The first email is from David R., who writes, "Has Xoma ever earned a cent? I don't think so. It's amazing that such a nothing company can survive so long." Yes, Xoma has earned a cent. In fact, the company posted a profit of $21.8 million, or 16 a share, in the third quarter. But I think I know where David is going with his question. Yes, Xoma eked out a profit last quarter, but the company is expected to lose money for the full year, and its accumulated deficit was $730 million as of the end of the third quarter. So, Xoma shouldn't really be thought of as a profitable biotech company just yet. But then, red ink flows like water in Biotechland, so Xoma is no different from most. I wouldn't necessarily harp on the company for this. I pretty much laid out the Xoma investment story in a
Kris B. emails to ask about Vanda: "I would like to know your analysis of Vanda Pharmaceuticals. I am a realist and think iloperidone gets an approvable letter later this year and forces Vanda to run another trial examining the QTc issue. However, I am long at this current price, $5.75, and left wondering why there is very little value placed on two successful phase III drugs and over $3.50 a share in cash." Vanda is pitching iloperidone as safer and better tolerated than currently used schizophrenia drugs like Risperdal or Geodon. But that's not borne out, necessarily, in the phase III data presented last month. Iloperidone looks like a me-too drug on efficacy, with a mixed-to-worse side effect profile compared with currently marketed schizophrenia drugs. It may cause fewer movement disorders (a plus), but more weight gain and a worse metabolic profile, which puts patients at risk for diabetes (not good). I don't think the QTc (irregular heartbeat) issue is resolved, either. Kris succinctly articulates the bull argument on Vanda right now, which is that the stock is cheap and expectations are low, so owning Vanda seems like a low-risk bet. It closed the week at $5.27.