Codexis(CDXS)2024-08-09 03:01Financial Data and Key Metrics - Q2 2024 total revenues were 6.3 million in product revenues and 1.7 million in R&D revenues, down compared to Q2 2023 [23] - Product gross margin was 45% in Q2 2024, down from Q2 2023 due to product mix [23] - R&D expenses decreased by 34% year-over-year to 11.4 million in Q2 2024, reflecting cost-saving measures [24] - SG&A expenses were 2 million stock-based compensation charge [24] - The company ended Q2 with $73.2 million in cash, cash equivalents, and investments, sufficient to fund operations through positive cash flow expected by the end of 2026 [28] Business Line Performance - The pharma manufacturing business is expected to drive strong product revenue growth in the second half of 2024, supported by existing and expected orders [6][26] - The ECO Synthesis platform has accelerated commercial momentum, with the company now engaging with major players in the siRNA manufacturing space [7] - The double-stranded RNA ligase program is gaining traction, with a large pharma customer testing the technology for a Phase 2 asset moving into Phase 3 [13] Market and Strategic Focus - The company is focused on growing its pharmaceutical manufacturing business and enabling siRNA therapeutics through the ECO Synthesis platform [4] - The ECO Synthesis platform has demonstrated the ability to synthesize full-length oligonucleotides and achieve coupling efficiency of over 98%, comparable to traditional chemical methods [8][10] - The company is targeting a stepwise approach to becoming a direct producer of GMP-grade siRNA, with plans to produce GLP-grade material in 2025 [7][18] Management Commentary on Outlook - Management reiterated full-year 2024 guidance, expecting double-digit product revenue growth and a strong second half of the year [4][22] - The company is confident in its path to positive cash flow by the end of 2026, driven by growth in the pharma manufacturing pipeline and double-stranded RNA ligase orders [28][29] - The ECO Innovation Lab and potential GMP facility are seen as key drivers of future growth and value creation [19][21] Q&A Session Summary Question: How can the ECO Synthesis platform be leveraged for drugs in clinical testing? - The platform is applicable to drugs in development or on the market, with companies showing interest in the margin improvements it offers [31][32] - The double-stranded RNA ligase provides immediate cost savings for products in clinical trials, while the full ECO Synthesis platform can be applied for sequential synthesis and ligation [33] Question: What technical milestones remain for the ECO Synthesis platform? - Key priorities include reducing cycle time for iterative additions and developing an enzymatic route for critical reagents [36] - The company is ahead of schedule, with progress in delivering constructs for proof-of-concept comparisons with traditional chemical methods [37] Question: What is the demand for the ligase optimization service? - Customers are increasingly opting for in-house optimization services, which are faster and more efficient [38] - The service has expanded the pipeline of potential candidates, with confidence in securing additional ligase orders and attracting new customers [39] Question: What is the rationale for hiring Britton Jimenez as SVP of Commercial Operations? - Britton brings 20+ years of CDMO experience, addressing a skills gap as the company enters its next growth phase [41] Question: How is the funding environment impacting customer behavior? - The funding environment has improved, with no significant pushback on innovation budgets, and customers are eager to fund projects in the siRNA space [45][46]