XOMA Breaks Bad News to Investors

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

XOMA (Nasdaq: XOMA  ) updated investors yesterday about its phase 2a trial testing XOMA 052 in diabetics: "The results were as expected based on data from the phase 2a three-month interim review and the phase 2b trial."

That's the nicest way I've ever seen of saying a trial didn't show an effect. You'll recall that the phase 2b trial failed to show a meaningful decrease in the hemoglobin A1c levels, the gold standard for diabetes drugs.

Like the former trial, 052 reduced the levels of C-reactive protein, a measure of cardiovascular risk. But that won't be enough to get the drug onto the market to treat cardiovascular disease. XOMA will likely have to run a large outcomes trial to get 052 approved as a heart protector.

Diabetes was the quickest route to potential riches for XOMA. And if 052 worked, the once-monthly dosing would certainly have competed well with Novo Nordisk's (NYSE: NVO  ) once-daily Victoza and Amylin Pharmaceuticals (Nasdaq: AMLN  ) and Eli Lilly's (NYSE: LLY  ) once-weekly Bydureon. I could even see some patients preferring a monthly injection over daily pills like Merck's (NYSE: MRK  ) Januvia and Takeda's Actos.

But alas, 052 is dead as a diabetes treatment.

Investors sticking with XOMA are counting on 052 working in patients with an eye disease called Behcet's uveitis. The protein that 052 targets, interleukin-1 beta, seems to play a more important role in that disease than it does in diabetes. Based on the phase 2 results in that indication, there would seem to be a high likelihood of success for the upcoming phase 3 trial in Behcet's uveitis.

The orphan indication won't bring in the level of sales that treating diabetes could have, but with a market cap of just $85 million or so, revenue doesn't have to be that high to justify the valuation.

Interested in keeping track of XOMA as it works 052 through clinical development? Click here to add it to My Watchlist, which will help you keep track of all our Foolish analysis on XOMA.

Want to know the latest drug stock we've picked for the Fool's market-beating Rule Breakers newsletter? Click here to take a look at all our recommendations with a free 30-day trial.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1505323, ~/Articles/ArticleHandler.aspx, 10/26/2016 9:49:40 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 33 minutes ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:00 PM
XOMA $5.46 Up +0.12 +2.25%
XOMA CAPS Rating: **
AMLN.DL $0.00 Down +0.00 +0.00%
Amylin Pharmaceuti… CAPS Rating: **
LLY $76.76 Down -0.99 -1.27%
Eli Lilly and Co. CAPS Rating: ***
MRK $60.87 Down -1.08 -1.74%
Merck and Co. CAPS Rating: ****
NVO $40.24 Down -0.09 -0.22%
Novo Nordisk CAPS Rating: *****