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) 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?"
Speaking of investor sentiment, let me run down the predictions for all the reader contestants in my FDA Drug Approval Contest: MAP: 37% predict approval; 59% rejection; 4% no decision. Affymax: 68% predict approval; 22% rejection; 10% no decision. Chelsea: 53% approval; 43% rejection; 4% no decision. A single contestant -- a biotech trader living in Texas who goes by the nickname "CBH" -- has a perfect 9-0 record in the contest so far. CBH predicts rejections for MAP's Levadex and Chelsea's Northera, and an approval for Affymax's peginesatide. @Bullbear123 "@adamfeuerstin $TLON you were wrong again." I was wrong about Talon Therapeutics ( TLON). I didn't think the company would be capable of getting a positive vote for its leukemia drug Marqibo from Wednesday's FDA advisory pane. But that's what happened, even if the 7-4 vote (with two abstentions) in favor of Marqibo wasn't exactly a ringing endorsement. I put abstentions in the "no" bucket, so the real vote was more like 7-6 recommending Marqibo's approval, which is even a weaker signal of support. The FDA drug approval decision date for Marqibo is May 13. To Talon's credit, the company did a nice job Wednesday framing Marqibo as a benefit for leukemia patients with no other medical options. Having Dr. Sue O'Brien, a respected oncologist from M.D. Anderson Cancer Center, advocating for Marqibo definitely helped sway some panel member votes. Smart strategy, Talon. Working against Talon is Marqibo's "meh" efficacy, which was noted even by panel members who voted in favor of the drug. I didn't hear a single panel member effusively praise the drug. Most of the explanations for "yes" votes Wednesday were along the lines of, "Well, these patients are really sick, Marqibo may help them but probably won't hurt so I'll vote to recommend approval."