What is the expected timeline for the milestone payments and royalty receipt schedules from the newly acquired assets?
Milestone‑payment timetable
XOMA’s recent acquisition of the mezagitamab royalty and the LAVA‑Therapeutics assets adds two early‑stage programs that are still in pre‑clinical or Phase 1 development. Historically, royalty‑focused deals of this type structure milestone payments around the key clinical‑development gates:
- Phase 1/Phase 2 entry – a modest cash‑upfront or “Phase‑1” milestone is typically payable within 12‑18 months of the closing of the transaction, once the sponsor files an IND‑enabling package or initiates the first human‑safety study.
- Phase 2/Phase 3 initiation – a larger “Phase‑2” or “Phase‑3” milestone is usually triggered when the sponsor files a BLA/EMA or FDA‑type efficacy‑enabling submission, which for a novel antibody platform can be expected 24‑36 months out, assuming a 12‑month Phase 1 and a 12‑18‑month Phase 2 timeline.
Because XOMA’s deal was announced in early Q2 2025, the first milestone is likely to be received by the end of 2026 (≈ 18 months post‑close), with the second, larger milestone arriving mid‑2028 as the programs move toward pivotal‑trial filing.
Royalty‑receipt schedule
Royalty streams only begin after a product receives regulatory approval and is commercialised. For early‑stage assets, the typical “first‑sale” royalty lag is 3‑4 years from the transaction date. Assuming a 3‑year development horizon to a first‑in‑class indication (e.g., a oncology or rare‑disease indication), XOMA can expect its initial royalty checks in late 2028‑early 2029. Subsequent quarterly royalty receipts will then follow the product’s launch cadence, with the first full‑year royalty run‑off projected for FY 2030.
Trading implications
These cash‑flow milestones and royalty ramps create clear, forward‑looking catalysts. The mid‑2026 Phase‑1 milestone and the mid‑2028 Phase‑2 milestone are likely to generate short‑term price spikes as the market digests the cash infusion. More importantly, the late‑2028/early‑2029 royalty debut will be a fundamental upside driver, prompting a re‑rating of XOMA’s valuation multiples (EV/EBITDA, P/E) as the royalty base expands. Traders should therefore:
- Buy on pull‑backs ahead of the 2026‑2028 milestone windows, positioning for upside when the milestones are booked.
- Hold a modest long‑position through 2029 to capture the royalty‑growth tail, while monitoring for any regulatory delays that could shift the royalty receipt timeline.
In short, the cash‑flow timeline is: first milestone ≈ Q4 2026 → second milestone ≈ H1 2028 → first royalty ≈ Q4 2028/Q1 2029, and each of these dates will act as a price‑sensitive event for XOMA’s equity.