8-K: XOMA Royalty Reports Fourth Quarter and Full Year 2024 Financial Results, Highlights Business Achievements

XOMA Royalty Corporation reports its Q4 and full year 2024 financial results, highlighting a doubled royalty and milestone portfolio and FDA approvals for OJEMDA and MIPLYFFA.

Summary

• XOMA Royalty Corporation reported its fourth quarter and full year 2024 financial results on March 17, 2025.
• The company doubled its royalty and milestone portfolio to over 120 royalty assets through five transactions in 2024.
• Key achievements include FDA approvals for Day One's OJEMDA and Zevra Therapeutics' MIPLYFFA.
• Cash receipts totaled $4.0 million in the fourth quarter and $46.3 million for the full year 2024.
• The company has over $100 million in cash on hand.
• XOMA Royalty completed a $15 million royalty monetization agreement with Twist Bioscience.
• XOMA Royalty acquired an economic interest in DSUVIA from Talphera, Inc. for $8 million.
• Kinnate stockholders received $2.5879 per share in cash plus a Contingent Value Right (CVR) on April 3, 2024.
• The acquisition of Pulmokine Inc. cost $20 million upfront.
• XOMA Royalty earned a $9.0 million milestone upon the approval of OJEMDA and recorded $2.7 million in income resulting from OJEMDA sales in 2024.
• XOMA Royalty received an $8.1 million payment related to Day One's sale of its priority review voucher.
• XOMA Royalty will be eligible to receive up to $10.5 million in milestone payments and royalties ranging from low single to low double-digits on net commercial sales from Alexion.
• XOMA Royalty paid $6 million in milestones to Affitech related to VABYSMO achieving specific sales thresholds.
• Total income and revenues were $8.7 million and $28.5 million for the fourth quarter and full year of 2024, respectively.
• R&D expenses were $0.9 million and $2.9 million in the fourth quarter and full year of 2024, respectively.
• G&A expenses were $7.0 million and $34.5 million for the fourth quarter and full year of 2024, respectively.
• Credit losses were $7.9 million in the fourth quarter of 2024 related to the Talphera transaction.
• Net loss for the fourth quarter and full year ended December 31, 2024, was $4.0 million and $13.8 million, respectively.
• On December 31, 2024, XOMA Royalty had cash and cash equivalents of $106.4 million.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company reports a net loss, it also highlights significant growth in its royalty portfolio, FDA approvals, and a strong cash position. The expectation of becoming cash flow positive in the future is also a positive indicator.

Positives

• The royalty and milestone portfolio has doubled to over 120 assets.
• FDA approvals for OJEMDA and MIPLYFFA provide commercial royalty streams.
• The company has a strong cash position with over $100 million on hand.
• XOMA Royalty anticipates becoming cash flow positive based on royalty income.
• The company secured license agreements for unpartnered Kinnate assets.
• Total income and revenues increased significantly compared to the previous year, reaching $28.5 million for the full year 2024.

Negatives

• The company experienced a net loss of $13.8 million for the full year 2024, primarily due to non-cash credit losses on purchased receivables.
• Credit losses totaled $30.9 million for the year ended December 31, 2024, including $7.9 million related to the Talphera transaction.
• G&A expenses increased by $8.9 million for the full year of 2024, primarily due to costs associated with the acquisition of Kinnate.
• Cash and cash equivalents decreased from $159.6 million on December 31, 2023, to $106.4 million on December 31, 2024.

Risks

• The company's future performance depends on the success of its licensees in developing and commercializing therapeutic candidates.
• Regulatory approvals for investigational compounds are not guaranteed.
• The company faces risks inherent in the biotechnology industry, including the need for substantial funding by licensees and the viability of markets for its products.
• The company's financial results are subject to fluctuations based on the performance of its royalty assets and the timing of milestone payments.

Future Outlook

XOMA Royalty anticipates becoming cash flow positive on a consistent basis based on anticipated incoming cash payments from royalties alone and expects R&D and G&A expenses to normalize in the second half of 2025.

Management Comments

• Owen Hughes, Chief Executive Officer of XOMA Royalty, stated, 'Our balanced approach to building the scale of XOMA Royaltys portfolio by selectively acquiring royalty economics across the lifecycle of drug development is beginning to bear fruit.'
• Tom Burns, Chief Financial Officer of XOMA Royalty, commented, 'Based upon the anticipated incoming cash payments from royalties alone, we have line of sight on becoming cash flow positive on a consistent basis.'

Industry Context

XOMA Royalty operates as a biotechnology royalty aggregator, acquiring potential future economics associated with pre-commercial and commercial therapeutic candidates. This model provides non-dilutive funding to biotech companies, allowing them to advance their internal drug candidates. The company's focus on royalty assets across the lifecycle of drug development positions it to benefit from successful drug approvals and commercialization.

Comparison to Industry Standards

• Royalty aggregators like XOMA Royalty are compared to companies such as DRI Healthcare Trust and Ligand Pharmaceuticals, which also focus on acquiring royalty streams from pharmaceutical products.
• XOMA Royalty's portfolio of over 120 royalty assets is a key metric for comparison against its peers.
• The company's cash position of over $100 million provides financial flexibility for future acquisitions and investments.
• The FDA approvals of OJEMDA and MIPLYFFA are significant achievements that enhance the value of XOMA Royalty's portfolio.

Stakeholder Impact

• Shareholders may be impacted by the net loss reported for the year, but also by the potential for future growth and profitability.
• Employees may be affected by the company's efforts to normalize R&D and G&A expenses.
• Licensees benefit from XOMA Royalty's non-dilutive funding model.
• Patients benefit from the development and commercialization of new therapies supported by XOMA Royalty's investments.

Next Steps

• Completion of enrollment in Rezolute's sunRIZE Phase 3 clinical trial, with topline results expected in the fourth quarter of 2025.
• Presentation of topline results from the Phase 3 PROSERA study by Gossamer / Chiesi.
• Initiation of a registrational Phase 3 study in pulmonary hypertension associated with interstitial lung disease (PH-ILD) in 2025 by Gossamer / Chiesi.
• First patient dosed in Takeda's Phase 3 clinical trial investigating mezagitamab.
• Commencement of one of two registrational Phase 3 clinical trials investigating Sildenafil Cream, 3.6%, by Dar Bioscience.

Key Dates