Codexis(US:CDXS)2022-11-05 21:15Financial Data and Key Metrics Changes - Total revenues for Q3 2022 were $34.5 million, a decrease of 6% from the prior year period [37] - Product revenues for Q3 2022 were $28.0 million compared to $28.7 million in Q3 2021, with a significant decline in enzyme sales related to PAXLOVID [38] - Excluding PAXLOVID, product revenues grew 53% year-over-year [38] - The net loss for Q3 2022 was $10.0 million, translating to a loss of $0.15 per share, compared to net income of $2.2 million or $0.03 per share in Q3 2021 [41] - Cash and equivalents as of September 30, 2022, stood at $109 million, with no funds drawn from the $50 million ATM equity facility [41] Business Segment Data and Key Metrics Changes - Performance Enzymes segment revenue decreased 4% to $31.1 million in Q3 2022, with an operating profit margin of 35% [42] - Biotherapeutics segment revenue was $3.3 million, with an operating loss of $11.4 million, reflecting increased investment in self-funded programs [42] Market Data and Key Metrics Changes - The company aims to focus on pharmaceutical manufacturing and life sciences, which represent approximately 95% of revenue in the Performance Enzymes segment [12] - The Life Sciences market is viewed as having significant growth potential, particularly in genomic sequencing and DNA/RNA synthesis [16] Company Strategy and Development Direction - The company is refining its strategy to focus on markets where it has a competitive advantage, particularly in Performance Enzymes and Biotherapeutics [6][9] - There is a commitment to maintaining cash runway through the end of 2024 to leverage scientific capabilities and intellectual property [11] - The company plans to prioritize attractive market opportunities and enhance commercial discipline [9][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the need to adapt to a changing market reality and focus on fewer, more promising projects [10] - The company is optimistic about the potential of its pipeline, particularly in pharmaceutical manufacturing and biotherapeutics [14][24] - Management emphasizes the importance of product revenues over R&D revenues, which are less profitable [53] Other Important Information - The company has made several key leadership appointments to strengthen its team [7][8] - There is a focus on increasing commercial efforts to reach new customers and improve responsiveness [15] Q&A Session Summary Question: Can you elaborate on the near-term versus mid to long-term focus for the commercial strategy? - The near-term focus is on existing customer relationships and mid-size pharma companies to create a revenue pipeline [50] Question: What is the current state of R&D revenue and partnering activity? - The macro environment has not changed materially, and expectations for R&D revenue remain conservative [52] Question: Are there potential revenue milestones tied to the therapeutic pipeline? - There are potential milestones, but they are not expected to be overly material in size [55] Question: What is the size of the commercial organization and plans for expansion? - The commercial organization currently has around 20 members, with plans for modest expansion by 5 to 10 additional staff [57] Question: How does the company differentiate itself in the biocatalysts market? - The company has established relationships with major players and focuses on mid-size companies that require biocatalysis technology [58] Question: Is there a plan to license the CodeEvolver platform? - There are no current plans to license the CodeEvolver platform, with a focus on continuous improvement instead [62] Question: How quickly can the company ramp up the business of producing and selling kits? - The company is in early stages and will take time to understand customer needs before fully committing to this strategy [63] Question: What is the outlook for the existing relationship with Tate & Lyle? - The food and industrial part of the business represents about 5% of revenue, and the relationship with Tate & Lyle is expected to remain status quo [68]