Please ensure Javascript is enabled for purposes of website accessibility

Why XOMA Corp. Shares Rocketed Higher

By Sean Williams - May 28, 2015 at 3:11PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

XOMA shareholders press the launch button after the company begins the (approximate) countdown to a major news event.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of XOMA (XOMA -7.58%), a clinical-stage biopharmaceutical company geared toward developing monoclonal antibodies for the treatment of metabolic, inflammatory, and cardiovascular diseases, surged by as much as 11% following a press release that provided an update on its EYEGUARD-B trial.

So what: According to XOMA's press release, which came out before the opening bell, its phase 3 EYEGUARD-B trial, which is sponsored by its development partner Servier and is testing experimental drug gevokizumab as a treatment for Behcet's disease, met its exacerbation event target.

In plainer terms, the trial has hit the required number of events such that Servier can begin analyzing the data and can soon report on whether gevokizumab hit its primary endpoint of demonstrating superiority over the placebo in reducing Behcet's disease uveitis exacerbations or not. As the press release notes, the primary endpoint result is expected in "approximately seven weeks," which is a fancy way of telling XOMA shareholders that in less than two months a major catalyst will hit the newswires.

Now what: Today's move isn't a huge surprise, as commentary from management three weeks ago that it was very near reaching its exacerbation event target caused its share price to rise by a double-digit percentage on that day as well. What's really going to matter is whether or not gevokizumab actually works.

Source: National Institutes of Health via Facebook.

If the trial is successful, XOMA plans to file a pre-biologics licensing application with the Food and Drug Administration almost immediately. If approved, XOMA's market potential would be about 7,500 patients in the United States.

Although it's a critical step to get XOMA's first product on pharmacy shelves, it's also important that investors recognize how intricately tied XOMA is to the success of one drug, gevokizumab. In addition to seven clinical studies being run on its own utilizing the drug in the U.S., its partnership with Servier includes five additional trial indications. Essentially, 12 out of 15 preclinical and clinical studies ongoing involve this therapy.

If gevokizumab misses the mark in EYEGUARD-B, XOMA shareholders could take that as a bad sign for the remainder of its pipeline. Let's recall that gevokizumab missed the mark in a previous midstage trial designed to treat patients with erosive osteoarthritis of the hand, so a success is far from a guarantee.

Personally, I'd rather wait this one out on the sidelines, because even if gevokizumab meets its primary endpoint in the EYEGUARD-B trial, you'll have plenty of opportunities to benefit from its 11 other studies involving gevokizumab and the potential sales performance of the drug in the future.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

XOMA Corporation Stock Quote
XOMA Corporation
$20.23 (-7.58%) $-1.66

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.