Going With XOMA>

Discussion in 'Stocks' started by stonedinvestor, Feb 20, 2007.

  1. Folks I've been circling this baby bio for a while now and making a move today on XOMA. I believe this baby bio to best positioned in the field.

    Genentech (NYSE: DNA) and UCB Pharma reported positive psoriasis data on Raptiva and Cimzia, respectively, at the American Academy of Dermatology (ADA) meeting this past weekend. Xoma, Ltd. (Nasdaq: XOMA) receives a royalty on sales of both products, along with sales of Genentech's Lucentis. We believe that total royalty payments to XOMA could eclipse $50 million in 2012, helping to drive XOMA to strong profitability.

    The recent positive data on both Raptiva and Cimzia has sparked a rally in XOMA shares. Royalty payments are 100% margin and provide management with cash to fund internally developed candidates such as X.629 and X.052. We remind investors that Genentech's Lucentis blew away expectations in the fourth quarter and should eventually post global sales over $1B. We estimate that XOMA's royalty on sales of Lucentis is approximately 0.6%.

    These royalties are derived through the licensing of XOMA's proprietary antibody development and production technology. We believe there are dozens of candidates in mid-stage trials that will eventually pay a royalty to XOMA. XOMA will disclose these products once they enter phase III trials. Companies such as Protein Design Labs (now PDL BioPharma) and Cambridge Antibody Technologies (now part of AstraZeneca {NYSE: AZN}) pioneered the royalty-revenue based growth model. We see XOMA's royalty suite bringing in over $50 million in 2012. Based on discounted cash flow (DCF) analysis, XOMA shares are worth $2.50 based on just this royalty payment alone.

    Add to all that a Feb 26 presentation to analysts by the company... I think we have the safety valve here of royalty streams while the company has the ability to keep making more deals.... Stoney like!
  2. As I have received several emails and phonecalls today about this stock I thought I'd just remind everyone that we already own it!

    The new Pfizer news is HUGE and the Volume today is outstanding! Waiting for a slight pull in to load up for despite all the good news we are just back at cost on this low priced bio.

    If you are looking for a play in Bioland look no further!
    Except maybe for ARNA which I'm tossing around right now in my head. I don't want to waste bandwidth check the newsflow yourself last week and do your DD but this stock is GOING TO DOUBLE I think.... ~ SI
  3. stoney, you're nothin but quality...I always read your posts.
    What do you think of LIFC and SIRT? Thanks again

  4. Good morning Gnar you have good taste in stocks and these two represent a very interesting comparison as one is a classic good growth story... but maybe mature and one is a complete up and comer with a l;ot of big guns behind it. One has the earnings one is hoping for it sometime like 2019! Which would you buy?

    Ah but it's not so simple. Let's start with LIFC I owned this stock at $22 a couple years ago and rode it to $27. It's now $33. In my estimation $27-$33 is the correct price for the Alloderm part of the business but of course they are getting into this new cosmetic product " Strattice " which they got the FDA go ahead for on June 13. The company plans to use existing sell through structures to push the Strattice into all the channels they sell the Alloderm through... it's an ambitious plan, the chart looks very good and I would have no problem getting into this name but the ultimate reward may be only something in the $37 range which from $33 is not a huge percentage... but a good gain.

    SIRT is a totally different Animal. I took a tiny position a while back just to track the stock and see how it trades, I wasn't thrilled with the trading patterns and dumped it. I don't think it's quite ready for full investment yet, though it remains one of my TOP BIO IDEAS but the question is for when? Let's take a slightly deeper look- This SIRT-1 activator I feel good about-- it extends life in yeast and in Mice what else do you want? Humans you say?....
    The cash burn is intense as last qtr no rev was bracketed by expenses jumping from $4.3 mil to $7 mil! But they have a ton of cash .

    It all started when a man named Sinclair made a breakthrough in 2003 when he found that resveratrol could increase the life span of yeast by 70 percent.

    That study caught the attention of former venture capitalist and serial entrepreneur Christoph Westphal.

    Westphal, a Harvard-educated doctor, had already co-founded several biotech companies, including Acceleron Pharma, Alnylam Pharmaceuticals and Momenta Pharmaceuticals. Westphal met with Sinclair and Sirtris was born.
    Sirtris has its skeptics, including competing scientists and a company across town called Elixir Pharmaceuticals, which was co-founded by Sinclair’s MIT colleague Guarente, and uses a different approach to slow aging.

    But Sirtris has been very successful so far at bringing the money and the science together, perhaps thanks to Westphal.

    In addition to attracting more than $80 million in venture capital before its IPO raised $69 million more, Sirtris has lined up an advisory board packed with top scientists, including Robert Langer and Nobel laureate Philip Sharp, both from MIT, not to mention investors including Henry, Fidelity guru Peter Lynch and others.

    It’s tantalizing to think of Sirtris’ compounds - the initial clinical candidate is a proprietary version of resveratrol called SIRT501 - as anti-aging drugs, but the company focuses on their effects on “diseases of aging.”

    Activating the SIRT1 gene could help patients with diseases ranging from Type 2 diabetes to neurodegeneartive eye diseases to Alzheimer’s, according to Sirtris.

    Westphal, who gave up his VC career to devote his time to Sirtris, believes the company’s drugs will one day provide a platform to treat a wide range of diseases.

    But the first two diseases in the company’s sights are Type 2 diabetes and MELAS syndrome, a rare mutation of the DNA of mitochondria that leads to muscle failure.

    While there are ways to treat diabetes, there are no known treatments for MELAS so Sirtris may be able to get SIRT501 fast-tracked to combat the syndrome. I believe that's why they chose MELAS as a target to get that fast track, around then will be the time to plunk down a large bet on SIRT. Overall it could be about
    five years - some time in 2012 - before the drug gets federal approval. My research indicates that sometime in 2009 they will have all the pre clinicals lined up and enough facts in place to get this Bio off to the races... so i would say for a up market go with LIFC now and wait for a pullback in the market find your happy price on SIRT sometime between the last qtr this year and the half way point of next... and take the plunge.

    The really good news Gnar is that you and I will be able to take this drug in our lifetime...

    The flying saucer guy inside me though does wonder of the dark implications of a world where EVERYONE gets access to a drug that allows folks to live many years more... will the furthest recesses of the government allow broad distribution that's another argument for another time.

    2 good stocks. ~ stoney
  5. You know Gnarles I don't like todays action on LIFC but that's immaterial I'm in a pissy mood in general but just as a lark I was putting LIFC through a bunch of chart settings making the bear argument and I could say $32 bucks is a possibility> there's a top of a multi month channel there and a 50 day EMA to boot. If you have a big profit maybe I would shift into SIRT now-- not that it looks so great at the moment but bio is perking pretty good. If you were deciding between the two with fresh money I'd stick still with LIFC in the long run nice up chart... but this habit of hard breaks you'll notice and then it forms another up channel, time and duration of rally wise...it kind of looks like we're due for another one of those sharp breaks.

    ~ SI
  6. Yes sir I had the same idea on SIRT, theres been a lot of anti aging talk in the news