Xoma Royalty, a company that has been quietly building a business by acquiring troubled biotech firms, has found its latest target. Late Monday, Xoma announced plans to acquire Generation Bio, a gene therapy developer whose market value has fallen below the cash it holds on its balance sheet.
Under the agreement, Xoma will pay about $4.29 per share for Generation Bio—below the company’s $5.39 closing price on Monday. To soften the gap, shareholders will also receive contingent value rights (CVRs), which could unlock additional payouts in the future. These may include excess cash at closing, savings from exiting a Generation office lease, milestone payments from a licensing deal with Moderna, or proceeds if Xoma sells Generation’s delivery technology.
Generation’s board of directors unanimously approved the deal, signaling a clear decision to wind down the company’s independent path and return value to shareholders where possible.
Generation Bio raised $200 million in its 2020 initial public offering, riding the wave of enthusiasm that swept preclinical gene and cell therapy companies onto public markets. Its promise lay in a next-generation gene therapy platform that used lipid nanoparticles, rather than engineered viruses, to deliver genetic material.
The optimism didn’t last. In 2021, disappointing preclinical results pushed back development timelines, sending the company’s shares sharply lower. While a later partnership with Moderna offered some validation, Generation also cut 40% of its workforce and narrowed its research focus as part of a strategic reset.
In August, Generation highlighted data suggesting its platform could deliver RNA medicines into T cells. At the same time, however, the company laid off 90% of its remaining staff and launched a strategic review, acknowledging that the technology was still early and would require significant time and investment. Shortly after, its longtime CEO moved into a board chair role.
By then, Generation had become the kind of “zombie” biotech Xoma has increasingly targeted, companies with valuable intellectual property but little near-term path forward. Since 2024, Xoma has pursued similar deals with firms like Turnstone Biologics, Mural Oncology, HilleVax, and Lava Therapeutics.
Xoma CEO Owen Hughes has described this approach as a way for struggling companies to “do the right thing” by shareholders, even when scientific progress has stalled. Rather than pushing on with uncertain and expensive development, the goal is to return whatever value remains.
Jefferies analyst Farzin Haque called the deal structure attractive under the circumstances. While Generation holds a diverse set of assets with strong intellectual property, he noted that all its programs would require substantial additional work to demonstrate proof of concept in humans and create meaningful value for an acquirer.
The deal also highlights the growing use of contingent value rights in biotech acquisitions. For Xoma, CVRs allow flexibility and limit upfront risk. For shareholders, they preserve the possibility of future upside, even as the company itself winds down.
Holding M.Pharm in Pharmaceutical Chemistry, Chandni crafts cutting-edge, research-driven healthcare news for Towards Healthcare, combining scientific depth with innovative storytelling to simplify complex topics for global readers.
