XOMA Plummets 23% Amid Rezolute's Trial Setback: What's Next for Biotech Royalty?

Summary
• XOMA Royalty (XOMA) tumbles 23.25% intraday, trading at $26.37 after opening at $27.90
• Rezolute’s failed Phase 3 trial for RZ358 in congenital hyperinsulinism triggers analyst price target cuts
• Leerink Partners slashes XOMA’s price target to $45 from $58, maintaining Outperform rating
• Intraday range of $25.51–$29.45 highlights volatile session amid sector uncertainty

Today’s sharp selloff in XOMA reflects cascading impacts from Rezolute’s clinical failure and revised analyst expectations. The stock’s 23% drop underscores the fragility of biotech royalty plays tied to single-asset performance. With the 52-week low at $18.35 looming, investors are recalibrating risk exposure in a sector where clinical outcomes dictate valuations.

Rezolute's Failed Phase 3 Trial Sparks XOMA's Sharp Decline
XOMA’s 23% intraday collapse stems directly from Rezolute’s (RZLT) announcement that its Phase 3 trial for RZ358 in congenital hyperinsulinism failed to meet primary endpoints. The drug showed a 45% reduction in hypoglycemia events versus 40% for placebo—a numerical improvement that lacked statistical significance due to high placebo response. This outcome forced Leerink Partners to remove RZ358’s royalty contribution from its valuation model, slashing XOMA’s price target to $45. The sell-off accelerated as market participants priced in reduced near-term revenue visibility, despite ongoing trials for tumor hyperinsulinism expected in 2026.

Biotech Sector Mixed as AMGN Rises, XOMA Crumbles
While XOMA’s biotech peers face mixed fortunes, Amgen (AMGN) stands out with a 1.03% intraday gain, reflecting its diversified pipeline and stable royalty streams. In contrast, XOMA’s reliance on high-risk, high-reward assets like RZ358 exposes it to outsized volatility. The sector’s broader uncertainty is compounded by Novo Nordisk’s GLP-1 failure in Alzheimer’s and J&J’s halted MS trial, amplifying risk-off sentiment. XOMA’s sharp decline highlights the sector’s bifurcation between established players and speculative royalty aggregators.

Options and ETF Plays in XOMA’s Volatile Environment
• 200-day average: $28.40 (below current price) • RSI: 55.26 (neutral) • MACD: -0.53 (bearish) • Bollinger Bands: $29.61–$34.19 (price near lower band)

Technical indicators suggest short-term bearish momentum, with XOMA testing its 200-day average and RSI hovering near neutral. The stock’s 52-week range of $18.35–$39.92 indicates potential for further downside, though the 9.56 P/E ratio hints at undervaluation. Aggressive short-term traders may consider XOMA20251219P25 and XOMA20260116C30 for directional bets.

Top Option 1: XOMA20251219P25
• Code: XOMA20251219P25 • Type: Put • Strike: $25 • Expiration: 2025-12-19 • IV: 103.46% (high volatility) • Leverage: 26.54% (high) • Delta: -0.324 • Theta: -0.042 • Gamma: 0.083 • Turnover: 600
• IV: High volatility suggests strong price swings • Leverage: Amplifies returns on downward moves • Delta: Moderate sensitivity to price changes • Gamma: High sensitivity to price acceleration
This put option offers 26.54% leverage with 103.46% implied volatility, ideal for capitalizing on XOMA’s near-term bearish bias. A 5% downside to $25.05 would yield a payoff of $0.05 per share, aligning with the stock’s current trajectory.

Top Option 2: XOMA20260116C30
• Code: XOMA20260116C30 • Type: Call • Strike: $30 • Expiration: 2026-01-16 • IV: 95.69% (high) • Leverage: 13.27% (moderate) • Delta: 0.407 • Theta: -0.052 • Gamma: 0.048 • Turnover: 1,869
• IV: High volatility supports potential rebound • Leverage: Moderate amplification for bullish scenarios • Delta: Balanced sensitivity to price moves • Gamma: Sufficient responsiveness to acceleration
Despite the bearish setup, this call option provides a hedge for a potential rebound. A 10% rebound to $29 would yield a $1.00 payoff, leveraging XOMA’s undervalued fundamentals and analyst optimism.

Backtest XOMA Royalty Stock Performance
The backtest of XOMA's performance after a -23% intraday plunge from 2022 to now shows mixed results. While the stock experienced a maximum return of 8.03% over 30 days, the win rates for 3-day and 10-day periods are lower, indicating that short-term gains were not consistent.

XOMA at Crossroads: Rezolute’s Setback or Catalyst for Rebound?
XOMA’s 23% drop reflects immediate pain from Rezolute’s trial failure, but the stock’s 9.56 P/E ratio and Leerink’s Outperform rating suggest undervaluation. Investors must weigh near-term risks against long-term catalysts like the tumor hyperinsulinism trial and Ojemda’s 2026 EMA approval. Aggressive bulls may target the $25 support level with XOMA20251219P25, while cautious buyers could eye a rebound above $29.60 (Bollinger lower band). Meanwhile, Amgen’s 1.03% rise underscores the sector’s resilience, offering a benchmark for XOMA’s potential recovery. Watch for $25 breakdown or regulatory updates in Q1 2026.