Why did XOMA give shareholders two more weeks on the LAVA Therapeutics deal – and what happens next?

XOMA Corporation (NASDAQ: XOMA), a royalty aggregator specializing in milestone and license income streams across biopharma programs, has extended its tender offer to acquire all outstanding shares of LAVA Therapeutics N.V. (NASDAQ: LVTX). The deadline has been pushed to one minute after 11:59 p.m. Eastern Time on October 17, 2025, unless extended further or terminated earlier. The extension moves the goalpost from the original October 3 expiry, signaling the company’s intent to give shareholders additional time to participate and to finalize all closing conditions.

For XOMA, the LAVA deal represents a continuation of its capital-deployment model, converting distressed or underfunded biotech pipelines into long-term royalty opportunities. For LAVA shareholders, the extension provides more time to consider whether to accept the upfront cash and speculative contingent value rights (CVRs) that underpin the transaction’s structure.

Why did XOMA extend its tender offer deadline for acquiring LAVA Therapeutics?

The decision to extend a tender offer deadline is rarely arbitrary. Such moves typically highlight that either acceptance levels have not yet met the required thresholds or that certain deal conditions remain incomplete. In the case of XOMA, the tender requires at least 80 percent of LAVA’s issued and outstanding shares to be tendered, though the threshold can be reduced to 75 percent under specific circumstances. Alongside this, the agreement requires shareholder resolution approvals, a confirmed minimum cash balance at closing, and the satisfaction of other customary regulatory and operational requirements.

By shifting the expiration to October 17, XOMA has given itself a two-week window to secure higher shareholder participation. LAVA has scheduled a shareholder meeting in early November 2025 to vote on resolutions tied directly to the merger. If these hurdles are cleared, both companies expect to finalize the transaction in the fourth quarter of this year.

What are the financial terms and how do the contingent value rights impact LAVA shareholders?

At the core of the offer is a dual-pronged structure. Each LAVA share tendered will entitle holders to a cash payment alongside a non-transferable contingent value right. The CVR grants shareholders 75 percent of the net proceeds from LAVA’s partnered assets as well as 75 percent of net proceeds generated from the out-licensing or sale of unpartnered programs.

This structure is designed to balance the need for immediate liquidity with the prospect of future upside. The CVR element effectively keeps former LAVA shareholders invested in the company’s pipeline beyond the acquisition. However, these rights also carry execution risk. Their eventual payout will depend on whether XOMA can successfully monetize LAVA’s research programs and strike favorable deals with partners.

Shareholders who have already tendered their stock do not need to take further action despite the extension. Those who have hesitated now face a decision point. Should they accept the certainty of the upfront cash or gamble on the CVR producing meaningful returns in the years ahead?

How does this deal fit into XOMA’s royalty aggregator strategy and biotech sector trends?

XOMA’s business model distinguishes it from traditional drug developers. Rather than investing heavily in risky, capital-intensive R&D, the company buys royalty and milestone rights from biotech innovators and then collects income streams as those assets advance. This strategy has allowed XOMA to diversify across multiple therapeutic areas and reduce exposure to single-asset failures.

Acquiring LAVA Therapeutics fits neatly into this approach. By absorbing the Dutch biotech’s portfolio, XOMA gains exposure to immune-oncology assets that could yield future milestone payouts if they progress. The deal also reflects a broader trend in the biotech industry. Small and mid-cap companies, facing sustained financing droughts and falling valuations, have become prime targets for royalty aggregators, private equity players, and large pharmaceutical acquirers.

Since 2022, capital scarcity has forced many clinical-stage firms to sell pipelines or strike creative financing deals. XOMA has used this environment to its advantage, bolstering its royalty portfolio with assets like Vabysmo from Roche and Kerendia from Bayer. Adding LAVA’s programs extends that strategy into newer oncology platforms, offering longer-term optionality even as near-term revenues may remain uncertain.

What does LAVA’s financial position reveal about the urgency of this transaction?

LAVA Therapeutics entered 2025 with an uphill financial battle. By the second quarter, the company’s cash balance had declined to 56.2 million US dollars, compared with 76.6 million dollars at year-end 2024. Quarterly net losses stood at 8.6 million dollars. To conserve resources, LAVA discontinued its LAVA-1266 program for acute myeloid leukemia and myelodysplastic syndrome following interim data analysis.

These realities underscore why the company opted for an acquisition path. Without a partnership or buyout, LAVA would have faced dilutive equity raises at depressed valuations or additional program cuts. For shareholders, XOMA’s tender provides a defined exit path, while the CVR offers exposure to any future monetization without bearing the ongoing cost of development.

How are markets and analysts reacting to the extended timeline and deal structure?

Investor sentiment has been mixed, reflecting the asymmetry of upside and downside across the two tickers involved. LAVA Therapeutics stock (NASDAQ: LVTX) has climbed more than 61 percent year-to-date, recently trading near 1.55 US dollars with a market capitalization around 40.9 million dollars. Analyst consensus leans toward a neutral stance, with research platforms projecting an average 12-month target price of 1.37 dollars. That suggests limited downside but also muted upside unless CVR outcomes exceed expectations.

By contrast, XOMA Corporation stock (NASDAQ: XOMA) enjoys stronger analyst sentiment. Projections place its 12-month price target near 69.50 dollars, implying significant potential upside from current levels. Investors view XOMA’s diversified royalty aggregator model as a defensive play within the biotech sector, providing cash flow stability while preserving exposure to pipeline progress across multiple programs. Institutional flows show continued interest, with buy-side activity outweighing sells in recent months.

From a trading perspective, LVTX holders face a decision between crystallizing near-term gains or betting on longer-term CVR payouts. For XOMA investors, the extension has not materially dented confidence, with many analysts suggesting a hold-to-buy stance given the resilience of the company’s royalty-driven business model.

What risks remain for shareholders and what comes next in the deal timeline?

Despite the extended deadline, risks remain for both sides. The biggest question is whether enough LAVA shareholders will tender their stock to meet the 80 percent acceptance threshold. Should participation lag, XOMA could be forced into another extension or reconsider aspects of the deal. Regulatory hurdles are considered minimal given the modest transaction size, but execution risk tied to CVR monetization looms large.

The next key milestone is LAVA’s shareholder meeting in early November, where votes on required resolutions will be cast. If approved, XOMA plans to close the deal in the fourth quarter of 2025. The tight timeline leaves little margin for delays, raising the stakes for both management teams.

What does this extension signal about biotech deal-making and future M&A activity?

The extension of the XOMA-LAVA tender is emblematic of a larger wave of consolidation across the biotech industry. Cash-constrained small and mid-cap companies are increasingly compelled to sell to aggregators or larger pharmaceutical players. Meanwhile, royalty aggregators like XOMA are uniquely positioned to capitalize, acquiring pipelines without bearing the full brunt of R&D costs.

Institutional investors expect this consolidation to continue through 2026, particularly in oncology and rare disease segments where clinical development costs remain high. If the XOMA-LAVA deal closes successfully, it will add to the case for royalty aggregators as efficient consolidators in a fragmented biotech market.

The extension of XOMA’s tender offer for LAVA Therapeutics underscores the cautious optimism running through the sector. For LAVA shareholders, the choice now revolves around taking immediate cash or holding out for uncertain CVR payouts. For XOMA, the move reflects strategic patience and confidence in its royalty aggregator model. The outcome will not only shape the two companies involved but will also serve as a bellwether for how distressed biotech assets are valued and absorbed in today’s consolidation-driven market.