INVESTOR ALERT: Pomerantz Investigates XOMA Claims!

Background – Rezolute Trial Failure Triggers Investigation

XOMA Corporation (NASDAQ: XOMA), a biotech royalty aggregator, recently faced a sharp stock price decline after a key partner’s drug trial failed to meet its endpoints (^[1]) (^[1]). Rezolute, Inc. – XOMA’s development partner – announced on December 11, 2025 that the Phase 3 “sunRIZE” study of ersodetug (RZ358) in congenital hyperinsulinism did not meet its primary or key secondary endpoints (^[1]). Following this news, XOMA’s share price fell ~22.8% (down $7.82 to $25.39 on Dec. 19, 2025) (^[1]). In response, Pomerantz LLP, a securities class-action law firm, disclosed it is investigating whether XOMA and its officers engaged in securities fraud or other unlawful practices (^[2]). The probe suggests potential questions about XOMA’s disclosures or conduct leading up to the Rezolute trial results, creating an overhang of legal risk for investors.

XOMA’s Evolving Business Model: It’s important to understand XOMA’s niche business model to put this setback in context. XOMA has transformed into a biotech royalty aggregator, acquiring rights to future milestone and royalty payments on drug candidates developed by other companies (^[3]). Rather than advancing its own drugs, XOMA provides capital to partner companies in exchange for a share of their products’ future economics. This strategy has led XOMA to build a portfolio of 120+ assets spanning various development stages (^[4]). Notably, the portfolio now includes two marketed therapies and several late-stage programs (^[3]). For example, XOMA holds an economic interest in Roche’s approved eye drug Vabysmo® (faricimab) for retinal diseases, as well as royalty rights tied to Day One’s OJEMDA™ (tovorafenib for pediatric glioma) and Zevra’s MIPLYFFA™ (arimoclomol for Niemann-Pick disease) – both of which received FDA approvals in 2024 (^[4]) (^[4]). XOMA’s agreement with Rezolute was one such royalty license: XOMA had licensed out RZ358 to Rezolute in 2017 and was eligible for up to $232 million in milestones plus high-single to mid-teen percent royalties if the drug succeeded (^[5]) (^[5]). In fact, XOMA had already earned $12 million in milestone fees from Rezolute as the trial progressed (^[5]). The failure of RZ358 now means those future milestone/royalty prospects have largely evaporated, illustrating the key risk in XOMA’s model – its revenues depend on partners’ clinical success. Investors must weigh XOMA’s broad portfolio of shots-on-goal against the binary risk inherent in each asset.

Dividend Policy & Shareholder Yield

Common Stock: XOMA does not pay any dividend on its common stock, and there’s no indication of a near-term change in this policy. The company’s earnings have been negative in recent years (net loss of $13.8 million in 2024) (^[4]), so management has retained earnings to reinvest in new royalty acquisitions rather than initiate common dividends. In fact, XOMA has favored share buybacks as a return method – using part of its financing proceeds to repurchase ~$2.4 million of common stock in the first nine months of 2025 (^[5]). Given the growth-focused strategy, common shareholders currently realize returns primarily through stock price appreciation (and buyback-driven equity concentration), not cash payouts.

Preferred Stock: While common equity yields nothing, XOMA has two series of preferred shares that provide a fixed income to holders. The 8.625% Series A Cumulative Perpetual Preferred (NASDAQ: XOMAP) carries a $25 liquidation preference and pays quarterly cash dividends totaling $2.15625 per share annually (^[5]). Similarly, the 8.375% Series B Cumulative Perpetual Preferred (NASDAQ: XOMAO) pays $2.09375 per depositary share per year (^[5]). Together, these preferreds represent about $64 million in capital. All scheduled preferred dividends have been paid to date, and XOMA’s board has expressed intent to continue these distributions going forward (^[5]). Importantly, the preferred stock is cumulative, meaning due dividends accrue if not paid. However, XOMA has maintained timely payments, funded by its combination of royalty revenues and available cash. It’s worth noting that the preferred shares are perpetual (no maturity date) and generally non-convertible into common stock except under special conditions (e.g. a change of control) (^[5]). They also do not participate in any upside of common equity – by charter, Series A and B receive only their fixed dividends and have no claim on common dividends or earnings growth (^[5]). In summary, common stockholders have no dividend yield, whereas preferred holders receive a healthy fixed yield (~8.4–8.6% of par) that XOMA has consistently honored.

Leverage and Debt Maturities

Royalty-Backed Loan (Blue Owl Facility): XOMA employs significant leverage in the form of a royalty-backed term loan provided by funds managed by Blue Owl Capital. In December 2023, XOMA drew $130 million under this loan, secured by the company’s interest in Roche’s Vabysmo royalties (^[3]). The loan is non-recourse to XOMA’s other assets (Blue Owl’s recourse is essentially limited to the Vabysmo royalty stream) (^[3]) (^[3]). Key terms include a 9.875% fixed interest rate, with interest payable semi-annually (^[3]). The facility amortizes over up to 15 years, though XOMA can prepay at any time and will regain full royalty rights to Vabysmo once the debt is repaid (^[3]). As an extra inducement, XOMA issued Blue Owl warrants for 120,000 common shares (strike prices $35–$50, significantly out-of-the-money relative to the ~$26 current price) (^[3]).

As of Q3 2025, the outstanding balance on the Blue Owl term loan was about $108.7 million (with ~$14.3 million classified as current and $94.4 million long-term) (^[5]) (^[5]). The loan structure sweeps Vabysmo royalty receipts: XOMA uses the drug’s worldwide sales royalties to pay the 9.875% interest, and any excess royalty beyond interest due is automatically applied to principal repayment (^[5]). This mechanism has already begun to deleverage the loan – for the nine months ended Sept 30, 2025, XOMA received ~$22.5 million in Vabysmo-related cash payments and reduced the loan principal by roughly $9–10 million (^[5]) (^[5]). The interest is well-covered by the royalty: no shortfall has occurred, and XOMA even maintains a reserved cash balance ($2.2 million as of Q3) dedicated to interest if royalties ever fall short (^[5]). There is no imminent maturity wall on this debt thanks to the long-dated structure (final maturity up to 15 years out, i.e. 2038) (^[3]). If Vabysmo sales stay strong, management expects to retire the loan ahead of schedule, after which the full royalty stream would revert to XOMA unencumbered (^[3]).

Other Obligations: XOMA’s capital structure also includes convertible preferred stock (designated “Series X”) held by its largest shareholder. Biotechnology Value Fund (BVF), a longtime investor, owns a series of preferred shares (worth ~$20 million on the balance sheet) that are convertible into common stock under certain conditions (^[5]). If fully converted, BVF’s stake in XOMA could increase from ~21% of common to up to ~44% of outstanding shares (^[5]). These BVF preferreds have no cash coupon but represent potential dilution. Aside from BVF’s stake, XOMA had no outstanding convertible notes or traditional bonds as of Q3 2025 – the Blue Owl loan constitutes the main financial debt (^[5]). The company does carry contingent payment liabilities tied to some acquisition agreements: for example, XOMA must pay Daré Bioscience an extra $11 million for each $22 million in royalty receipts it eventually collects under certain deals after a $88 million threshold (^[5]). It also owes possible future milestone payments to partners like Kuros and BioInvent if their programs succeed (up to ~$12.1 million in total milestones) (^[5]). Crucially, these are not fixed commitments – they become due only if the corresponding royalties or milestones are achieved, and management notes they would be paid out of the cash from those very events (^[5]) (^[5]). In summary, XOMA’s balance sheet leverage is primarily the $108 million Vabysmo loan, which is steadily shrinking, plus the ongoing preferred equity (with fixed dividends). There are no near-term debt maturities or large mandatory payments looming, other than the semi-annual interest on the loan (covered by Vabysmo royalties) and the quarterly preferred dividends.

Cash Flows and Coverage

XOMA’s unique income stream – a mix of royalty payments, milestone receipts, and license fees – has grown substantially, but so have fixed outflows like interest and preferred dividends. In the first nine months of 2025, XOMA reported total revenues of $38.4 million, nearly doubling the $19.8 million in the same period of 2024 (^[5]) (^[5]). This surge reflects the ramp-up of Vabysmo royalties and one-time milestone payments from partners. For instance, royalty income from Roche’s Vabysmo (acquired via an Affitech agreement) was $18.3 million in the 9M 2025, up from $10.0 million in 9M 2024 (^[5]). XOMA also received a $5.0 million milestone from Rezolute for dosing the first and last patients in the Phase 3 RZ358 trial during 2024–2025 (^[5]), a $4.0 million payment from Takeda upon a partner’s regulatory filing (^[5]), and a $4.0 million milestone tied to Day One’s EMA submission for tovorafenib (OJEMDA) in 2025 (^[5]). Meanwhile, new drug approvals have begun generating initial sales royalties: in Q3 2025, XOMA recognized $1.9 million in royalties from OJEMDA’s early sales and $0.9 million from MIPLYFFA’s launch (^[5]).

These incoming cash flows are used to cover the company’s operating expenses and financial obligations. General & Administrative (G&A) expenses remain XOMA’s largest cost, totaling $25.7 million for the first nine months of 2025 (^[5]). This reflects the cost of sourcing and managing deals, as well as integration costs from acquisitions (G&A spiked in 2024 due to one-time expenses for two company buyouts) (^[4]). R&D expenses are now minimal ($1.4 million in 9M 2025) since XOMA isn’t actively developing drugs internally (^[5]). The interest expense on the Blue Owl loan was about $10.0 million over the first nine months of 2025 (^[5]), and annual preferred dividends amount to roughly $5.5 million (e.g. $4.1 million paid in the first nine months) (^[5]). Together, the interest and preferred payouts (~$15 million annualized) are fully covered by the royalty and milestone income (projected ~$50+ million for full-year 2025). Indeed, cash receipts from Vabysmo alone are on track to exceed $30 million for 2025, sufficient to pay all interest and concurrently reduce principal (^[5]) (^[5]). XOMA’s preferred dividends have also been consistently paid out of operating cash flow; the company has not needed to suspend or defer any preferred payments (^[5]).

Cash Position: As of late 2024, XOMA had over $100 million in cash on hand (^[4]), bolstered by the Kinnate Biopharma acquisition (which added ~$120 million gross cash via merger in April 2024) (^[6]) (^[6]) and the Blue Owl financing. By Q3 2025, XOMA’s balance sheet showed $110.7 million in current assets (including ~$26 million cash/securities and $13+ million short-term receivables) and an additional $40.1 million in long-term restricted cash (mostly the reserve and escrowed funds related to the loan) (^[5]) (^[5]). This liquidity provides a buffer for any timing mismatches in royalty receipts or new deals. Notably, XOMA’s operations have been near breakeven on a cash-flow basis in 2025 – the company nearly covered its operating costs and financing outflows through its royalty income. For the full year 2024, XOMA did post a net loss of $13.8 million (^[4]), due largely to non-cash write-downs (see risks below) and high acquisition-related G&A costs, but its cash flow from royalties is growing. As more partnered drugs move to market (or advance in trials), XOMA expects its royalty streams to expand, improving coverage of fixed charges. Interest coverage thus appears adequate given Vabysmo’s strong commercial performance (management even expects royalty income to increase further in coming periods as Vabysmo sales grow) (^[5]). However, investors should monitor XOMA’s cash burn for new deals – the company continues to deploy capital into acquisitions (e.g. $15 million paid to Twist Bioscience for early-stage program rights (^[5]), $8 million for a royalty in DSUVIA in 2024 (^[7])). While these investments aim to generate future cash flows, they can temporarily consume cash. At present, XOMA’s cash reserves and ongoing royalties appear sufficient to meet operating needs, debt service, and preferred dividends without requiring new financing in the immediate term.

Valuation and Comparables

Valuing XOMA is challenging given its unusual business model and evolving financial profile. Traditional earnings metrics are currently of limited use – XOMA’s net income is negative (due to heavy non-cash charges and investment for growth), so P/E is not meaningful. Instead, investors often look at asset value, book value, and the prospects of XOMA’s royalty portfolio relative to its market price. As of Q3 2025, common shareholders’ equity was $87.9 million (^[5]). With the stock trading around $26 per share in early 2026, XOMA’s market capitalization is roughly $320 million (^[8]). This implies a price-to-book ratio of ~3.6× (using common equity) – indicating that the market assigns significant value to XOMA’s intangible assets and future royalty streams beyond the current balance sheet. In fact, XOMA carries $44.6 million of intangible assets on its books (from acquisitions like Kinnate and royalty rights purchases) (^[5]) (^[5]), but the market is valuing the business at many times that, anticipating that the diverse pipeline of 70+ partnered drug programs will translate into substantial future royalties.

Another lens is EV/Revenue. Considering the enterprise value (market cap $320 M plus debt $108 M and preferred ~$64 M, minus cash ~$150 M), XOMA’s EV is roughly ~$340 million. With FY 2024 income+revenue of $28.5 million (^[4]), the stock traded at an EV/Revenue near 12× for 2024; based on an estimated ~$50 million revenue in 2025, the multiple would be closer to 6–7× forward revenue. This valuation reflects XOMA’s high-growth royalty inflows (2024 revenue was up nearly 6× from 2023’s $4.8 million (^[4]) (^[4])) but also the inherent uncertainty of those revenues (driven by milestone timing and clinical outcomes). By comparison, a larger peer like Royalty Pharma (NASDAQ: RPRX) – which invests in approved drug royalties – trades around ~12× EV/EBITDA with a modest dividend yield ~2.5%. Unlike RPRX, XOMA’s assets are earlier-stage on average, making its cash flows less predictable and justifying a lower multiple or discount until more assets reach commercialization. In essence, investors are valuing XOMA for its pipeline optionality: the company’s market cap exceeds its current net assets and near-term cash flows, implying expectations of significant milestone hits or royalty ramp-ups in the coming years.

It’s also informative to consider book value per share and cash per share. Post-Kinnate acquisition, XOMA’s book value jumped (from $61.9 M at 2024 start to $87.9 M by Q3 2025) (^[5]), equating to about $7.14 book value per common share. The stock’s ~$26 price is well above that, again reflecting anticipated growth. XOMA’s cash and securities (including restricted) totalled roughly $150 million at Q3 2025 (^[5]) (^[5]), which is about $12 per share in gross cash. Subtracting all debt and preferred obligations, the net cash position was around $20–30 million (roughly $2 per share). This means the market is capitalizing XOMA’s intangible portfolio at roughly $25 per share, or ~$300 million – a sign of bullish sentiment on the long-term royalty pipeline value. Of course, that valuation can swing with trial outcomes: XOMA’s share price climbed from the mid-teens in late 2023 to the mid-$30s by late 2025 as optimism grew around its deals, then dropped back into the mid-$20s after the Rezolute setback (^[1]). One independent analysis currently gives XOMA a “fundamental rating” of 5/10, noting concerns about its debt and cash flow stability despite the company’s growth prospects (^[9]). Investors should therefore view XOMA’s stock as a high-risk, high-reward vehicle, trading not on current earnings but on the probability-weighted future royalties from dozens of biotech projects. Comparables in this niche are few (most biotech licensors are either much larger like Royalty Pharma, or focused on a single product), making relative valuation tricky. The key drivers of XOMA’s value will be the success rate of its partnered programs and the magnitude of royalties they ultimately generate.

Risks and Red Flags

XOMA’s strategy comes with several significant risks and potential red flags that investors should monitor:

– Pipeline Failure Risk: XOMA’s future revenues depend on the success of partner-developed drugs, many of which are in clinical stages. The Rezolute case is a prime example – the failure of the Phase 3 RZ358 trial wiped out a major expected revenue stream and caused a >20% one-day stock plunge (^[1]). This concentration risk is real: before its failure, RZ358 was one of five Phase 3 assets underpinning XOMA’s valuation (^[3]). Similarly, XOMA recorded large credit loss impairments of $30.9 million in 2024 on two acquired royalty interests after those underlying drug programs suffered setbacks (^[4]). (Specifically, XOMA had to write down $9.0 M on an Aronora-partnered asset and $14.0 M on an Agenus-partnered asset in Q2 2024 when those programs underperformed (^[5]).) These examples highlight the high attrition rates in biotech: even a well-curated portfolio can see assets fail, directly impacting XOMA’s financial results. A string of trial failures could materially reduce future cash flows and investor confidence.

– Concentration of Cash Flows: In the near term, one product – Roche’s Vabysmo – generates a dominant share of XOMA’s cash receipts. Vabysmo (approved for wet AMD and DME in 2022) is a blockbuster-in-the-making, and its royalties are crucial for servicing XOMA’s debt (^[5]) (^[5]). If Vabysmo’s sales were to disappoint or if a safety issue emerged, XOMA’s royalty income and ability to repay the Blue Owl loan could be impaired. Competition in the retinal disease market (e.g. from Regeneron’s Eylea or novel gene therapies) and eventual patent expiry are longer-term considerations – any hit to Vabysmo’s sales growth would directly slow XOMA’s debt reduction and cash generation (^[5]) (^[5]). Although the loan is non-recourse (isolating default risk to the asset), losing that revenue would be a setback for common equity holders and might force XOMA to find alternative financing to fund new deals. This single-asset reliance is a red flag until XOMA’s other royalties (like OJEMDA, MIPLYFFA, etc.) grow to diversify its income.

– High Financial Leverage: XOMA employs debt and preferred equity aggressively. The Blue Owl loan’s interest rate of 9.875% is high-cost debt (^[3]) – a reflection of both higher interest rate environments and the risk of relying on a single royalty. While currently covered by Vabysmo, that interest is a fixed claim on XOMA’s cash flow. The company also must pay out over $5 million annually in preferred dividends off the top (^[5]). These fixed charges total around $15 million/year, which is significant relative to XOMA’s 2024 cash income ($28.5 M) (^[4]). Any downturn in royalty receipts could tighten coverage. Furthermore, reliance on external financing is part of XOMA’s growth model – management has stated it may raise additional debt or equity capital for acquisitions as needed (^[5]). This could mean future dilution (equity issuances or BVF converting its preferred stake) or additional debt if opportunities arise. Investors should keep an eye on XOMA’s leverage ratios and its ability to refinance or pay down obligations; although no major maturity is near, the company’s capital deployments mean it might tap markets again, and market conditions could affect those plans.

– Execution and Integration Risk: XOMA’s rapid expansion (doubling its portfolio to 120 assets in 2024 (^[4])) included two whole-company acquisitions (Kinnate Biopharma and Pulmokine) (^[4]). These deals are somewhat unusual for a royalty company – in Kinnate’s case, XOMA essentially bought the company to obtain its cash and pipeline, then undertook to out-license or wind down the R&D programs. While Kinnate added ~$9.5 M net cash to XOMA (^[6]) (^[6]), there are risks around the remaining contingent value rights (CVRs) issued to Kinnate shareholders. XOMA owes 85% of any proceeds from selling or licensing Kinnate’s drug programs within one year of the merger (^[6]) (^[6]). If XOMA fails to generate deals for those assets, it could be left holding unproductive assets (or incurring wind-down costs) while the CVRs expire. In general, acquiring companies (even mainly for their cash) can introduce complexity – Kinnate’s operations needed to be wound down, leading to ~$3.6 M in severance costs and other one-time expenses in 2024 (^[5]). There’s a risk that management might pursue similar transactions in the future to obtain cash or assets, which could temporarily depress earnings or distract from the core royalty business. The integration and management bandwidth risk is worth noting, even if XOMA’s team thus far has handled it (the net loss narrowed in 2024 despite those costs) (^[4]).

– Accounting Complexity: XOMA’s financial statements involve non-standard revenue recognition methods (e.g. effective interest method for purchased receivables, cost-recovery method for others, units-of-revenue method related to a past royalty sale) (^[5]) (^[5]). These can obscure the true economic cash flows in a given quarter. For instance, some royalty purchase agreements are accounted for under the cost-recovery method, meaning XOMA does not book income until its purchase price is fully recovered (^[5]). This conservative accounting can delay revenue recognition even if cash is coming in. Conversely, using an effective interest rate (EIR) method on deals like Vabysmo means XOMA recognizes a calculated yield on the asset, which may differ from actual cash received in the period (^[5]). The upshot is that GAAP earnings can be volatile and include significant non-cash gains/losses based on revaluations and assumptions (e.g. the credit loss charges, or fair value changes in equity stakes like Rezolute’s stock) (^[5]) (^[5]). Investors must be prepared for noisy earnings reports and should focus on underlying cash generation and deal progress. There is also some key-man risk, as XOMA’s lean team (13 employees as of 2023) (^[10]) is led by executives with deep deal expertise – losing any could slow the pace of finding and negotiating attractive royalty buys.

– Legal and Reputational Risks: The ongoing Pomerantz investigation is a cautionary flag. While such “investor alerts” often precede routine shareholder lawsuits after a stock drop, there’s potential for litigation claiming XOMA misled investors about RZ358 or other programs. Even if claims are unfounded, defending securities litigation can be costly and time-consuming. A lawsuit could, for instance, assert that XOMA failed to disclose adverse information from Rezolute’s trial or overstated RZ358’s prospects – allegations that, if proven, might result in a settlement or damages. XOMA has not yet disclosed any specific wrongdoing, and Pomerantz is still soliciting shareholder involvement (^[2]) (^[2]). Nonetheless, the situation bears watching. Beyond this case, XOMA’s business relies on partner relationships and reputation in the biotech industry. Any perception that it overpromises outcomes, or that it might trade on inside knowledge of trial results, could harm its ability to source deals. (Notably, XOMA sold a portion of its Rezolute equity holdings for $7.0 M in Q3 2025 at a $3.7 M profit (^[5]) (^[5]); while likely a prudent risk-management move, such timing could draw scrutiny if not properly disclosed.) Overall, while the legal risk from the current investigation appears moderate, it adds to the governance risk profile. Investors should ensure XOMA’s management maintains transparency, especially as the company straddles both investing and biotech spheres.

Open Questions for Investors

– Will the Pomerantz “Investor Alert” develop into a material lawsuit, and if so, what might be the impact on XOMA? Thus far it’s only an investigation into potential claims (^[2]). A key question is whether any evidence emerges that XOMA’s management knew more about the Rezolute trial issues than was disclosed. If a class-action proceeds, it could lead to a settlement or changes in disclosure practices, but if it fizzles out, this episode may have little long-term effect beyond highlighting the volatility of XOMA’s model.

– How quickly can XOMA’s newer royalty assets ramp up to replace the lost RZ358 opportunity? The company does have other late-stage bets: Day One’s tovorafenib (OJEMDA) just launched for pediatric brain tumors, and Zevra’s arimoclomol (MIPLYFFA) for Niemann-Pick is another new market entrant (^[4]). Investors will be watching initial sales trends – e.g. will OJEMDA uptake meet expectations, generating steady royalties for XOMA? Another near-term catalyst is Daré Bioscience’s Sildenafil Cream (tentative brand name) for female sexual arousal disorder, which is in late-stage development. XOMA has a deal entitling it to milestones/royalties if this product gains approval (^[5]). Positive regulatory outcomes here (or for any of XOMA’s “Phase 3 or registration” assets) could boost XOMA’s revenue and sentiment. The open question is whether wins from these programs will outpace the inevitable failures elsewhere in the portfolio.

– Will XOMA continue to pursue large acquisitions as a growth strategy? The 2024 takeovers of Kinnate and Pulmokine signal that management is willing to execute M&A to acquire royalty assets (and even cash). While the Kinnate deal effectively monetized Kinnate’s cash for XOMA’s use (^[6]) (^[6]), it also left XOMA with several early-stage oncology programs to potentially license out. By March 2025 (one year post-merger), we will see if XOMA managed to offload any Kinnate assets under the CVR terms – an indicator of management’s ability to extract value from such acquisitions. Going forward, should XOMA find other biotechs trading below cash or holding attractive royalty rights, it might attempt similar transactions. Investors should question whether this “acquire to obtain cash/assets” playbook is repeatable and accretive, or if it could lead to distractions and integration issues. Clarity on XOMA’s acquisition criteria and capital allocation priorities will be important as the company scales up.

– At what point might XOMA shift from reinvestment to returning capital to common shareholders? Right now XOMA is in growth mode, plowing royalty income and loan proceeds into new deals or buybacks rather than dividends (^[3]) (^[5]). However, if XOMA’s royalties mature into a steady, sizable cash flow (for example, once the Vabysmo loan is paid off and XOMA retains all that royalty income), the company could generate substantial free cash. Will management then initiate a dividend or larger buyback program? Or will XOMA double down on expansion? This balance between shareholder yield vs. portfolio growth remains an open strategic question. Management’s comments emphasize growth, but large shareholders like BVF may eventually prefer cash returns if the stock remains undervalued. How XOMA navigates this decision in the next 2–3 years will tell us whether it transitions toward a more income-oriented royalty company or remains an aggressive asset accumulator.

– Is XOMA’s current valuation justified by its portfolio potential? Ultimately, investors must ask whether the $300+ million market cap properly reflects the risk-adjusted value of XOMA’s royalty interests. With ~70 programs in development and over 120 total assets (^[4]), even a few successes could justify significant upside – but many assets are early-stage and may not pan out. XOMA’s fundamental performance is improving (2024 revenue was 6× 2023’s, and losses narrowed) (^[4]) (^[4]), yet the company still loses money and relies on external financing. The stock trades at a premium to book and to realized earnings, so the market is factoring in future growth. A key question is whether XOMA can consistently convert its pipeline into cash profits. Investors will be looking for evidence in upcoming earnings reports that operational cash flow (excluding one-time milestones) is covering costs and growing. If XOMA’s portfolio yields a few more Vabysmo-like wins, today’s valuation could be modest; if not, the stock could languish or trade down to nearer its tangible book value. This tension makes XOMA a potentially rewarding but risky investment – one that requires careful due diligence on the science and probability of its partnered drug programs.

Sources:** Official SEC filings (10-Q/10-K) (^[5]) (^[5]), XOMA press releases (^[3]) (^[6]), and reputable financial news reports (^[1]) (^[4]) have been used in preparing this analysis. Investors should review XOMA’s SEC filings and investor presentations for the most up-to-date disclosures on its royalty agreements and financial condition. The above report reflects information available as of January 2026 and highlights areas of interest and concern for shareholders in light of the recent developments.

Sources

1. https://globenewswire.com/news-release/2026/01/06/3213950/1087/en/INVESTOR-ALERT-Pomerantz-Law-Firm-Investigates-Claims-On-Behalf-of-Investors-of-XOMA-Royalty-Corporation-XOMA.html
2. https://prnewswire.com/news-releases/investor-alert-pomerantz-law-firm-investigates-claims-on-behalf-of-investors-of-xoma-royalty-corporation—xoma-302654842.html
3. https://investors.xoma.com/news-events/press-releases/detail/441/xoma-raises-up-to-140-million-in-non-dilutive
4. https://nasdaq.com/articles/xoma-royalty-corporation-expands-portfolio-acquisitions-and-fda-approvals-reports
5. https://sec.gov/Archives/edgar/data/791908/000110465925109782/xoma-20250930x10q.htm
6. https://investors.xoma.com/news-events/press-releases/detail/450/xoma-announces-calculation-of-additional-price-per-share
7. https://sec.gov/Archives/edgar/data/791908/000155837025003131/xoma-20241231x10k.htm
8. https://companiesmarketcap.com/xoma/marketcap/
9. https://chartmill.com/stock/quote/XOMA/fundamental-analysis
10. https://tradingview.com/symbols/NASDAQ-XOMA/

For informational purposes only; not investment advice.