XOMA Royalty to acquire Turnstone Biologics for $0.34 per share

EMERYVILLE/SAN DIEGO - XOMA Royalty Corporation (NASDAQ:XOMA), a biotechnology royalty aggregator with a market capitalization of $327 million and impressive gross profit margins of 90%, announced today it will acquire Turnstone Biologics Corp. (NASDAQ-CM:TSBX) for $0.34 in cash per share plus one non-transferable contingent value right. According to InvestingPro analysis, XOMA is currently trading slightly above its Fair Value.

The definitive merger agreement, unanimously approved by Turnstone’s Board of Directors, will be executed through a tender offer to be launched by July 11, 2025. The transaction is expected to close in August 2025. XOMA enters this deal from a position of financial strength, with InvestingPro data showing liquid assets exceeding short-term obligations by 5.5 times.

The offer requires that shareholders tender at least a majority of outstanding Turnstone shares, along with other customary closing conditions including a minimum cash balance requirement. Shareholders representing approximately 25.2% of Turnstone’s common stock have already agreed to tender their shares.

"Following a thorough review process conducted with the assistance of its legal and financial advisors, the Turnstone Board of Directors has unanimously determined that the acquisition by XOMA Royalty is in the best interests of all Turnstone stockholders," according to the statement based on the companies’ press release.

After the tender offer closes, any remaining shares not tendered, except those validly subject to appraisal, will be converted into the right to receive the same cash and CVR consideration.

Leerink Partners is serving as exclusive financial advisor to Turnstone, with Cooley LLP providing legal counsel. Gibson, Dunn & Crutcher LLP is acting as legal counsel to XOMA Royalty.

XOMA Royalty is a biotechnology royalty aggregator that acquires potential future economics associated with pre-commercial and commercial therapeutic candidates. The company has demonstrated remarkable revenue growth of 638% over the last twelve months. Turnstone Biologics has historically focused on developing selected tumor-infiltrating lymphocyte therapy for treating solid tumors. InvestingPro subscribers can access 5 additional exclusive insights about XOMA’s financial health and growth prospects.

In other recent news, XOMA Corporation has made significant strides in its financial and strategic endeavors. The company announced an increased royalty stake in Takeda’s mezagitamab, acquiring BioInvent’s interest, which enhances their royalty percentage to an estimated 5.5%. XOMA will pay up to $30 million for this additional royalty claim, including an immediate $20 million payment and a balance due upon further approval of mezagitamab. Additionally, XOMA stands to receive $16.25 million in milestone payments from Takeda, contingent on achieving specific developmental and regulatory targets.

In another development, XOMA completed the sale of its Kinnate Biopharma Inc. assets, potentially yielding up to $270 million in upfront and milestone payments, alongside royalties on future sales. This sale allows XOMA to distribute a significant portion of Kinnate’s cash balance to legacy shareholders. Meanwhile, H.C. Wainwright has maintained its Buy rating on XOMA, with a price target of $104, citing confidence in XOMA’s diverse portfolio of royalty-bearing assets. The firm’s analysis underscores the potential of XOMA’s Phase 3 programs to significantly boost royalty revenues.

XOMA’s strategy of leveraging its partnerships to advance drug candidates through clinical trials remains central to its growth trajectory. The company’s unique business model, focusing on royalty-bearing partnerships, continues to attract attention from investors and analysts alike.

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