CDXS

Codexis ($CDXS) Shares Plunge 30%, Yet Major Shareholder Pours $1.46M Into Buying Spree—What's Happening?

03/24/2025 20:11

Codexis ($CDXS) has seen its stock price plummet following disappointing earnings, yet major shareholder Opaleye Management has been aggressively buying shares, catching the attention of investors. The enzyme engineering technology company reported its Q4 2024 results on February 27th. Codexis posted a loss of 13 cents per share, significantly worse than analysts' expected loss of 4 cents. Revenue came in at $21.46 million, falling short of the anticipated $27.41 million and representing a 19.2% decrease year-over-year. Following this earnings announcement, Codexis shares plunged nearly 30%, dropping from $3.93 on February 28th to $2.74 by March 3rd. However, amid this sharp decline, a notable pattern emerged: major shareholder Opaleye Management has been buying shares aggressively, viewing the price drop as an opportunity. According to SEC filings, Opaleye Management purchased approximately 540,000 shares worth about $1.46 million between February 28th and March 21st, when the stock was under significant pressure. Particularly noteworthy were purchases of 147,649 shares on February 28th and 47,351 shares on March 3rd, the days when the stock experienced its steepest declines. This isn't an isolated movement. Opaleye Management has been consistently accumulating Codexis shares since September 2024. The most substantial purchase occurred on September 20th, 2024, when they acquired 1.055 million shares in a single transaction worth approximately $3.18 million. This persistent buying pattern signals strong confidence in Codexis's long-term value proposition. Codexis specializes in enzyme engineering technology for the biotechnology sector, focusing on pharmaceutical, food, and industrial enzyme development. The company has been diversifying its business, as evidenced by the completion of a purchase agreement with Crosswalk Therapeutics for gene therapy assets in July 2024. Under this agreement, Codexis is eligible to receive future development and commercial milestone payments along with low-to-mid single-digit percentage net sales-based royalties. However, Codexis's financial situation remains challenging. Over the past twelve months, the company has generated $59.34 million in revenue while recording a net loss of $65.28 million. Free cash flow stands at negative $53.72 million, indicating significant cash burn. On the positive side, the company holds $73.46 million in cash and short-term investments, providing some runway to execute its strategic initiatives. Codexis's performance and stock price have shown considerable quarterly volatility. In Q2 2024, revenue declined 62.6% year-over-year to $7.98 million, but rebounded in Q3 with a 38.3% year-over-year increase to $12.83 million. This performance instability reflects the company's transitional state as it pivots its business model. Industry experts are closely watching Codexis's strategic shift to expand its enzyme engineering technology into biopharmaceuticals and gene therapy, markets with potentially higher value and growth prospects. While this transition inevitably brings short-term performance fluctuations, it may position the company for stronger long-term growth. Analysts maintain a positive outlook on Codexis, with an average price target of $7.00, representing a 174% premium to the current price of $2.55. This suggests that the market values Codexis's long-term potential significantly higher than its current trading price. Codexis CEO Stephen Dilly emphasized during the recent earnings call: "While we are in a transition period, we are laying the groundwork to broaden the application of our enzyme engineering technology and create larger market opportunities." Investors should monitor when Codexis might return to profitability and whether it can successfully establish its position in new business areas. However, Opaleye Management's aggressive buying activity certainly provides a positive signal, indicating strong belief in the company's long-term growth story despite current challenges.

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