BOSTON ( TheStreet) -- This week's Biotech Stock Mailbag opens with a question from @Nixon786:
"Why is Xoma up 50% for the month?"
The spark that sent Xoma (XOMA - Get Report) shares higher was the $40 million financing announced March 6. Normally, dilutive financings undertaken by money-losing biotech firms don't send stock prices higher. That's particularly true for companies like Xoma with a sad history of drug development futility.
What's different here is that Baker Bros., a well-respected and closely followed health-care hedge fund, bought half the Xoma deal. RA Capital, a Boston-based hedge fund, was also a buyer of Xoma shares in the offering, according to regulatory filings.When Baker Bros. buys, other investors follow, especially when Baker Bros. buys big. The fund now owns about 20% of Xoma and I'm told will likely get a board seat. The fund tends to take large, long-term positions in drug and biotech companies it likes, including Seattle Genetics (SGEN), Incyte (INCY) and Viropharma (VPHM). The question you're probably asking now is, "Wait a second -- Xoma? What the hell can Baker Bros. see in Xoma?"
Owen S. asks: "What are your predictions for the FDA drug approvals next week involving MAP Pharmaceuticals (MAPP), Affymax (AFFY) and Chelsea Therapeutics (CHTP). And how do your predictions match up with investors you talk with on Wall Street?"