Codexis(CDXS) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents unaudited condensed consolidated financial statements, highlighting increased Q2 2025 revenue, narrowed net loss, and substantial cash inflow from financing activities Condensed Consolidated Balance Sheets Total assets decreased to $138.2 million by June 30, 2025, from $149.0 million, driven by reduced short-term investments, while equity also declined Condensed Consolidated Balance Sheets | Financial Metric | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 26,761 | 19,264 | | Short-term investments | 39,569 | 54,194 | | Total current assets | 88,729 | 98,772 | | Total assets | 138,246 | 149,011 | | Liabilities & Equity | | | | Total current liabilities | 15,237 | 23,648 | | Long-term debt | 39,373 | 28,905 | | Total liabilities | 82,615 | 82,084 | | Total stockholders' equity | 55,631 | 66,927 | Condensed Consolidated Statements of Operations Q2 2025 total revenues nearly doubled to $15.3 million, driven by R&D, significantly narrowing net loss to $13.3 million from $22.8 million Condensed Consolidated Statements of Operations | Metric ($ in thousands, except EPS) | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | 15,328 | 7,979 | 22,871 | 25,052 | | Product Revenue | 7,380 | 6,259 | 13,439 | 15,810 | | R&D Revenue | 7,948 | 1,720 | 9,432 | 9,242 | | Loss from Operations | (12,862) | (22,732) | (33,348) | (34,620) | | Net Loss | (13,272) | (22,755) | (33,960) | (34,260) | | Net Loss per Share | (0.16) | (0.32) | (0.40) | (0.49) | Condensed Consolidated Statements of Cash Flows Net cash used in operations increased to $31.8 million, while investing activities provided $11.4 million, and financing provided $27.9 million Condensed Consolidated Statements of Cash Flows | Cash Flow Activity ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | (31,765) | (19,957) | | Net cash provided by (used in) investing activities | 11,402 | (55,650) | | Net cash provided by financing activities | 27,859 | 29,084 | | Net change in cash, cash equivalents & restricted cash | 7,496 | (46,523) | Notes to Condensed Consolidated Financial Statements Notes detail revenue by geography, the $40 million Innovatus Loan, $16.4 million from equity sales, and significant customer concentration - For the six months ended June 30, 2025, the Americas and APAC regions were the largest sources of revenue, contributing $8.4 million and $8.1 million, respectively[39] - The company entered into a five-year term loan agreement with Innovatus for up to $40.0 million, with the second tranche of $10.0 million funded in June 2025[74] - During Q2 2025, the company sold 7,244,966 shares of common stock under its Cantor Sales Agreement, receiving net proceeds of $16.4 million[67] - Customer concentration remains high, with Customer A and Customer B accounting for 21% and 19% of total revenues, respectively, for the three months ended June 30, 2025[82] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strategic focus on pharma biocatalysis and ECO Synthesis™, highlighting a 92% Q2 revenue increase, improved gross margin, and sufficient liquidity Business Overview Codexis leverages its CodeEvolver® platform for pharma biocatalysis and develops the ECO Synthesis™ platform for RNAi therapeutics manufacturing - The company's core strategy revolves around its proprietary CodeEvolver® directed evolution technology platform to develop novel enzymes[85] - Key focus areas are the established pharma biocatalysis business and the emerging Enzyme-Catalyzed Oligonucleotide (ECO) Synthesis™ manufacturing platform for RNAi therapeutics[85] - In 2025, the company expects to manufacture GLP-grade siRNA for customers in its Innovation Lab and partner with a CDMO for GMP-grade synthesis using the ECO Synthesis™ platform[87] Results of Operations Q2 2025 total revenues surged 92% to $15.3 million, driven by R&D, with product gross margin improving to 72% and SG&A expenses decreasing 21% Results of Operations Summary | Metric ($ in thousands) | Q2 2025 | Q2 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | 15,328 | 7,979 | 7,349 | 92% | | Product Revenue | 7,380 | 6,259 | 1,121 | 18% | | R&D Revenue | 7,948 | 1,720 | 6,228 | 362% | | Cost of Product Revenue | 2,098 | 3,462 | (1,364) | (39)% | | Product Gross Margin | 72% | 45% | - | - | - The increase in Q2 R&D revenue was driven by $3.6 million from legacy agreements and $2.5 million from a new licensing agreement executed in the quarter[95] - SG&A expenses decreased by $3.4 million in Q2 2025 compared to Q2 2024, mainly due to $2.2 million in lower stock-based compensation and $0.9 million in lower legal costs[102] Liquidity and Capital Resources The company holds $66.3 million in cash and investments, supported by a $40 million term loan and equity sales, deemed sufficient for 12 months Liquidity and Capital Resources Summary | Metric ($ in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | 26,761 | 19,264 | | Short-term investments | 39,569 | 54,194 | | Working capital | 73,492 | 75,124 | - The company secured a five-year term loan from Innovatus for up to $40 million, with the full amount drawn as of June 27, 2025[112][116] - Under the Cantor Sales Agreement, the company raised gross proceeds of $17.3 million during Q2 2025[117] - Management believes existing cash and expected revenues will provide adequate funds for operations for at least the next 12 months[119] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company faces interest rate and foreign currency risks, but a hypothetical 10% adverse change is not expected to materially impact its financial position - As of June 30, 2025, the company had $66.3 million in cash, cash equivalents, and short-term investments subject to interest rate risk[128] - The company has $40.8 million in principal outstanding under the variable-rate Innovatus Loan, where a 10% increase in the prime rate would impact results by $0.3 million over the next twelve months[129] - Foreign currency risk is considered minimal, with a hypothetical 10% unfavorable change in exchange rates resulting in a potential loss of approximately $40 thousand[130] Item 4. Controls and Procedures Management, including CEO and CFO, deemed disclosure controls effective as of June 30, 2025, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[134] - No material changes to the company's internal control over financial reporting were identified during the most recent fiscal quarter[135] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material pending litigation or other legal proceedings - As of the filing date, Codexis is not involved in any material legal proceedings[138] Item 1A. Risk Factors This section outlines key risks including net losses, customer and manufacturer dependence, unproven ECO Synthesis platform, competition, and financial and regulatory risks - Financial & Strategic Risks: The company has a history of net losses and may not achieve profitability, is dependent on a limited number of customers, and its new ECO Synthesis platform is based on novel, largely unproven technology[140][142][163] - Operational Risks: Codexis relies on a limited number of third-party contract manufacturers for large-scale production of its enzymes, posing a risk to supply chain stability[140][157] - Capital & Debt Risks: The company may need additional capital in the future and must comply with covenants in its loan agreement with Innovatus, which could restrict business operations[141][185][187] - Regulatory & IP Risks: The company's and its customers' products are subject to extensive regulation, and protecting its intellectual property rights is critical and may involve costly litigation[141][143][208] Other Items (Items 2, 3, 4, 5, 6) This section covers remaining disclosures, including no unregistered equity sales, no defaults, no Rule 10b5-1 plan changes, and a list of exhibits - There were no unregistered sales of equity securities during the period[259] - During the three months ended June 30, 2025, no directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements[262]