Codexis(US:CDXS)2022-08-07 12:00Financial Data and Key Metrics Changes - Total revenues for Q2 2022 were $38.4 million, a 51% increase from the prior year [43] - Product revenues for Q2 2022 were $34.6 million, compared to $14.7 million in Q2 2021, driven by higher enzyme sales to Pfizer for PAXLOVID [44] - R&D revenues decreased to $3.8 million from $10.7 million in the previous year due to fewer new deals and lower revenue from existing customers [44] - Product gross margin for Q2 2022 was 67%, down from 71% in Q2 2021, primarily due to product mix changes and higher shipping costs [45] Business Line Data and Key Metrics Changes - Performance Enzymes segment revenue increased 69% to $36.5 million in Q2 2022, with an operating profit margin of 40% [49] - Biotherapeutics segment revenue was $1.9 million, with an operating loss of $9.9 million, reflecting increased investment in self-funded programs [49] Market Data and Key Metrics Changes - The company serves 21 of the 25 largest pharmaceutical companies, indicating strong market penetration [17] - The food sector generated over $1 million in sales this quarter, with significant contributions from customers like Tate & Lyle [23] Company Strategy and Development Direction - The company aims to drive double-digit growth in non-Pfizer product sales and expand its presence in the food and industrial verticals [56] - Focus on advancing and monetizing the biotherapeutics pipeline, with expectations for significant growth in 2023 [58] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a slowdown in R&D revenue growth due to macroeconomic factors but expressed confidence in recovering significant sector revenue growth in 2023 [25][52] - The company anticipates positive cash flow in the second half of the year due to a $25 million payment from Pfizer [54] Other Important Information - The company has not drawn any funds from its $50 million ATM equity facility established in May of the previous year [48] - The CEO transition is expected to maintain continuity, with Dr. Stephen Dilly taking over leadership [59][64] Q&A Session Summary Question: What attracted Stephen Dilly to the CEO role? - Stephen Dilly expressed excitement about the core technology, CodeEvolver, and its potential to add value across various applications [67] Question: Update on the pipeline and new programs? - John Nicols highlighted the growth in the pipeline, with 20% increase in assets and significant headroom for revenue growth in food and life sciences [71][73] Question: Update on Roche T4 DNA-Ligase license agreement? - The technology was transferred to Roche, which is working on integrating it into their products, with revenues expected as royalties on their sales [78] Question: Insights on Molecular Assemblies partnership? - The partnership is progressing well, with expectations for milestone payments and royalties on product sales, enhancing the company's revenue potential [81][84] Question: Impact of Pfizer's manufacturing process improvements on enzyme orders? - Management clarified that the enzyme provided was off-the-shelf and not engineered by the company, indicating no adverse impact from Pfizer's success [88]