XOMA Corp (NASDAQ: XOMA) is off to an incredible start in the pre-market hours this morning and for good reason. The company announced a license agreement that’s bringing a good amount of money through the doors. Of course, this is exciting investors, leading to gains in the value of the stock and prompting an alert from our partners at Trade Ideas. Currently (8:32), XOMA is trading at $10.95 per share after a gain of $2.02 per share or 22.62%.
XOMA Climbs On License Agreement
As mentioned above, XOMA Corp is having a strong start to the day today after announcing that it has entered into a global license and commercialization agreement surrounding gevokizumab. The agreement was signed with Novartis. Under the agreement, XOMA has granted NVS a license to its intellectual property covering the use of IL-1 beta targeting antibodies for the treatment of cardiovascular disease.
The finances associated with this agreement are significant for XOMA. Under the agreement, the company will receive upfront payments totaling $31 million as well as a $5 million equity investment. The company is also eligible to receive significant milestone payments plus tiered high-single-digit to mid-double-digit royalties on net sales of gevokizumab. The company will also receive low single-digit royalties on canakinumab sales in cardiovascular indications that will rise to mid-single-digit royalties under certain circumstances. Finally, NVS has agreed to settle XOMA’s EUR12 million debt to Les Laboratories Servier and extend the maturity date on XOMA debt owed to NVS from September 2020 to September of 2022. In a statement, Jim Neal, CEO at XOMA, had the following to offer…
“Today, we achieved a significant milestone in the transformational change that we initiated in March of this year. The immediate impact of these licensing agreements for gevokizumab and our IL-1 beta intellectual property eliminates almost half of XOMA’s outstanding debt, more than doubles our cash position, and generates potential recurring revenues through royalties. It also validates both the value of XOMA’s scientific advances and our business strategy to build shareholder value by licensing our portfolio of assets and intellectual property to partners who will continue to asset’s clinical development…”
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on XOMA. In particular, we’re interested in following the license agreement to see what the royalties translate into over time. We’re also interested in following the company’s continued shift toward a licensing model. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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