XOMA Royalty Corporation (NASDAQ:XOMA) has emerged as one of the most compelling and strategically positioned companies in the biotechnology investment landscape by focusing on a business model that many overlook but that delivers consistent, scalable, and potentially explosive returns—royalty aggregation. Based in Emeryville, California, XOMA is not a traditional biotech firm seeking FDA approval for a single therapy. Instead, it operates as a biotech royalty aggregator, acquiring economic interests in milestones and future royalty payments tied to commercial and late-stage development assets.
This model, which de-risks exposure to early-stage drug development while maximizing upside from successful therapies, has allowed XOMA to build a highly diversified portfolio across a broad spectrum of therapeutic categories. The company’s strategic approach to acquiring rights across the drug development lifecycle—especially in Phase 3 and commercial-stage assets—is beginning to generate meaningful, recurring revenue, positioning it as a next-generation royalty powerhouse in the healthcare sector.
A Transformational 2024: Expanding Royalty Revenue and Portfolio Value
In 2024, XOMA Corporation underwent a major transformation as it significantly expanded its commercial royalty portfolio, diversified its late-stage pipeline, and executed acquisitions that delivered immediate financial and strategic value. According to its full-year and fourth quarter 2024 financial report, XOMA recorded total revenues of $28.5 million, a massive increase compared to $4.8 million in 2023. This surge was driven primarily by income from purchased receivables, including milestone payments and royalties from assets like OJEMDA™, VABYSMO®, and MIPLYFFA™.
The company currently has six commercial-stage assets generating royalty revenue, and a Phase 3 pipeline of 11 assets, which include high-potential programs like ersodetug (RZ358) from Rezolute, seralutinib from Gossamer Bio, and Ovaprene® from Daré Biosciences. These programs are expected to reach key inflection points in 2025, including pivotal data readouts and FDA submissions that could drive both royalty income and valuation appreciation for XOMA.
With over $106.4 million in cash and cash equivalents as of December 31, 2024, and more than $100 million in liquidity available, XOMA has the financial flexibility to continue executing its strategy while remaining positioned to deliver positive cash flow from royalties alone by late 2025.
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Strategic Royalty Acquisitions Drive Future Growth
XOMA made several notable royalty acquisitions in 2024 that expanded both its commercial and pre-commercial asset base. These included:
- A $15 million royalty monetization agreement with Twist Bioscience for a 50% economic interest in over 60 partnered programs across 30 companies.
- A $22 million transaction with Daré Bioscience that added rights to XACIATO™, Ovaprene®, and Sildenafil Cream 3.6%, diversifying XOMA’s presence in women’s health and contraceptive innovation.
- An $8 million investment in DSUVIA®, a sublingual sufentanil tablet, entitling XOMA to potential sales-based royalties, including revenues from the U.S. Department of Defense.
These deals reflect XOMA’s ability to identify underappreciated royalty streams and structure agreements that generate long-term cash flow while supporting biotech innovators with non-dilutive capital.
Value-Driven Company Acquisitions: Kinnate and Pulmokine
In 2024, XOMA also executed two major company acquisitions that enhanced its royalty pipeline. The acquisition of Kinnate Biopharma added five programs and nearly $7.8 million in cash, along with licensing opportunities already yielding partnerships. In a separate deal, XOMA acquired a royalty interest in seralutinib—a Phase 3 drug for pulmonary arterial hypertension (PAH)—via the acquisition of Pulmokine Inc. for $20 million. Seralutinib’s Phase 3 results are expected in 2025 and could significantly boost XOMA’s near-term royalty revenue if successful.
Together, these acquisitions demonstrate XOMA’s ability to deploy capital opportunistically, adding assets with both short-term milestone potential and long-term royalty tailwinds.
Product Approvals and Milestone Income Fuel Revenue Visibility
XOMA’s royalty assets are not speculative—they are increasingly generating income through regulatory approvals and commercial launches. In 2024, two key FDA approvals resulted in immediate cash receipts and long-term revenue potential:
- OJEMDA™ (tovorafenib) from Day One Biopharmaceuticals was approved for pediatric low-grade glioma (pLGG), resulting in a $9 million milestone payment to XOMA and $2.7 million in royalty income from initial sales.
- MIPLYFFA™ (arimoclomol) from Zevra Therapeutics was approved for Niemann-Pick type C, a rare neurodegenerative disorder, marking another addition to XOMA’s growing base of orphan drug royalties.
Additional payments, including an $8.1 million priority review voucher sale and licensing revenues from the likes of Alexion (AstraZeneca), underscore the company’s ability to monetize non-dilutive assets at multiple points along the development timeline.
2025 Catalysts: Multiple Phase 3 Readouts and First-in-Class Launches
XOMA is entering 2025 with multiple high-value catalysts that could significantly elevate its revenue and valuation. These include:
- Topline Phase 3 results from ersodetug (RZ358) for congenital hyperinsulinism.
- Registrational data from seralutinib in pulmonary arterial hypertension.
- Clinical progress for mezagitamab from Takeda and Sildenafil Cream 3.6% from Daré Bioscience.
These programs not only offer strong royalty tailwinds upon approval, but also reinforce the quality and maturity of XOMA’s pipeline. As each asset progresses, milestone payments and royalty streams grow—building consistent, scalable, and inflation-resistant cash flow.
Financial Stability and Capital Efficiency
Despite significant investments in 2024—including $65 million deployed into new assets—XOMA maintains a healthy balance sheet and disciplined cash management strategy. Interest expenses and one-time acquisition costs temporarily impacted profitability, but the company expects a normalization of expenses and a return to cash flow positivity in 2025. The CFO reaffirmed this outlook, highlighting the company’s growing royalty base and reduced operational spend following the integration of Kinnate and Pulmokine.
Net loss for 2024 was $13.8 million, significantly narrowed from the $40.8 million loss in 2023, reflecting XOMA’s shift toward profitability. Importantly, most of the losses were non-cash charges related to credit losses on legacy royalty receivables, not core operations.
Conclusion: XOMA Is a Scalable, Diversified Royalty Platform with Asymmetric Upside
XOMA Corporation (NASDAQ: XOMA) has evolved into a biotech royalty powerhouse with a unique, low-risk, high-reward model that appeals to both growth and income-focused investors. With over 120 partnered and proprietary assets, a pipeline stacked with late-stage clinical trials, multiple commercial approvals, and a strong cash position, XOMA is poised for a breakout in 2025 and beyond.
Unlike traditional biotech companies burdened with single-asset risk and high burn rates, XOMA benefits from diversified income streams, a proven acquisition strategy, and clear visibility into near-term cash flow. For investors seeking exposure to biotech innovation without the binary risk of drug development, XOMA offers a rare opportunity to participate in the financial upside of medical breakthroughs—without taking the clinical risk.
As royalty catalysts accelerate, and the portfolio matures, XOMA is well on its way to becoming one of the biotech sector’s most reliable and profitable revenue-generating engines.
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