Bleak Prospects Lying Ahead For XOMA Corp (NASDAQ:XOMA)

[[tagnumber 0]][[tagnumber 1]]If you check out the official website of XOMA Corp (NASDAQ:XOMA), you will see that it is presented as a late–stage biotech whose portfolio of therapeutic product candidates is primarily based on innovative monoclonal antibodies targeted at a range of endocrine diseases. You will also learn that the company has so far developed as many as six endocrine assets and even has a Phase 3 drug candidate. However, there is more to it than meets the eye.[[tagnumber 2]] [[tagnumber 0]]In their most recent press releases, the managers of XOMA introduce the company as a ‘leader in the discovery and development of therapeutic antibodies‘. What they fail to inform the invesmtnet community, however, is that this alleged leader has been around for more than three decades and has yet to get the mythic FDA approval for any of the product endeavors that have been in development over the years. In other words, XOMA has not been able to roll out any drugs on the market for 34 years now.[[tagnumber 2]] [[tagnumber 0]][[tagnumber 6]]That is why, XOMA‘s most recent Phase III trial for its gevokizumab drug candidate could either push the stock sky–high or send it to a tailspin. As per the July 22 press release, the study failed to reach its primary endpoint and XOMA crashed hard on the charts, wiping off 77% of its value by the end of the corresponding market session. Needless to say, one of XOMA‘s worst daily performances ever. This unleashed a full–blown investigation of potential securities fraud caused by issuing misleading information to investors.[[tagnumber 2]] [[tagnumber 0]]As it would later turn out, XOMA hasn‘t really recovered from this huge blow yet. Last week, the company‘s shares took yet another real beating as dismal earnings sliced off one third of XOMA‘s market cap. Given that the biotech‘s Q3 2015 revenue barely reached 40% of its Q3 2014 top line, investors‘ punitive reaction hardly comes as a surprise.[[tagnumber 2]] [[tagnumber 0]]Less than two hours before market closes today, XOMA shares are traded at $1.35 per share with barely 2.5 million shares having changed hands so far. By contrast, the stock‘s 30–day average turnover stands at 4.8 million. When compared with close to 19 million shorted shares as of Oct. 30, the latter suggests that a) the majority of XOMA traders are still betting against the stock and b) it may take a shorter up to 4 days to cover his/her position, which could bring about hefty losses should the stock make a miraculous resurgence in the meantime. Is this possible, though?[[tagnumber 2]] [[tagnumber 0]]Not if you ask insiders. Out of the sixty–five insider trades that have taken place over the last twelve months, 83% represented sell–offs. As a result, investors who used to believe in the stock actually disposed of more than 19 million XOMA shares. The message they send by doing so speaks for itself.[[tagnumber 2]]