UPDATE: MLV & Co Downgrades XOMA on Valuation/Sentiment

In a report published Tuesday, MLV & Co analyst Graig C. Suvannavejh downgraded the rating on

from Buy to Hold, and lowered the price target from $8.00 to $7.00. In the report, MLV & Co noted, “Following 1) negative P2 data for gevokizumab (gevo) last week in erosive osteoarthritis (EOA) and 2) 4Q results, we now lower our PT to $7 (vs. prior $8) and rating to Hold (from Buy), based on valuation and also sentiment. Simply put, gevo's miss was big, especially given the rev opp'y we saw in EOA ($1B). While advancing gevo into P3 for pyoderma gangrenosum (PG, ultra orphan) has more appeal than going into severe acne, even with higher projected sales ($335M vs. prior $90M), gevo in PG just doesn't pack the same punch revenue-wise as gevo in EOA. "We'd been pretty +ive on XOMA since assuming coverage last August; that said, in the time since, we've seen one too many disappointments. Thus, while also finding the stock fully valued at current levels, we'd like to see more concrete progress with gevo before regaining full confidence in XOMA again.” XOMA Corp. closed on Monday at $6.43.