Codexis (CDXS) 8 Aug 242024 Q2 Earnings call transcript

Welcome to the Codexis' Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. And now, I'll turn the call over to Carrie McKim, Director of Investor Relations. Please go ahead.

Thank you, operator. With me today are Dr Stephen Dilly, Codexis' President and Chief Executive Officer; Kevin Norrett, Chief Operating Officer; and Sri Ryali, Chief Financial Officer. Dr. of any also questions SVP be and our for available during Lutz, Research, here is will Stefan the Q&A.

and management this as growth the milestones, launches, public are Private programs historical and gross call, forward-looking XXXX. revenue including statement guidance for execution of product not for this of will extent and on future prospects and well Codexis, forward-looking strategies of product a our and successful and related beliefs making announcements During the revenues revenue, number XXXX, the date, that statements including expectations within current our and August they Litigation descriptions product reflecting regarding meaning technical Securities facts statements call the of X, the margin as statements milestones of XXXX partnerships. To of management thereto, Reform Act be contained in of are as revenues, anticipated

because reliance in You known some undue are, that should Codexis' risks, not cases, that and can place forward-looking beyond on actual control they and factors results. affect unknown and involve uncertainties other materially statements these

over about the Stephen. expressly information statements and filings be Codexis' found Commission. factors to with required by update as results except turn materially or that call in actual I'll Additional affect Codexis obligation intent the disclaims can forward-looking any Exchange to Securities can these now, law. And

Thank joining. and Carrie, you, thanks for everyone

We're but X are want on will are we provide pivot our to manufacturing exactly to our on through be guidance. manufacture our strategic both Just manufacturing highlight siRNA fronts. QX business; the of more our enabling great key we firstly, XXXX Sri Synthesis a secondly, the full-year progress of growing reiterating ECO expected and where that details year we I performance, across ago, revenue-generating platform. and focusing areas: our pharmaceutical announced making therapeutics

XXXX. growth digit clear a year, visibility strong delivering double half revenue of achieving have product including for the We to second

will manufacturing pipeline late remain of named the evolution the opportunities product pharma revenue. drive going near-term clinical new on focused has In and we Our screening business product a which of deep top our stage to programs funnel. into commercialization, adding and trials parallel,

returning will part reaching the growth that positive the manufacturing driving advancing throughout platform. manufacturing focus this cash around the drive of and to Synthesis our product ECO revenue emerging of these has team sustained becoming direct business siRNA XXXX. Zeroing of end RNA ligase in a on vision pharma key growth enabled our year, this to a flow producer decade, expect We streamlined priorities business, our double-stranded on our with of

targets I'd that, Our to over laid Kevin. but out plans like there. To approach how and stepwise get a the take revenue we to to calculated we've you pass are ambitious, call through

Thanks, Stephen.

information our on to our want each commercial the start strategy. offering, momentum of revenue the including evolving continued cover From seeing priorities, spend roadmap I'll TIDES today USA services of my more time and to of I'll our recent manufacturing across meeting. with recap there, I commercialization streams. are We most strategic key anticipated siRNA outlining for our a

year expected. Stephen which or already due that of expect second our experience more want with organization those President as in of for he our strengthened phase orders valuable position new manufacturing half to we be next just to Commercial Senior and the I space has addition I for have a includes our we of business, updates, CDMO Part XX Vice of into jump as than Britton to pharma years Codexis next that further are the Slide Operations, exist Before highlighting strong on by commercial we Britton Jimenez. however, mentioned, of X brings start of growth. the insight growth phase of that the

platform the we Synthesis customers' technical year ECO technology, so our their where ago. standpoint, momentum, the This this has be with we be and a a this would major accelerated now put platform. to commercial could engaged a players ahead in we manufacture that thought Turning hands are are we of space. working they began could we into own envisioned we When siRNA. on From

is part value. of still thoughtfully While GMP-grade producer this the most to time, minor of a a our significant This ourselves over not plan, a see quantities siRNA direct into capture growing primary undertaking. we is of

plans our X. already you to first through produce USA Meeting stepwise There, the are a material, we Slide X chain. To the progress. approach to me GLP-grade on important we walk set back the today, we hear stage value underway our announced our envision updates up rest strategy, and of to let you'll recent taking on As you moving on the by TIDES

First, we synthesis sequential oligonucleotide. full-length a demonstrated the of

synthesizing technology, rolled we optimization of targeting Synthesis our highlighted may length. material screening We Having at the What X. oligonucleotides full have our moiety. flexibility and capabilities this years Slide through closer you in both our upon ligase lumasiran double-stranded experience the strands at have from synthesize engineering. missed a the of taken that Second, which builds out starting platform, presentations RNA presentation of from attachment of firmly is one established our the ECO we of a ligase our players and look our note. Taking on TIDES services, space enzyme proof in

which also be our highlight a of givosiran extended examples the dynamic to real-world asset. that can fragment believe full-length synthesized these strand, platform. We of nature make therapeutic an We ligated the

with is in XX%, all necessary addition on As greater we nucleotide the par TIDES, at modifications, of coupling achieved to we chemistry. consistently than shared of phosphoramidite incorporating which efficiency

notable attachment typically chemical methods. of moiety We and synthesis lack conjugation of enzymatic executed observed a impurities the using when confirmed the also

large pharma who currently into And presentation, revenues. interest players capability. that in could in interested in with how many are groundbreaking share conversations I'll We this are this later translate

to X. Slide Moving

manufacturing know that our enzymes using using are solutions drugs large We interested priced be program for chemistry. the potential impactful for due efficiency siRNA lower pharma in as margins volume large already This ligase and chemistry to margins. increased increasingly higher customers into is to and using more continue view to currently valuable CDMOs We are improved particularly in double-stranded tend as and the traditional become indications, increases. bridge who much RNA assets targeting phosphoramidite and where enzymatic

combined they engineered chemistry to We ligation next is customers say with natural the the at became recognized our have ligase. with traditional during where interactions continued step. of clear benefits TIDES This USA, abundantly our immediately

versus Here, the our are or are several you behind natural can in engineered a interested why comparison variant see ligases. reasons wildtype using engineered enzyme. There customers between

immediate of higher well into and translates volumetric savings This they batches the API, to reduced time as cost potentially with higher drive offering First, product fewer make as purification, productivity. same can amount yields.

offers potential across can broad These diverse across mitigates versatility siRNA to the superior ligases offer single X oligonucleotide should engineered ligation adjust just adoption and a starting substrate of the a RNA design enzyme. assets. are the of set of modified to of and broader a strategies enable Second, benefits need substrates, performance fit which technology that range our

stage the to wildtype clear financial COGS, later library of ligases from reduce look With for even companies significantly our incentive to engineered potential switching for assets. at provides a

our are this saw focused and engineered They clinical is orders. for customer. our III. This fact, a In of generating that dynamic II pharma benefits scale in the determined moving we an test enough encouraging we first on into Phase up signal, to asset ligase additional large were compelling Phase with

see asset double-stranded can our expect Slide we that RNA XXXX. On importantly, meaningful business revenues flow become a of and study the program versus opportunity repeatable, translates More using a end supports to single you positive X, ligase single comparing a sustainable to revenue ligase pharma the cash the for manufacturing into enzyme. typical a path our around case

$X equating Codexis that billion, XX% $XXX pharma just of capture This deliver with sold were for million cost approximately Assuming can for of single therapeutic pharma savings, sales roughly year. Customer $XX those siRNA manufacturing $XX drug estimated year. is million. indication, top-performing savings feedback peak to a peak with the at a in enzyme annual XX% a patients single roughly a percent their an double a annual commercial COGS the large ligation what potential COGS, what to in we're If asset. million that's per million treated impact the indicates customer projected about for at of XXX,XXX with hearing kilogram per is goods line of the of can $X

drug sales revenue the to same higher Just a imagine for potentially like case market which targets in study basis. If Codexis mass could on are opportunity $XX XXx an a Xx control, billion an they if patients, of annual asset could the where were using at peak. math, cholesterol be indication this millions to reach in

The the chain, from for manufacturing take required economics that run heard raw are entering opportunity establish we siRNA our lead of new assets rate see our Given move by potential X, trials. On is kilograms Codexis it potentially ligase of siRNA clinical the our one seeing even customers asset of driver Slide we've research the due pharma business. bottlenecks given therapeutic of the roughly value compelling customers manufacturing many for more of today stage What market become providing revenue biggest based in protocols. up to programs currently can if doesn't you that $XX a to get are development-stage current for time materials paying. to to use that million, clinic

we early-stage at more currently than much kilogram timeline a risk under likely small carry Innovation preclinical are volume require on per delays. Based thing dynamic, ECO The a revenue that using $X programs early-stage of estimate development. these that nice assets result, material million. about within ECO Synthesis the a can the relatively As platform Lab be our higher handled per opportunity that cost is asset this is of and

needed move the down, revenue significant. the opportunity up you per kilogram dramatically but quantities through becomes the comes incredibly cost that clinical so As trials, go

Phase revenue pharma Codexis, Following in we could million assets what million the see our top $X in somewhere business. $X line to here, I, similar to manufacturing visual between generate II for

per volumes. become a product million XX However, $X.X billion Codexis. asset At that by Phase could a a we million, for $XXX for drug annual opportunity of commercial for revenue by followed annual a opportunity revenue estimate of roughly potential III, $XXX years, single figure,

the walk there. how this producer Slide chain With XX% the of it's easy GMP-grade direct me business, to for siRNA. On a get for to why gross climb we potential become value let margins greater see through you X, or we want to

from mentioned already orders as earlier, generating ligase First, we program. double-stranded RNA I our are

in with constructs pharma deliver they derived which ones, are sequential and of CDMOs Second, to concept. chemically their and/or compare using synthesis, can proof we ligation several large to specific important also conversation an

to flexible capabilities on and space Fourth, allow combination of produce drive will of grams of preparation representing the Through efficiency Centralizing of in track synthesis sequential ECO with of a the for which siRNA material, towards Lab, will Innovation studies our customers. ECO first IND. XXXX, expect them our the Third, around becoming to a CDMO. one supply us of manufacturing we for the completion Synthesis step dedicated expect in our ligation year. in an our for our tens end GLP-grade Lab siRNA in toxicology consolidation remains to efforts through Innovation get to we customers hundreds use and

Finally, approximately is deliver can the hundred our to siRNA next material that of build provider an own natural in clinical to trials. kilograms step a supply becoming customers' few annually GMP facility

scoping X in While path a complete, manufacturing with conversations take to partnering likely GMP we using engaged also customers we already term this to started provide facility, years would have to nearer our which are technology. up

supply need we facility. chain own material to know raw We for that both our GMP partnering address also and the

couple on the flow will plan that as While without that revenue the around a the to is cash our Slide fund various best I from RNA what from that laid end be are to we the positive manufacturing value compromising just upon climbing commercialization is important streams GMP briefly thoughtful this And we double-stranded to we believe ligase path plus XX, GMP footprint revenue summarize investment we facility flow of pharma trajectory. On that That of out. relying to not way XXXX. growth very I to the to that pipeline, want expected see orders. from want on be I our chain, existing building clear based get

optimization First, through to we drive double-stranded near-term services. our and expect revenue ligase screening customized RNA

our customers assets revenue into extensive see engineering, will product that near-term be we customized trials. Alternatively, from translate identify revenue as could can R&D clinical quickly. if require engineered ligase their the suitable to they with likely this scale For and product we potential scale revenue library variants

siRNA sequential constructs. development can synthesis and value create desired our to Innovation take could and to Second, our critical customers' creation, longer-term we also Lab, projects on ligation through do where ECO we

Third, could mentioned, product-related small years. few modest siRNA service produce I next Lab revenue over as in the ECO provide quantities expect we the and to the GLP-grade of Innovation

we footprint. siRNA and XXXX, revenue Finally, our partnerships providing by with through beyond generate GMP-grade then expect CDMO customers with initially to own GMP

to XX. Moving Slide on our milestones

As discussions. partners with technology. With At our and meeting of let an become about you customers meeting TIDES the publicly seen, discuss turn for and ECO the financial commercial results TIDES to the us Synthesis important the our we to for advance validation platform Europe showcase in show November, technical that, me expect over their expressing has to call rest to Sri to our outlook have the year. of venue excitement updates continued upcoming

call. our exactly line good and revenues with Thanks, and our in on XX, last QX during guidance Kevin, Starting afternoon, were expectations the provided everyone. we Slide

expectations line to this second let guidance elements million and of including of and year-over-year I'll through sight revenues were product delivering R&D driving million. key of to XX% our quarter growth. at for product revenue half first we QX. clear but on Total least me Looking revenues to our half $X.X a see year, ahead, XXXX, we $X million have second full second review shortly, revenue strong of year of a walk $X.X the revenues continue

in be is The As always were to where last highest is the year, was quarter down projecting We product of which opposite XXXX QX $X non-cash fee recognized by product our that license we as R&D expected, year, would gross QX to last compared XXXX. this This revenue margin XXXX. lowest QX quarter. year of a this our Biotherapeutics' revenue compared of decrease revenue quarter. largely as XX% in was QX was million primarily XXXX, Product down well reflects having QX mix. driven the

XXXX compared year. Turning expenses. expenses last to $XX.X to million $XX.X second quarter million R&D for were the of

R&D to in year, reduction expense ramp-up and to that You year, reflected up can note see the we this expenses. continued of XX% QX the last actions to R&D QX benefit expect the want of were year-over-year a compared little also in This took I we expenses a million XXXX. slight half second in was compensation ECO of were non-cash a expense Synthesis year to of $X investment. SG&A stock-based second Lab compared in see million. expenses by primarily Innovation modification $XX.X the for the quarter million one-time of the $XX.X driven

quarter to and expenses last $XX.X SG&A million Excluding this one-time in were charge, the year. flat

The distribution XXXX. look the of to of our want I Now at the closer year Slide excluding PAXLOVID, on take XX a revenue, through our XXXX historical shows dynamics. first XXXX product a revenue graph halves across and for second

have before, As primarily you throughout revenue the year, and we of by an can customer see as timing we see of distribution orders. driven typically discussed uneven

better we takeaway look the revenue XX% XXXX in As what be The a previously product have last year-to-date our closer indicators year, product XX Slide at trends is revenue XXXX. product and much roughly trends. are more our like first our communicated, lumpy graph the of of tends is our half a shows weighted that of we on making on of the look single XXXX quarter, comparison revenue saw years. focusing for to this annual The between any overall instead and X progress. Taking here

the we to you reduced some quarter-to-quarter of advance. revenue in time, see, programs diversification Big smooth products, our can continue this Over pharma As pipeline have manufacturing to the X out we expect concentration as commercial lumpiness.

guidance. Turning to

gross We we margin get reiterating ranges, product and are in our revenue there. how confident XXXX and here's

to first up product half. with XX% are XX% to the roughly the second revenues actual roughly of million Our half expected of $XX.X year weighted make

of likelihood. binding very we revenue strong orders have already and the commitments includes orders. of half second existing from expected indication most where or Importantly, comes This

are order a deliver we example, RNA to from QX. in ligase pharma the million an double-stranded $X.X large As customer contracted

the mix We also the expect with include the expect second QX followed product a half by product year help the we revenue and higher-margin growth Slide in to least to revenue to be modeling, products to the of half to QX this of of XX. year. compared with product year, XXXX. Shifting XX% strong return as To versus overall QX an in at first line

was our May, QX in previewed better R&D business. than QX year's in we and line As R&D-based this revenue roughly actually

and business, Now from Biotherapeutics. based about non-recurring we talk like we items when our discontinued revenue excluding programs are

range there. $XX Looking million take guidance $XX R&D get at let how full you to our me of year we million, through

business rate DNA million. Our R&D-based Roche. with to run $X to $X is $X recorded also approximately million we million agreement related In double-stranded QX, ligase the

ground and we that, XXXX new year. new of anticipated license large rest year. these our from ahead, make fees and screening projects the expect drive to To will one-off revenues several come R&D off in we midsized of programs programs to progress have Looking getting translate later in back pharma the revenue the into and half continued other across biotechs, significant this R&D this

revenue roughly QX followed In by just factors the is with of modeling, outlined. terms I expected a QX based be to R&D in line strong and on QX QX,

Moving strong cash, to million flow through which our XX. continue cash operations a flow to in fund and doubling cash around products of end We will cash of we positive $XX.X of path is position by That the XXXX. revenue equivalents XXXX. with positive expect quarter anticipated a Slide ended investments, cash roughly planned the to

we to the Stephen. existing path chain see provider. And a double-stranded we trajectory growth value now on and orders. get turn couple we From full-fledged for even already RNA pharma there, SiRNA based plus as a Codexis heard to call a clear I'll become service an higher have an there, climb primarily the baked back that's you manufacturing As in ligase today, of pipeline, via

Sri. you, Thank

siRNA to path As becoming today's hear from a conviction major you our a strong have in player in can synthesis. we commentary,

path you the things a have get of There us for end around we're to maintaining flow our to few focused cash to that addition, believe XXXX. on are In just there. positive

strong including in this half will pharma orders that, manufacturing drive a product 'XX product revenues, year First, customer. After we growth orders, by order a pipeline, driven a ligase from few expected our today's ligase and first and second revenue additional in large of pharma that RNA double-stranded plus existing only expect 'XX.

we remain future. GMP-grade R&D upside the beyond product ECO Finally, Codexis' potential next near-term of Innovation and adding revenue our top Lab that, growth revenue on and focused in On to programs manufacturing significant screening provide evolution the pharma can a XXXX. and facility new for drive

questions. Now we'd your Operator? to take be happy

[Operator Instructions] Fitzgerald. from Kluska of line Our first questions come Kristen Cantor with the

One we you the a platform on get for Synthesis is in in This or company is leveraged have What [indiscernible] you be to on with question are line switching whether elaborate potentially are consider drugs testing. do need could just been process? lot companies And could discussion in currently a -- approached to questions. clinical them? work would how the ECO by if currently that for more you've

to is going that development approached The I'd about their platform companies in Kevin being it in think to second. it I'm way already are our by clinical conversations, we these the our applicable I in trials, can even or the of in yes, market synthesis to are how platform that drugs. so talk to looking a midst is rephrase him at throw how on over already drugs But on and the And is the market.

So Kevin?

today. They're Absolutely. margin see based you in super upon we the improvement slides outlined Sure. that interested the can

are derive today and clinical because products savings, shortmers an of foremost, they ligate that's ligating at is double-stranded see customers immediate same can PAC, the really phosphoramidite growth the applied, them ECO later RNA in then are cost chemistry, and sequential with together. doing Also synthesis the they in with today. some and years. immediate technology and can full That shortmers platform, for large-scale trials exciting them offers with where looking be ligase, had that and we shortmers synthesize applicable First impact through an and we've conversations really together, Synthesis that the commercial

Peterson Jefferies. line come Our with Tycho from next questions the of

left Tycho. is there launch? type ECO that? that and year-end. is the be payment? terms in just level outlined us process the Maybe Just And about of collaboration? than milestones technical Can what's visibility your and by pilot you on of collaboration collaboration? release looks on then bit comments press technological first remind appreciated. expected. one, color of then Is it for you Matt on faster commercial for here exactly in And technical your This a would first into any between a that the Is a like around upfront some type terms Can more in that what of just partnership talk you

sequential And of of I'm both to the Stefan Thanks, about And also different in where working But and the next we're with constructs both the get and the the synthesis. in about the described, Kevin, conversations in we're of super process are to pleased technical the could in of platform. what talk the around to on Matt. if pitch different Kevin but ask shortmer and platform we to methods terms you terms that going talk thought then flexibility terms progress the ligation also and partner.

So Stefan?

Thanks, Stephen. Yes.

an enzyme addition. us the key that for each is still of to focusing very relevance is much XXXX engineering commercial get on we're cycle will priorities development for time year. iterative the us The X process So

both that from other from is The we a for see and of technical advantageous, perspective. an enzymatic are route reagents an critical highly economic the which we developing aspect supply

are what Yes. counterparts. a collaboration add chemistry from And concept proof asking us do to their technical can can delivering phosphoramidite compare do constructs to Kevin. their of is with this them customers is I standpoint, they so

super TIDES say would has technical months the that out ahead an gotten by like that as of on in of collaboration, from well raw saw as our the we it what we've we allows to then. a we're you still Innovation presentation, just you front, having to synthesis hands a I'd I materials that that development you us because terms of probably solidify and think X from can outlined, technical outline customers. we're versus into outlined, in will to 'XX few progress the I where before Stefan process So what method for a of few Stefan excited have I'm USA going point do guys have accelerated path been that's done being and the already put that heard to to as now. specifications seen an other enzymatic that Lab customers where ECO doing And

coming optimization Great. the TIDES. your We you to ligase look of launched to service And then customers. work maybe out one on optimize for

I and think talk But the you a offered bit kit doing a a just guys in-house, and send on guys X now, funnel which of more and months given libraries you it out mix order think about or it's options, far service? for then bit been demand to sending kind to just between kits of the as deep TIDES any you both faster, kind I as of it few work was have. can you optimization it the you guys

Sure.

elements months there service. ligase use And testing about customers roll Lab, So seen critical is us are since is conditions to then, having we that our the to of think couple to they've as sending the what more of and we services, not the don't to be and Innovation able by happen on super in. ECO us launching them on, it variant optimization done the they might doing able we their to our up want speed them that from to out them part be excited service customers. receptivity out there's And been identifying and counsel sending until want really that other screening to them in because then, last we we substrates really through just samples to were the parameters

us ones in from which customers, could bringing growth result, to years. and confidence bigger do up. rapidly And paths. And existing next both the gives only we're more offer of pipeline also more excited to send even able of their a developed our ligase customers we obviously couple board, having So scale not on but be about in a the maybe it as potential couple candidates, a outpace substrates which new us also other getting we've that orders

head one months key it focus of just about some if now Can could Operations areas squeeze of maybe you more onboard then Britton on here. to coming up And just I they're the the and the in to Commercial bring rationale in board. talk

Sure.

So as we bringing the is Britton part a an the of a have as on whole, stage of see looking where around for Codexis been important evolution next table board team to relevant brings XX organization. which Codexis have doesn't skills other in in we is Britton years CDMO experience the gaps necessarily in space, something needs and of where the that droves. have

it to somebody So next the type for that build-out we and as of thought on experience with of go future. phase prudent the into growth we Codexis' bring

Matt from questions [Operator come next Craig-Hallum. the with Our Instructions] of line Hewitt

This is Jack Matt. on for

what Just considering and from is the on environment some macroenvironment, improving industry provide funding guys you in we've Could heard just the from biotech are insight hearing that others the QX. pharma throughout you or seeing your customers?

that? do want take to you Kevin,

positive relates innovation to relatively it budgets. feedback, heard as We've Yes. especially

in what terms or on budgetary not. of lot experienced haven't considerations a pushback We

on been where pharma be a I a time as it's of looking leapfrog technology So focused progress just for simple people pushback fund exciting that -- really companies and projects space. the not and like in up of think period we seen or haven't at really, any is answer to here just progress this I all, are Right. willingness to in think, result might ways as really, set

one And Kevin. thing add, I'd

analytical game having you'd regulatory to the making stuff, the siRNA, more with all the also I particularly us with just think not the innovation phase good providing terms making that that in backing, money product, for the it's really think earlier raises and stuff. about framework, for of agree is

are So the a of full we forward. provider solution truly service to take siRNA the

there's good all in to a long-term, the work lot news, it's So -- but of do. it's

Dilly call the no I'll turn questions. closing for to showing I'm further are there back over Stephen remarks.

joining And second the as today. thanks on a we're year. us for very half Well, hear, underway of you busy again

on stay and progress investor share us. So our slate connecting fall you the events the will be see tuned please over look conferences also forward through highlight Obviously, a few around many months. to our of TIDES Europe updates of the as we next for And we'll then.

again. thanks So

teleconference. today's We conclude Thank appreciate you. your does This participation.

of may time. You at day. Enjoy rest your lines the this disconnect your