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Canaccord Adams Initiates Coverage on XOMA (XOMA) with a Buy; XOMA-052 Promising New Type 2 Diabetes Drug

More News related to XOMA

More News related to New Coverage

November 18, 2009 9:28 AM EST

Canaccord Adams initiates coverage on XOMA (Nasdaq: XOMA) with a Buy.

Canaccord analyst says, "While Type 2 diabetes represents a significant unmet medical need, the FDA is very concerned with the safety profiles of new diabetes drugs. We believe that the agency is especially cautious about the cardiac safety of diabetes drugs given the recent experience with Avandia, a popular diabetes drugs whose cardiac safety has been disputed. We note that XOMA-052’s mechanism of action is thought to be cardioprotective, and the company is planning on developing the drug for prevention and treatment of heart disease. IL-1 is also an important regulator of immune function, and FDA could have concerns about immune dysregulation. We note however, that there are three other approved drugs that block IL-1 function and do not have data to suggest meaningfully increased risk of
infections.

"Financing risk – XOMA may raise funds through a dilutive financing to fund clinical programs. We note that XOMA has less than 12 months of operating capital remaining on its balance sheet...Partnership risk – XOMA may not be able to secure a partner for 052 While we think that XOMA is a compelling product for both Type 2 diabetes and cardiovascular disease with significant commercial potential, XOMA may still not be able to secure an ideal development and commercialization partnership. The company may strike a deal with terms that are lower than anticipated. If the company is unable to strike a commercialization partnership, it may be forced to assume significantly greater development and marketing costs."

To see all the upgrades/downgrades on shares of XOMA, visit our Analyst Ratings page.