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Biotech / Medical : XOMA. Bull or Bear? -- Ignore unavailable to you. Want to Upgrade?

To: roger m who wrote (8179)	1/5/1999 12:21:00 AM
From: Tharos	Read Replies (1) \| Respond to of 17367

100% agreement. No one here has ever said, "Sell the house and invest the proceeds in Xoma." Some of us love the concept and are unabashed about it, but I believe none of us have ever said Xoma is any more than a good speculation.

To: roger m who wrote (8179)	1/7/1999 8:57:00 PM
From: Robert S.	Read Replies (4) \| Respond to of 17367

What some on this board fail to take into account is that if Xoma receives FDA approval and it starts showing earnings, then it will no longer be valued based upon potential; rather, it will primarily be valued based upon EPS. A while back the valuation model (I believe from J.Abella's old web site) below was presented on "that other board" and it provides a foundation for determining market valuation for unproven biotechs: Here is a valuation model that helps you se if Biotech's are over or undervalued. Its works best with companies with no revenues from other products, and no approved products. Everyone knows it a very hard task to value a Biotech but this evaluation model has helped in the past Step One Xoma corp has the following products in its clinical and nonclinical pipeline Neuprex - for Hemorrhagic trauma - Phase III Neuprex - for Meningococcemia - Phase III Nueprex - Partial Hepactectomy - Phase II Neuprex - Severe Intra abdominal infections Neuprex - Lung infections in Cystic Fibrosis Hu1124 - Psoriasis Five preclinical products in pipeline Neuprex for Hemorrhagic trauma - 250,000 patients x 1000(estimate) = 250mm times 30% penetration(estimate) = 75mm contribution market cap x 0.5 for phase III = 37.5mm Nueprex for Meningococcemia - 3000 patients X 1000(estimate) = 3mm times 30% penetration(estimate) = .9 x 0.5 for phase III = .45mm Neuprex for Cystic Fibrosis - 30,000 patients x 1000(estimate) = 30mm times 30% penetration(estimate) = 9mm times 0.3 for phase I =2.7mm Neuprex for Intra abdominal Infections - 200,000 patients x 1000(estimate) = 200mm times 30% penetration(estimate) = 60mm times 0.4 for phase II =24mm Neuprex for partial hepactomy (Liver transpants, cirohhis, Hepatitis) 1.0mm patients x 1000(estimate) = 1.0 billion times 30% penetration(estimate) = 300mm times 0.4 for phase II =120mm Hu1124 for psoris = 150,000 patients times 500(estimate) = 75mm times 30% penetration(estimate) = 22.5mm times 0.4 for phase II =9mm 5 preclinical compounds = 25mm Xoma also has 25 patents on its technology = 12.5mm Total = 231.2 market cap from technology and patents Plus CURRENT ASSETS MINUS LONG TERM LIABILITIES (56mm-25mm) = 31mm Total = 262.2mm Management Factor Accumulated deficit = 354mm Revenues last five years = 31mm Market cap management factor (31/354)=0.9 Multiply 262.2 times 0.9 = 24mm Total market valuation (management factor plus valution) = 286.2 Divided by shares outstanding (39,679) = 7.21 Fair Value price = 7.21 Current share price = 4.75 The shares of Xoma Corp are undervalued by $2.46 EDIT: Current share price = $4.00 Shares outstanding now 45M Fair value = $6.37