XOMA Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and XOMA (NASDAQ: XOMA  ) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

XOMA is one of many companies that doesn't yet have an approved drug among its stable of candidates. But lately, increasing optimism about one of its drugs has kept hope alive for the company. Let's take an early look at what's been happening with XOMA over the past quarter and what we're likely to see in its quarterly report on Tuesday.

Stats on XOMA

Analyst EPS Estimate

($0.26)

Year-Ago EPS

($0.34)

Revenue Estimate

$7.9 million

Change From Year-Ago Revenue

(20%)

Earnings Beats in Past 4 Quarters

0

Source: Yahoo! Finance.

Will XOMA make progress this quarter?
Analysts have widened their loss estimates on XOMA in recent months by small amounts, with an extra penny per share of losses for the just-ended quarter and $0.04 more for full-year 2013's loss. With very little revenue, though, those estimates only reflect ongoing cash burn as XOMA keeps trying to develop successful drugs. The stock is up about 8% since early December.

XOMA's primary drug candidate is gevokizumab, formerly known as XOMA 052. Back in 2011, the drug initially failed a study that had tried to show it could help treat diabetes, which could have made it a blockbuster in the same league as rival Bydureon, which Bristol-Myers Squibb (NYSE: BMY  ) and AstraZeneca (NYSE: AZN  ) picked up in their acquisition of Amylin. But last September, XOMA said that development partner Servier is looking to start a phase 3 trial of the drug to treat an eye disease called Behcet's uveitis.

Unfortunately, at this point, XOMA investors are playing a waiting game. Clinical trials are ongoing, but results aren't expected until the end of this year at the earliest. At the end of December, the company chose to target another eye disease called non-infectious anterior scleritis as another possible indication for its top drug, and January brought some positive interim phase 2 study results in treating acne vulgaris. But until major results come in, it'll be hard for XOMA to make much progress.

In its quarterly report, watch for CEO John Varian to discuss his continuing vision for the company as well as the progress of his cost-cutting measures. With cash at a premium, XOMA needs to keep moving forward and get gevokizumab approved for something in the next couple of years to justify the big move up that the stock made in 2012.

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