XOMA(XOMA) - 2025 Q2 - Quarterly Results

Executive Summary & Business Highlights This section covers recent business achievements, including acquisitions and pipeline advancements, alongside financial highlights for H1 and Q2 2025, emphasizing portfolio expansion and cash flow Recent Business Achievements XOMA Royalty expanded its portfolio through mezagitamab royalty acquisition and LAVA Therapeutics interests, alongside multiple company acquisitions and key pipeline advancements - Purchased mezagitamab royalty and milestone rights from BioInvent International[2] - Secured royalty economic interests in two early-stage partnered assets via XOMA Royalty's acquisition of LAVA Therapeutics[2] - XOMA Royalty announced acquisitions of Turnstone Biologics, LAVA Therapeutics, and HilleVax[3] - Acted as structuring agent and provided financing for XenoTherapeutics' acquisition of ESSA Pharma[3] - Completed the sale of Kinnate pipeline assets, distributing upfront proceeds to CVR holders[3] - Rezolute completed enrollment in Phase 3 sunRIZE study of ersodetug for congenital hyperinsulinism[4] - Day One Biopharmaceuticals and Ipsen's tovorafenib MAA was accepted by EMA, triggering a $4 million milestone payment to XOMA Royalty[4] - Zevra Therapeutics submitted an MAA to EMA for arimoclomol as a treatment for Niemann-Pick Type C[4] Financial Highlights & CEO Commentary XOMA Royalty received $29.6 million in H1 2025 royalties and milestones, with the CEO highlighting portfolio expansion and a path to positive cash flow Cash Receipts (H1 & Q2 2025) | Period | Total Cash Receipts | | :--- | :--- | | First Half 2025 | $29.6 million | | Second Quarter 2025 | $11.7 million | - CEO Owen Hughes emphasized diversified portfolio expansion through disciplined capital deployment, driving increased royalty receipts and a clearer path to becoming cash flow positive[6] Detailed Business Activities This section details XOMA Royalty's business development, acquisitions, and significant pipeline advancements and anticipated partner events Business Development & Acquisitions Details XOMA Royalty expanded its portfolio through mezagitamab royalty acquisition, LAVA Therapeutics interests, and definitive merger agreements for Turnstone, HilleVax, and LAVA - XOMA Royalty deployed $20 million to purchase future mezagitamab royalty and milestone interests from BioInvent[7] - An additional $10 million will be paid upon a specific regulatory milestone[7] - XOMA Royalty is entitled to up to $16.25 million in milestones from Takeda and mid-single digit royalties on future sales[7] - XOMA Royalty secured economic interests in PF-08046052 (Pfizer) and JNJ-89853413 (Johnson & Johnson) through the LAVA Therapeutics acquisition[7] - Turnstone Biologics acquired for $0.34 cash per share plus a CVR, closing August 11[7] - HilleVax acquired for $1.95 per share plus a CVR, expected to complete in September[7] - LAVA Therapeutics acquired for $1.16-$1.24 cash per share plus a CVR, expected to close in Q4 2025[7] - XOMA Royalty facilitated XenoTherapeutics' acquisition of ESSA Pharma by acting as structuring agent and providing financing[7] - Kinnate pipeline assets sold for up to $270 million in payments and royalties, with CVR holders receiving their share of upfront payments[7] Pipeline Partner Updates through August 8, 2025 Partners achieved key clinical and regulatory milestones, including Rezolute's BTD and Phase 3 enrollment, Takeda's mezagitamab Phase 3, and MAA acceptances for tovorafenib and arimoclomol - U.S. FDA granted Breakthrough Therapy Designation (BTD) to ersodetug for hypoglycemia caused by tumor HI[8] - Completed enrollment in the Phase 3 sunRIZE study, triggering a $5 million milestone payment to XOMA Royalty[8] - Takeda dosed the first patient in a Phase 3 mezagitamab trial for chronic primary immune thrombocytopenia (ITP), resulting in a $3.0 million net milestone payment to XOMA Royalty[8] - Day One Biopharmaceuticals' MAA for tovorafenib (pediatric low-grade glioma) was accepted for review by the EMA[8] - Zevra Therapeutics submitted an MAA to EMA for arimoclomol for Niemann-Pick Disease Type C treatment[8] - Gossamer Bio completed enrollment in the Phase 3 PROSERA Study evaluating seralutinib for pulmonary atrial hypertension (PAH)[8] - Daré Biosciences announced positive interim Phase 3 safety and efficacy results for Ovaprene®, a monthly, hormone-free intravaginal contraceptive[8] Anticipated 2025 Partner Events of Note Key anticipated partner events in late 2025 include Rezolute's sunRIZE Phase 3 data, Takeda's mezagitamab Phase 3, Gossamer Bio's SERANATA study, and Daré Bioscience's Sildenafil Cream commercial launch - Topline data from sunRIZE Phase 3 clinical trial (ersodetug for congenital hyperinsulinism) expected in December 2025[9] - First patient dosed in the Phase 3 registrational study for ersodetug for hypoglycemia due to tumor hyperinsulinism[9] - First patient dosed in Takeda's Phase 3 clinical trial investigating mezagitamab for adults with IgA Nephropathy[9] - Gossamer Bio activates first clinical sites for the Phase 3 SERANATA Study (seralutinib for pulmonary hypertension) in Q4[9] - Sildenafil Cream, 3.6% expected to be commercially available in Q4 2025[9] - Commencement of one of two Phase 3 clinical trials for Sildenafil Cream, 3.6% for female sexual arousal disorder[9] Financial Performance Review This section provides a detailed financial overview for Q2 and H1 2025, including cash receipts, income statement analysis, and net income and cash position Second Quarter and Year to Date 2025 Financial Overview XOMA Royalty received $29.6 million in H1 2025 cash from partners, with $11.7 million in Q2, and repurchased over 107,500 shares year-to-date Cash Receipts from Partners (H1 & Q2 2025) | Period | Total Cash Receipts | Royalty Payments | Milestone Payments & Fees | | :--- | :--- | :--- | :--- | | First Half 2025 | $29.6 million | $16.0 million | $13.6 million | | Second Quarter 2025 | $11.7 million | $2.6 million | $9.0 million | Common Stock Repurchases (Q2 & H1 2025) | Period | Shares Repurchased | Cost | | :--- | :--- | :--- | | Second Quarter 2025 | 81,682 | $1.8 million | | Year to Date 2025 | >107,500 | $2.4 million | Detailed Income Statement Analysis XOMA Royalty saw increased income and revenue in Q2 and H1 2025, driven by VABYSMO and OJEMDA, alongside decreased R&D and G&A expenses, and significant other income growth Income and Revenue (in millions) | Period | 2025 | 2024 | Change (YoY) | Primary Driver | | :--- | :--- | :--- | :--- | :--- | | Q2 | $13.1 | $11.1 | +$2.0 (+18.0%) | VABYSMO and OJEMDA | | H1 | $29.0 | $12.6 | +$16.4 (+130.2%) | VABYSMO and OJEMDA | Research and Development (R&D) Expenses (in millions) | Period | 2025 | 2024 | Change (YoY) | Primary Driver | | :--- | :--- | :--- | :--- | :--- | | Q2 | $0.1 | $1.2 | -$1.1 (-91.7%) | Wind-down of Kinnate KIN-3248 clinical trial costs | | H1 | $1.4 | $1.2 | +$0.2 (+16.7%) | Wind-down of Kinnate KIN-3248 clinical trial costs | General and Administrative (G&A) Expenses (in millions) | Period | 2025 | 2024 | Change (YoY) | Primary Driver | | :--- | :--- | :--- | :--- | :--- | | Q2 | $7.8 | $11.0 | -$3.2 (-29.1%) | Lower exit packages to Kinnate senior leadership | | H1 | $15.9 | $19.5 | -$3.6 (-18.5%) | Lower exit packages to Kinnate senior leadership | Non-Cash Stock-Based Compensation (G&A) (in millions) | Period | 2025 | 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Q2 | $1.6 | $2.7 | -$1.1 (-40.7%) | | H1 | $3.6 | $5.5 | -$1.9 (-34.5%) | Credit Losses on Purchased Receivables (in millions) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Q2 | $0.0 | $9.0 | | H1 | $0.0 | $9.0 | Amortization of Intangible Assets (in millions) | Period | 2025 | 2024 | Primary Driver | | :--- | :--- | :--- | :--- | | Q2 | $0.7 | $0.0 | IP acquired from Pulmokine (Nov 2024) and BioInvent (May 2025) | | H1 | $1.2 | $0.0 | IP acquired from Pulmokine (Nov 2024) and BioInvent (May 2025) | - XOMA Royalty recorded a $19.3 million gain on the Kinnate acquisition in Q2 2024, with no comparable gain in 2025[17] Interest Expense (in millions) | Period | 2025 | 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Q2 | $3.2 | $3.4 | -$0.2 (-5.9%) | | H1 | $6.7 | $7.0 | -$0.3 (-4.3%) | Other Income, net (in millions) | Period | 2025 | 2024 | Change (YoY) | Primary Driver | | :--- | :--- | :--- | :--- | :--- | | Q2 | $7.8 | $2.1 | +$5.7 (+271.4%) | Increase in fair value of equity securities | | H1 | $7.7 | $4.0 | +$3.7 (+92.5%) | Increase in fair value of equity securities | Net Income and Cash Position XOMA Royalty's Q2 2025 net income was $9.2 million, while H1 2025 net income increased to $11.6 million, with cash and cash equivalents decreasing to $78.5 million due to strategic deployments Net Income (in millions) | Period | 2025 | 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Q2 | $9.2 | $16.0 | -$6.8 (-42.5%) | | H1 | $11.6 | $7.4 | +$4.2 (+56.8%) | Cash and Cash Equivalents (in millions) | Date | Amount | | :--- | :--- | | June 30, 2025 | $78.5 | | December 31, 2024 | $106.4 | - Q2 2025 deployments included $20 million for mezagitamab economics, $1.8 million for stock repurchases, and $1.4 million in preferred stock dividends[20] - H1 2025 deployments included $25.0 million for royalty and milestone assets, $2.4 million for stock repurchases, and $2.7 million in preferred stock dividends[20] Company Overview XOMA Royalty Corporation operates as a biotechnology royalty aggregator, acquiring future economic rights associated with pre-commercial and commercial therapeutic candidates - XOMA Royalty is a biotechnology royalty aggregator acquiring future economics from pre-commercial and commercial therapeutic candidates[21] - This model provides non-dilutive, non-recourse funding to sellers for drug development or general corporate purposes[21] - The company maintains an extensive and growing portfolio of assets, representing rights to future economics from therapeutic candidates[21][24] Forward-Looking Statements & Disclosures This section outlines cautionary forward-looking statements, inherent biotechnology risks, and clarifies definitions of "portfolio" and "assets" and lists commercial assets - Statements on potential commercial payments, anticipated events, regulatory timings, and milestone/royalty proceeds are forward-looking and not guarantees of performance[22] - Actual results may differ materially due to inherent biotechnology industry risks, including development uncertainties, market viability, and regulatory approval[22][23] - XOMA Royalty disclaims any obligation to update forward-looking statements, except as legally required[23] - "Portfolio" refers strictly to milestone and/or royalty rights for a basket of drug products in development[24] - "Assets" refers strictly to milestone and/or royalty rights for individual drug products in development[24] - Commercial assets include VABYSMO®, OJEMDA™, MIPLYFFA™, XACIATO™, IXINITY®, and DSUVIA®[25] - All other assets are investigational compounds with efficacy and safety not established, and no guarantee of commercial availability[25] Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows Condensed Consolidated Statements of Operations This section presents the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025, and 2024, detailing income and revenues, operating expenses, other income/expense, and net income Condensed Consolidated Statements of Operations (in thousands, except share and per share amounts) | | | | Three Months Ended June, | | | | Six Month Ended June 30, | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | | 2025 | | 2024 | | 2025 | | 2024 | | Income and Revenues: | | | | | | | | | | Income from purchased receivables under the EIR method | $ | 6,007 | $ | 4,562 | | $ 12,077 | $ | 4,562 | | Income from purchased receivables under the cost recovery method | | 1,743 | | 870 | | 7,268 | | 870 | | Revenue from contracts with customers | | 5,025 | | 5,025 | | 9,025 | | 6,025 | | Revenue recognized under units-of-revenue method | | 354 | | 629 | | 671 | | 1,119 | | Total income and revenues | | 13,129 | | 11,086 | | 29,041 | | 12,576 | | Operating expenses: | | | | | | | | | | Research and development | | 69 | | 1,161 | | 1,362 | | 1,194 | | General and administrative | | 7,802 | | 11,004 | | 15,948 | | 19,465 | | Credit losses on purchased receivables | | — | | 9,000 | | — | | 9,000 | | Amortization of intangible assets | | 655 | | — | | 1,199 | | — | | Total operating expenses | | 8,526 | | 21,165 | | 18,509 | | 29,659 | | Income (Loss) from operations | | 4,603 | | (10,079) | | 10,532 | | (17,083) | | Other income (expense) | | | | | | | | | | Gain on the acquisition of Kinnate | | — | | 19,316 | | — | | 19,316 | | Change in fair value of embedded derivative related to RPA | | — | | 8,100 | | — | | 8,100 | | Interest expense | | (3,236) | | (3,402) | | (6,703) | | (6,953) | | Other income, net | | 7,824 | | 2,050 | | 7,729 | | 4,010 | | Net income | $ | 9,191 | $ | 15,985 | | $ 11,558 | $ | 7,390 | | Net income available to common stockholders, basic | $ | 5,522 | $ | 10,224 | $ | 6,225 | $ | 3,253 | | Basic net income per share available to common stockholders | $ | 0.46 | $ | 0.88 | $ | 0.52 | $ | 0.28 | | Weighted average shares used in computing basic net income per share available to common | | | | | | | | | | stockholders | | 12,007 | | 11,643 | | 11,988 | | 11,611 | | Net income available to common stockholders, diluted | $ | 7,823 | $ | 14,617 | $ | 8,822 | $ | 4,654 | | Diluted net income per share available to common stockholders | $ | 0.44 | $ | 0.84 | $ | 0.50 | $ | 0.27 | | Weighted average shares used in computing diluted net income per share available to common | | | | | | | | | | stockholders | | 17,761 | | 17,321 | | 17,777 | | 17,263 | Condensed Consolidated Balance Sheets This section presents the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, convertible preferred stock, and stockholders' equity Condensed Consolidated Balance Sheets (in thousands, except share and per share amounts) | | June 30, | December 31, | | :--- | :--- | :--- | | | 2025 | 2024 | | ASSETS | | | | Current assets: | | | | Cash and cash equivalents | $ 75,060 | $ 101,654 | | Short-term restricted cash | 80 | 1,330 | | Investment in equity securities | 8,801 | 3,529 | | Trade and other receivables, net | 1,817 | 1,839 | | Short-term royalty and commercial payment receivables under the EIR method | 17,960 | 14,763 | | Short-term royalty and commercial payment receivables under the cost recovery method | 700 | 413 | | Prepaid expenses and other current assets | 507 | 2,076 | | Total current assets | 104,925 | 125,604 | | Long-term restricted cash | 3,345 | 3,432 | | Property and equipment, net | 26 | 32 | | Operating lease right-of-use assets | 288 | 319 | | Long-term royalty and commercial payment receivables under the EIR method | 4,775 | 4,970 | | Long-term royalty and commercial payment receivables under the cost recovery method | 58,937 | 55,936 | | Exarafenib milestone asset | 3,402 | 3,214 | | Investment in warrants | 609 | — | | Intangible assets, net | 45,434 | 25,909 | | Other assets - long term | 1,715 | 1,861 | | Total assets | $ 223,456 | $ 221,277 | | LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY | | | | Current liabilities: | | | | Accounts payable | $ 1,138 | $ 1,053 | | Accrued and other liabilities | 5,411 | 5,752 | | Contingent consideration under RPAs, AAAs, and CPPAs | — | 3,000 | | Operating lease liabilities | 472 | 446 | | Unearned revenue recognized under units-of-revenue method | 1,434 | 1,361 | | Preferred stock dividend accrual | 1,368 | 1,368 | | Current portion of long-term debt | 11,672 | 11,394 | | Total current liabilities | 21,495 | 24,374 | | Unearned revenue recognized under units-of-revenue method – long-term | 3,666 | 4,410 | | Exarafenib milestone contingent consideration | 3,402 | 3,214 | | Long-term operating lease liabilities | 238 | 483 | | Long-term debt | 102,201 | 106,875 | | Total liabilities | 131,002 | 139,356 | | Convertible preferred stock, $0.05 par value, 5,003 shares authorized, issued and outstanding as of June 30, 2025 | | | | and December 31, 2024 | 20,019 | 20,019 | | Stockholders' equity: | | | | 8.625% Series A cumulative, perpetual preferred stock, $0.05 par value, 984,000 shares authorized, issued and | | | | outstanding as of June 30, 2025 and December 31, 2024 | 49 | 49 | | 8.375% Series B cumulative, perpetual preferred stock, $0.05 par value, 3,600 shares authorized, 1,600 shares | | | | issued and outstanding as of June 30, 2025 and December 31, 2024 | — | — | | Common stock, $0.0075 par value, 277,333,332 shares authorized, 12,062,466 and 11,952,377 shares issued | | | | and outstanding as of June 30, 2025 and December 31, 2024, respectively | 90 | 90 | | Additional paid-in capital | 1,300,066 | 1,298,747 | | Accumulated other comprehensive income | 122 | 73 | | Accumulated deficit | (1,227,892) | (1,237,057) | | Total stockholders' equity | 72,435 | 61,902 | | Total liabilities, convertible preferred stock and stockholders' equity | $ 223,456 | $ 221,277 | Condensed Consolidated Statements of Cash Flows This section presents the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025, and 2024, detailing cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | | | Six Months Ended June 30, | | | :--- | :--- | :--- | :--- | | | 2025 | | 2024 | | Cash flows from operating activities: | | | | | Net income | $ 11,558 | $ | 7,390 | | Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | | Adjustment for income from EIR method purchased receivables | (3,935) | | (4,562) | | Stock-based compensation expense | 3,588 | | 5,546 | | Credit losses on purchased receivables | — | | 9,000 | | Gain on the acquisition of Kinnate | — | | (19,316) | | Common stock contribution to 401(k) | 141 | | 118 | | Amortization of intangible assets | 1,199 | | — | | Depreciation | 6 | | 5 | | Accretion of long-term debt discount and debt issuance costs | 749 | | 508 | | Non-cash lease expense | 31 | | 29 | | Change in fair value of equity securities | (5,173) | | (535) | | Change in fair value of available-for-sale debt securities classified as cash equivalents | 49 | | — | | Change in fair value of derivatives | (5) | | — | | Changes in assets and liabilities: | | | | | Trade and other receivables, net | 22 | | 478 | | Prepaid expenses and other assets | 1,715 | | (603) | | Accounts payable and accrued liabilities | (387) | | 921 | | Operating lease liabilities | (219) | | (82) | | Unearned revenue recognized under units-of-revenue method | (671) | | (1,117) | | Net cash provided by (used in) operating activities | 8,668 | | (2,220) | | Cash flows from investing activities: | | | | | Net cash acquired in Kinnate acquisition | — | | 18,926 | | Payments of consideration under RPAs, AAAs, and CPPAs | (8,000) | | (37,000) | | Receipts under RPAs, AAAs, and CPPAs | 2,039 | | 16,741 | | Payment for BioInvent contract-based intangible asset | (20,614) | | — | | Purchase of property and equipment | — | | (17) | | Purchase of equity securities | (99) | | — | | Net cash used in investing activities | (26,674) | | (1,350) | | Cash flows from financing activities: | | | | | Principal payments – debt | (5,065) | | (3,616) | | Debt issuance costs and loan fees paid in connection with long-term debt | (80) | | (661) | | Payment of preferred stock dividends | (2,736) | | (2,736) | | Repurchases of common stock | (2,370) | | (13) | | Proceeds from exercise of options and other share-based compensation | 896 | | 2,353 | | Taxes paid related to net share settlement of equity awards | (570) | | (1,387) | | Net cash used in financing activities | (9,925) | | (6,060) | | Net decrease in cash, cash equivalents and restricted cash | (27,931) | | (9,630) | | Cash, cash equivalents and restricted cash at the beginning of the period | 106,416 | | 159,550 | | Cash, cash equivalents and restricted cash at the end of the period | $ 78,485 | | $ 149,920 | | Supplemental Cash Flow Information: | | | | | Cash paid for interest | $ 6,078 | $ | 3,780 | | Cash paid for taxes | $ 277 | $ | — | | Non-cash investing and financing activities: | | | | | Estimated fair value of the Exarafenib milestone asset | $ — | $ | 2,922 | | Estimated fair value of the Exarafenib milestone contingent consideration | $ — | $ | 2,922 | | Right-of-use assets obtained in exchange for operating lease liabilities in Kinnate acquisition | $ — | $ | 824 | | Relative fair value basis reduction of rights-of-use assets in Kinnate acquisition | $ — | $ | (824) | | Accrual of contingent consideration under the Affitech CPPA | $ — | $ | 3,000 | | Preferred stock dividend accrual | $ 1,368 | $ | 1,368 | | Excise tax accrual due to stock repurchases | $ 24 | $ | — | | Transaction costs in connection with BioInvent IP acquisition included in accounts payable | $ 111 | $ | — | Investor & Media Contacts This section provides contact details for investor relations and media inquiries - Investor Contact: Juliane Snowden, +1-646-438-9754, juliane.snowden@xoma.com[32] - Media Contact: Kathy Vincent, kathy@kathyvincent.com[32]