• Total Revenue: $8 million for Q2 2024.
• Product Revenue: $6.3 million for Q2 2024.
• R&D Revenue: $1.7 million for Q2 2024.
• Product Gross Margin: 45% for Q2 2024.
• R&D Expenses: $11.4 million for Q2 2024, a 34% reduction year-over-year.
• SG&A Expenses: $15.7 million for Q2 2024, including a one-time non-cash stock-based compensation expense of $2 million.
• Cash Position: $73.2 million in cash, cash equivalents, and investments as of the end of Q2 2024.
• 2024 Revenue Guidance: At least 10% year-over-year product revenue growth.

• Warning! GuruFocus has detected 6 Warning Signs with CDXS.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Codexis Inc (NASDAQ:CDXS) is on track to achieve double-digit product revenue growth for 2024, with a strong second half expected.
• The company has a deep pipeline of pharmaceutical manufacturing opportunities, which are advancing into late-stage clinical trials and commercialization.
• Codexis Inc (NASDAQ:CDXS) has strengthened its commercial organization by adding a new Senior Vice President of Commercial Operations, Britton Jimenez, who brings over 20 years of experience in the CDMO space.
• The ECO synthesis platform is ahead of schedule, accelerating commercial momentum and engaging major players in the siRNA manufacturing space.
• The company is focused on becoming a direct producer of GMP-grade siRNA, which could significantly enhance revenue opportunities and margins.

Negative Points

• Q2 2024 revenues were down compared to Q2 2023, with total revenues at $8 million, reflecting a decrease in both product and R&D revenues.
• Product gross margin decreased to 45% this quarter, largely driven by product mix.
• R&D expenses, although reduced year-over-year, are expected to ramp up in the second half of the year due to investments in the ECO synthesis Innovation Lab.
• The company faces challenges in transitioning to a direct producer of GMP-grade siRNA, which involves significant investment and development of a new GMP facility.
• Codexis Inc (NASDAQ:CDXS) acknowledges the lumpiness in revenue distribution throughout the year, which can lead to uneven financial performance across quarters.

Q & A Highlights

Q: How can the ECO Synthesis platform be leveraged for drugs currently in clinical testing, and are there ongoing discussions with companies about this? A: Stephen Dilly, CEO, explained that the platform is applicable to drugs in development or on the market. Kevin Norrett, COO, added that companies are interested due to potential margin improvements. The platform can synthesize drugs using double-stranded RNA ligase, offering immediate cost savings, and is applicable for products in clinical trials.

Q: What are the remaining technical milestones for the ECO platform, and what does the first technical collaboration entail? A: Stephen Dilly, CEO, and Stefan Lutz, SVP of Research, noted that 2024 focuses on enzyme engineering and process development. Kevin Norrett, COO, mentioned that customers are interested in proof of concept for their constructs, and the ECO Innovation Lab will facilitate this. The collaboration involves comparing constructs to phosphoramidite chemistry counterparts.

Q: Can you discuss the demand for the optimization service launched recently and the customer preference between ordering kits or in-house optimization? A: Stephen Dilly, CEO, stated that the service allows customers to send substrates for rapid optimization, which has been well-received. This approach helps identify variants and conditions quickly, leading to a growing pipeline of potential candidates and increased customer engagement.

Q: What was the rationale for hiring Britton Jimenez as SVP of Commercial Operations, and what will be his focus? A: Stephen Dilly, CEO, explained that Britton Jimenez brings 20 years of CDMO experience, which is valuable for Codexis's growth. His focus will be on leveraging this expertise to drive the next phase of Codexis's development and commercial strategy.

Q: How is the current macro environment affecting funding in the pharma and biotech industry, and what are you hearing from customers? A: Kevin Norrett, COO, noted positive feedback regarding innovation budgets, with no significant pushback on funding. Companies are eager to invest in technology that can leapfrog current capabilities, indicating a willingness to fund projects in this space.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.