The broader stock market has entered an official 10% correction, but for investors focusing on the Nasdaq Composite (^IXIC -0.64%), double-digit declines from recent highs are nothing new. On Wednesday morning, though, Nasdaq investors saw a little light at the end of a long, dark tunnel, with futures on the index rising more than 1% as of 8:30 a.m. ET.
There's even more volatility lurking under the surface of major stock market indexes, with good news celebrated but bad news punished. That was the case in premarket trading Wednesday morning, as Palo Alto Networks (PANW -1.71%) helped contribute to the Nasdaq's gains. However, another Nasdaq stock in the biotechnology industry crashed hard after shareholders heard clinical study results they definitely didn't expect. The name of that stock will be revealed below, but first, here's more on what Palo Alto said.
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A good day for cybersecurity
Shares of Palo Alto Networks were up almost 7% in premarket trading Wednesday morning. The cybersecurity specialist's fiscal second-quarter financial report had a lot of encouraging information that made shareholders more confident about the future.
Palo Alto's numbers showed continued demand for its cybersecurity services. Total revenue climbed 30% year over year to $1.3 billion. Adjusted net income of $185 million was 20% higher than in the year-ago period, working out to adjusted earnings of $1.74 per share. Remaining performance obligations under current contracts were up an even more impressive 36% to $6.3 billion, working out to more than a year's worth of future revenue.
Moreover, trends toward more numerous and extensive cyberattacks helped to bolster Palo Alto's guidance for the remainder of its 2022 fiscal year. The company now sees total revenue of $5.425 billion to $5.475 billion for the full year, up 27% to 29% from fiscal 2021, and adjusted earnings should come in between $7.23 and $7.30 per share. Those numbers are broadly higher than previous guidance as CEO Nikesh Arora pointed to the ongoing digital transformation efforts from Palo Alto's clients.
Unlike many high-growth tech stocks, Palo Alto now trades only about 12% below its all-time highs. That might not offer as big a discount as other investments, but it shows the strength of Palo Alto's business and the high regard in which investors hold the company.
Kodiak growls as trial results disappoint
Taking a huge hit, however, was Kodiak Sciences (KOD -5.77%). The biotech's stock plunged 75% in premarket trading after one of its most promising candidate treatments didn't produce the results it had hoped to see.
Kodiak announced that the phase 2b/3 study of its KSI-301 treatment for wet age-related macular degeneration (AMD) failed to meet its primary endpoint of showing non-inferior visual acuity gains compared to the Regeneron Pharmaceuticals treatment, Eylea. The numbers showed that 59% of patients receiving KSI-301 had visual acuity gains and anatomic improvements that were comparable to patients receiving Eylea.
Yet despite showing strong durability and being safe and well tolerated, treatment with KSI-301 no more often than every 12 weeks proved "insufficient" in the words of CEO Victor Perlroth. Kodiak has had the ambitious goal of helping prevent blindness while offering a treatment regimen that requires less frequent injections, but investigators concluded that the study design stretched out treatments too long for about 30% of the study's patients whose visual acuity deteriorated.
Kodiak still has high hopes for KSI-301 in other ocular diseases, including diabetic macular edema, retinal vein occlusion, and diabetic retinopathy. Moreover, if further studies in wet-AMD patients establish a way to separate out patients with persistent or early recurrent disease activity from those who responded more positively to the dosing intervals in this study, then Kodiak might still have a path forward toward possible approval in the long run.
