XOMA PLATFORM FAR UNDERVALUED
Mar 13, 2008 (Zacks Investment Research via COMTEX) -- Xoma, Ltd. (XOMA) reported financial results in-line with expectations on for the fourth quarter in 2007. For 2008, the company plans to focus its Ramp;D dollars on the advancement of XOMA-052 and XOMA-629. Also in 2008, management will look to bring in one additional collaboration partner, as well as continue to grow the bio-defense contract business with the U.S. government. Xomas antibody discovery platform is starting to show signs of paying off, as both -052 and -629 could prove to be significant products in the not-so-distant future. The name remains significantly undervalued in our view. With the shares trading at $2.58, Xoma is a very volatile stock. However, valuation is attractive based on our view of what Xoma will look like in three to four years. If all the above things work out, the market capitalization in 2012 should be in the area of $1 billion to $1.5 billion based on comparable companies such as PDL BioPharma (PDLI) ($1.2 billion), Medarex (MEDX) ($1billion), Abgenix (ABGX)nbsp; (acquired by Amgen (AMGN) for $2.2 billion), and Cambridge Antibody Technologies (acquired by AstraZeneca (AZN) for $1.3 billion). That would be an impressive return from the current market value of only $340 million. In 2012, we see total revenues of $156.2 million. Based on the industry average P/S ratio of 8x, that would be a market value of $1.25 billion. Thus, when we look at the future value of Xoma based on its current business strategy we see the stock around $9-$10 by the end of 2012. Discounting that price by 25% back to present day we arrive at our fair-value of $5. |
