XOMA Stock Forecast

Customers of I Know First woke up on July 14^th to a 14-day biotech forecast which recommended a large list of long and short positions based on the I Know Frist advanced predictive algorithm. This forecast included Xoma Corporation (XOMA), and read a bearish signal to investors, with a moderate signal of -5.83 but a very high predictability return of .41. On trading day July 22^nd, XOMA stock sustained a sudden collapse from $4.39 to $1, a one-day hit of 77.22%. XOMA now trades at $.82, lower than the $1 minimum expected from securities traded on the NASDAQ.

Xoma’s sob story comes in the wake of unexpectedly resounding negative results of another drug in late stage clinical trial. Gevokizumab, an antibody developed solely by Xoma, was designed to treat and heal inflammatory symptoms from a wide variety of diseases, and was widely known as Xoma’s best chance at publishing a drug after FDA approval. Unfortunately, Xoma’s drug didn’t meet the objectives it was assigned to pass the test. Xoma still has 3 drugs way down the pipeline, which was not nearly enough to keep the stock from collapse. Although there are still some back tests and further analysis to be conducted, Xoma’s signature drug looks dead in the water.

Last year, Xoma’s total revenue shrank to almost a half of its 2013 levels, leveling at $18,866,000. With consistent net losses of more than quadruple that figure, Xoma has been relying vastly on owner’s equity since its inception. Although this capital structure is typical of a biotech company in its early stages of development, it is completely atypical for a 34-year-old company, and usually unacceptable. On July 26^th, the stock took another huge hit as Baker Bros. Advisors removed XOMA from their investment fund, selling 11 Million shares at $1.09 each. As the algorithm predicted and as the bare facts indicate, XOMA is rendered a very unattractive, as their business costs far exceed their revenues, and their prospects of extracting added revenues from their intellectual property and human capital remains quite low, at least until the distant future.