XOMA (Nasdaq:XOMA) Soars on XOMA 052 Licensing Deal

Shares of XOMA (Nasdaq:XOMA) exploded on the news they made a deal to license its diabetes drug XOMA 052 to Laboratoires Servier of France for $15 million.

XOMA also landed a $20 million loan from Servier, while also retaining the right to acquire the the rights for the drug in Japan and the U.S. in the future.

Wedbush increased their price target on XOMA saying, "The increase in our fair value is primarily due to changes in our XOMA-052 royalty assumptions and the inclusion of milestone payments in our XOMA-052 fair value (PT). With a potentially disease modifying treatment for diabetes, cardiovascular disease and other blockbuster indications like rheumatoid arthritis, we believe today’s (Tuesday) announcement of a regional development and commercial partnership with Servier is transforming for the company financially as well as for the stock. We calculate fair value as a sum of parts with each part derived from a 30% annual discount from our peak net sales estimate and apply a 1-10x multiple depending on stage of development to reflect risk."

Wedbush maintains an "Outperform" rating on XOMA, which closed Tuesday at $7.30, gaining $2.00, or 37.83 percent. Trading volume was at just over 49 million, about 16 times the normal 3-month average just below 3 million shares a day.

XOMA has a price target of $16 on them from Wedbush, which raised it from $12.