XOMA Corporation’s (XOMA - Snapshot Report) shares declined 18.5% after the company reported wider-than-expected loss per share in the first quarter of 2014 and slower-than-expected patient enrolment in two phase III studies being conducted with gevokizumab.
The company posted a loss of 23 cents per share, wider than the Zacks Consensus Estimate of a loss of 19 cents per share and the year-ago loss of 15 cents per share.
Total revenues for the reported quarter were $3.4 million, down 63.9% from the year-ago quarter. Revenues were lower than the year-ago quarter primarily due to a milestone payment from Servier. Revenues were well below the Zacks Consensus Estimate of $9 million.
The Quarter in Detail
R&D expenses for the quarter increased 29.5% to $21.5 million. The surge was driven by increased costs related to pipeline development, including gevokizumab and higher stock-based compensation expense.
XOMA is working on commencing a phase III study on gevokizumab for inflammatory pyoderma gangrenosum (PG). XOMA intends to submit the phase III study protocols for gevokizumab to the U.S. Food and Drug Administration (FDA) within the next few weeks. A response from the FDA should be out by Aug 2014. Gevokizumab received orphan drug status in the U.S. for the treatment of PG.
Meanwhile, partner Servier is enrolling patients in the phase III EYEGUARD program on gevokizumab. EYEGUARD-A is being conducted to evaluate gevokizumab for the treatment of non-infectious uveitis (NIU), EYEGUARD-B is evaluating gevokizumab’s ability to prevent disease flares in patients with Behçet's uveitis and EYEGUARD-C is being conducted to evaluate gevokizumab for the prevention of disease flares in NIU patients who are controlled with steroids. Gevokizumab has orphan drug status for NIU and Behçet's uveitis. However, patient enrolment for EYEGUARD-A and EYEGUARD-C is going slower than expected.
Selling, general and administrative expenses increased 27.4% to $5.3 million.
2014 Guidance Maintained
XOMA continues to expect cash usage for operating activities in the range of $55.0 million − $60.0 million in 2014. This includes license and contract-related revenues that the company expects to receive this year.
XOMA currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Alexion Pharmaceuticals, Inc. (ALXN - Analyst Report), ANI Pharmaceuticals, Inc. (ANIP - Snapshot Report) and Gilead Sciences Inc. (GILD - Analyst Report). All these stocks carry a Zacks Rank #1 (Strong Buy).