Neutral Stance on Xoma Amid Strategic Acquisitions and Uncertain Growth Outlook

Xoma maintains a Hold rating from TD Cowen analyst Phil Nadeau due to stable financial performance and strategic acquisitions. While the company's recent deals add potential future revenue streams, the immediate impact on profitability and growth is uncertain. Nadeau's 3-star rating is based on a 2.7% average return and 40.87% success rate in the Healthcare sector.

XOMA Royalty (NASDAQ: XOMA) has reported its second quarter and year-to-date (YTD) financial results for 2025, showcasing robust growth and strategic acquisitions. The company reported $29.6 million in royalties and milestones in the first half of 2025, including $11.7 million in the second quarter. This performance is driven by increased royalties from VABYSMO and OJEMDA, as well as significant pipeline advancements.

The company's net income for the second quarter was $9.2 million, up from $7.4 million in the second quarter of 2024. Total income/revenue for the quarter was $13.1 million, compared to $11.1 million in the same period last year. XOMA ended the quarter with $78.5 million in cash and cash equivalents, reflecting strong financial health.

Strategic acquisitions have been a key driver of XOMA's growth. The company acquired Turnstone Biologics, LAVA Therapeutics, and HilleVax, and purchased mezagitamab royalty rights from BioInvent for $20 million. These acquisitions expand XOMA's portfolio and create potential future revenue streams.

Pipeline advancements are also contributing to XOMA's growth. Rezolute completed enrollment in its Phase 3 sunRIZE study for ersodetug, and Takeda initiated a Phase 3 trial for mezagitamab. Additionally, Zevra submitted an MAA to the EMA for arimoclomol. These developments position XOMA for potential future royalty streams.

Despite the strong financial performance, XOMA faces uncertainty regarding the immediate impact of its recent deals on profitability and growth. TD Cowen analyst Phil Nadeau maintains a Hold rating for XOMA, citing stable financial performance and strategic acquisitions. Nadeau's rating is based on a 2.7% average return and a 40.87% success rate in the Healthcare sector.

References:
[1] https://www.stocktitan.net/news/XOMA/xoma-royalty-reports-second-quarter-and-year-to-date-2025-financial-vomm2z8bess1.html