LVTX Downgraded by Jefferies Amidst Acquisition News

Jefferies downgrades Lava Therapeutics (LVTX) from Buy to Hold following an acquisition agreement with XOMA Royalty. The price target is reduced from $3 to $1.50. LVTX's financial health reveals a year-over-year revenue decline of 60.5%, negative margins, and a distress zone Altman Z-Score. The company's focus on innovative cancer treatments and bispecific antibodies positions it uniquely in the biotech landscape.

Jefferies has downgraded LAVA Therapeutics (LVTX) from a Buy to Hold rating following the company's acquisition agreement with XOMA Royalty. The price target has been reduced from $3 to $1.50, reflecting the financial challenges faced by LVTX. The downgrade comes amidst a year-over-year revenue decline of 60.5%, negative margins, and a distress zone Altman Z-Score [1].

The acquisition agreement, announced on August 4, 2025, involves XOMA Royalty acquiring LVTX for between $1.16 and $1.24 per share in cash, along with a non-transferable contingent value right (CVR) per share representing 75% of the net proceeds related to LVTX's partnered assets and any net proceeds from out-licensing or selling unpartnered programs [1].

Despite the financial struggles, LVTX's focus on innovative cancer treatments and bispecific antibodies positions it uniquely in the biotech landscape. The company has developed several clinical-stage bispecific gamma delta T cell engagers, including JNJ-89853413 targeting CD33 and hematologic cancers, and PF-08046052 targeting EGFR and solid tumors [1].

The acquisition by XOMA Royalty, a biotechnology royalty aggregator, aims to enhance LVTX's financial position by providing non-dilutive, non-recourse funding for the advancement of its internal drug candidates. However, the transaction is subject to various conditions, including the tender of at least 80% of LVTX's issued and outstanding shares and the approval of certain resolutions by LVTX's shareholders' meeting [1].

Investors should closely monitor LVTX's financial performance and the progress of the acquisition agreement to assess the potential impact on the company's stock price and overall valuation. The closing of the transaction is expected in the fourth quarter of 2025, pending the satisfaction of all conditions.

References:
[1] https://ir.lavatherapeutics.com/news-releases/news-release-details/xoma-royalty-enters-agreement-acquire-lava-therapeutics-between