Poor Clinical Results Push XOMA Corp (NASDAQ:XOMA) to the Bottom of the Charts

[[tagnumber 0]][[tagnumber 1]]The good thing about biotechs is that a successful clinical trial could send the company flying on the charts. Unfortunately, there is a flip side to it, as well, and it hit XOMA Corp (Nasdaq:XOMA) really hard last week. For the company‘s late–stage trial of its gevokizumab drug candidate for the potential treatment of ophthalmic diseases resulted in a dismal failure. As a result, XOMA shares wiped off nearly 80 per cent of their market value, which is why XOMA shares are now worth less than a dollar.[[tagnumber 2]] [[tagnumber 0]]Prior to the trial debacle, you could buy and sell XOMA at above $4.00 per share, yet this window of opportunity closed on July 22 and the chances of reopening seem slim to none. A lot of insiders are abandoning ship as evident from the myriad SEC Form 4‘s filed recently. And while last week marked a considerable dump of shares by one of XOMA‘s big stakeholders, the 12–month historical data suggest that other insiders eventually lost confidence in the stock. Overall, the net activity for the last twelve months is determined by 653 thousand purchased and 19.9 million sold insider shares. What these investors‘ expectations for the future of the company might have been is subject to anyone‘s interpretation.[[tagnumber 2]] [[tagnumber 0]][[tagnumber 6]]Prior to the negative news, XOMA had already fallen under pressure by shorters, which suggests that the expectations for the stock might have been low well before the results of the trial came out. As of July 15, there were more than 25 million short sold shares, more than three times higher as compared to mid–July 2014. We have yet to see the new data covering the second half of July to see how the short interest in XOMA has changed. Anyway, a significantly better days–to–cover ratio (now standing at 5 days) seems highly unlikely at this point.[[tagnumber 2]] [[tagnumber 0]]The situation doesn‘t look any better when it comes to XOMA‘s revenue streams over the last four quarters on record. Each subsequent quarter brought the business less revenue with Q1 2015 being particularly bad with barely $2.6 million of revenue and a net loss of almost $22 million. Taking into account that XOMA‘s 2014 revenue of $18.8 million had already marked a 50% decline from the year before, the negative trend seems crystal clear at this stage.[[tagnumber 2]] [[tagnumber 0]]How the stock will perform in the short term will be hugely dependent upon what actions the management will take to handle this crisis. If CEO John Varian‘s determination to see the company successful are anything to go by, traders interested in this stock had better keep a watchful eye.[[tagnumber 2]]