Xoma: A Rally for Good Reasons

Xoma (XOMA) stock rallied surprising many but not all. We put this firm in a special table called aggressive portfolio where we put of firms with strong scientific and technological fundamentals that, for bad reasons, or trials and errors reasons have underperformed. With all its past history where past management’s sins overshadowed its science and scientists’ obvious clear capabilities, we never kicked XOMA out of our portfolios. Its scientists’ resilience made us patient and continue to expect from this firm’s scientists and its current management.

XOMA is indeed a pioneer in the discovery and development of antibody therapeutics,

In today’s news, Xoma has signed two agreements with Novartis: The first is about licensing the global commercial rights to gevokizumab, a novel anti-IL-1 beta allosteric monoclonal antibody, to Novartis 9NVS). In the second agreement XOMA has granted Novartis a license to its intellectual property covering the use of IL-1 beta targeting antibodies in the treatment of cardiovascular disease.


XOMA will receive $31 million in upfront payments, including a $5 million equity investment, and is eligible to receive significant pre- and post-commercialization milestone payments plus tiered high-single to mid-double-digit royalties on net sales of gevokizumab.

XOMA is also eligible to receive low-single-digit royalties on canakinumab sales in cardiovascular indications rising to mid-single-digit royalties under certain circumstances.

Novartis has agreed to settle XOMA’s €12 million debt to Les Laboratoires Servier and extend the maturity date on XOMA’s debt to Novartis from September 2020 to September 2022.

Prohost Observations


Xoma’s Scientists’ technological capabilities that have been boxed by past management and underestimated by Wall Street investors have impressed Novartis. We hope this will be only the beginning of a flood of lucrative agreements and meaningful partnerships. Xoma’s scientists can accomplish a lot in the presence of a wise professional insightful management.

We agree with Jim Neal, Chief Executive Officer of XOMA, stating that the company achieved a significant milestone in the transformational change that it has initiated in March of this year. The immediate outcome of these licensing agreements for gevokizumab and IL-1 beta intellectual property was the elimination of almost half of XOMA’s outstanding debt; more than doubled its cash position; and brought it potential recurring revenues through royalties.

The agreement with Novartis might have also validated the XOMA’s scientific advances and its new business strategy that aims at building shareholder value through licensing assets and intellectual property to capable and experienced partners who can get the best out of great technologies and great products.

This is comforting news.

Again we say, we hope that this will be the beginning of using Xoma’s scientists’ creativities in helping patients around the world and bringing a lot of beef to the hungry firms and shareholders.

Gevokizumab is a potent monoclonal antibody with the potential to treat patients with a wide variety of inflammatory and other diseases. Gevokizumab binds strongly to interleukin-1 beta (IL-1 beta), a pro-inflammatory cytokine, and modulates the cellular signaling that produce inflammation. IL-1 beta has been shown to be involved in a diverse array of disease states, including cardiometabolic diseases and other inflammatory diseases. .  

Do Not Forget about “The Week in Review” column. The articles will contain many important impacting news, including drug approvals and breakthrough discoveries.

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