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XOMA Royalty Corp (XOMA)·Q2 2025 Earnings Summary

Executive Summary

  • XOMA delivered a strong Q2 with Total income and revenues of $13.129M and diluted EPS of $0.44, materially above S&P Global consensus for revenue ($9.388M*) and EPS (-$0.15*), driven by higher royalty receipts and milestone income; net income was $9.191M .
  • Cash receipts were $11.7M (royalties/commercial $2.6M; milestones/fees $9.0M), and management reaffirmed a clearer line of sight to consistent cash-flow positivity from royalties alone .
  • Strategic actions accelerated: closed the Turnstone acquisition (Aug 11), announced agreements to acquire LAVA Therapeutics and HilleVax, and expanded mezagitamab economics via BioInvent, positioning the portfolio for incremental milestone and royalty upside .
  • OpEx normalized YoY as G&A fell versus Q2 2024 (no Kinnate severance), and there were no credit losses YTD 2025; cash and equivalents were $78.5M at quarter-end while the Blue Owl debt remained in place .
  • Near-term stock reaction catalysts: outsized beat vs consensus, recent M&A closings/announcements, and multiple partner Phase 3/EMA milestones in 2H25 (ersodetug topline, mezagitamab progress, tovorafenib EMA review) .

What Went Well and What Went Wrong

What Went Well

  • Strong financial performance: Total income and revenues rose to $13.129M in Q2 and diluted EPS reached $0.44, with net income of $9.191M; CFO emphasized growing clarity on reaching consistent cash-flow positivity from royalties .
  • Portfolio scaling via disciplined capital deployment: purchased additional mezagitamab economics (BioInvent), announced acquisitions of Turnstone, LAVA, and HilleVax to add late- and early-stage assets .
  • Pipeline milestones: Rezolute completed Phase 3 sunRIZE enrollment (triggered $5M milestone), first patient dosed in Takeda’s mezagitamab Phase 3 in ITP ($3M net milestone), and EMA accepted tovorafenib MAA (Day One/Ipsen) .

Quote: “We continue to add to our diversified portfolio... Recently approved drugs are addressing key unmet patient needs, which is driving increased royalty receipts, and we await data from several key Phase 3 assets over the coming quarters.” — CEO Owen Hughes .

What Went Wrong

  • Lower royalty/commercial cash receipts sequentially: Q2 royalties/commercial payments were $2.6M vs $13.4M in Q1 given timing of partner sales and milestone events .
  • Interest expense remained elevated due to Blue Owl Loan ($3.236M in Q2), reducing operating leverage despite stronger “other income” from equity mark-to-market .
  • Cash and equivalents declined to $78.5M from $95.0M in Q1, reflecting capital deployed ($20.6M BioInvent intangible purchase), dividends, repurchases, and debt service .

Financial Results

Core P&L vs Prior Year and Prior Quarter

MetricQ2 2024Q1 2025Q2 2025
Total income and revenues ($USD Millions)$11.086 $15.912 $13.129
Net income ($USD Millions)$15.985 $2.367 $9.191
Diluted EPS ($USD)$0.84 $0.06 $0.44
Basic EPS ($USD)$0.88 $0.06 $0.46

Income Components (“Segment-like” Breakdown)

Component ($USD Millions)Q2 2024Q1 2025Q2 2025
Income from purchased receivables (EIR method)$4.562 $6.070 $6.007
Income from purchased receivables (cost recovery)$0.870 $5.525 $1.743
Revenue from contracts with customers$5.025 $4.000 $5.025
Revenue recognized under units-of-revenue method$0.629 $0.317 $0.354

Actuals vs S&P Global Consensus (Q2 2025)

MetricConsensusActualSurprise
Revenue ($USD Millions)$9.388*$13.129 +$3.741M, +39.8% — bold beat
Primary EPS ($USD)-$0.15*$0.44 (diluted) +$0.59 — bold beat

Values retrieved from S&P Global.*

Operating Expense and Other Items (Q2 2025)

Item ($USD Millions unless noted)Q2 2024Q1 2025Q2 2025
R&D expense$1.161 $1.293 $0.069
G&A expense$11.004 $8.146 $7.802
Credit losses on purchased receivables$9.000 $0.000 $0.000
Interest expense$3.402 $3.467 $3.236
Other income, net$2.050 -$0.095 $7.824

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal revenue guidanceFY/Q2 2025NoneNoneMaintained: no formal guidance
OpEx trajectory (qualitative)2H 2025Expected normalization in 2H25 (prior commentary) Not updated numerically in Q2Maintained qualitative outlook
Cash flow (qualitative)FY 2025Line of sight to consistent cash-flow positive from royalties CFO reiterated clearer line of sight from royalties Maintained qualitative outlook
Dividends (preferred)Q3 2025 pay dateQuarterly preferred declared historicallyDeclared $0.53906 (Series A) and $0.52344 (Series B depo shares), payable ~Jul 15 Maintained dividend cadence

Earnings Call Themes & Trends

No earnings call transcript was available for Q2 2025; themes reflect management’s press releases and 8-K disclosures.

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Royalty/M&A expansion2024: Added Twist, Daré, DSUVIA; acquired Kinnate/Pulmokine ; Q1’25: Added Castle Creek D-Fi; highlighted EMA filing for tovorafenib Acquired BioInvent’s mezagitamab economics; announced acquisitions of Turnstone, LAVA, HilleVax Accelerating inorganic portfolio build
Cash receiptsFY’24: $46.3M cash receipts ; Q1’25: $18.0M total ($13.4M royalties; $4.6M milestones) Q2’25: $11.7M total ($2.6M royalties; $9.0M milestones) Strong YTD; quarterly variability
OpEx normalizationPrior: transient Kinnate/Pulmokine costs; expect normalization in 2H25 Q2’25 G&A down YoY; R&D minimal as KIN-3248 winds down Normalizing OpEx profile
Credit lossesFY’24: $30.9M; Q2’24 one-time $9.0M Aronora 2025 YTD: none Improved credit profile
Regulatory/clinical catalystsQ1’25: EMA MAA accepted (tovorafenib); Rezolute BTD and Phase 3 progress Q2’25: Rezolute Phase 3 enrollment complete and BTD; Takeda Phase 3 first patient dosed; EMA accepted tovorafenib; Zevra MAA filing Multiple late-stage readouts pending

Management Commentary

  • CEO Owen Hughes: “We continue to add to our diversified portfolio... Recently approved drugs are addressing key unmet patient needs, which is driving increased royalty receipts, and we await data from several key Phase 3 assets over the coming quarters.”
  • CFO Tom Burns: “In the first six months of 2025, we have received $29.6 million in cash... In the second quarter, we received $11.7 million... our line of sight to becoming cash flow positive on a consistent basis exclusively from the cash payments received from royalties grows clearer.”

Q&A Highlights

  • No Q2 2025 earnings call transcript was available; no Q&A themes to report [ListDocuments result: 0 earnings-call-transcript].

Estimates Context

  • XOMA delivered a significant beat vs consensus: revenue $13.129M vs $9.388M*, and diluted EPS $0.44 vs -$0.15*, reflecting higher milestone receipts (Day One/Ipsen EMA-related, Takeda Phase 3 initiations) and growing royalty base; we expect estimates to adjust upward to reflect milestone timing and incremental economics from recent portfolio transactions .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Large headline beat: Q2 revenue and EPS materially exceeded consensus, driven by milestone timing and royalty receipts; this is a clear positive for near-term sentiment .
  • Portfolio catalysts: multiple late-stage readouts (ersodetug Phase 3 topline in Dec-25; mezagitamab Phase 3 advancement; tovorafenib EMA review) and potential monetization pathways support medium-term cash flows .
  • Strategic M&A: Turnstone closed; LAVA and HilleVax agreements add partnered assets and potential CVR upside—expect deal-related flow and balance sheet movements to continue near term .
  • OpEx normalization and improved quality of earnings: no credit losses YTD, G&A lower YoY without Kinnate severance, R&D minimal as KIN-3248 winds down—enhancing operating leverage vs 2024 .
  • Cash position remains robust with $78.5M (incl. restricted) even after deploying $20.6M for BioInvent IP and share repurchases/dividends; monitor Blue Owl debt service and net cash trajectory .
  • Near-term trading: expect positive reaction to the outsized beat and M&A closings; watch for incremental disclosures on LAVA/HilleVax transaction progress and any partner commercial updates .
  • Risks: timing variability in royalties/milestones, interest expense from debt, and execution risk around asset dispositions/CVR structures; however, absence of 2025 credit losses to date is supportive .

KPIs and Portfolio Actions

Cash, Debt, and Capital Actions

KPIQ4 2024Q1 2025Q2 2025
Cash, cash equivalents and restricted cash ($USD Millions)$106.416 $95.027 $78.485
Long-term debt ($USD Millions)$106.875 $99.934 $102.201
Current portion of long-term debt ($USD Millions)$11.394 $13.697 $11.672
Cash receipts ($USD Millions)$46.3 FY’24 $18.0 $11.7
Royalties/commercial payments ($USD Millions)$20.0 FY’24 $13.4 $2.6
Milestones/fees ($USD Millions)$7.1 FY’24 (licensees) $4.6 $9.0
Share repurchases (shares; $USD Millions)—25,828; $0.5 81,682; $1.8
Preferred dividends paid ($USD Millions)$5.5 FY’24 $1.4 $1.4

Selected Transaction Highlights (Q2 and Early Q3)

TransactionTermsTiming
BioInvent mezagitamab economics purchase$20M upfront; up to $30M total; entitled to up to $16.25M Takeda milestones and mid-single-digit royalties May 27, 2025
Turnstone acquisition$0.34/share in cash + CVR; tender successfully closed; ~74% tendered; merger completed Aug 11, 2025
LAVA acquisition$1.16–$1.24/share in cash + CVR (75% of net proceeds on partnered assets/unpartnered dispositions) Expected close Q4 2025
HilleVax acquisition$1.95/share in cash + CVR with specified proceeds sharing mechanics Expected completion in September 2025

Drivers of the Beat and Variance Commentary

  • Revenue/earnings beat primarily reflected higher milestone receipts (Rezolute, Takeda, Day One/Ipsen) alongside continuing royalty streams from commercial assets (e.g., VABYSMO, OJEMDA); Q2 “other income” also benefited from mark-to-market on equity securities .
  • Sequential variability vs Q1 came from lower royalties/commercial payments in Q2 ($2.6M vs $13.4M), while milestones/fees rose ($9.0M vs $4.6M), consistent with the lumpy nature of milestone timing in the model .
  • OpEx tailwinds YoY due to absence of Q2’24 one-time items (Kinnate exit packages and Aronora credit losses), partially offset by ongoing interest expense on the Blue Owl facility .

Cross-Quarter Theme Evolution

  • The narrative has shifted from portfolio assembly and transient 2024 charges (credit losses, acquisition costs) to a cleaner 2025 P&L with no credit losses YTD, clearer cash-flow visibility, and increased exposure to late-stage assets via new transactions .

Disclosures and Notes

  • No Q2 2025 earnings call transcript was available; analysis is derived from the Q2 2025 8-K press release and other company press releases .
  • S&P Global consensus figures used for estimates comparison; see table for marked values.*