XOMA Challenged With A 'Major Financing Overhang'

XOMA Corp (NASDAQ: XOMA) appears to have a “significant financing overhang,” having reported net loss of $12.5 million during Q3:16 and ending the quarter with $20.6 million in cash.

Ladenburg Thalmann’s Matthew L. Kaplan maintains a Neutral rating on the company.

Q3 And Overhang

XOMA shares had appreciated 260.40 percent over the 52 weeks up to November 1, as compared to the 1.05 percent increase in the S&P 500 over the same period.

The company reported loss per share of $(2.08), along with R&D expenses of $8.7 million and lower than estimated SG&A expenses of $4.1 million.

“XOMA has a €12 million loan due to Servier starting in January 2017 and principal payment obligation for the $20 million loan from Hercules starting in July 2016 running through September 2018,” Kaplan pointed out.

The analyst believes the high spending levels and weak balance sheet point to a meaningful financing overhang persisting for the company.

In fact, any significant surprise in the earnings report could have a meaningful impact on the stock price in the period immediately following the initial report.

Phase 2 Study

In the meantime, XOMA has reported data from its Phase 2 Proof of Concept study for ZOMA 358 in Congenital Hyperinsulinism (CHI) or Post-Bariatric Surgery Hyperinsulinism (PBH).

The data shows short duration of activity with varying doses from 1mg/kg to 5mg/kg.

Kaplan noted that “given XOMA 358 showed a ~21-day half-life in Phase 1 work, XOMA was expected to have a period of 10–14 days to evaluate the durability of any response and also potential dose response.”

At last check, XOMA was down 0.89 percent on the day at $6.69.