joint collaboration with Chiron/Novartis

 Pre-clinical, toxicology and Phase 1 safety work completed by Novartis

• In support of oncology indications • Drug was well tolerated

 XOMA exercised right to reacquire LFA 102 for development in

diseases of hyperprolactinemia

XOMA 213 (LFA 102):

Potential Indications

 Prolactinoma

• Benign tumors of the pituitary gland

• Results in sexual dysfunction, infertility and osteoporosis

• Existing therapies poorly tolerated in 20% of 140,000 patients

 Antipsychotic-Induced Hyperprolactinemia

• Side effect seen in patients treated with commonly prescribed antipsychotics, antidepressants and pain medications

• Can result in same signs and symptoms as prolactinoma • Can result in poor compliance

Anti-PTHr Research Program

 Hyperparathyroidism results from overproduction of parathyroid

hormone (PTH) when the gland hypertrophies

• Can be primary or secondary to chronic kidney disease

 Most primary patients can be treated surgically

• 10% do not respond to surgery

 PTHrP is a protein produced in ~30% of patients with solid tumors

 Endogenous hyperparathyroidism and PTHrP can result in significant

hypercalcemia causing fatigue, loss of appetite, confusion, nausea and muscle weakness

 Antibodies found that bind to receptor and inhibit signaling to both

natural ligand (PTH) and to PTHrP (associated with malignancy)

Anti-ACTH Research Program

 Adrenal corticotropic hormone (ACTH) is produced by pituitary gland

• Causes release of cortisol from adrenal glands

 Antibody approach to condition when non-malignant tumors

(adenoma) on the pituitary gland causes excessive release of ACTH

• Existing therapies inefficient or poorly tolerated

 Antibodies discovered that bind to ACTH ligand and reduce or

eliminate signaling

Gevokizumab: Pyoderma Gangrenosum

(PG)

Pyoderma Gangrenosum:

Gevokizumab Phase 3 Indication

 Severe inflammatory, ulcerative disease of the skin with undetermined

cause

• One of several indications collectively known as neutrophilic dermatoses • Claims data over past 3 years indicate U.S. pyoderma gangrenosum patient

population of 11,000 - 14,000

• Typically takes >11 months to fully heal with corticosteroids1 • Orphan Drug Designation granted by FDA: February 2014

 Patent from POC study

• Total resolution of target ulcer with no sign of active PG

Pain (0 - 10) Ulcer Size (cm2₎ Day 0 10 5.2 Day 84 7 0

Pyoderma Gangrenosum:

Phase 3 Program Study Designs

Pyoderma Gangrenosum Phase 3 Studies

U.S. Only (Study 172)

U.S. & x-U.S. (Study 173)

# Patients 58 58

Gevokizumab doses

(Monthly, SC) 60mg : Placebo 60mg : Placebo

Randomization 1:1 1:1

Primary endpoint Complete healing of target ulcer at approximately Day 124

Secondary endpoints Multiple, including time to ulcer closure and pain

Compound Indication

Pre-clinical Phase 1 Phase 2 Phase 3

Endocrine Franchise XOMA 358

(INSR)

Congenital hyperinsulinism & Post-bariatric surgery hyperinsulinism

XOMA 129

(INSR)

Short acting reversal of insulin (e.g. hospital treatment of insulin overdose)

XOMA 213

(Prolactin receptor) Various hyperprolactinemias

XOMA 159

(INSR) Inherited receptoropathies

Anti-PTHr Hyperparathyroidism, Malignancy-induced

hypercalcemia

Anti-ACTH Cushing’s disease

Gevokizumab Pyoderma gangrenosum (PG)

Out-license Opportunity

XMetA Type 2 Diabetes

Financial Highlights

 $51.0 million cash at June 30, 2015

 Raised ~$50.5 million non-dilutive liquidity by licensing TGF-b antibody

program to Novartis on September 30, 2015

• $37.0 million upfront payment

• $13.5 million loan maturity date extended to September 2020 • Potential milestone payments of up to $480 million

• Royalties tiered from mid-single digits to low double digits • Cash runway into 2017

 Corporate actions reduces cash burn rate significantly

• Right sized XOMA to support endocrine franchise

• Evaluating strategic alternatives to CMC and biodefense operations

Investment Thesis –

Driving Development in Endocrine Therapeutics

 XOMA 358 (XMetD): Initiate proof-of-concept clinical studies in

congenital hyperinsulinism & post-bariatric hyperinsulinism

 XOMA 129 (XMetD Fab): Manufacture lead molecule, conduct tox

studies leading to clinical development

 XOMA 213 (LFA 102): Initiate proof-of-concept study in lactation

cessation

 Expand endocrine rare disease portfolio with ongoing high-value

research programs

 Continue gevokizumab Phase 3 program in pyoderma gangrenosum

(PG) with disciplined go/no-go decisions

• Amending protocol to allow blinded data analyses