Xoma Royalty Acquires Struggling Biotechs HilleVax and Lava Therapeutics in Strategic Buyouts

Xoma Royalty Corporation has announced agreements to acquire two struggling biotechnology companies, HilleVax and Lava Therapeutics, in a move that underscores the ongoing challenges faced by the biotech sector. The deals, announced on August 4, 2025, represent a growing trend of "zombie" biotech buyouts as companies grapple with clinical setbacks and dwindling cash reserves.

HilleVax Acquisition: A Bid to Salvage Norovirus Vaccine Programs

Xoma has offered $1.95 per share for HilleVax, a company that went public in 2022 with ambitious plans to develop a vaccine for moderate or severe acute gastroenteritis. The deal includes additional rights for HilleVax shareholders, including:

• A portion of any cash exceeding $103 million at deal closing
• 90% of proceeds from potential sales of HilleVax's norovirus vaccine programs
• A share of savings from the closure of HilleVax's Boston office

HilleVax's fortunes took a downturn following disappointing results from a mid-stage trial of its lead program in infants. The setback led to a 40% staff reduction and a strategic review that ultimately culminated in this acquisition.

Lava Therapeutics: Reshaping the Future of Gamma Delta T Cell Engagers

In a separate agreement, Xoma will acquire Lava Therapeutics for a minimum of $1.16 per share, with potential additional payments of up to $0.08 per share. Lava shareholders will also receive a contingent value right (CVR) worth 75% of net proceeds from partnered programs and any sales of wholly owned pipeline assets.

Lava Therapeutics, known for its work on gamma delta T cell engagers for cancer treatment, has faced its own challenges. The company recently announced a 30% staff reduction following disappointing results from a study of its lead program. As part of the acquisition:

• Lava will wind down its LAVA-1266 program and discontinue the related phase 1 study
• Xoma will gain economics related to Lava's partnered programs with Pfizer and Johnson & Johnson

Industry Implications: The Rise of "Biotech Zombies" and Strategic Acquisitions

These acquisitions highlight a growing trend in the biotech industry, where companies trading below their cash holdings—dubbed "biotech zombies"—become targets for strategic buyouts or face pressure to dissolve and return cash to shareholders.

Other players in this space include:

• Concentra Biosciences, which has acquired Cargo Therapeutics, Elevation Oncology, and Allakos
• KKR, which recently acquired a majority stake in HealthCare Royalty Partners
• Alis Biosciences, a new fund aimed at freeing "trapped" capital in biotech balance sheets

The trend extends to venture investors as well, with OrbiMed announcing a $1.86 billion fund for "non-dilutive credit and royalty-based financing" to support struggling startups.

As the biotech sector continues to navigate challenges, these strategic acquisitions and financial maneuvers may reshape the landscape of pharmaceutical innovation and development in the coming years.