XOMA Royalty (NASDAQ:XOMA) executives used the company’s 2025 financial results call to emphasize a year of portfolio expansion, rising royalty receipts, and what management described as progress toward a business model in which recurring royalties can cover core operating costs.
Management highlights a “foundational year” and growing receipts
Chief Executive Officer Owen Hughes said 2025 was a “foundational year” as the company continued executing its strategy to build a diversified portfolio of biotechnology royalty and milestone assets. Hughes said XOMA added 22 assets to its portfolio during 2025, along with the acquisition of two platform technologies the company hopes to outlicense for future royalties and milestones.
With seven commercially available programs, Hughes said the company is building a “diverse and growing source of recurring receipts.” He pointed to early-stage commercial launches for Day One Biopharmaceuticals’ OJEMDA and Zevra Therapeutics’ MIPLYFFA, and noted that both companies submitted marketing authorizations in the European Union in 2025. Hughes also cited Ipsen’s Feb. 26, 2026 announcement of a positive CHMP opinion recommending conditional marketing authorization for OJEMDA in the EU. He added that Ipsen submitted a marketing authorization in Japan in the fourth quarter, which triggered a $2 million milestone payment to XOMA.
Portfolio setbacks and late-stage catalysts
Hughes acknowledged that the company is not immune to clinical setbacks. He said two Phase III programs—Rezolute’s congenital hyperinsulinism program and Gossamer Bio’s seralutinib for pulmonary arterial hypertension—showed clinical efficacy but failed to meet statistical significance thresholds versus control arms.
However, Hughes said both companies remain committed to exploring options in 2026. He said Rezolute plans to meet with the FDA before the end of the first quarter under its breakthrough designation after further analysis of primary results and other endpoints. Hughes also said Gossamer plans to meet with the FDA to discuss a path forward for seralutinib, citing a pre-specified intermediate- and high-risk subgroup analysis that showed a 20-meter placebo-adjusted six-minute walk distance improvement with a P value of 0.0207, and noted that three of four secondary endpoints met a P value threshold of less than 0.0125.
Looking forward, Hughes said XOMA’s broader portfolio includes 14 programs in registrational stage and outlined developer-guided potential events in calendar 2026, including:
- Rezolute: top-line results from a separate Phase III program evaluating ersodetug in tumor hyperinsulinism in the second half of 2026
- Volixibat: top-line results from the VISTAS study in primary sclerosing cholangitis (PSC) in the second quarter of 2026
- REC-4881: developer engagement with the FDA in the first half of 2026 to align on a registrational study in familial adenomatous polyposis (FAP)
- AstraZeneca TIGIT program: additional data in various solid tumors throughout 2026
Deal activity: Takeda revenue share and “negative enterprise value” acquisitions
Chief Investment Officer Brad Sitko said XOMA added 22 new portfolio assets in 2025, including five in Phase II or Phase III trials, with total upfront cash outlay of $25 million. Sitko said XOMA’s late-stage portfolio additions were largely driven by a revenue-sharing transaction executed in December with Takeda related to mezagitamab.
Sitko said XOMA purchased additional mezagitamab royalty and milestone rights from BioInvent for $20 million earlier in 2025. XOMA then reduced some of its aggregated mezagitamab rights in exchange for economic rights across nine development-stage assets in Takeda’s externalized asset portfolio. Sitko said the Takeda transaction could provide low- to mid-single-digit royalties and up to $853 million in milestones across the nine assets. Following the transaction, he said XOMA’s mezagitamab participation moved from a mid-single-digit royalty and $16.25 million in potential milestones to a low single-digit royalty and up to $13 million in potential milestones.
Among the Takeda-related development-stage assets Sitko highlighted were osavampator (Phase III in major depressive disorder), volixibat (Phase 2B in PSC and primary biliary cholangitis), OHB-607 (Phase II in bronchopulmonary dysplasia in extremely premature infants), and REC-4881 (Phase II in FAP).
Sitko also emphasized XOMA’s use of whole-company acquisitions and special situations, saying the company completed or served as structuring agent on seven acquisitions. He said XOMA accumulated $11.7 million of non-dilutive capital net of expenses from those transactions, and obtained interests in partnered assets and potential future out-licensing proceeds, citing collaborations involving Lava Therapeutics (Johnson & Johnson and Pfizer), Generation Bio (Moderna), and legacy Kinnate assets. Sitko said XOMA obtained economic interests in “approximately 25%” of more than $1.1 billion of potential milestone payments and low- to mid-single-digit royalties from eight partnered assets, as well as eligibility for 25% to 70% of proceeds from any future out-license or sale of certain legacy assets or platform technologies.
Financial results: GAAP income rises, buybacks and balance sheet updates
Chief Financial Officer Jeffrey Trigilio reported full-year 2025 total GAAP income and revenue of $52.1 million, up from $28.5 million in 2024. On a cash basis, he said total receipts increased 9% to $50.5 million, including about $34 million from royalties, up 68% year over year.
Trigilio said the increase was driven by VABYSMO and OJEMDA growth, along with a new contribution from MIPLYFFA following its approval for Niemann-Pick disease type C in late 2024. He said royalty receipts in 2025 came from four programs, two more than in 2024, and that six programs generated clinical, regulatory, and business development events, resulting in about $17 million of cash milestone payments.
On expenses, Trigilio reported full-year G&A expense of $36 million, compared with $34.5 million in 2024. He said 2025 G&A included non-cash stock-based compensation of $9.3 million, and included an increase of about $1.1 million tied to litigation XOMA initiated against Janssen Biotech alleging breach of contract and unjust enrichment related to Janssen’s use of XOMA intellectual property in the commercialization of Tremfya. Trigilio noted that Johnson & Johnson has reported cumulative Tremfya net revenues of approximately $19.7 billion since 2017, but emphasized litigation is uncertain and there is no assurance on outcome, timing, or recovery amount.
GAAP net income for 2025 was $31.7 million, compared with a GAAP net loss of $13.8 million in 2024. Trigilio cited accounting items that contributed to GAAP results with limited cash impact, including $21.2 million of gains from acquisitions (HilleVax, Turnstone, and Mural), a $3.7 million gain on sale of equity securities, and $3.0 million of amortization expense for intangible assets.
Trigilio also highlighted balance sheet and capital allocation items, including $25 million deployed for royalty and milestone interests and $16 million used to repurchase and retire slightly more than 648,000 shares at an average price of $24.75. XOMA ended 2025 with about $83 million of unrestricted cash and cash equivalents. He said the company reduced principal on its Blue Owl loan from $123 million to $112.5 million; he described the facility as self-amortizing and funded solely by VABYSMO receipts with no recourse to XOMA or other assets. If VABYSMO net revenues continue to grow at similar—or slightly lower—rates than 2025, Trigilio said the loan could be fully repaid by the end of 2030, at which point VABYSMO receipts would return to XOMA for a few years, while noting the loan can be repaid at any time.
Q&A: royalty growth outlook, Tremfya litigation, and platform out-licensing
During questions, Trigilio said growth prospects for royalty receipts “look strong,” pointing to VABYSMO as the largest contributor and to continued ramp for OJEMDA and MIPLYFFA, while declining to provide specific guidance.
On the Tremfya litigation, Hughes said the company and its legal advisors have “a lot of confidence” in the breach claim, which he said relates to an agreement with MorphoSys dating to the 2003 timeframe involving phage display and HuCal technologies used to create Tremfya. Hughes said royalty rates in similar relationships are typically low single digits, but noted the agreement structure was different and could affect remuneration if XOMA is successful.
Hughes also provided detail on the platform technologies acquired through Generation Bio, emphasizing XOMA does not intend to become a drug development company or fund R&D internally. He said Generation Bio’s cell-specific LNP delivery technology has non-human primate data suggesting metabolism bypasses the liver and may be re-dosable. Hughes said Moderna has certain rights, but XOMA believes it can license the technology outside Moderna’s field of use to generate royalties and milestones, including potential value for Generation Bio shareholders through contingent value rights. He added that a second technology, iqDNA, is earlier stage and that XOMA is speaking with third parties to fund work aimed at eventual monetization.
In another exchange, Hughes described the company’s approach to capital deployment as balancing portfolio investments with share repurchases to increase free cash flow per share over time, while still aiming to diversify across modality, indication, sponsor, and geography.
About XOMA Royalty (NASDAQ:XOMA)
XOMA Royalty (NASDAQ: XOMA) is a specialty healthcare royalty company that acquires and manages royalty interests in small-molecule and biologic drugs. The company’s business model centers on purchasing royalty streams on marketed or near-market pharmaceutical products, providing capital to developers in exchange for a share of future net sales. By focusing on late-stage assets with established clinical and commercial profiles, XOMA Royalty aims to generate predictable, long-term cash flows for its shareholders.
The company’s investment portfolio spans a range of therapeutic areas, including oncology, immunology and rare diseases.
