XOMA Strengthens Immuno-Oncology Portfolio with Lava Royalty Deal

3d illustration proteins with lymphocytes , t cells or cancer cells | Image Credit: © Design Cells - stock.adobe.com

XOMA Royalty, an Emeryville, Calif.-based biotechnology royalty aggregator, announced on Aug. 4, 2025 that it is acquiring Lava Therapeutics, which has multiple clinical-stage bispecific gamma delta T-cell engagers in its development pipeline (1). The purchase price has been set between $1.16 and $1.24 per share in cash plus a non-transferable contingent value right (CVR).

The CVR represents the right for XOMA to receive 75% of net proceeds related to Lava’s two partnered assets: JNJ-89853413, targeting the CD33 protein and hematologic cancers, partnered with Johnson & Johnson, and PF-08046052, targeting the epidermal growth factor receptor and solid tumors, partnered with Pfizer (1). Also, XOMA may also receive 75% of net proceeds from any licensing or sale of Lava programs that are as yet unpartnered.

Deal not done, but parameters in place

“We believe the structure of this transaction has the potential to benefit both Lava and XOMA Royalty shareholders over time,” stated Owen Hughes, CEO of XOMA Royalty, in a company press release (1). “We are adding economics related to Lava’s partnered programs investigating the utility of gamma delta bispecific antibodies, which hold significant promise for patients.”

As a part of the transaction, Lava is planning to wind down development of its LAVA-1266 candidate for acute myeloid leukemia and myelodysplastic syndrome, including discontinuing a Phase I clinical trial.

The deal is set to close in the fourth quarter of 2025. Below summarizes what this deal may mean for the broader drug development landscape.

Response to financial trends

The acquisition reflects a growing trend in the biotechnology industry: smaller or development-stage companies monetizing royalty streams or licensing arrangements to manage risk and secure near-term capital. For companies that may not yet be generating significant product revenue, such deals can support continued R&D activities while reducing dependence on equity markets or dilutive financing.

For investors and other biotech firms, the transaction underscores the value of royalty-based business models and the potential for licensing deals to serve as tradable assets in their own right.

Focusing Lava’s pipeline

Lava's business is primarily anchored in bispecific gamma delta T-cell engagers, a novel class of therapeutics in cancer immunotherapy. While these assets remain early-stage, the existing licensing partnerships suggest external validation of the underlying science. XOMA’s interest in acquiring associated milestone and royalty rights could signal confidence in the long-term commercial viability of this modality.

Drug discovery and development professionals may interpret this as a signal of growing institutional backing for non-conventional immune targets, reinforcing interest in gamma delta T-cells as a therapeutic platform.

Strategic de-risking for licensees

For larger pharmaceutical companies involved as partners, deals of this kind may indirectly benefit their development programs. By allowing development-stage partners to monetize future revenue, these pharma companies help ensure that clinical programs remain adequately funded—mitigating risks tied to small company solvency or pipeline stagnation.

Additionally, such arrangements reflect the broader deconstruction of traditional biotech business models, wherein licensing, partnerships, and royalty trading are increasingly integral to the financial and strategic frameworks underpinning drug development.

Significance for M&A, royalty market growth

This acquisition is the latest in a royalty aggregation pattern that includes, among various other transactions, Royalty Pharma’s 2020 purchase of Vertex Pharmaceuticals’ cystic fibrosis royalties (2). For drug manufacturers and strategic investors, it suggests that the secondary market for drug royalties—particularly those tied to immuno-oncology—is expected to remain active and competitive.

Companies with underexploited licensing agreements may explore similar transactions, either to attract capital or to reposition themselves within the investment ecosystem.

References

1. XOMA Royalty. XOMA Royalty Enters into Agreement to Acquire LAVA Therapeutics for Between $1.16 and $1.24 Per Share in Cash, Plus a Contingent Value Right. Press Release. Aug. 4, 2025.
2. Royalty Pharma. Royalty Pharma Acquires Additional Royalty Interest from the Cystic Fibrosis Foundation. Press Release. Nov. 2, 2020.