On August 13, 2025 XOMA Royalty Corporation (NASDAQ: XOMA), the biotech royalty aggregator, reported its 2025 second quarter and year to date financial results and highlighted recent actions that have the potential to deliver shareholder value (Press release, Xoma, AUG 13, 2025, View Source [SID1234655165]).
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"We continue to add to our diversified portfolio of both early- and late-stage assets through disciplined capital deployment and creative financial structures," stated Owen Hughes, Chief Executive Officer of XOMA Royalty. "Recently approved drugs are addressing key unmet patient needs, which is driving increased royalty receipts, and we await data from several key Phase 3 assets over the coming quarters."
Royalty and Milestone Acquisitions
Company
Asset and Transaction Detail
BioInvent XOMA Royalty deployed $20 million to purchase the future mezagitamab royalty and milestone interests held by BioInvent and will pay an additional $10 million as the asset achieves a certain regulatory milestone. With its existing entitlement, plus the newly acquired economics from BioInvent, XOMA Royalty will be entitled to milestones of up to $16.25 million from Takeda and mid-single digit royalties on future mezagitamab commercial sales.
LAVA Therapeutics XOMA Royalty will secure an economic interest in two partnered assets through the Company’s recently announced acquisition of LAVA. The partnered assets are PF-08046052, which is being developed by Pfizer, and JNJ-89853413, which is being developed by Johnson & Johnson.
Company Acquisitions
Company
Transaction Details
Turnstone Biologics XOMA Royalty and Turnstone Biologics entered into a definitive merger agreement, whereby XOMA Royalty will acquire Turnstone for $0.34 in cash per share of Turnstone common stock plus one non-transferable contingent value right (CVR). The transaction closed on August 11.
HilleVax XOMA Royalty and HilleVax have entered into a definitive merger agreement, whereby XOMA Royalty will acquire HilleVax for $1.95 per share upon closing. HilleVax stockholders also will receive a CVR that entitles them to receive certain potential payments following the closing of a pro rata portion of any remaining HilleVax cash in excess of $102.95 million; certain savings realized related to HilleVax’ office lease obligations, and should XOMA Royalty sell or out license the HilleVax norovirus programs within two years after the acquisition closes, 90% of any net proceeds received within five years by XOMA Royalty. The acquisition is expected to be completed in September.
LAVA Therapeutics XOMA Royalty and LAVA Therapeutics have entered into a definitive merger agreement, whereby XOMA Royalty will acquire LAVA for between $1.16 and $1.24 in cash per share of LAVA common stock plus one non-transferable CVR representing the right to receive 75% of the net proceeds related to LAVA’s two partnered assets and 75% of any proceeds related to the sale or out license of LAVA’s unpartnered programs. The acquisition is expected to close in the fourth quarter of 2025.
XenoTherapeutics Acquisition of ESSA Pharma XOMA Royalty acted as structuring agent and is providing short-term financing for XenoTherapeutics’ acquisition of ESSA Pharma.
Kinnate XOMA Royalty sold the remaining Kinnate pipeline assets for a total of up to $270 million in upfront and milestone payments, plus royalties on commercial sales at rates ranging from low-single digits to mid-teens. In July, the Kinnate CVRs holders received their 85% share of the modest upfront payments.
Pipeline Partner Updates through August 8, 2025
Partner
Event
Rezolute
In May, the company announced the U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy Designation (BTD) to its investigational therapy, ersodetug, for the treatment of hypoglycemia caused by tumor HI.1
In May, Rezolute announced the completion of enrollment in the Phase 3 sunRIZE study. Topline data are anticipated in December of 2025.2 As a result of Rezolute completing enrollment in the study, XOMA Royalty received a $5 million milestone payment.
Takeda The first patient was dosed in Takeda’s Phase 3 clinical trial investigating mezagitamab as a treatment for adults with chronic primary immune thrombocytopenia (ITP). This achievement resulted in XOMA Royalty receiving a $3.0 million milestone payment, net, during the second quarter.
Day One Biopharmaceuticals Ipsen, Day One’s partner outside of the U.S., announced its Marketing Authorization Application (MAA) for tovorafenib as a treatment for pediatric low-grade glioma (pLGG) had been accepted for review by the European Medicines Agency (EMA)3.
Zevra Therapeutics On July 28, Zevra announced it had submitted an MAA to EMA for the evaluation of arimoclomol for the treatment of Niemann-Pick Disease Type C (NPC)4.
Gossamer Bio On June 16, Gossamer announced it had completed enrollment in the ongoing Phase 3 PROSERA Study that is evaluating seralutinib in Functional Class II and III pulmonary atrial hypertension (PAH) patients 5. Topline results continue to be anticipated in February 20266.
Daré Biosciences Announced positive interim safety and efficacy results from its ongoing Phase 3 clinical trial evaluating the contraceptive effectiveness, safety, and acceptability of Ovaprene, an investigational monthly, hormone-free intravaginal contraceptive.
Anticipated 2025 Partner Events of Note
Partner
Event
Rezolute
Topline data from sunRIZE Phase 3 clinical trial, which is investigating ersodetug in infants and children with congenital hyperinsulinism (cHI). Topline data are expected in December 20252.
First patient dosed in the Phase 3 registrational study for ersodetug for the treatment of hypoglycemia due to tumor hyperinsulinism8.
Takeda First patient dosed in Takeda’s Phase 3 clinical trial investigating mezagitamab as a treatment for adults with IgA Nephropathy.
Gossamer Bio Activates first clinical sites for the global, registrational Phase 3 SERANATA Study examining seralutinib in patients with pulmonary hypertension associated with interstitial lung disease (PH-ILD) in the fourth quarter5.
Daré Bioscience
Makes Sildenafil Cream, 3.6% available commercially via prescription in the fourth quarter of 2025 as a compounded drug under Section 503B of the Federal Food, Drug, and Cosmetic Act.9
Commencement of one of two registrational Phase 3 clinical trials investigating Sildenafil Cream, 3.6%, for the treatment of female sexual arousal disorder10.
Second Quarter and Year to Date 2025 Financial Results
Tom Burns, Chief Financial Officer of XOMA Royalty, commented, "In the first six months of 2025, we have received $29.6 million in cash from partners, of which $16.0 million were royalty payments related to commercial sales and $13.6 million in milestone payments and fees. In the second quarter, we received $11.7 million in cash, $2.6 million from our partners’ commercial sales and $9.0 million from milestones and fees. Our partners’ product marketing activities continue to be well executed and as new commercial opportunities within our portfolio emerge, our line of sight to becoming cash flow positive on a consistent basis exclusively from the cash payments received from royalties grows clearer. With this outlook, we deployed $1.8 million to repurchase 81,682 shares of our common stock in the second quarter, bringing the total number of shares repurchased in 2025 to over 107,500 shares."
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Income and Revenue: Income and revenue for the three and six months ended June 30, 2025, were $13.1 million and $29.0 million, respectively, as compared with $11.1 million and $12.6 million for the corresponding periods of 2024. The increase in both periods presented was primarily driven by increased income related to VABYSMO and OJEMDA.
Research and Development (R&D) Expenses: R&D expenses for the three and six months ended June 30, 2025, were $0.1 million and $1.4 million, respectively, compared with $1.2 million for each of the corresponding periods of 2024. The R&D expenses in the first quarter of 2025 and the three- and six-month periods of 2024 were related to the clinical trial costs incurred subsequent to XOMA Royalty’s acquisition of Kinnate in April 2024 related to KIN-3248 and the associated wind-down activities.
General and Administrative (G&A) Expenses: G&A expenses for the three and six months ended June 30, 2025, were $7.8 million and $15.9 million, respectively, as compared with $11.0 million and $19.5 million for the corresponding periods of 2024. The decrease in the second quarter of 2025 compared to the second quarter of 2024 was primarily due to the $3.6 million in exit packages paid to Kinnate senior leadership in the second quarter of 2024.
In 2025, XOMA Royalty’s G&A expenses included non-cash stock-based compensation expenses during the three and six months ended June 30, 2025, of $1.6 million and $3.6 million, respectively, as compared to $2.7 million and $5.5 million for the corresponding periods of 2024. The 2024 periods reflect non-cash stock-based compensation related to the appointment of Mr. Hughes to full-time Chief Executive Officer and issuance of performance stock units.
Credit Losses on Purchased Receivables: In the second quarter of 2024, XOMA Royalty recorded a one-time, non-cash credit loss on purchased receivables of $9.0 million and a corresponding reduction of royalty receivables of $9.0 million associated with the Aronora assets. To date there have been no credit losses in 2025.
Amortization of Intangible Assets: Amortization of intangible assets relates to the IP acquired in the Company’s acquisitions of Pulmokine in November 2024 and the mezagitamab economics from the BioInvent transaction in May 2025. Amortization of non-cash intangible assets were $0.7 million and $1.2 million for the three and six months ended June 30, 2025.
Gain on Acquisition of Kinnate: In the second quarter of 2024, XOMA Royalty recorded a $19.3 million gain on the acquisition of Kinnate due to the fair value of net assets that exceeded total purchase consideration.
Interest Expense: For the three and six months ended June 30, 2025, interest expense was $3.2 million and $6.7 million, respectively, as compared with $3.4 million and $7.0 million for the corresponding periods of 2024. Interest expense relates to the Blue Owl Loan established in December 2023.
Other Income, net: For the three and six months ended June 30, 2025, other income, net was $7.8 million and $7.7 million, respectively, as compared with $2.1 million and $4.0 million for the corresponding periods of 2024. The increases for the periods presented were primarily driven by increases in the fair value of XOMA Royalty’s investments in equity securities.
Net Income: XOMA Royalty reported net income of $9.2 million and $11.6 million for the three and six months ended June 30, 2025, as compared to $16.0 and $7.4 million in the corresponding periods of 2025.
Cash Position: On June 30, 2025, XOMA Royalty had cash and cash equivalents of $78.5 million (including $3.4 million in restricted cash), compared with cash and cash equivalents of $106.4 million (including $4.8 million in restricted cash) on December 31, 2024.
In the second quarter of 2025, XOMA Royalty received $11.7 million in cash receipts including $2.6 million in royalties and commercial payments and $9.0 million in milestones and fees. During the second quarter of 2025, XOMA Royalty deployed $20 million to acquire additional economics in mezagitamab, repurchased approximately 81,700 shares of XOMA Royalty common stock for a cost of $1.8 million, and paid $1.4 million in dividends on the XOMA Royalty Perpetual Preferred stocks. In the first six months of 2025, XOMA Royalty received $29.6 million in cash receipts, including $16.0 million in royalties and commercial payments and $13.6 million in milestone payments and fees. During the first half of 2025, XOMA Royalty deployed $25.0 million to acquire additional assets for its royalty and milestone portfolio, repurchased approximately 107,500 shares of its common stock for a cost of $2.4 million, and paid $2.7 million in dividends on the XOMA Royalty Perpetual Preferred stocks.