Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Xoma Shares Soaring on Hope for Experimental Drug

By

The market potential for gevokizumab, now being tested for inflammatory eye disease, may be worth $1 billion. But will the data hold up?

PrintPRINT
MINYANVILLE ORIGINAL The Xoma (XOMA) story has not been a happy one for investors in recent years.

A year ago, CEO Steven B. Engle stepped down just months after the company's lead drug failed in a study testing the medicine as a treatment for diabetes. Shares of the company dropped throughout 2011, trading as low as $1.10 in December.

There were concerns about whether the company has enough money, a worry that was addressed with a stock offering in March. A necessary restructuring was announced in January.

The stock has had a lot of momentum in the months since. Xoma shares traded Tuesday midday at around $4 a share, a remarkable turnaround since late last year.

The company is now led by CEO John Varian. With funding in place and help from partner Les Laboratoires Servier of France, Xoma is studying its top drug candidate, gevokizumab, for different inflammatory diseases. Servier and Xoma are testing the drug in the final phase of trials for a rare eye disease known as non-infectious uveitis and a subset known as Bechet's uveitis. This is the biggest near-term opportunity for the company's lead drug.

Xoma is testing the medicine in a mid-stage study to treat severe acne and is enrolling patients in another so-called proof-of-concept trial for osteoarthritis of the hand. Data from those trials may be available by the end of this year and middle of 2013.

Data from two late-stage studies of the eye disease, however, won't be released until the end of 2013, says Cowen & Co. analyst Simos Simeonidis.

Simeonidis recommends buying the stock because he sees a big sales potential for treating uveitis -- a market that may be worth $1 billion in yearly sales. If all goes well in the studies, the drug could be approved by 2015, he predicts.

Here's the caveat: The late-stage study, or phase III trial, of gevokizumab for the eye conditions were based on a very small study in Turkey -- not a location "most investors are very comfortable with in terms of clinical trial experience," Simeonidis says. It is "the obvious bear story and the biggest risk for investors," the analyst notes.

Xoma is not the new kid on the block, either. It was founded in 1980, the year Ronald Reagan defeated Jimmy Carter for the White House. The company went public six years later. Xoma has an accumulated loss of $886 million at the end of 2011. The shares traded above $400 each in 1991 but haven't traded anywhere near those lofty levels in decades.

Twitter: @brettchase

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE