NASDAQ: XOMA — $30.49 ▲0.58 (+1.94%)
As of Dec-08-2025, 4:00 PM ET 👑🧬

FUNstock Index: 7.3/10

Biotech investing usually comes with two guarantees:

1. volatility 🤕

2. dilution 🧪

XOMA Royalty is trying very hard to break that tradition — by not developing drugs at all.

Instead of burning cash in labs, XOMA collects royalties, milestones, and economic interests from drugs developed by other biotech companies. Think of it as a biotech landlord: it doesn’t build the house, but it gets paid if the tenant succeeds.

That model may sound boring — until you notice that:

• the CEO just spent $2.5 million of his own money buying shares

• BVF Partners owns over 20%

• Morgan Stanley is the second-largest holder

• cash receipts are growing fast

• profits just showed up

• and bears are thin on the ground

Let’s break it down.

🧬 What Exactly Is XOMA Royalty?

XOMA Royalty Corporation operates as a biotech royalty aggregator in the U.S. and Asia-Pacific.

Instead of funding drug trials itself, XOMA:

• acquires royalty and milestone rights on drug assets

• targets early- to mid-stage clinical programs and late-stage / commercial assets

• lets partners handle the science, trials, and regulatory risk

• collects cash if (and when) things work

In July 2024, the company officially became XOMA Royalty Corporation, leaning all the way into this strategy.

Founded in 1981. HQ: Emeryville, California.
Business model: be patient, be picky, clip coupons.

🚨 Trigger #1: The $2.5M Insider Buy (This Is the Big One)

On December 4, 2025, CEO Owen Hughes made a move that gets investors’ attention:

• Bought 100,000 shares

• Price: $25.05

• Total value: $2,505,000

• Ownership nearly doubled (+99%)

That’s not symbolic. That’s conviction.

When a CEO writes this kind of check after a run-up, it usually means one of two things:

• they see future cash flows not yet priced in, or

• they really, really like sleeping next to risk 😴

History suggests the former.

🏦 Trigger #2: Institutions Are Already Here (And Still Have Room)

For a company this small, XOMA’s sponsorship is… impressive:

• 67.6% held by institutions

• 113 institutional holders

• Insiders own 1.7%

• Float largely spoken for

Top holders include:

• BVF Partners (20.9%) — biotech specialists with long-term pedigrees

• Morgan Stanley (13.3%)

• FMR (Fidelity)

• Vanguard

• BlackRock

That’s not passive “index noise.” That’s active biotech money.

And importantly: ownership could still expand if execution continues.

For XOMA Royalty (XOMA)’s Institutional Ownership breakdown, 🔍 see here.

🐻 Trigger #3: Bears Are Scarce

Short interest: ~2.7%

For a small-cap biotech-adjacent name, that’s unusually calm. Either:

• shorts don’t see an obvious attack angle, or

• the royalty model complicates their math

Either way: not many people betting aggressively against the stock.

📈 Trigger #4: Earnings Quietly Got… Good?

Third-quarter 2025 marked a turning point.

Highlights:

• $43.9M in cash receipts in the first nine months of 2025

• $14.3M in Q3 alone

• Net income swung positive

• Operating cash flow flipped from negative last year to +$8.4M YTD

As CFO Tom Burns put it, XOMA may be approaching:

“A self-sustaining entity from royalties alone.”

That’s… kind of the dream.

 👉 Want the full picture? Dive into XOMA Royalty (XOMA)’s financials here.

📌📌 Trigger #5: The Blue Owl Deal: Non-Dilutive Firepower, Zero Funny Business

In December 2023, XOMA secured up to $140 million in non-dilutive, non-recourse financing from funds managed by Blue Owl Capital, backed by royalties from VABYSMO® (faricimab)—one of the most successful ophthalmology drugs on the market. Translation: XOMA raised serious capital without issuing new shares and without putting the core business on the hook if things go sideways.

Even better, management explicitly stated that proceeds would be used for stock repurchases and additional royalty and milestone acquisitions, doubling down on a shareholder-first strategy. This deal builds on XOMA’s prescient $14 million acquisition of VABYSMO royalties back in 2021 and meaningfully expands its ability to compound value as a biotech royalty aggregator—at a time when traditional biotech funding is scarce, expensive, and often massively dilutive. 

Quite a deal, and quite a catalyst:

• Non-dilutive

• Non-recourse

• Royalty-backed

• Explicitly pro–shareholder (buybacks!)

That’s not noise — that’s DNA.

🧪 Pipeline Optionality (A Fancy Way of Saying “Many Shots on Goal”)

XOMA doesn’t need every partner to succeed — only a few.

Its economics touch assets partnered with:

• Pfizer

• Johnson & Johnson

• Takeda

• Rezolute

• Gossamer Bio

• Zevra

• Day One Biopharma

• and others

Multiple Phase 3 readouts, EMA decisions, FDA alignments, and commercialization milestones are lined up through mid-2026.

This isn’t binary biotech. It’s portfolio math.

💰 Valuation: Not Cheap — But Trending Better

Let’s be honest:

• trailing P/E is high

• price/sales looks spicy 🌶️

• debt exists (watch it carefully)

But here’s the key:
👉 forward P/E collapsed from ~175x to ~30x in a year

That’s what happens when revenues rise faster than expectations.

This isn’t “deep value.”
It’s execution value.

⚖️ The Investment Case (No Crown Without Risk)

✅ Why Bulls Like It

• Diversified royalty exposure

• Non-dilutive model (for partners and often shareholders)

• Growing cash receipts

• Strong institutional backing

• CEO signaling alignment

• Preferred shares (XOMAO/XOMAP) for income seekers

⚠️ What Can Go Wrong

• Biotech trial failures (always)

• Partner execution risk

• Leverage needs monitoring

• Valuation leaves little room for mistakes

• Sentiment can flip fast in small caps

💡💡💡 Curious about another deep oil exploration play?
Check our takes on UnitedHealth Group or even Oscar Health.

🧠 Big Picture Take

XOMA isn’t trying to cure cancer.
It’s trying to own a slice of many cures.

If royalty receipts keep compounding and dilution stays controlled, this could evolve from:

“quirky biotech finance hybrid”
into
“royalty machine investors didn’t fully appreciate early enough.”

High risk? Yes.
Asymmetric? Possibly.
Interesting? Absolutely.

✅ Quick Take / TL;DR

• CEO bought $2.5M worth of stock

• Institutions already own most of the float

• Cash receipts nearly doubled YoY

• Profits turned positive

• Royalty portfolio reduces binary risk - and helps repurchase shares!

• Not cheap — but fundamentals are improving

• Preferred shares = income angle

• Common shares = higher risk / higher reward

Not conservative. But compelling.

✅ FAQ

Is XOMA a traditional biotech?
No. It doesn’t run trials. It monetizes royalty rights.

Why do insiders matter here?
Because visibility into future milestones is highest at the top.

Is debt a concern?
Yes — manageable, but worth watching closely.

Income or growth?
Both. Preferred shares for income, common stock for upside.

Who should not own this?
Anyone allergic to volatility or biotech risk.

Final Word 👑

Royalty businesses don’t make headlines — until they do.

What if XOMA doesn’t just collect checks…
what if it builds an empire of optionality?

Invest at your own risk. Crowns are heavy.

This article blends research and entertainment — not prescriptions.
Side effects may include mental turbulence and raised eyebrows.
Nothing here is financial advice.

Always DYOR, resist FOMO, and never invest money you can’t afford to lose.

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