Shares of Xoma Corp. sank Thursday, a day after the biotechnology company said its second-quarter loss widened in a performance that fell short of Wall Street expectations.

THE SPARK: The Berkeley, Calif., company said Wednesday it lost $17.2 million, or 21 cents per share, in the quarter that ended June 30. That compares to a loss of $16.2 million, or 24 cents per share, in the same quarter last year.

Revenue fell 23 percent in the quarter to nearly $7.2 million. Adjusted results, excluding some non-cash charges, amounted to a loss of 19 cents per share.

Analysts expected, on average, a smaller loss of 16 cents per share on $9.3 million in revenue, according to FactSet.

THE BIG PICTURE: Xoma is a development-stage company without any products on the market. It is studying a drug candidate called gevokizumab as a treatment for uveitis, a swelling of the uvea, which is the middle layer of the eye.

THE ANALYSIS: The company's revenue drop was largely offset by expenses that came in below expectations, Roth Capital Partners analyst Bert Hazlett said in a research note. He noted that research and development spending was light due to the timing of clinical studies.

Hazlett raised his price target on the shares by a dollar to $6 based on the potential of gevokizumab's potential for use in treating additional conditions.

SHARE ACTION: Down 17 percent, or 89 cents, to $4.41 Thursday afternoon, while broader trading indexes climbed slightly. The stock has traded between $2.37 and $5.53 over the past year.