XOMA Revenue Jumps 39% in Fiscal Q2

XOMA (XOMA 5.34%), a biotechnology royalty aggregator, reported second quarter results on August 13, 2025, for the period ending June 30. The company’s revenue (GAAP) reached $13.1 million for Q2 2025, surpassing analyst GAAP estimates of $9.39 million. This was driven by substantial milestone payments and growing, but still limited, commercial royalties. Earnings per share (EPS) came in well above the $(0.15) loss analysts anticipated, at $0.44 diluted net income per share available to common stockholders (GAAP), though this fell short of last year’s Q2 2024 GAAP diluted net income per share of $0.84. Overall, the quarter highlighted XOMA’s strong deal flow and portfolio-building efforts, but recurring cash flow from product royalties remains behind milestone-driven results.

Source: Analyst estimates for the quarter provided by FactSet.

Company Profile and Business Model

XOMA is a biotechnology company specializing in acquiring royalty interests in pharmaceutical and biotechnology products. Rather than developing drugs itself, it earns income from milestone payments and royalties on sales of partnered products. Its approach is to purchase the rights to potential future payments from a diverse group of drug assets across various therapeutic categories and clinical stages.

Recently, XOMA has focused on expanding and diversifying its royalty portfolio, deploying capital to secure new assets and future income streams. The most important success factor for its business is building a wide portfolio with exposure to major partners and late-stage products. The company also relies heavily on its ability to strike deals that yield milestones and royalties while managing cash outflows and monitoring its capital position.

Quarter in Review: Portfolio Activity and Key Metrics

This period (Q2 2025) was notable for delivering a substantial GAAP revenue beat, with reported revenue of $13.1 million exceeding the analysts' estimate of $9.39 million, primarily on the back of $9.0 million in milestone and fee income. Commercial royalties, which are more stable and recurring, contributed $2.6 million. Key product contributors included VABYSMO eye therapy and OJEMDA, a treatment for pediatric low-grade glioma, with partners attributing increased income to higher sales. Net income (GAAP) fell from last year’s level because the previous period included a sizable non-recurring gain ($19.3 million from the Kinnate asset sale). GAAP EPS of $0.46 was much higher than the consensus expectation but trailed last year.

The company spent $20 million on new royalty and milestone rights for mezagitamab, an antibody in clinical development for immune thrombocytopenia with Takeda, and committed potentially $10 million more if regulatory milestones are achieved. Shareholder returns included $1.8 million in repurchases of about 81,700 shares and $1.4 million in quarterly preferred dividends. Expenses were tightly managed, with general and administrative costs dropping from $11.0 million in the second quarter of 2024 to $7.8 million in the second quarter of 2025, aided by the absence of last year’s exit payments and lower stock compensation charges. Research and development remained minimal, since XOMA does not conduct significant internal drug development.

During the quarter, XOMA completed or announced several acquisitions that expand its revenue base. These included purchases or pending deals involving Turnstone Biologics, HilleVax, and LAVA Therapeutics, which added both partnered and development-stage assets. The company finalized the sale of its remaining Kinnate assets, which could bring in up to $270 million in future milestone and royalty payments from the sale of the Kinnate pipeline assets. These transactions further increased the diversity and potential value of XOMA’s royalty portfolio, a key goal for management. The company also acted as a structuring agent for XenoTherapeutics’ agreement with ESSA Pharma. No major credit losses were recorded on purchased receivables for the quarter (compared to a $9.0 million non-cash charge in Q2 2024).

Milestone receipts remain critical to the company’s results. A $5 million payment came from Rezolute after completion of enrollment in its sunRIZE Phase 3 study for ersodetug, a treatment for congenital hyperinsulinism. Another $3.0 million was received from Takeda following the dosing of the first patient in a Phase 3 trial of mezagitamab, and a $4.0 million milestone was recognized from Day One Biopharmaceuticals for the European Medicines Agency (EMA) acceptance of a marketing application. XOMA’s commercial-stage royalty streams, while growing, are not yet enough to fully cover operations, making milestone achievements key to funding its business and investments.

The company’s partner roster remains broad and includes large pharmaceutical and biotechnology firms such as Takeda, Pfizer, Johnson & Johnson, Roche, and Day One Biopharmaceuticals. These relationships matter because the size and ability of partners to execute clinical and commercial strategies directly affect the predictability of future cash flows and XOMA’s risk profile. For example, any delays in the regulatory process or setbacks in clinical trials at partner companies could affect the timing and amount of future royalty and milestone payments. Recent victories, such as FDA Breakthrough Therapy Designation for Rezolute’s ersodetug and the acceptance of marketing applications for other partner assets, are important milestones but also highlight continued dependence on partner execution and regulatory progress.

Looking Forward

Management did not issue detailed quantitative guidance for fiscal 2025 revenue or earnings. Leadership reiterated its vision to achieve consistent cash flow positivity from recurring royalty receipts and cited upcoming partner milestones, including late-stage clinical results and regulatory decisions, as important catalysts for future income. Topline data from Rezolute’s sunRIZE trial is expected in December 2025.

Investors should watch for developments in XOMA’s royalty portfolio, including progress on regulatory submissions and new acquisitions. The company’s cash position will remain under scrutiny, given its sizable investment commitments and reliance on milestone-driven income. The core question is whether XOMA does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.