UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13G

Under the Securities Exchange Act of 1934

XOMA Ltd.

(Name of Issuer)

Common Shares, $.0005 par value

(Title of Class of Securities)

G9825R107

(CUSIP Number)

July 21, 2006; October 24, 2006

(Date of Event Which Requires Filing of this Statement)

Check the appropriate box to designate the rule pursuant to which this Schedule is filed:

¨ Rule 13d-1(b)

x Rule 13d-1(c)

¨ Rule 13d-1(d)

The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page.

The information required in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No. G9825R107


1.		Names of Reporting Persons. QVT Financial LP I.R.S. Identification Nos. of above persons (entities only).

		11-3694008
2.		Check the Appropriate Box if a Member of a Group (See Instructions)
		(a) ¨
		(b) x
3.		SEC Use Only

4.		Citizenship or Place of Organization

		Delaware


Number of Shares Beneficially Owned by Each Reporting Person With:		5. Sole Voting Power

		0
		6. Shared Voting Power

		6,131,403 shares
		7. Sole Dispositive Power

		0
		8. Shared Dispositive Power

		6,131,403 shares


9.	Aggregate Amount Beneficially Owned by Each Reporting Person

	6,131,403 shares
10.	Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)	¨

11.	Percent of Class Represented by Amount in Row (9)

	5.99%
12.	Type of Reporting Person (See Instructions)

	PN

Page 2 of 9 pages


CUSIP No. G9825R107


1.		Names of Reporting Persons. QVT Financial GP LLC I.R.S. Identification Nos. of above persons (entities only).

		11-3694007
2.		Check the Appropriate Box if a Member of a Group (See Instructions)
		(a) ¨
		(b) x
3.		SEC Use Only

4.		Citizenship or Place of Organization

		Delaware


Number of Shares Beneficially Owned by Each Reporting Person With:		5. Sole Voting Power

		0
		6. Shared Voting Power

		6,131,403 shares
		7. Sole Dispositive Power

		0
		8. Shared Dispositive Power

		6,131,403 shares


9.	Aggregate Amount Beneficially Owned by Each Reporting Person

	6,131,403 shares
10.	Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)	¨

11.	Percent of Class Represented by Amount in Row (9)

	5.99%
12.	Type of Reporting Person (See Instructions)

	OO

Page 3 of 9 pages


CUSIP No. G9825R107


1.		Names of Reporting Persons. QVT Fund LP I.R.S. Identification Nos. of above persons (entities only).

		98-0415217
2.		Check the Appropriate Box if a Member of a Group (See Instructions)
		(a) ¨
		(b) x
3.		SEC Use Only

4.		Citizenship or Place of Organization

		Cayman Islands


Number of Shares Beneficially Owned by Each Reporting Person With:		5. Sole Voting Power

		0
		6. Shared Voting Power

		5,183,958 shares
		7. Sole Dispositive Power

		0
		8. Shared Dispositive Power

		5,183,958 shares


9.	Aggregate Amount Beneficially Owned by Each Reporting Person

	5,183,958 shares
10.	Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)	¨

11.	Percent of Class Represented by Amount in Row (9)

	5.11%
12.	Type of Reporting Person (See Instructions)

	PN

Page 4 of 9 pages


CUSIP No. G9825R107


1.		Names of Reporting Persons. QVT Associates GP LLC I.R.S. Identification Nos. of above persons (entities only).

		01-0798253
2.		Check the Appropriate Box if a Member of a Group (See Instructions)
		(a) ¨
		(b) x
3.		SEC Use Only

4.		Citizenship or Place of Organization

		Delaware


Number of Shares Beneficially Owned by Each Reporting Person With:		5. Sole Voting Power

		0
		6. Shared Voting Power

		5,183,958 shares
		7. Sole Dispositive Power

		0
		8. Shared Dispositive Power

		5,183,958 shares


9.	Aggregate Amount Beneficially Owned by Each Reporting Person

	5,183,958 shares
10.	Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)	¨

11.	Percent of Class Represented by Amount in Row (9)

	5.11%
12.	Type of Reporting Person (See Instructions)

	OO

Page 5 of 9 pages

Item 1

(a).

Name of Issuer

XOMA Ltd. (the “Issuer”)

Item 1

(b).

Address of Issuer’s Principal Executive Offices

The address of the Issuer’s principal executive offices is:

2910 Seventh Street, Berkeley, California 94710, United States

Item 2

(a).

Name of Person Filing

Item 2

(b).

Address of Principal Business Office or, if none, Residence

Item 2

(c).

Citizenship

QVT Financial LP

1177 Avenue of the Americas, 9th Floor

New York, New York 10036

Delaware Limited Partnership

QVT Financial GP LLC

1177 Avenue of the Americas, 9th Floor

New York, New York 10036

Delaware Limited Liability Company

QVT Fund LP

Walkers SPV, Walkers House

P.O. Box 908GT

Mary Street

George Town, Grand Cayman, Cayman Islands

Cayman Islands Limited Partnership

QVT Associates GP LLC

1177 Avenue of the Americas, 9th Floor

New York, New York 10036

Delaware Limited Liability Company

Item 2

(d).

Title of Class of Securities

Common Shares, $0.0005 par value (the “Common Shares”).

Item 2

(e).

CUSIP Number

The CUSIP number of the Common Shares is G9825R107.

Item 3.

If this statement is filed pursuant to §§ 240.13d-1(b) or 240.13d-2(b) or (c), check whether the person filing is a:

(a)

Broker or dealer registered under section 15 of the Act (15 U.S.C. 78o).

(b)

Bank as defined in section 3(a)(6) of the Act (15 U.S.C. 78c).

(c)

Insurance company as defined in section 3(a)(19) of the Act (15 U.S.C. 78c).

(d)

Investment company registered under section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8).

(e)

An investment adviser in accordance with § 240.13d-1(b)(1)(ii)(E);

(f)

An employee benefit plan or endowment fund in accordance with § 240.13d-1(b)(1)(ii)(F);

(g)

A parent holding company or control person in accordance with § 240.13d-1(b)(ii)(G);

(h)

A savings associations as defined in Section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813);

(i)

A church plan that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940 (15 U.S.C. 80a-3);

(j)

Group, in accordance with § 240.13d-1(b)(1)(ii)(J).

Page 6 of 9 pages


Item 4.	Ownership.

	(a)	Amount beneficially owned:

		QVT Financial LP (“QVT Financial”) is the investment manager for QVT Fund LP (the “Fund”), which beneficially owns 5,183,958 Common Shares, consisting of 1,126,739 Common Shares and an additional 4,057,219 Common Shares issuable upon conversion of the Issuer’s convertible notes. QVT Financial is also the investment manager for a separate discretionary account managed for Deutsche Bank AG (the “Separate Account”), which holds 947,445 Common Shares, consisting of 191,830 Common Shares and an additional 755,615 Common Shares issuable upon conversion of the Issuer’s convertible notes. QVT Financial has the power to direct the vote and disposition of the Common Shares held by the Fund and the Separate Account. Accordingly, QVT Financial may be deemed to be the beneficial owner of an aggregate amount of 6,131,403 Common Shares, consisting of the shares owned by the Fund and the shares held in the Separate Account.

		QVT Financial GP LLC, as General Partner of QVT Financial, may be deemed to beneficially own the same number of Common Shares reported by QVT Financial. QVT Associates GP LLC, as General Partner of the Fund, may be deemed to beneficially own the same number of Common Shares reported by the Fund.

		The reported share amounts for reflect amounts beneficially owned by QVT Financial as of July 21, 2006 and amounts beneficially owned by the Fund as of October 24, 2006, as adjusted for subsequent transactions through October 25, 2006.

		Each of QVT Financial and QVT Financial GP LLC disclaim beneficial ownership of the shares owned by the Fund and the shares held in the Separate Account. QVT Associates GP LLC disclaims beneficial ownership of all Common Shares owned by the Fund, except to the extent of its pecuniary interest therein.

	(b)	Percent of class:

		See Item 11 of the Cover Pages to this Schedule 13G.

	(c)	Number of shares as to which the person has:

		(i)	Sole power to vote or to direct the vote

			0

		(ii)	Shared power to vote or to direct the vote

			See item (a) above.

		(iii)	Sole power to dispose or to direct the disposition of

			0

		(iv)	Shared power to dispose or to direct the disposition of

			See item (a) above.

Item 5.	Ownership of Five Percent or Less of a Class

	If this statement is being filed to report the fact that as of the date hereof the reporting person has ceased to be the beneficial owner of more than five percent of the class of securities, check the following ¨.

Item 6.	Ownership of More than Five Percent on Behalf of Another Person.

	Not Applicable

Item 7.	Identification and Classification of the Subsidiary Which Acquired the Security Being Reported on By the Parent Holding Company

	Not Applicable

Item 8.	Identification and Classification of Members of the Group

	Not Applicable

Item 9.	Notice of Dissolution of Group

	Not Applicable

Item 10.	Certification

	By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect.

Page 7 of 9 pages

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: November 13, 2006


QVT FINANCIAL LP		QVT FUND LP

By QVT Financial GP LLC,		By QVT Associates GP LLC,
its General Partner		its General Partner

By:	/s/ Daniel Gold	By:	/s/ Daniel Gold
Name:	Daniel Gold	Name:	Daniel Gold
Title:	Managing Member	Title:	Managing Member

By:	/s/ Tracy Fu	By:	/s/ Tracy Fu
Name:	Tracy Fu	Name:	Tracy Fu
Title:	Managing Member	Title:	Managing Member

QVT FINANCIAL GP LLC		QVT ASSOCIATES GP LLC

By:	/s/ Daniel Gold	By:	/s/ Daniel Gold
Name:	Daniel Gold	Name:	Daniel Gold
Title:	Managing Member	Title:	Managing Member

By:	/s/ Tracy Fu	By:	/s/ Tracy Fu
Name:	Tracy Fu	Name:	Tracy Fu
Title:	Managing Member	Title:	Managing Member

Page 8 of 9 pages

EXHIBIT A

JOINT FILING AGREEMENT

The undersigned hereby agree that the statement on Schedule 13G signed by each of the undersigned shall be filed on behalf of each of the undersigned pursuant to and in accordance with the provisions of Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended.

Dated: November 13, 2006


QVT FINANCIAL LP		QVT FUND LP

By QVT Financial GP LLC,		By QVT Associates GP LLC,
its General Partner		its General Partner

By:	/s/ Daniel Gold	By:	/s/ Daniel Gold
Name:	Daniel Gold	Name:	Daniel Gold
Title:	Managing Member	Title:	Managing Member

By:	/s/ Tracy Fu	By:	/s/ Tracy Fu
Name:	Tracy Fu	Name:	Tracy Fu
Title:	Managing Member	Title:	Managing Member

QVT FINANCIAL GP LLC		QVT ASSOCIATES GP LLC

By:	/s/ Daniel Gold	By:	/s/ Daniel Gold
Name:	Daniel Gold	Name:	Daniel Gold
Title:	Managing Member	Title:	Managing Member

By:	/s/ Tracy Fu	By:	/s/ Tracy Fu
Name:	Tracy Fu	Name:	Tracy Fu
Title:	Managing Member	Title:	Managing Member

Page 9 of 9 pages

XOMA LTD SC 13G