DEFA14A: XOMA Royalty Extends LAVA Therapeutics Tender Offer

XOMA Royalty Corporation and LAVA Therapeutics N.V. announced the extension of the tender offer for LAVA's outstanding shares until October 17, 2025.

Summary

• XOMA Royalty Corporation and LAVA Therapeutics N.V. have jointly announced an extension of the tender offer for all issued and outstanding common shares of LAVA Therapeutics.
• The tender offer, which was originally set to expire on October 3, 2025, has been extended to one minute after 11:59 p.m., New York City time, on October 17, 2025.
• The offer includes a cash amount (to be determined per the Purchase Agreement) plus a non-transferable contingent value right (CVR) for each share.
• The CVR entitles shareholders to receive 75% of the net proceeds from LAVA's two partnered assets and 75% of any net proceeds from out-licensing or sale of LAVA's unpartnered programs.
• The proposed acquisition is expected to close in the fourth quarter of 2025, subject to customary closing conditions.
• LAVA shareholders who have already tendered their shares do not need to take any further action.
• Closing conditions include the tender of at least 80% (or 75% in certain cases) of LAVA's issued and outstanding shares, adoption of certain resolutions by LAVA shareholders, and a minimum cash balance at closing.
• A corporate reorganization will follow a subsequent offering period, aiming for XOMA Royalty to acquire 100% of LAVA's successor, with remaining LAVA shareholders receiving the same cash and CVR consideration.
• LAVA will hold a shareholders meeting in connection with the transactions prior to early November 2025.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While there is a slight delay, the extension of the tender offer indicates that the acquisition is still on track and progressing towards completion. The presence of shareholder support agreements further reinforces the likelihood of the deal closing, reducing uncertainty compared to a termination or significant hurdle.

Positives

• The extension provides additional time for shareholders to tender their shares and for closing conditions to be met, indicating the transaction is still actively progressing.
• LAVA shareholders who previously tendered shares do not need to re-tender, simplifying the process for early participants.
• Shareholder support agreements are in place, suggesting a high likelihood of the tender condition being met.

Negatives

• The extension introduces a slight delay in the anticipated completion of the acquisition, prolonging uncertainty for investors.
• The cash amount per share is still 'to be determined,' which could create uncertainty regarding the immediate value shareholders will receive.

Risks

• Various closing conditions set forth in the Purchase Agreement may not be satisfied or waived, including uncertainties regarding the percentage of LAVA shareholders tendering their shares.
• The possibility that competing offers will be made for LAVA Therapeutics.
• The risk that the transactions may not be completed in a timely manner, or at all, which could adversely affect LAVA's business and share price.
• Delay or failure of the Offer Conditions to be satisfied, including insufficient common shares of LAVA being tendered.
• Significant costs associated with the transactions.
• The risk that any shareholder or other litigation in connection with the transactions may result in significant costs of defense, indemnification, and liability.
• The risk that activities related to the CVR agreement may not result in any value to LAVA's shareholders.
• The possibility that prior to the completion of the transactions, LAVA's or XOMA Royalty's business may experience significant disruptions due to transaction-related uncertainty.
• The effects of disruption from the transactions on LAVA's business, potentially making it more difficult to establish or maintain relationships with employees, manufacturers, suppliers, vendors, or business partners.
• The occurrence of any event, change, or other circumstance that could give rise to the termination of the Purchase Agreement.
• Potential adverse effects on LAVA's business condition and results from general economic and market conditions and overall fluctuations in the United States and international equity markets, including inflation, heightened interest rates, pandemics, and geopolitical conflicts.

Future Outlook

The proposed acquisition is expected to close in the fourth quarter of 2025, subject to the satisfaction of customary closing conditions, including a minimum tender percentage of LAVA shares and shareholder approval of certain resolutions. Following the tender offer, a corporate reorganization is planned to ensure XOMA Royalty acquires 100% of LAVA's successor, with remaining shareholders receiving the same cash and CVR consideration.

Management Comments

• XOMA Royalty and LAVA Therapeutics N.V. jointly announced the extension of the tender offer expiration, indicating continued progress towards the acquisition.

Industry Context

This transaction highlights the ongoing trend of biotechnology royalty aggregators like XOMA Royalty acquiring assets from biopharmaceutical companies. XOMA Royalty specializes in acquiring future economics from pre-commercial and commercial therapeutic candidates, providing non-dilutive funding to sellers. LAVA Therapeutics, with its proprietary Gammabody platform and partnered clinical-stage assets (JNJ-89853413 with Johnson & Johnson, PF-08046052 with Pfizer), represents an attractive target for such aggregators seeking to expand their portfolio of potential future royalties and milestones. The CVR structure is a common mechanism in biotech M&A to bridge valuation gaps and allow selling shareholders to participate in future upside of pipeline assets.

Legal Proceedings

• Potential shareholder or other litigation in connection with the transactions may result in significant costs of defense, indemnification, and liability.

Stakeholder Impact

• Shareholders: Will receive a cash amount and a CVR for their shares, with the CVR's value dependent on future proceeds from LAVA's partnered and unpartnered assets.
• Employees: May experience significant disruptions due to transaction-related uncertainty, and the announcement may make it more difficult to establish or maintain relationships.
• Manufacturers, Suppliers, Vendors, Business Partners: May face challenges in maintaining relationships due to transaction-related uncertainty.

Next Steps

• XOMA Royalty will file an amendment to its Tender Offer Statement on Schedule TO with the SEC.
• LAVA Therapeutics will file an updated Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC.
• LAVA Therapeutics plans to send a revised proxy statement and proxy card to shareholders for a reconvened extraordinary general meeting.
• LAVA will hold a shareholders meeting prior to early November 2025 to vote on EGM Proposals related to the transactions.
• Completion of the tender offer and satisfaction of all closing conditions.
• A corporate reorganization will occur after the tender offer to acquire 100% of LAVA's successor.

Key Dates

Recommendation

The extension of the tender offer indicates the acquisition is still moving forward, which is generally positive for LAVA shareholders. However, the delay, the 'to be determined' cash component, and the inherent risks associated with transaction completion and the realization of CVR value warrant a 'hold' recommendation. Investors should await the finalization of the offer terms and the successful closing of the transaction before making further investment decisions, as the CVR's ultimate value remains speculative.

Keywords

LAVA Therapeutics, XOMA Royalty, Tender Offer, Acquisition, Contingent Value Right, Biotechnology, M&A, Gammabody, SEC Filing, LVTX, XOMA