Biotech Acquirer Xoma to Acquire Generation Bio
Generation Bio, a struggling gene therapy developer, is being bought out at a price below market closing, with additional payment rights for shareholders tied to future performance.
Xoma Royalty, a company that has recently established a business strategy centered on acquiring distressed biotechnology firms, has secured its latest target. In a late Monday announcement, Xoma stated it has agreed to acquire Generation Bio, a gene therapy developer whose current valuation is reported to be less than its cash holdings.
Transaction Details:
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Target: Generation Bio, a gene therapy developer that has lost most of its market value since its $200 million initial public offering (IPO) in 2020.
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Price: Xoma is set to pay approximately $4.29 per share, which is lower than Generation Bio’s Monday closing price of $5.39.
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Additional Terms: Generation Bio shareholders will receive a Contingent Value Right (CVR). The CVR makes them eligible for potential additional payments, including a share of any cash exceeding $29 million at closing, savings from a Generation office lease, a portion of future milestones from a licensing deal with Moderna, and any proceeds from Xoma’s potential sale of a key delivery technology.
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Approval: Generation Bio’s board of directors has unanimously approved the deal.
Background of Generation Bio:
Generation Bio went public in 2020 hoping to advance a next-generation gene therapy technology that utilizes lipid nanoparticles for genetic payload delivery. However, the company faced numerous setbacks:
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Shares plummeted in 2021 following disappointing preclinical study results that led to delayed development timelines.
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Despite forming a partnership with Moderna, the company later laid off 40% of its staff and streamlined research amid strategic shifts.
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In August, the company cut 90% of its workforce and initiated a strategic review, acknowledging the early stage of its technology and the long development road ahead.
Xoma’s “Zombie Biotech” Strategy:
Generation Bio fits the profile of the “zombie” biotech firms that Xoma, led by CEO Owen Hughes, has been acquiring and often winding down to return capital to investors. Since 2024, Xoma has acquired companies such as Turnstone Biologics, Mural Oncology, HilleVax, and Lava Therapeutics using this strategy.
While an analyst noted that Generation Bio possesses a “diverse set of assets” with strong intellectual property protection, all its programs will require “substantial work” to achieve human proof-of-concept. Xoma’s use of CVRs is an increasingly common tool to enhance the potential total worth of its acquisition deals.
