Codexis (CDXS) 8 Aug 24 2024 Q2 Earnings call transcript
Codexis Inc., a leading enzyme engineering company, recently held its second-quarter 2024 earnings call, highlighting the company's strategic pivot towards growing its revenue-generating pharmaceutical manufacturing business and enabling the manufacture of siRNA therapeutics through its ECO Synthesis manufacturing platform. The call, led by CEO Stephen Dilly, COO Kevin Norrett, CFO Sri Ryali, and SVP of Research Stefan Lutz, provided valuable insights into Codexis' strategic direction, financial performance, and growth prospects.
Strategic Pivot and Financial Performance
Codexis announced a strategic pivot in 2023, focusing on two key areas: growing its revenue-generating pharmaceutical manufacturing business and enabling the manufacture of siRNA therapeutics through its ECO Synthesis manufacturing platform. This strategic move is paying off, with the company reiterating its full-year 2024 guidance and anticipating double-digit product revenue growth for the year.
In the second quarter of 2024, Codexis reported revenues of $8 million, which were in line with expectations. The company is confident in a strong second half of the year, driven by existing and expected orders. Product gross margin for the quarter was 45%, slightly lower than the previous year due to product mix. However, the company is optimistic about achieving a return to at least 10% product revenue growth versus 2023.
ECO Synthesis Platform and siRNA Manufacturing
Codexis' ECO Synthesis platform is a game-changer in the siRNA manufacturing space. The company is already engaged with major players in the industry and is seeing significant momentum in commercial discussions. Codexis' unique approach to synthesizing oligonucleotides through sequential synthesis and ligation has caught the attention of large pharma players, with several conversations underway for potential orders.
The company's double-stranded RNA ligase program is seen as a bridge into enzymatic solutions for customers currently using traditional chemistry. With the potential to significantly reduce costs of goods sold (COGS), Codexis' library of engineered ligases provides a clear financial incentive for companies to switch from wildtype, even for later-stage assets.
Future Growth and Challenges
Codexis' path to positive cash flow by the end of 2026 is ambitious but well-planned. The company is focusing on a calculated stepwise approach, driven by its existing pharma manufacturing pipeline, a few double-stranded RNA ligase orders, and new screening and evolution programs. The ECO Innovation Lab and potential GMP-grade facility are expected to provide significant upside for the future.
However, the company faces challenges in raw material supply chain for both partnering and its own GMP facility. Codexis is carefully considering the best approach to fund its GMP investment without compromising its trajectory.
Investor and Analyst Interactions
Key shareholders and investors raised important questions during the call, focusing on the applicability of Codexis' ECO Synthesis platform for drugs in clinical testing and the company's first technical collaboration for ECO, expected by year-end. Codexis' management provided detailed answers, highlighting the immediate cost savings and margin improvement offered by their platform.
Conclusion
Codexis' second-quarter 2024 earnings call painted a positive picture of the company's strategic direction, financial performance, and growth prospects. With a clear focus on its pharmaceutical manufacturing business and siRNA therapeutics, Codexis is well-positioned to capitalize on the growing demand for innovative solutions in the biotech industry. The company's strategic pivot, combined with its unique ECO Synthesis platform, positions it as a major player in the siRNA manufacturing space. Codexis' confident outlook for the future, coupled with its robust pipeline and strategic partnerships, bodes well for its long-term growth and success.