Four years ago, a record number of biotechnology companies flooded public markets, capitalizing on investor interest in drugmakers amid the COVID-19 pandemic.
Since then, though, many of those once high-flying biotechs have failed to meet expectations, leaving scores of them worth less than the cash in their bank accounts.
Historically, struggling biotechs would attempt to pivot, staking their future on a different strategy, a sale, or even a merger with a privately held firm. But recently, frustrated investors are pressing these “zombie” biotechs to shut down and return cash to shareholders instead.
This pressure has created an investment opportunity for an unlikely beneficiary. Over the last year or so, Xoma Royalty, a company known for betting on others’ future drug revenues, has started winding down distressed biotechs. Through those deals, Xoma returns cash to…