SCHEDULE: XOMA Royalty Corp. Merger Agreement and Shareholder Support

XOMA Royalty Corp. announces a merger agreement with Ligand Pharmaceuticals Inc., with key shareholders entering a support agreement to vote in favor of the transaction.

Summary

• XOMA Royalty Corp. has entered into an Agreement and Plan of Merger with Ligand Pharmaceuticals Incorporated and its subsidiary, Flex Merger Sub, Inc.
• The merger will result in Flex Merger Sub merging with and into XOMA Royalty Corp. (HoldCo), with HoldCo surviving as a wholly-owned subsidiary of Ligand Pharmaceuticals.
• Certain reporting persons, including Biotechnology Value Fund L.P. and its affiliates, have entered into a Voting and Support Agreement with Ligand Pharmaceuticals.
• Under the Support Agreement, these reporting persons have agreed to vote their shares in favor of the merger and related transactions.
• They have also agreed to convert their Series X Preferred Stock to common stock to facilitate voting for the merger and have irrevocably appointed Ligand Pharmaceuticals as their proxy to vote their shares.
• The reporting persons are restricted from transferring or pledging their shares during the term of the Support Agreement, subject to exceptions, and have agreed not to assert appraisal rights.
• The total number of XOMA Royalty Corp. shares outstanding as of April 23, 2026, was 12,129,405.
• As of the filing date, the reporting persons and managed accounts hold 5,003 shares of Series X Preferred Stock, convertible into 5,003,000 common shares.
• A Series X Beneficial Ownership Limitation of 19.99% restricts the conversion of all Series X Preferred Stock.
• The reporting persons intend to request an increase in this limitation to 45% and a waiver of a 61-day notice period.
• BVF beneficially owned 1,322,758 shares (10.9% ownership), excluding convertible preferred stock.
• BVF2 beneficially owned 1,267,545 shares (10.5% ownership), excluding convertible preferred stock.
• BVF GP Holdings LLC, as a member of BVF GP and BVF2 GP, may be deemed to beneficially own 2,590,303 shares (21.4% ownership).
• Mark N. Lampert, as a director and officer of BVF Inc., may be deemed to beneficially own 2,590,303 shares (21.4% ownership).

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive development, as it signifies a definitive agreement for a merger and strong support from key shareholders, although the process of overcoming preferred stock conversion limitations introduces some complexity.

Positives

• The company has secured a merger agreement with Ligand Pharmaceuticals Incorporated, indicating a potential acquisition.
• Key shareholders, including Biotechnology Value Fund L.P. and its affiliates, have committed to supporting the merger through a Voting and Support Agreement.
• The reporting persons collectively hold a significant stake (21.4%) in XOMA Royalty Corp., demonstrating strong backing for the transaction.
• The reporting persons are taking steps to address beneficial ownership limitations to facilitate the conversion of preferred stock and support the merger.

Negatives

• The Series X Beneficial Ownership Limitation of 19.99% currently prevents the full conversion of Series X Preferred Stock.
• The reporting persons need to secure an increase in the beneficial ownership limitation and a waiver of a notice period to fully convert their preferred stock.

Risks

• The merger is subject to customary closing conditions, including stockholder approval and regulatory review.
• There is a risk that the necessary approvals or waivers for the conversion of Series X Preferred Stock may not be obtained.
• The Support Agreement terminates upon the termination of the Merger Agreement, meaning the shareholder support is contingent on the merger proceeding.
• The reporting persons are restricted from transferring or pledging their shares, which could limit their flexibility.

Future Outlook

The company is proceeding with a merger with Ligand Pharmaceuticals. Key shareholders have agreed to support the transaction, and efforts are underway to address limitations on preferred stock conversion to facilitate the merger.

Management Comments

• The reporting persons have agreed to vote their Shares in favor of the Merger Agreement and the other transactions contemplated by the Merger Agreement.
• The reporting persons have irrevocably appointed Parent as proxy to vote such Reporting Persons' Shares pursuant to the Support Agreement.
• The reporting persons agreed not to transfer, sell, pledge, encumber or otherwise dispose of any of their Shares during the term of the Support Agreement, subject to certain exceptions.
• The reporting persons agreed not to assert any appraisal rights with respect to the Merger.

Industry Context

StockSavvy.ai notes that this filing indicates a significant corporate action, specifically a merger, within the biotechnology and pharmaceutical sector. Such events are common as companies seek consolidation, strategic partnerships, or exits to maximize shareholder value.

Comparison to Industry Standards

• The ownership stake of 21.4% by BVF GP Holdings LLC and its affiliates is substantial and aligns with typical activist investor or significant strategic partner positions in merger scenarios.
• The use of a Support Agreement by major shareholders to guarantee votes for a merger is a standard practice in such transactions to ensure deal certainty.
• The existence of beneficial ownership limitations on preferred stock is a common feature in venture capital or specialized financing rounds, and the process of seeking waivers or increases is a typical negotiation point during M&A.

Stakeholder Impact

• Shareholders: The merger agreement offers a potential exit or liquidity event for shareholders, subject to the terms of the merger.
• Employees: The impact on employees will depend on the integration plans of Ligand Pharmaceuticals post-merger.
• Creditors: The financial stability of the combined entity will be a key consideration for creditors.

Next Steps

• The reporting persons will deliver a written notice to increase the Series X Beneficial Ownership Limitation to 45%.
• The reporting persons will request a waiver from the Issuer of the 61-day notice period for conversion.
• The reporting persons will take all necessary actions to obtain the waiver.
• The reporting persons will deliver a notice of conversion for all Series X Preferred Stock owned by them.
• The merger is subject to customary closing conditions, including stockholder approval and regulatory review.

Key Dates

Recommendation

The filing confirms a merger agreement, which is a significant event. However, the details provided are primarily focused on the mechanics of the merger and shareholder support rather than new financial performance or strategic initiatives that would warrant a buy or sell recommendation at this stage. A 'hold' recommendation is appropriate pending further details on the merger terms and closing conditions.

Keywords

XOMA Royalty Corp, Ligand Pharmaceuticals, Merger Agreement, Schedule 13D, BVF, Shareholder Support, Preferred Stock, Beneficial Ownership, SEC Filing, Corporate Action