Yesterday, one of our Global Growth stocks, XTL Biopharmaceuticals (XTLB), saw its stock get almost completely wiped out. The company announced that its diabetic-pain treatment failed crucial tests and it didn't reduce patients' pain scores. The stock dropped from $2.10 to 13 cents, a 94% plunge.

My analysts have looked over the filings, and it doesn't look good. Since XTLB is a drug discovery firm, it won't make any revenue until it has a product that has been approved and licensed for distribution by the FDA. So in order to stay in business, the company must either receive milestone payments from the companies they license drug candidates' from, raise equity (which causes shareholder dilution), or raise debt (which is very costly in the current credit environment).

With the failure of XTLB's lead candidate, the other drug discovery candidates are at the preclinical stage and seem to be too far behind to have any chance of generating revenue without one of the above three scenarios occurring to maintain operations. In the most recent 20F filed at the end of March 2008, they mention they're burning though cash at about $1.5 million a month and have enough cash to last a year. This would imply that they have about 4.5 months left of cash to maintain operations.

What to do now: Since the stock will remain depressed, I wouldn't rush to sell it until we hear what the CEO has to say in the next day or so. However, if you're a shareholder, you may want to sell next year assuming you have enough capital losses to offset capital gains from this year.

Here's the company's press release:

XTL Biopharmaceuticals Announces Top-Line Results From the Bicifadine Phase 2b Study for Diabetic Neuropathic Pain Study failed to meet its primary endpoint

VALLEY COTTAGE, N.Y., Nov. 18 /PRNewswire-FirstCall/ -- XTL Biopharmaceuticals Ltd. (Nasdaq: XTLB) announced today the top-line results from the Bicifadine Phase 2b clinical trial for the treatment of diabetic neuropathic pain. The trial's primary objective was to compare the efficacy of two doses of Bicifadine against placebo in reducing pain associated with diabetic neuropathy. The primary endpoint of the study was the reduction in pain score during the course of treatment. The company announced that the study failed to meet its primary endpoint. The trial also failed to meet key secondary analysis.

Ron Bentsur, CEO of the company, commented: "We are all very disappointed with the results of the study. We will devote the next few days to further analyze the data and decide on the appropriate course of action for the Bicifadine program, and for the company."

Here are links to the stories from AP and Reuters.