Xoma Royalty kicked off the week by buying up a pair of biotechs that have both struggled to recover from recent clinical setbacks.
One of the acquisition targets is Takeda spinout HilleVax, which has been in limbo since its norovirus vaccine flunked a phase 2 trial a year ago. Xoma will pay $1.95 cash per share of HilleVax—slightly below the $2.04 price at which its stock closed trading Friday.
For each share, the biotech’s stockholders will also receive a nontransferable contingent value right (CVR) entitling them to a portion of any remaining cash in HilleVax’s account once $102.9 million has been siphoned off as well as a share of the savings from the closing of HilleVax’s Boston office.
In addition, the CVR entitles the owner to a portion of the proceeds from the license or sale of HilleVax’s vaccines within five years, according to an Aug. 4 release.
The Boston-based biotech went off track in July 2024, when the company’s sole clinical-stage candidate failed a phase 2b trial in norovirus-related acute gastroenteritis. The viruslike particle-based vaccine, dubbed HIL-214, missed all primary and secondary endpoints of the Nest-IN1 study of more than 2,800 infants in the U.S. and Latin America.
The disappointing result sunk HilleVax’s stock and led the company to lay off 41 employees—equivalent to 40% of the biotech’s workforce at the time.
At the time, HilleVax said it would discontinue testing HIL-214 in infants while “exploring the potential for continued development” of HIL-214 and a preclinical candidate called HIL-216 in adults.
However, the company has kept quiet since then, providing no updates on its pipeline plans beyond repeating its goal of “exploring the potential for continued development of its norovirus vaccine candidates in adults.”
In its Aug. 4 release, HilleVax said the company's board of directors had decided to accept Xoma’s offer after conducting a “strategic review process.”
Xoma’s second acquisition of the day, Lava Therapeutics, has also experienced its own failed trial and layoffs in the last year. Specifically, the Dutch biotech’s bispecific gamma delta T-cell engager LAVA-1207 failed to prove its worth in a phase 1 prostate cancer study at the end of 2024, leading the company to initially let go off 30% of its employees in a bid to conserve cash and later to close down its operations in the Netherlands.
This morning’s deal will see Xoma pay between $1.16 cash and $1.24 per share of Lava—below the $1.42 at which the company’s stock closed trading Friday.
Lava’s shareholders will also receive a CVR entitling them to a share of the proceeds realized from any of Lava’s assets. These include LAVA-1266, which is being evaluated in a phase 1 trial for acute myeloid leukemia and myelodysplastic syndrome, as well as a Johnson & Johnson-partnered CD33- and gamma delta T cell-targeting program and a Pfizer-partnered EGFR and bispecific gamma delta T cell receptor-targeted therapy.
As a result of today’s deal, Lava will wind down the LAVA-1266 program and discontinue the phase 1 study.
“We believe the structure of this transaction has the potential to benefit both Lava and Xoma Royalty shareholders over time,” Xoma’s CEO Owen Hughes said in the release. “We are adding economics related to Lava’s partnered programs investigating the utility of gamma delta bispecific antibodies, which hold significant promise for patients.”
Xoma’s business model is to acquire rights to royalties and milestones, offering biotechs cash upfront in exchange for longer-term revenue streams. But the company has been expanding its own portfolio via the acquisition of Turnstone Biologics in June and now both HilleVax and Lava.