Xoma’s Strategic Expansion Gains Momentum Following Strong Financial Performance

Xoma Corporation, a biotechnology firm specializing in royalty acquisitions, is demonstrating significant operational momentum through a combination of unexpected profitability and aggressive strategic expansion. Recent quarterly results revealed a dramatic financial turnaround, while concurrent acquisition activity signals a determined push to broaden the company's portfolio of future revenue streams.

The company's third-quarter earnings report delivered a substantial positive surprise to the market. Xoma transformed a net loss of $17.2 million from the same period last year into a net profit of $14.1 million. On a per-share basis, this translated to earnings of $0.70, dramatically surpassing analyst expectations that had projected a loss of $0.09 per share.

While revenue figures of $9.35 million came in slightly below market forecasts, the company's cash generation capabilities proved notably robust. Xoma reported receiving $14.3 million in royalty payments during the third quarter alone, bringing the yearly total to $43.9 million collected from various partners.

Acquisition Strategy Accelerates Portfolio Growth

Parallel to its financial achievements, Xoma is actively executing its expansion strategy. The company recently secured an 87% stake in LAVA Therapeutics and announced plans to acquire Mural Oncology. These moves continue a pattern of strategic investments, building upon previous transactions with Turnstone Biologics and HilleVax.

Should investors sell immediately? Or is it worth buying Xoma?

Xoma's business model as a royalty aggregator involves acquiring economic rights to future milestone and licensing payments. This approach provides financing to biotechnology companies while enabling Xoma to diversify its own risk exposure across multiple assets. With liquid resources totaling $130.6 million, the company appears well-positioned to pursue additional acquisition opportunities.

Upcoming Catalysts Present Significant Potential

Future performance drivers for Xoma lie in approaching clinical and regulatory milestones expected from its partner network. The market anticipates Phase 3 results from partner Rezolute for ersodetug in December 2025, with the drug representing a potential breakthrough treatment for congenital hyperinsulinism.

Further significant developments are scheduled for 2026, including regulatory decisions from the European Medicines Agency on tovorafenib (developed by Day One) and arimoclomol (from Zevra). Both assets could generate mid-single-digit royalty percentages for Xoma. Analysts at Leerink Partners have acknowledged this potential by establishing a price target of $58 for Xoma shares.

The combination of strengthened financials, strategic acquisitions, and promising pipeline assets suggests Xoma may be positioning for sustained growth, despite some initial market hesitation following the mixed revenue performance in its latest quarterly report.