XOMA Corporation (NasdaqGM:XOMA) FY Conference Transcript

Summary of XOMA Corporation FY Conference Call (September 08, 2025) Company Overview - Company: XOMA Corporation (NasdaqGM:XOMA) - Industry: Biotechnology - Key Executives: Owen Hughes (CEO), Brad Sitko (Chief Investment Officer) [1] Core Points and Arguments - Portfolio Growth: Since the arrival of the current management team in 2023, XOMA has expanded its revenue-generating assets from 1 to 6, with 11 assets currently in phase three development [2][3] - Historical Context: XOMA is noted as the longest-tenured publicly traded biotech company, having gone public in 1984 and originally focused on antibody discovery [3] - Key Assets: - Resolute Program: Developed in-house, showing a high response rate of 80-90% in phase two trials, with a significant royalty rate expected [4][5] - Gossamer Asset: In phase three, with data expected in February 2026 [6] - Vabysmo: A high-revenue drug with peak sales estimates of $6-10 billion, where XOMA holds a 50 basis point royalty [5][6] Financial Performance - Cash Flow: XOMA has been free cash flow positive in 2024 and anticipates the same for 2025, with royalties expected to drive profitability [12] - Dividend Yield: The company has the highest dividend yield among publicly traded royalty companies at approximately 8.5% [12] - Capital Structure: XOMA has utilized asset-backed loans and perpetual preferreds to avoid equity dilution, raising $130 million in late 2023 [13][14] Strategic Focus - Acquisition Strategy: XOMA is focused on acquiring early-stage assets and companies, aiming to build a diversified portfolio to mitigate risks associated with individual assets [21][22] - Market Positioning: The company differentiates itself by deploying smaller check sizes compared to larger competitors, allowing it to capitalize on opportunities without significant equity dilution [9][10] - Risk Management: XOMA acknowledges the inherent risks in biotech investments, emphasizing a cautious approach to new acquisitions and capital deployment [17][18] Upcoming Events - Phase Three Data Announcements: Key data releases for the Resolute program in December 2025 and Gossamer's Serolutum in February 2026 [25] - New Studies: Initiation of the mesoglobin map study by Takeda, with XOMA holding a 6% royalty on the asset [26] Additional Insights - Market Dynamics: The royalty financing space is becoming increasingly competitive, with several large players entering the market [9] - Long-term Vision: XOMA aims to leverage its existing portfolio and new acquisitions to enhance shareholder value while maintaining a focus on non-dilutive financing strategies [24][27]