XOMA shares hold as analyst reiterates Buy rating post-FDA nod

On Monday, H.C. Wainwright maintained a Buy rating on shares of XOMA Corporation (NASDAQ: XOMA), with a set price target of $117.00. This affirmation comes following the FDA's recent approval of Miplyffa (arimoclomol) for the treatment of Niemann-Pick type C (NPC), a rare disease. The drug, developed by Zevra, received the green light from the FDA on September 20, subsequent to a favorable Advisory Committee vote on August 2, which supported the drug's efficacy.

The FDA's approval marks a significant milestone for XOMA, which acquired a royalty and milestone interest in arimoclomol following a transaction with LadRx Corporation in June 2023. With this approval, XOMA is poised to receive a mid-single digit royalty and could earn up to $52.6 million in milestone payments. Arimoclomol has the distinction of being the first approved treatment for NPC, a condition estimated to affect between 2,000 and 2,500 patients in the United States.

Currently, there are 150 patients receiving arimoclomol through an expanded access program. Analysts have made projections that, if the drug were to treat 1,000 patients at its peak with the ultra-orphan drug pricing of $300,000 per year, it could represent a $15 million royalty opportunity for XOMA. The company's first-to-market status with this drug may lead to increased market penetration.

The transaction with LadRx is seen as a strategic move that aligns with XOMA's business model of identifying and capitalizing on niche opportunities that can provide a diverse set of future potential royalties. The recent FDA approval and the subsequent financial benefits reinforce the firm's confidence in maintaining a Buy rating and a $117 price target for XOMA shares.

In other recent news, XOMA Royalty Corporation has seen significant financial developments, with Zevra Therapeutics receiving FDA approval for MIPLYFFA™, a treatment for Niemann-Pick disease type C. This marks the addition of the sixth commercial asset to XOMA Royalty's portfolio. The company's financial interest in MIPLYFFA™ originates from a deal with LadRx, which includes a $5 million upfront payment and a mid-single digit royalty on arimoclomol's commercial sales.

The company has also reported an $8.1 million milestone payment from Viracta Therapeutics linked to the sale of a Priority Review Voucher by Day One Biopharmaceuticals. This is part of a larger agreement where XOMA initially invested $13.5 million to secure up to $54 million in potential milestones plus mid-single-digit royalties on OJEMDA™. Following the FDA's approval of Day One Biopharmaceuticals' New Drug Application for OJEMDA™, XOMA secured an additional $9 million milestone payment.

In analyst news, H.C. Wainwright has raised its price target for XOMA shares to $117, maintaining a Buy rating. The firm's decision reflects a positive view of XOMA's financial future, influenced by recent major transactions, including deals involving products like Vabysmo and Ojemda.

Additionally, XOMA announced its rebranding to XOMA Royalty Corporation, a change that won't affect the company's operations or financial standing.

InvestingPro Insights

Following H.C. Wainwright's endorsement of XOMA Corporation, InvestingPro data and tips provide a deeper dive into the company's financial health and market performance. The robust revenue growth of 277.95% over the last twelve months as of Q2 2024, coupled with an impressive gross profit margin of 91.84%, underscores XOMA's strong financial performance in its niche market. This is particularly noteworthy as analysts have highlighted the company's impressive gross profit margins, reinforcing the potential for sustained financial health.

InvestingPro Tips also reveal that despite analysts not expecting the company to be profitable this year, XOMA has demonstrated a high return over the last year, with an 80.01% price total return, and a strong return over the last three months at 15.3%. These returns reflect investor confidence and market momentum, which may interest potential investors looking at the company's recent FDA approval as a catalyst for growth. Additionally, with liquid assets exceeding short-term obligations, XOMA operates with a moderate level of debt, suggesting a stable financial footing for future operations.

For investors seeking more comprehensive analysis, InvestingPro offers additional tips on XOMA, which can be found at https://www.investing.com/pro/XOMA. These insights could provide valuable context for evaluating the company's stock performance and future prospects.

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