Can XOMA bounce back?

Shares of Xoma Corporation are continuing to decline following dismal news regarding recent drug trials. XOMA Corporation stock was trading at over $4.00 a share before the Company's July 22, 2015 announcement that its EYEGUARD-B clinical study had failed. Then on August 6, 2015, the Company announced a reported loss of $23.8 million in its second quarter.

The Bad News:

XOMA (XOMA) is a late-stage biotech company focusing on antibody-based therapeutics.

The company's lead product candidate, gevokizumab, is used to treat patients with Behcet's disease uveities, an inflammatory disorder which can be extremely painful and eventually lead to blindness. XOMA has partnered with SERVIER, a French pharmaceutical company, to develop and commercialize gevokizumab. However, the Phase 3 clinical trial was a failure. The study compared the drug to a placebo plus current treatment methods, but did not show significant superiority to the placebo in endpoints. While the drug did show certain improvements in patients, it wasn't enough for XOMA to file for official FDA approval in the US.

Next Steps:

XOMA is now trying to direct its efforts towards analyzing gevokizumab for use as a treatment for other conditions, but CEO and Director John Varian acknowledged in a recent earnings call that "there will be a significant reduction in XOMA's future spend on the EYEGUARD program."

The Outlook:

XOMA has some avenues to pursue while it regroups after this disappointing study. The Company announced it is considering "strategic options for our manufacturing and biodefense operations and their support groups" and that it still expects to find the "capital resources to fund [research on treatments] XOMA 358 and 213." Despite Varian's optimism, however, shares haven't bounced back since this earnings call, and continue to trade below $1.00 per share. In addition, XOMA finds itself dealing with lawsuits, as at least one case has been filed alleging that the Company's positive statements about the EYEGUARD-B clinical trial and its potential success were misleading. With shares hovering below the $1.00 mark, it's possible many investors are in agreement: it's going to be hard for XOMA brass to right this ship.

Published on Aug 24, 2015
By Mario

Copyrighted 2020. Content published with author's permission.

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