XOMA Corp (NASDAQ: XOMA)
Yesterday, XOMA stock fell like a brick from the empire state building; losing more than 70% in a single trading session. This happened after the company announced data from its Phase 3 EYEGUARD-B study into gevokizumab. Unfortunately, as we’ve come to expect from XOMA in late-stage studies, the primary endpoint of the study was missed. However, we are starting to see gains in the stock today. So today we’ll talk about why we’re seeing gains and what we can expect to see moving forward. So, let’s get right to it…
Why XOMA Is Gaining
XOMA stock is having a relatively good day in the market today. Currently (11:44), the stock is trading at $1.06 per share after a gain of 6.00% so far today. So, what’s causing the uptrend? Well, an important factor to remember here is the fact that price movements in the market happen through a series of overreactions. So, we could say that the over 70% decline in the value of the stock yesterday was an overreaction to the release of the Phase 3 data. As a result of the overreaction, the price of the stock was brought down further than many investors believe it should be. Therefore, we’re seeing a slight recovery today while investors bring the value back up to what they believe is reasonable.
What We Can Expect To See Moving Forward
Unfortunately, I have a particularly bearish opinion of XOMA both in the short and long term outlook. While we may see an uptrend in the stock today and even possibly tomorrow, I don’t think that the growth is going to last very long. The reality is that the most recent data release may have been the straw that broke the camel’s back. After all, investors are looking for growth; which requires a product at some point. However for years XOMA has gotten medications to late-stage testing; only to miss primary endpoints and have to start back at square one. Now, I know that they have two candidates that are looking promising, but I’m not sure I have enough faith in them to predict that either of these will make it through late stage clinical trials. All in all, there’s too much uncertainty around XOMA to predict any real growth.
What Do You Think?
Where do you think XOMA is headed and why? Let us know in the comments below!