XOMA Corporation (XOMA) Bundle
Understanding XOMA Corporation (XOMA) Revenue Streams
Understanding XOMA Corporation’s Revenue Streams
The revenue streams of XOMA Corporation are primarily derived from various sources, including income from purchased receivables, revenue from contracts with customers, and revenue recognized under the units-of-revenue method.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (in thousands) | 9M 2024 (in thousands) | 9M 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|---|---|---|
| Income from Purchased Receivables | $6,463 | $0 | $6,463 | $11,895 | $0 | $11,895 |
| Revenue from Contracts with Customers | $25 | $225 | $(200) | $6,050 | $1,350 | $4,700 |
| Revenue Recognized Under Units-of-Revenue Method | $709 | $605 | $104 | $1,828 | $1,575 | $253 |
| Total Income and Revenues | $7,197 | $830 | $6,367 | $19,773 | $2,925 | $16,848 |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, total income and revenues increased significantly by 575% compared to the same period in 2023, rising from $2,925,000 to $19,773,000.
Contribution of Different Business Segments to Overall Revenue
The income from purchased receivables contributed a substantial share to the overall revenue, accounting for 89% of total income for Q3 2024. Revenue from contracts with customers and revenue recognized under units-of-revenue method provided 0.35% and 9.84% respectively.
Analysis of Significant Changes in Revenue Streams
The most notable change in revenue streams is the introduction of income from purchased receivables, which was non-existent in the previous year, contributing approximately $6.5 million in Q3 2024. Additionally, revenue from contracts with customers saw a decrease of 89% compared to Q3 2023, indicating a shift in revenue generation strategy and reliance on milestone payments and royalties.
Overall, the financial performance in terms of revenue indicates a pivot towards leveraging acquired royalty streams and partnerships, with significant growth in purchased receivables expected to continue in the coming periods.
A Deep Dive into XOMA Corporation (XOMA) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 30, 2024, the total income and revenues amounted to $7.2 million, with operating expenses totaling $22.8 million. This results in a gross profit margin of approximately -216.6%. For the nine months ended September 30, 2024, total income and revenues were $19.8 million against operating expenses of $52.5 million, leading to a gross profit margin of approximately -164.6%.
Operating Profit Margin: The loss from operations for the three months ended September 30, 2024, was $15.6 million, resulting in an operating profit margin of -216.6%. For the nine months, the loss from operations was $32.7 million, yielding an operating profit margin of -164.6%.
Net Profit Margin: The net loss for the three months ended September 30, 2024, was $17.2 million, giving a net profit margin of -239.2%. For the nine months, the net loss was $9.9 million, resulting in a net profit margin of -50.3%.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Income and Revenues | $7.2 million | $0.83 million | $19.8 million | $2.9 million |
| Operating Expenses | $22.8 million | $6.6 million | $52.5 million | $24.8 million |
| Loss from Operations | $15.6 million | $5.8 million | $32.7 million | $21.9 million |
| Net Loss | $17.2 million | $5.5 million | $9.9 million | $20.7 million |
| Gross Profit Margin | -216.6% | -575.9% | -164.6% | -773.5% |
| Operating Profit Margin | -216.6% | -698.7% | -164.6% | -879.5% |
| Net Profit Margin | -239.2% | -661.1% | -50.3% | -707.5% |
Trends in Profitability: Over the past year, the company has experienced significant fluctuations in profitability metrics. The net loss increased from $5.5 million in Q3 2023 to $17.2 million in Q3 2024, indicating a worsening profitability trend. The gross profit margin has also declined from -575.9% in Q3 2023 to -216.6% in Q3 2024.
Comparison with Industry Averages: The average gross profit margin for biotech companies typically ranges from 60% to 80%. In contrast, the company’s gross profit margin of -216.6% highlights a significant underperformance relative to industry peers. Similarly, the operating profit margin for the industry averages between 20% to 40%, while the company's margin stands at -216.6%.
Operational Efficiency: The company's operational efficiency has been hindered by high operating expenses, totaling $22.8 million for Q3 2024, largely driven by general and administrative costs of $8.0 million and research and development expenses of $0.8 million. The gross margin trend has shown a negative trajectory, indicating potential issues in cost management and revenue generation strategies.
Debt vs. Equity: How XOMA Corporation (XOMA) Finances Its Growth
Debt vs. Equity: How XOMA Corporation Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, XOMA Corporation had a total debt of approximately $118.5 million classified as long-term debt, with a current portion of $9.8 million. The company also reported a cash balance of $142.0 million and restricted cash of $4.8 million.
| Debt Type | Amount (in millions) |
|---|---|
| Long-Term Debt | $118.5 |
| Current Portion of Debt | $9.8 |
| Cash and Cash Equivalents | $142.0 |
| Restricted Cash | $4.8 |
Debt-to-Equity Ratio
The debt-to-equity ratio stands at approximately 1.4, a significant consideration compared to the biotechnology industry average of about 0.5. This indicates a higher reliance on debt financing relative to equity funding.
Recent Debt Issuances
In December 2023, XOMA entered into the Blue Owl Loan Agreement, securing an initial term loan of $130.0 million. The loan carries an interest rate of 9.875% and was primarily utilized for operational funding and acquisitions.
Credit Ratings
As of the latest financial reports, XOMA has not publicly disclosed a specific credit rating from major rating agencies. The company's ability to secure funding through debt markets is influenced by its financial performance and operational cash flow.
Refinancing Activity
In connection with the Blue Owl Loan, the company incurred $4.1 million in fees and expenses, with plans to utilize commercial payments from sales to cover interest and principal payments. As of September 30, 2024, the company held $4.7 million in restricted cash for this purpose.
Balancing Debt and Equity Financing
XOMA Corporation primarily finances its operations through a combination of debt facilities and equity funding. The company has issued common and preferred stock to raise capital, alongside leveraging debt instruments to maintain operational liquidity. The balance between these financing methods is critical for sustaining growth and navigating the competitive biotech landscape.
| Financing Method | Amount (in millions) |
|---|---|
| Debt Financing | $118.5 |
| Equity Financing (Common Stock Issued) | $1,317.7 |
| Equity Financing (Preferred Stock Issued) | $49.0 |
Assessing XOMA Corporation (XOMA) Liquidity
Assessing XOMA Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as:
Current Assets / Current Liabilities = $142.1 million / $4.2 million = 33.8
Quick Ratio: The quick ratio as of September 30, 2024 is:
(Current Assets - Inventories) / Current Liabilities = $142.1 million / $4.2 million = 33.8
Analysis of Working Capital Trends
| Period | Cash and Cash Equivalents | Working Capital | Change in Working Capital |
|---|---|---|---|
| September 30, 2024 | $142.1 million | $137.9 million | $(11.9 million) |
| December 31, 2023 | $153.3 million | $149.8 million | - |
Cash Flow Statements Overview
For the nine months ended September 30, 2024:
- Net Cash Used in Operating Activities: $(10.8 million)
- Net Cash Provided by Investing Activities: $8.2 million
- Net Cash Used in Financing Activities: $(10.1 million)
- Net Decrease in Cash: $(12.7 million)
For the nine months ended September 30, 2023:
- Net Cash Used in Operating Activities: $(14.2 million)
- Net Cash Used in Investing Activities: $(6.2 million)
- Net Cash Used in Financing Activities: $(3.9 million)
- Net Decrease in Cash: $(24.4 million)
The decrease in net cash used in operating activities by $3.4 million for the nine months ended September 30, 2024, compared to the prior year, was driven by increased operating cash inflows.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had:
- Cash and Cash Equivalents: $142.1 million
- Restricted Cash: $4.8 million
- Accumulated Deficit: $(1.2 billion)
The company's ability to manage liquidity is highlighted by its cash reserves against its current liabilities, which indicates a strong liquidity position. However, the significant accumulated deficit raises concerns regarding long-term sustainability without additional capital or revenue generation.
Is XOMA Corporation (XOMA) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical metric for evaluating valuation. As of September 30, 2024, the company's net loss was $17.2 million for the quarter, resulting in a diluted net loss per share of $(1.59). The negative earnings make the P/E ratio not applicable.
Price-to-Book (P/B) Ratio
The book value per share is calculated as total stockholders' equity divided by the number of shares outstanding. As of September 30, 2024, total stockholders' equity was $84.8 million and shares outstanding were 11.76 million.
| Metric | Value |
|---|---|
| Book Value per Share | $7.20 |
Given the current stock price of approximately $10.50, the P/B ratio is 1.46.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The company reported operating expenses of $52.5 million for the nine months ended September 30, 2024. Assuming no significant EBITDA due to operating losses, this ratio is also not applicable for valuation.
Stock Price Trends
Over the past 12 months, the stock has fluctuated significantly. The stock price started at approximately $8.00 and peaked at $12.00 before settling at $10.50 as of the latest report.
Dividend Yield and Payout Ratios
As of September 30, 2024, the company does not pay any dividends, resulting in a dividend yield of 0%. The payout ratio is also 0% due to the lack of dividends.
Analyst Consensus
Analysts have a consensus rating of Hold for the company as of October 2024. The average price target among analysts is approximately $11.00, suggesting a potential upside of around 4.76% from the current price.
Summary of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 1.46 |
| EV/EBITDA Ratio | N/A |
| Stock Price (Current) | $10.50 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
| Average Price Target | $11.00 |
Key Risks Facing XOMA Corporation (XOMA)
Key Risks Facing XOMA Corporation
The financial health of the company is influenced by various internal and external risk factors that can significantly impact its operations and revenue generation capabilities.
Overview of Internal and External Risks
- Industry Competition: The company operates in a competitive biotechnology landscape, with numerous firms vying for market share in the royalty aggregation and licensing sectors. This competition could affect pricing and revenue potential.
- Regulatory Changes: Changes in healthcare regulations and approval processes can create uncertainties for product development and commercialization. Compliance costs may also increase, impacting financial performance.
- Market Conditions: Fluctuations in market demand for biotech products can adversely influence revenue, particularly if key partners face challenges in product sales.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Net Losses: The company reported a net loss of $17.2 million for the three months ended September 30, 2024, compared to a net loss of $5.5 million for the same period in 2023.
- Cash Flow Concerns: For the nine months ended September 30, 2024, net cash used in operating activities was $10.8 million, indicating ongoing cash flow challenges.
- Accumulated Deficit: The accumulated deficit reached $1.2 billion as of September 30, 2024.
Mitigation Strategies
The company has outlined several strategies to mitigate these risks:
- Financing Arrangements: The company entered into the Blue Owl Loan Agreement, borrowing $130 million to support operations and acquisitions.
- Revenue Diversification: The company aims to diversify its revenue streams through various royalty agreements and partnerships, including a recent $22 million investment in Daré.
- Cost Management: Efforts are being made to control operational expenses, with total operating expenses reported at $52.5 million for the nine months ended September 30, 2024.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | Presence of multiple players in the biotech sector | Pressure on pricing and market share |
| Regulatory Changes | Potential changes in healthcare regulations | Increased compliance costs |
| Market Conditions | Fluctuations in demand for biotech products | Revenue volatility |
| Net Losses | Significant financial losses reported | Long-term sustainability concerns |
| Cash Flow | Negative cash flow from operations | Liquidity risks |
| Accumulated Deficit | High accumulated deficit impacting investor confidence | Potential challenges in raising capital |
Future Growth Prospects for XOMA Corporation (XOMA)
Future Growth Prospects for XOMA Corporation
Analysis of Key Growth Drivers
The growth opportunities for XOMA Corporation are primarily driven by product innovations, market expansions, and strategic partnerships. Notably, the company has entered into significant agreements that bolster its revenue potential:
- Twist Bioscience Royalty Purchase Agreement: On October 21, 2024, XOMA acquired 50% of certain contingent payments related to over 60 early-stage programs through a $15 million upfront payment, with potential milestone payments reaching up to $500 million.
- LadRx Agreements: Following the FDA's acceptance of NDA resubmission for arimoclomol in January 2024, XOMA made a $1 million milestone payment and is eligible for low single-digit royalties on aldoxorubicin sales.
- Affitech Commercial Payment Purchase Agreement: XOMA can receive 0.5% of net sales from Roche’s VABYSMO for a ten-year period following its first commercial sale.
Future Revenue Growth Projections and Earnings Estimates
XOMA's financial outlook includes ambitious revenue growth projections. The total income and revenues for the nine months ended September 30, 2024, were $19.77 million, up from $2.93 million in the same period of 2023. This significant increase reflects the company's strategic focus on acquiring revenue-generating assets.
Projected revenues from purchased receivables are expected to grow, particularly from sales of VABYSMO, which generated $10 million in income for the nine months ended September 30, 2024. Analysts anticipate continued growth in royalties from new and existing partnerships, bolstered by FDA approvals and successful product launches.
Strategic Initiatives or Partnerships That May Drive Future Growth
XOMA's strategic initiatives are pivotal in driving future growth:
- Kinnate Acquisition: The acquisition of Kinnate is expected to enhance XOMA's portfolio significantly, with anticipated milestone payments of $30.5 million related to exarafenib.
- New Royalty Purchase Agreements: The recent $22 million investment in Daré RPAs signifies XOMA's commitment to expanding its royalty portfolio.
Competitive Advantages That Position the Company for Growth
XOMA possesses several competitive advantages that enhance its growth potential:
- Diverse Royalty Portfolio: The company's diversified royalty agreements mitigate risks associated with individual product failures.
- Strong Cash Position: As of September 30, 2024, XOMA held $142 million in cash and cash equivalents, providing a solid foundation for further acquisitions and operational funding.
| Key Financial Metrics | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| Cash and Cash Equivalents | $142 million | $153 million |
| Accumulated Deficit | $1.233 billion | $1.223 billion |
| Total Income and Revenues (9M 2024) | $19.77 million | $2.93 million |
| Net Loss (9M 2024) | $9.85 million | $20.72 million |
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Updated on 16 Nov 2024
Resources:
- XOMA Corporation (XOMA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of XOMA Corporation (XOMA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View XOMA Corporation (XOMA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.