Essa succumbs to Xoma

Another day has seen another low-ball oncology takeover; this time, the former prostate cancer specialist Essa Pharma has fallen to Xoma Royalty. The deal is unusual in that it’s being routed through the non-profit organisation XenoTherapeutics but, as Xeno specialises in skin grafts, the main driver for the deal appears to be Essa’s cash balance, rather than any of the target’s technology. Concentra Biosciences has been striking a series of similar transactions, while Xoma itself picked up the erstwhile tumour-infiltrating lymphocyte player Turnstone Biologics last month. The latest deal seems to be another sign of diversification for Xoma, which is better known as a royalty aggregator. Essa’s lead asset had been the N-terminal domain androgen receptor inhibitor masofaniten, but the company discontinued the project last October following disappointing phase 1/2 results in metastatic castration-resistant prostate cancer. At the time Essa still had a preclinical third-generation N-terminal domain AR inhibitor, but presumably this will also be dumped. In April, the group faced calls to liquidate, but said on Monday that selling out to Xeno/Xoma would be quicker and less risky. With plenty of biotech “zombies” still around, expect more of these types of deals in the coming months.

XOMA’s recent oncology transactions

Note: *includes short-term investments; **exact price will be determined based upon Essa’s cash balance at closing after deducting certain costs. Source: OncologyPipeline & company releases.