After Generation Bio telegraphed plans to lay off 90% of its staff this summer, Xoma Royalty has come knocking to bring yet another ailing biotech into its fold.
Xoma, which styles itself as a “biotech royalty aggregator,” has struck a deal to acquire Generation for roughly $4.29 per share at the time of the planned merger’s close. Moreover, stockholders in Generation Bio will receive one nontransferable contingent value right (CVR) per share, Xoma and Generation said in a joint press release Monday.
The CVR entitles those stockholders to shares of potential payouts tied to savings around Generation’s Cambridge, Massachusetts, office lease obligations, plus any proceeds from the biotech’s preexisting license agreement with Moderna or an out-licensing or sale of Generation’s cell-targeted lipid nanoparticle (ctLNP) delivery platform, according to the Dec. 15 announcement.
Meanwhile, shareholders will also be in line to receive some extra cash should Generation reach the date of the deal’s close with more than $29 million in its coffers, Generation and Xoma said Monday.
Back in 2023, Moderna paid $76 million upfront for the option to license two immune cell programs using Generation’s stealth cell-targeted lipid nanoparticles. The mRNA specialist also picked up an option to two liver-focused programs leveraging Generation’s liver-targeted lipid nanoparticles.
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Generation’s board has unanimously agreed to the merger, which the biotech contends is in the best interest of stockholders following a review of the proposal with legal and financial advisors.
To see the deal across the finish line, a subsidiary of Xoma Royalty will next tender a formal offer for all outstanding shares of Generation Bio stock within 15 business days, the companies said. As soon as the deal is confirmed, Generation will merge with another Xoma subsidiary, the release states. The deal is expected to close in February 2026.
The acquisition follows a running pattern for Xoma this year, which has moved to acquire several biotechs with promising technology or candidates that have fallen on hard times.
In Generation Bio’s case, the company in August revealed that it would let go of 90% of its staff after acknowledging it was unlikely to find the cash to take its lipid nanoparticle tech into the clinic.
“While our delivery system is mature, our program data are early and we recognize the significant time and investment required to reach proof-of-concept in patients, as well as the uncertainty of extending our current cash runway,” former CEO Geoff McDonough, M.D., said in a statement at the time.
McDonough stepped down from his post Oct. 31 to chair the biotech’s board of directors. Yolanda Howze—who’s been Generation’s chief legal officer since April 2023—is serving as CEO on an interim basis, Generation said in a press release this past fall.
“We are evaluating strategic options to maximize the value of our assets for our shareholders and their potential to offer meaningful benefit to patients,” McDonough added at the time.
Other recent companies to join Xoma’s portfolio of acquisitions include Mural Oncology, which accepted a roughly $36 million offer from the royalty aggregator in August, plus Takeda spinout HilleVax and Lava Therapeutics.
All three of those acquisition targets have suffered setbacks in the past year or so, including sizable downsizing rounds, key trial failures and, at times, a mix of both.
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In the case of the Lava deal, Xoma offered to pay between $1.16 cash and $1.24 per share of Lava, again with a CVR sweetener around any potential proceeds from Lava’s assets.
But, come October, Xoma’s deal for Lava had cooled a touch, with the royalty aggregator dropping its offer per share to $1.04, down from the previous $1.16- to $1.24-per-share range. Xoma ultimately closed on the deal for Lava at the lower per-share price in late November.
