Xoma Corporation, a biotech company specializing in the development of therapeutic antibodies, recently announced a royalty purchase agreement with Aevi Genomic Medicine. Under the agreement, Aevi will pay Xoma $20 million upfront in exchange for a portion of the royalty payments that Xoma is entitled to receive for its licensed products.
This move by Xoma is a strategic decision intended to provide the company with additional capital to accelerate its pipeline of drug development programs. By selling a portion of its future royalty revenue, Xoma is able to fund ongoing clinical trials and other research initiatives without diluting its ownership structure or incurring additional debt.
The royalty purchase agreement also provides Aevi with access to Xoma`s current and future licensed products, including X358, a drug designed to treat rare cases of hyperinsulinemic hypoglycemia (HH). X358 is currently in Phase 2 clinical trials, and the royalty payments from its future commercial success would be one of the primary sources of revenue for Xoma.
This agreement is not the first time Xoma has entered into a royalty purchase agreement. In 2017, Xoma sold its royalty interest in the drug Tavalisse to the healthcare investment firm HealthCare Royalty Partners for $25 million. Tavalisse is used to treat patients with chronic immune thrombocytopenia (ITP).
The Xoma royalty purchase agreement is a smart financial move for the company, as it provides a significant infusion of cash without diluting ownership or incurring additional debt. Additionally, the agreement provides Aevi with access to Xoma`s licensed products and the potential for future commercial success.
As always, investors and shareholders should keep an eye on Xoma`s continued drug development progress and the market success of its licensed products as factors that may affect the company`s future financial health.