Codexis 'curve ball' sends shares lower, but analysts still see big opportunity - InvestingChannel

Codexis ‘curve ball’ sends shares lower, but analysts still see big opportunity

Assuming Pfizer’s COVID treatment pill readout is positive, Craig-Hallum continues to see the potential for large follow-on orders in fiscal 2022 for Codexis
Shares of Codexis (CDXS) are under pressure after the company revealed that a $29M purchase order from an undisclosed global pharmaceutical customer is for the use of a Codexis enzyme in the manufacture of Pfizer’s (PFE) clinical-stage COVID antiviral candidate, not for Merck’s (MRK) molnupiravir drug. The stock had outperformed earlier this month following Merck’s report of positive late-stage clinical data for its molnupiravir pill as many had assumed that the large enzyme orders Codexis received in June and August were related to Merck’s COVID-19 pill. Despite what he called “a plot twist,” Stifel analyst Daniel Arias argued that the prospects for Pfizer’s PF-07321332 are similar to Merck’s drug as long as the data read-out is favorable and he still views this as a “big opportunity” for Codexis. Voicing a similar opinion, Craig-Hallum analyst Matt Hewitt said he believes the size of the opportunity “remains largely unchanged” from what he previously estimated despite Thursday’s “curve ball.”

LARGE ORDER FROM PFIZER, NOT MERK: In a regulatory filing, Codexis noted that on June 17 and August 25 the company had filed current reports on Form 8-K announcing that certain purchase orders for an aggregate of approximately $29M were received by the company from an undisclosed global pharmaceutical customer for use in the manufacture of an undisclosed active pharmaceutical intermediate in a therapeutic candidate. The company now discloses that the customer is Pfizer and that the proprietary Codexis enzyme product is intended for use in the manufacture of Pfizer’s clinical-stage COVID antiviral therapeutic candidate, PF-07321332. “Delivery dates for the quantities of enzyme ordered under the purchase orders are subject to a number of conditions,” Codexis added in its filing.

Merck’s recent report of positive late-stage clinical data for its oral molnupiravir in reducing hospitalizations or deaths for COVID-19 patients by 50% previously had sent shares of Codexis sharply higher given that Codexis had previously announced a long-term contract extension for production of enzymes used in manufacturing Merck’s sitagliptin for diabetes medications Januvia and Janumet. Many had assumed that the large enzyme orders Codexis received in June and August were related to Merck’s COVID-19 pill.
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