XOMA Corporation (XOMA): Business Model Canvas [11-2024 Updated]

In the dynamic landscape of biotechnology, XOMA Corporation (XOMA) stands out with its innovative approach to revenue generation through strategic partnerships and royalty agreements. This blog post delves into XOMA's Business Model Canvas, highlighting how the company leverages its key resources and value propositions to create a sustainable business model. Discover how XOMA navigates the complex world of biotech, engages with pharmaceutical giants, and capitalizes on emerging therapies to drive growth.

XOMA Corporation (XOMA) - Business Model: Key Partnerships

Collaboration with large-cap pharmaceutical companies

XOMA Corporation engages in strategic partnerships with large-cap pharmaceutical companies to enhance its research and development capabilities and market reach. For instance, XOMA has a collaboration agreement with Takeda, which allows XOMA to receive up to $19 million in milestone payments and a 4% royalty on future sales of licensed products.

Agreements with biotech firms for royalty and milestone rights

XOMA has established agreements with various biotech firms to acquire rights to future royalties and milestone payments. One notable agreement is with Twist Bioscience, where XOMA acquired 50% of contingent payments related to over 60 early-stage programs for an upfront payment of $15 million. This agreement positions XOMA to potentially earn up to $500 million in milestone payments and low single-digit royalties on future sales.

Partner	Agreement Type	Upfront Payment	Potential Milestone Payments	Royalty Percentage
Twist Bioscience	Royalty Purchase Agreement	$15 million	Up to $500 million	Low single-digit
LadRx	Agreements for Milestones and Royalties	$1 million	Potential high single-digit royalties on net sales	Mid-single-digit
Aptevo	Commercial Payment Purchase Agreement	$9.7 million	Up to $5.3 million	Mid-single-digit on IXINITY sales
Affitech	Commercial Payment Purchase Agreement	$12.2 million	Up to $6 million	0.5% of net sales of VABYSMO

Partnerships for clinical asset development and commercialization

XOMA's partnerships are also instrumental in the development and commercialization of clinical assets. For example, the partnership with Zevra enables XOMA to receive milestone payments upon regulatory approvals, with a recent milestone payment of $2.2 million recognized after FDA approval of MIPLYFFA. This strategic alignment with partners allows XOMA to leverage shared expertise and resources, significantly reducing the risks associated with drug development.

As of September 30, 2024, XOMA reported an accumulated deficit of $1.2 billion, highlighting the financial landscape in which these partnerships operate. The company generated a net loss of $17.2 million for the three months ended September 30, 2024, which underscores the importance of these collaborations in providing essential funding and resources.

XOMA Corporation (XOMA) - Business Model: Key Activities

Acquiring rights to milestone and royalty payments

XOMA Corporation operates primarily as a royalty aggregator, focusing on acquiring rights to future potential milestone and royalty payments from partnered commercial and pre-commercial therapeutic candidates. As of September 30, 2024, XOMA's accumulated deficit stood at $1.2 billion. The company generated total income and revenues of $19.77 million for the nine months ended September 30, 2024, significantly up from $2.93 million in the same period of the previous year.

In a notable transaction, on October 21, 2024, XOMA entered into a royalty purchase agreement with Twist Bioscience Corporation, acquiring 50% of certain contingent payments for an upfront payment of $15 million. This agreement includes eligibility for up to $0.5 billion in milestone payments and a 50% share of low single-digit royalties on future commercial sales.

Evaluating potential acquisitions and partnerships

XOMA's strategy heavily relies on evaluating potential acquisitions and partnerships to enhance its portfolio of royalty agreements. The company reported a net cash inflow from investing activities of $8.17 million for the nine months ended September 30, 2024, compared to a net cash outflow of $6.22 million for the same period in 2023. Key milestones in this area include a $1 million milestone payment made to LadRx in January 2024, and the acquisition of Kinnate through a merger that closed on April 3, 2024.

The company anticipates future income from milestone payments, which are contingent on the performance of its partners. For example, XOMA recognized a $2.2 million milestone payment upon FDA approval of a product under the LadRx agreements.

Managing and optimizing existing royalty agreements

Effective management of existing royalty agreements is crucial for XOMA's operational efficiency. The company recorded a royalty purchase agreement asset impairment of $23 million for the nine months ended September 30, 2024. Additionally, XOMA's income from purchased receivables for the nine months ended September 30, 2024, was reported at $11.9 million, reflecting a substantial increase compared to the previous year.

As of September 30, 2024, XOMA's total liabilities were $138.53 million, with current liabilities amounting to $21.13 million. The company's strategic focus involves leveraging its financial resources, which include $142 million in cash and cash equivalents, to fund ongoing operations and evaluate further acquisitions.

Key Financial Metrics	2024 (as of September 30)	2023 (as of September 30)
Accumulated Deficit	$1.2 billion	$1.2 billion
Total Income and Revenues	$19.77 million	$2.93 million
Royalty Purchase Agreement Asset Impairment	$23 million	$1.575 million
Income from Purchased Receivables	$11.9 million	$0
Total Liabilities	$138.53 million	$145.58 million
Cash and Cash Equivalents	$142 million	$57.83 million

XOMA Corporation (XOMA) - Business Model: Key Resources

Portfolio of royalty agreements and milestone rights

XOMA Corporation has established a significant portfolio of royalty agreements and milestone rights through various transactions. As of September 30, 2024, the company reported short-term royalty and commercial payment receivables of $12.7 million and long-term receivables of $54.2 million. The portfolio includes agreements such as:

• Twist Bioscience Royalty Purchase Agreement: Acquired rights to 50% of certain contingent payments for $15.0 million, with potential milestone payments up to $0.5 billion.
• Daré Royalty Purchase Agreements: Paid $22.0 million in cash for royalties related to XACIATO and synthetic royalties on OVAPRENE and Sildenafil.
• Viracta Royalty Purchase Agreement: Acquired future royalties for an upfront payment of $13.5 million.

This diverse portfolio is critical for generating future income and revenue, as it provides XOMA with access to potential cash flows from various pharmaceutical products and technologies in development.

Experienced management and advisory teams

XOMA's success is underpinned by a team of experienced professionals in the biotech and pharmaceutical sectors. The management team has extensive backgrounds in drug development, corporate strategy, and financial management. The advisory team includes industry veterans who provide insights and guidance on market trends and potential acquisitions. This expertise is crucial for navigating the complexities of royalty agreements and maximizing the value of the portfolio. For instance, the company has successfully executed the acquisition of rights to future payments, demonstrating their strategic acumen in identifying valuable opportunities.

Financial resources for acquisitions and operations

As of September 30, 2024, XOMA had $142.0 million in cash and cash equivalents, along with $4.8 million in restricted cash. The company has primarily financed its operations through:

• Debt facilities, including a significant term loan of $130.0 million secured under the Blue Owl Loan Agreement.
• Issuance of common and preferred stock, contributing to an additional $1.3 billion in additional paid-in capital.
• Milestone payments received from license agreements, which bolster the financial position and support ongoing operational needs.

These financial resources are essential for funding future acquisitions, operational costs, and strategic initiatives aimed at expanding XOMA's portfolio and enhancing shareholder value. The ability to raise capital and manage cash flow effectively is critical, especially given the company's accumulated deficit of $1.2 billion as of September 30, 2024.

XOMA Corporation (XOMA) - Business Model: Value Propositions

Access to diverse revenue streams from partnered therapies

XOMA Corporation operates a royalty aggregator model, which allows it to access a variety of revenue streams from partnered therapies. As of September 30, 2024, the company reported $19.8 million in total income and revenues for the nine months ended, which includes $11.9 million from income related to purchased receivables. This revenue is primarily derived from agreements with multiple pharmaceutical partners, allowing XOMA to benefit from sales milestones, royalties, and commercial payments tied to the performance of these partnered assets.

Focus on early to mid-stage clinical assets with high potential

XOMA's strategy emphasizes early to mid-stage clinical assets, particularly those that have demonstrated significant commercial sales potential. The company has invested in acquiring rights to future royalties and milestone payments associated with these assets. For instance, on October 21, 2024, XOMA entered into a royalty purchase agreement with Twist Bioscience, acquiring 50% of certain contingent payments related to over 60 early-stage programs for a $15 million upfront payment. This agreement positions XOMA to receive up to $500 million in milestone payments, alongside a share of future royalties.

Expertise in royalty aggregation and management

XOMA's expertise lies in the aggregation and management of royalties, enabling the company to optimize its revenue potential from various therapeutic candidates. As of September 30, 2024, XOMA reported an accumulated deficit of $1.2 billion, illustrating the challenges faced as it builds its portfolio. Nevertheless, the company continues to pursue opportunities to enhance its revenue streams, including significant agreements such as the Affitech Commercial Payment Purchase Agreement, which provides XOMA with 0.5% of net sales of VABYSMO over a ten-year period.

Revenue Source	Amount ($ in thousands)	Details
Income from Purchased Receivables	11,895	Includes income from royalties on sales of OJEMDA and VABYSMO.
Revenue from Contracts with Customers	6,050	Includes milestone payments from licensing agreements.
Revenue Recognized Under Units-of-Revenue Method	1,828	Amortization of unearned revenue from prior agreements.
Total Income and Revenues	19,773	For the nine months ended September 30, 2024.

Furthermore, XOMA's financial reports for the nine months ended September 30, 2024, indicate significant operating expenses totaling $52.5 million, driven by research and development, as well as general and administrative costs. This financial positioning underscores the company's commitment to developing its royalty aggregation business model and enhancing its value propositions in the biotechnology sector.

XOMA Corporation (XOMA) - Business Model: Customer Relationships

Engagement with pharmaceutical partners through licensing agreements

XOMA Corporation engages with pharmaceutical partners primarily through licensing agreements that facilitate the development and commercialization of therapeutic candidates. As of September 30, 2024, XOMA had recognized revenue from contracts with customers totaling $6.1 million for the nine months ended, a significant increase from $1.4 million in the same period of the previous year. This revenue includes milestone payments from various partnerships, such as a $5.0 million milestone payment from Rezolute and $1.0 million from AVEO.

Ongoing communication regarding milestone achievements

Ongoing communication regarding milestone achievements is critical for maintaining strong relationships with partners. In 2024, XOMA reported milestone payments related to several agreements, including a $1.0 million milestone payment from the FDA approval of OJEMDA and $2.0 million from Rezolute. The partnerships are structured to ensure that XOMA receives timely updates and financial benefits upon the achievement of specific developmental and regulatory milestones. As of September 30, 2024, XOMA had an accumulated deficit of $1.2 billion, highlighting the importance of these milestone payments for financial stability.

Support for partners in navigating regulatory processes

XOMA provides valuable support to its partners in navigating complex regulatory processes, which is vital for the successful commercialization of products. The company’s portfolio includes rights to potential milestone payments and royalties associated with partnered products that are in various stages of clinical development. For instance, under the license agreement with Janssen, XOMA is eligible to receive up to $3.0 million in milestone payments based on the achievement of regulatory approvals. This collaborative approach not only strengthens the relationships but also enhances the likelihood of successful product launches.

Partnership	Milestone Payment	Revenue Recognition Date	Expected Future Payments
Rezolute	$5.0 million	April 2024	Up to $232.0 million
AVEO	$1.0 million	September 2024	Ongoing royalties
Janssen	$2.0 million	January 2022	Up to $3.0 million per candidate
FDA Approval of OJEMDA	$1.0 million	September 2024	Future royalties based on sales

As of September 30, 2024, XOMA's short-term royalty and commercial payment receivables stood at $12.7 million, with long-term receivables at $54.2 million. This financial structure reflects XOMA's strategic engagement with partners and the anticipated revenue from milestone achievements and ongoing sales efforts. The company's emphasis on partnership and regulatory support is crucial as it seeks to enhance its revenue streams and overall market presence.

XOMA Corporation (XOMA) - Business Model: Channels

Direct partnerships with pharmaceutical companies

XOMA Corporation engages in direct partnerships with several pharmaceutical companies to enhance its revenue streams. As of September 30, 2024, the company had an accumulated deficit of $1.2 billion and reported a net loss of $17.2 million for the three months ended September 30, 2024. Among its partners, XOMA has collaborated with companies like Rezolute, from which it earned a $5.0 million milestone payment in April 2024, following the initiation of a Phase 3 clinical trial.

Licensing agreements for product candidates

XOMA has established multiple licensing agreements to capitalize on its product candidates. The company received a total of $6.0 million from Rezolute's equity financing activities and earned $2.0 million upon the dosing of the last patient in a Phase 2b clinical trial. Additionally, the agreement with Janssen allows XOMA to receive milestone payments of up to $3.0 million for each product candidate, alongside a 0.75% royalty on net sales. The company also entered into a royalty purchase agreement with Twist Bioscience on October 21, 2024, for a $15.0 million upfront payment, eligible for up to $0.5 billion in milestone payments.

Financial reporting and investor relations for stakeholders

XOMA maintains a robust financial reporting framework to keep stakeholders informed. For the nine months ended September 30, 2024, the company reported total income and revenues of $19.8 million, a substantial increase from $2.9 million for the same period in 2023. The company’s cash and cash equivalents stood at $142.0 million as of September 30, 2024. XOMA also incurred $10.8 million in net cash used in operating activities for the nine months ended September 30, 2024, reflecting its ongoing investments in partnerships and licensing agreements.

Partnership/Agreement	Milestone Payment	Royalty Percentage	Upfront Payment
Rezolute	$5.0 million	—	$6.0 million
Janssen	Up to $3.0 million per product	0.75%	$2.5 million
Twist Bioscience	Up to $0.5 billion	Low single-digit	$15.0 million

As of September 30, 2024, XOMA's financial position reflects its strategy of leveraging partnerships and licensing agreements to generate revenue through milestone payments and royalties.

XOMA Corporation (XOMA) - Business Model: Customer Segments

Large pharmaceutical companies seeking capital through royalties

As of September 30, 2024, XOMA Corporation has established partnerships with large pharmaceutical companies to acquire rights to future royalty streams. The company generated $6.463 million in income from purchased receivables related to these agreements in the third quarter of 2024, marking a significant increase compared to previous periods. The strategic focus on large-cap partners allows XOMA to leverage their extensive distribution networks and market presence, facilitating a steady revenue stream from these partnerships.

Biotech firms developing innovative therapies

XOMA actively collaborates with biotech firms engaged in developing innovative therapies. In the nine months ended September 30, 2024, revenue from contracts with customers, which includes milestone payments from biotech collaborations, reached $6.050 million, up from $1.350 million in the same period of 2023. This growth demonstrates XOMA's ability to tap into the burgeoning biotech sector, where emerging therapies often require significant capital investment and can yield substantial royalty streams upon commercialization.

Investors interested in biotech royalty streams

XOMA also targets investors looking for exposure to biotech royalty streams. The company holds a diverse portfolio of economic rights to future potential milestone and royalty payments, valued at approximately $223.34 million in total assets as of September 30, 2024. Investors are increasingly attracted to this model, as it provides opportunities for passive income through royalties without the inherent risks associated with drug development. XOMA's recent acquisition of rights to royalties from various therapeutic candidates further enhances its appeal to this investor segment.

Customer Segment	Revenue (Q3 2024)	Growth from Previous Year	Key Partnerships
Large Pharmaceutical Companies	$6.463 million	N/A	Various global pharma partners
Biotech Firms	$6.050 million	348% increase	Collaboration with Rezolute, AVEO
Investors	N/A	N/A	N/A

In conclusion, XOMA's customer segments reflect a well-diversified strategy that capitalizes on partnerships with large pharmaceutical companies, innovative biotech firms, and investors seeking reliable income from royalty streams. The company's focus on acquiring rights to future financial returns positions it favorably in the evolving biotechnology landscape.

XOMA Corporation (XOMA) - Business Model: Cost Structure

Operating expenses for staff and administrative functions

For the three months ended September 30, 2024, XOMA reported general and administrative (G&A) expenses of $8.0 million, compared to $6.4 million for the same period in 2023. For the nine months ended September 30, 2024, G&A expenses totaled $27.5 million, up from $18.3 million in 2023. This increase was largely attributed to costs associated with the acquisition of Kinnate, which included:

• $3.6 million in severance costs for exit packages
• $2.6 million in legal and consulting fees
• $0.2 million in information technology expenses
• $0.1 million in insurance costs

Costs associated with legal and consulting services

In the three months ended September 30, 2024, XOMA incurred approximately $1.1 million in legal and consulting costs, which contributed to the overall increase in G&A expenses. For the nine months, the total legal and consulting fees amounted to $2.6 million, reflecting the company's strategic focus on enhancing its operational capabilities post-acquisition.

Financial commitments for royalty acquisition agreements

XOMA has significant financial commitments related to its royalty acquisition agreements. As of September 30, 2024, the company reported:

• Royalty purchase agreement asset impairment of $14.0 million for the three months and $23.0 million for the nine months ended September 30, 2024.
• In January 2024, the company made a $1.0 million milestone payment to LadRx as per the terms of their agreement.
• In April 2024, XOMA entered into the Daré RPAs, incurring an upfront payment of $22.0 million for the rights to royalties and milestone payments associated with certain products.

Cost Category	Q3 2024 ($ million)	Q3 2023 ($ million)	9M 2024 ($ million)	9M 2023 ($ million)
General and Administrative Expenses	8.0	6.4	27.5	18.3
Legal and Consulting Costs	1.1	N/A	2.6	N/A
Royalty Purchase Agreement Impairments	14.0	N/A	23.0	1.6
Milestone Payments (LadRx)	1.0	N/A	N/A	N/A
Upfront Payment (Daré RPAs)	22.0	N/A	N/A	N/A

XOMA Corporation (XOMA) - Business Model: Revenue Streams

Income from Purchased Receivables and Royalties

As of September 30, 2024, XOMA Corporation generated $6.463 million in income from purchased receivables for the three months ended, and $11.895 million for the nine months ended. This income primarily included $5.4 million in estimated income related to sales of VABYSMO and $1.0 million from royalties on sales of OJEMDA.

For the nine months ended September 30, 2024, the breakdown of income was as follows:

Source	Income (in millions)
VABYSMO	$10.0
OJEMDA	$1.4
Milestone payment from OJEMDA	$0.5

Milestone Payments from Partnered Therapies

XOMA has established various partnerships, leading to significant milestone payments. For the nine months ended September 30, 2024, XOMA recognized $6.050 million from contracts with customers, which included milestone payments of $5.0 million from the Rezolute license agreement and $1.0 million from AVEO.

Milestone payments earned in previous periods are indicative of potential future revenue streams as XOMA continues to collaborate with its partners. The company’s financial statements reflect the importance of these payments in its revenue model, highlighting the dependency on successful product development and commercialization.

Revenue from Licensing Agreements with Biotech Firms

XOMA's licensing agreements with biotech firms contribute significantly to its revenue streams. The company recognized $0.025 million in revenue from contracts with customers for the three months ended September 30, 2024, and $6.050 million for the nine months ended.

Additionally, the revenue recognized under the units-of-revenue method was $709,000 for the three months and $1.828 million for the nine months ended September 30, 2024. This reflects the amortization of unearned revenue from the sale of royalty interests and the ongoing commitment to its licensing partners.

Revenue Stream	Q3 2024 ($ in millions)	YTD 2024 ($ in millions)
Income from Purchased Receivables	$6.463	$11.895
Milestone Payments	$0.025	$6.050
Revenue from Licensing Agreements	$0.709	$1.828

Updated on 16 Nov 2024

Resources:

1. 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.
2. 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.