Quick Take: Arena Pharmaceuticals (ARNA) and Codexis (CDXS) Report Q4 2018 Results
Arena Pharmaceuticals (ARNA) reported after the bell yesterday and delivered results that were better than expected, with EPS of $1.35 and revenue of $8.7 million both well ahead of expectations. Of course, this isn’t a growth story just yet, it’s a drug development story. On that front there’s not a lot of new news. The market’s still looking forward to the beginning of pivotal studies for UC (etrasimod) in mid-2019, and Arena is finalizing plans for phase 2b/3 pivotal trials in Crohn’s disease (no timeline yet). First data for both is likely a 2021 event. I’ll provide more details in this Friday’s Weekly Update. Until then, Arena remains a Hold. HOLD.
Codexis (CDXS) also reported after the closing bell yesterday, with revenue of $16 million coming in just shy of expectations, while EPS of $0.03 beat by $0.05. 2018 revenue was up 50%, to $61 million. Codexis’ business is tracking about as expected. The exercising of the licensing option by Nestle for CDX-6114 (for PKU) is a potential big step in the Novel Biotherapeutics business. A new pharma partnership in the Performance Enzymes segment (with Porton), and material progress in the partnership with Tate & Lyle (an enzyme for the production of a stevia sweetener is beginning to be used by a few food manufacturers) are also positives, but not new news. As with Arena, I’ll provide a more detailed review of earnings in Friday’s Weekly Update. For now, Codexis remains a buy, but take note that the stock is up against resistance and, if it doesn’t punch through, could easily retreat a few points. Therefore, I only recommend taking small positions at this point. BUY.