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 , a biopharmaceutical company developing antibody-based therapeutics, were clobbered, falling as much as 28% after the company announced that it would not be advancing gevokizumab as a treatment for erosive osteoarthritis of the hand (EOA) into later-stage development.
So what: According to XOMA's press release, the company plans to conduct a review of the data obtained during its mid-stage studies to see if there's a subset of the population that would benefit from gevokizumab prior to initiating any additional studies in the EOA indication. Based on the snippets of data released, we know from XOMA that patients with a milder form of the disease tended to sway the results toward the placebo while those with more severe pain appeared to respond better and may still be worth researching once XOMA's subset analysis is complete. Gevokizumab is also being studied in a number of other indications, including a number of ophthalmic diseases.
Now what: Gevokuzimab is XOMA's crown jewel, with 11 separate indications currently being tested if you lump in it and partner Servier's clinical studies involving the drug, so today's shortfall certainly stings. The good news is that the data demonstrated favorability toward gevokizumab in more severe cases, so it may not be a total loss in EOA, but it certainly throws a shred of doubt over a number of its other purported indications. We should of course remember that different diseases can behave markedly different to the same experimental therapy, so XOMA's pipeline could also be perfectly fine with today's downside move potentially overblown. As an investor I'd suggest keeping your eyes peeled for fresh data on gevokizumab in its other 10 indications. If all continues to progress well, especially in its ophthalmic disease targets, then XOMA should be just fine.
XOMA shares have soared over the past year, but even they may struggle to keep up with this top stock in 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.
The article Why XOMA Corp. Shares Zoomed Lower originally appeared on Fool.com.Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool has no position in any companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.