SCHEDULE 13D/A: Biotechnology Value Fund Reduces Stake in XOMA Royalty Corp Through Significant Private Sale

Biotechnology Value Fund (BVF) and its affiliated entities have significantly reduced their beneficial ownership in XOMA Royalty Corp, selling over 650,000 shares in a private transaction.

Summary

• Biotechnology Value Fund (BVF) and its affiliated entities, including BVF L.P. and BVF II L.P., filed an Amendment No. 11 to their Schedule 13D regarding their beneficial ownership in XOMA Royalty Corp.
• As of January 24, 2025, the Reporting Persons sold an aggregate of 650,717 shares of XOMA Royalty Corp Common Stock in a private transaction at a price of $26.10 per share.
• The sale included 339,679 shares from BVF, 85,776 shares from BVF2, 75,287 shares from Trading Fund OS, and 149,975 shares from one of the Partners Managed Accounts.
• Following the sale, BVF beneficially owns 1,450,165 shares (approximately 12.3% of outstanding shares), and BVF2 beneficially owns 1,532,861 shares (approximately 13.0% of outstanding shares).
• The aggregate beneficial ownership of Common Stock by BVF and BVF2, and entities controlling them (BVF GPH, Partners, BVF Inc., and Mark N. Lampert), is 2,983,026 shares, representing approximately 25.3% of the shares outstanding.
• The Reporting Persons and Partners Managed Accounts collectively hold 5,003 shares of Series X Preferred Stock, convertible into an aggregate of 5,003,000 Common Shares (1,000 Common Shares per Preferred Share).
• However, a Series X Beneficial Ownership Limitation prevents the conversion of any portion of the Series X Preferred Stock if it would result in beneficial ownership exceeding 19.99% of the outstanding Common Shares after conversion, currently prohibiting the conversion of all held Series X Preferred Stock.
• The shares of Common Stock were purchased with working capital, with BVF's 1,450,165 shares costing approximately $13,236,029 and BVF2's 1,532,861 shares costing approximately $17,633,338.
• The Series X Preferred Stock was acquired at an approximate aggregate purchase price of $9,321,390 for BVF, $6,069,180 for BVF2, $1,660,360 for Trading Fund OS, and $3,111,160 for Partners Managed Accounts.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative for XOMA Royalty Corp as a significant institutional investor has reduced its stake, which can be perceived as a lack of continued strong conviction or profit-taking. While profitable for the seller, it doesn't necessarily signal positive future prospects for the company from the perspective of a major holder.

Positives

• The Reporting Persons executed a significant sale of 650,717 shares at a price of $26.10 per share, which appears to be a profitable transaction given the average purchase prices of the common stock (approx. $9.13/share for BVF and $11.50/share for BVF2).

Negatives

• A major institutional investor group (BVF and affiliates) has reduced its stake in XOMA Royalty Corp, which could be interpreted by the market as a decrease in conviction or a strategic exit.
• The Series X Beneficial Ownership Limitation currently prohibits the conversion of all 5,003 shares of Series X Preferred Stock held by the Reporting Persons and Partners Managed Accounts, limiting their ability to realize the full value of these convertible securities into common shares.

Risks

• The Series X Beneficial Ownership Limitation restricts the Reporting Persons' ability to convert their Series X Preferred Stock into Common Stock if it would result in beneficial ownership exceeding 19.99% of the outstanding shares, potentially limiting liquidity or upside from the preferred shares.

Future Outlook

The document does not provide any forward-looking statements or guidance from XOMA Royalty Corp or the Reporting Persons regarding the company's future performance or strategic direction.

Industry Context

This filing details a significant ownership change by a prominent biotechnology-focused investment fund in a company operating in the royalty space, which is common for biotech firms to monetize assets without direct product development. The transaction reflects a specific investment decision by the fund rather than a broad industry trend.

Stakeholder Impact

• Shareholders: The reduction in beneficial ownership by a major institutional investor could lead to concerns about the company's future prospects or the investor's long-term commitment, potentially influencing share price.

Key Dates

Keywords

XOMA Royalty Corp, Schedule 13D, beneficial ownership, stock sale, institutional investor, preferred stock, biotechnology, equity stake, investment fund