XOMA. Bull or Bear? Message Board

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Biotech / Medical : XOMA. Bull or Bear?

XOMA 33.34

-2.1%

Nov 7 9:30 AM EST

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From: bob zagorin	3/9/2007 11:43:00 AM
	of 17367

excerpts from TSC report.. ....In conjunction with its results, management provided upbeat 2007 guidance, saying that it expects revenue to nearly double based on increased revenue from its partnership with Schering-Plough and more government contracts. Additional upside in 2007 and 2008 could be driven by new royalty payments for Cimzia, Xoma's treatment for Crohn's disease that analysts expect to be launched late this year. Management said that R&D spending will increase 25% to 30% in 2007, and that SG&A expenses will remain flat. While the light revenue and less-than-expected earnings are somewhat disappointing, our thesis for this position is not centered on near-term earnings. Along with its financial results, the company provided a long list of positive developments during its recently completed quarter. In accordance with an indenture governing the majority of the company's outstanding convertible notes, management was able to convert all of its $72 million in high-cost debt to equity after the stock closed above $2.80 for 20 straight days. We view this event as a major positive for the company, making its balance sheet even stronger. Xoma's remaining debt consists of a $35 million loan. Other important events that have occurred thus far in 2007 include: the expansion of Xoma's collaboration with Schering-Plough; the announcement of additional phase I and phase II clinical trials of Neuprex in adults and children undergoing a bone marrow transplant at Harvard medical clinics; the approval of Lucentis (a macular degeneration drug on which Xoma receives royalties) for sale in the European Union; and the expansion of Xoma's collaboration with Takeda, a Japanese drugmaker, in oncology. We believe each of these represents a significant positive for Xoma that together will drive revenue growth over the next two or more years...."

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