XOMA Corp (NASDAQ: XOMA)
XOMA has been an incredibly interesting stock to follow. After announcing the initiation of a Phase 2 study recently, the stock skyrocketed, leading to solid upward movement for several sessions. However, on Friday, the stock tanked, giving back gains. Nonetheless, today we’re seeing a strong recovery in motion. So today, we’ll talk about the Phase 2 initiation and why it’s such positive news as well as what we can expect to see from XOMA moving forward.
XOMA Initiated Phase 2 For XOMA 358
XOMA 358 is an experimental treatment that was created to prevent hypoglycemia in patients with a condition known as HI or congenital hyperinsulinism. The Phase 1 study of the drug ended with incredibly positive news. In the study, the treatment resulted in an increase in post-meal glucose as well as a decrease in insulin signaling and prevention of hypoglycemia after intravenous insulin administration with a single dose. Considering the strong results from the Phase 1 study of XOMA 358, investors and analysts alike are expecting to see overwhelmingly positive news out of the Phase 2 study as well. Upon announcing the initiation of the Phase 2 XOMA 358 study, Paul Rubin, M.D., the company’s CEO had the following to say:
“New treatments that safely and effectively attenuate insulin-induced hypoglycemia are needed for patients with congenital hyperinsulinism, as well as other diseases that cause hypoglycemia due to high insulin levels. There are no approved medications, and those currently used have inconsistent efficacy and issues with tolerability. Currently disease management options are limited to continuous ingestion or infusion of glucose or surgical removal of part or all of the pancreas… We are developing XOMA 358 as a first-in-class therapeutic for patients with this potentially fatal disease, and we are pleased to be conducting this study at a world-class medical center recognized for its leadership in treating HI patients.”
This news sent XOMA an a strong upward trend when it was first released that continued for several sessions before the large decline we saw on Friday.
Why Bulls Weren’t Concerned About The Decline
While Friday’s decline was a major hit to the stock, real bulls didn’t mind the downward movement. In fact, what we saw from XOMA on Friday was nothing more than natural movement in the market. The reality is that price movements in the market tend to happen through a series of overreactions. After massive upward movement, investors generally expect to see a steep fall to support followed by more positive activity. That’s exactly what we saw from XOMA and the positivity is happening today.
Today’s XOMA Recovery Is Impressive
While it is still relatively early in the trading session, the recovery we’re seeing from XOMA today is nothing less than impressive. Currently (10:03), the stock is trading at $1.37 after a gain of 11.56%, just 33 minutes after the market opened. Given the trajectory of the gains, I wouldn’t be surprised to see today end on a bullish note, driving gains of 15% or more.
What We Can Expect To See Moving Forward
Moving forward, I continue to maintain my opinion on XOMA; this one’s a stock to own! Ultimately, the Phase 1 study of XOMA 358 proved to be overwhelmingly positive, which leads me to believe that Phase 2 is going to end the same way. Ultimately, there is a good reason for the gains we’re seeing from the stock and few reasons to expect anything different. So, if you’re looking for a strong opportunity in biotech, you may want to watch XOMA very closely.
What Do You Think?
Where do you think XOMA is headed and why? Let us know your opinion in the comments below!