Source: Codexis Presentation at World Biofuels Conference
Despite all of the progress Codexis, Inc. (NASDAQ:CDXS) has yet to find a commercial partner for its cellulase enzymes since being dropped by Shell last year (10 months and counting now). Does BASF Se-spon Adr (OTCBB:BASFY)’s dash to the C1 platform somehow vindicate Codexis, Inc. (NASDAQ:CDXS)’s ambitious goals? I suppose one could see it that way, but I wouldn’t get too excited. The company is developing enzymes for animal and human nutrition “among other markets”. So while the move may once again prove the industrial importance of the C1 platform, it is unclear if developing cellulase enzymes for the economic production of bio-based chemicals is a goal.
What if it is?
In the worst case scenario, Codexis and BASF Se-spon Adr (OTCBB:BASFY) would be competitors. Given that the world’s largest chemical company has a market cap over 1,000 times larger than the developmental stage industrial biotech firm, I’m in no mood to party. There may be some good news. BASF has a massive financial reach, but Codexis got this far on the budget of one of the largest oil companies in the world — not that of a tiny start-up. So it won’t be easy to leap into the lead. Besides, directed evolution — the biologic tool used to develop enzymes — only works so fast.
In the best case scenario, BASF could tap Codexis as a partner or force another company to make such a move. The company isn’t a major player in fuels, but it did invest $30 million in Renmatix early last year for its thermocatalytic platform for producing cellulosic sugars. It wouldn’t necessarily make sense to develop its own biocatalytic process when Codexis is already 4.5 years ahead of a base strain, unless Dyadic provides an enhanced base strain to work with.
Foolish bottom line
Having the most mature platform in the industry is the biggest selling point Codexis management has at the bargaining table with potential partners. Can it lure in BASF? It would certainly help the company’s prospects, but I wouldn’t speculate. There are plenty of fuel-focused companies that seem to be a better fit at this point, although there a bigger opportunities in high-value specialty chemicals. Unfortunately, the waiting game continues for investors.
The article World’s Largest Chemical Company Makes a Splash in Enzymes originally appeared on Fool.com.
Fool contributor Maxx Chatsko owns shares of Codexis. Check out his personal portfolio, his CAPS page, or follow him on Twitter @BlacknGoldFool to keep up with his writing on energy, bioprocessing, and emerging technologies.The Motley Fool has no position in any of the stocks mentioned.
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