Codexis Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 13, 2025

Key Takeaways

  • Positive Sentiment: Codexis reported Q2 revenue of $15.3 million versus $8 million a year ago, halved its operating loss, maintained a strong cash balance of $66.3 million and reiterated full-year 2025 revenue guidance of $64–68 million.
  • Positive Sentiment: Demand for the Ecosynthesis platform has grown to over 30 active engagements, prompting the company to explore options—such as expanding lab capacity or building a GMP facility—to meet customer needs and maximize long-term value.
  • Positive Sentiment: The ligase business continues to gain traction as customers seek superior enzyme performance, with Codexis expecting to add several new ligase clients before year-end as a bridge to its full ECO offering.
  • Positive Sentiment: Product gross margin jumped to 72 percent in Q2 from 45 percent a year ago, driven by sales of higher‐margin products, and the company expects overall margins to improve for 2025 compared to 2024.
  • Neutral Sentiment: Pharma biocatalysis revenue remains subject to “lumpiness” due to variability in customer manufacturing schedules, and a hybrid revenue mix is expected until ECO revenues scale up over the next few years.
AI Generated. May Contain Errors.
Earnings Conference Call
Codexis Q2 2025
00:00 / 00:00

Transcript Sections

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Operator

Welcome to Codexis Second Quarter twenty twenty five Earnings Conference Call. Please note this event is being recorded. And now I'll turn the call over to Georgia Abeers, Chief Financial Officer. Please go ahead.

Georgia Erbez
Georgia Erbez
CFO at Codexis

Thank you, operator. With me today are Doctor. Stephen Dilly, Codexis' Chairman and Chief Executive Officer and Kevin Norick, Chief Operating Officer. During this call, we will be making a number of forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our guidance for 2025 revenue, anticipated milestones, including product launches, pilot scale manufacturing and paths to scale up, technical milestones and public announcements related there too as well as our strategies and prospects for revenue growth, path to profitability and successful execution of current and future programs and partnerships. To the extent that statements contained in this call are not descriptions of historical facts regarding Codexis, they are forward looking statements reflecting our beliefs and expectations as of the statement date 08/13/2025.

Georgia Erbez
Georgia Erbez
CFO at Codexis

You should not place undue reliance on these forward looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond Codexis' control that could materially affect actual results. Additional information about factors that could materially affect actual results can be found in Codexis' filings with the Securities and Exchange Commission. Codexis expressly disclaims any intent or obligation to update these forward looking statements, except as required by law. And now I'll return I'll turn the call over to Stephen.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

Thank you, Georgia, and thanks, everyone, for joining. Our second quarter results are strong and demonstrate our ability to run an effective business. We've maintained a solid cash balance, operating margins are significantly improved, our revenue is above consensus and our operating loss is halved compared to Q2 twenty twenty four. Given this trajectory, it is clear that the objective of cash flow breakeven by the 2026 is attainable. However, given the strong interest in the Ecosynthesis platform with more than 30 ongoing customer engagements, we're considering that this may not necessarily be the best way to create stockholder value.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

It is apparent that demand for Eco will rapidly exceed our ability to supply, starting in the ECO lab and then moving to GMP production. Therefore, we're exploring options that would expand our bandwidth to support early projects now and investing in the future to maximize the return from the ECO platform. The clearest path to creating value over the longer term is to lock in as many early phase product as we can onto the ECO platform. As they mature into late phase assets and commercial drugs, the return on investment becomes compelling, particularly if we remain the direct source of siRNA for as long as possible. To share a bit more, let me pass it over to Kevin.

Kevin Norrett
Kevin Norrett
Chief Operating Officer at Codexis

Thanks, Stephen. Moving to Slide three, we are pleased with recent progress across each of our core businesses and we remain on track for the key milestones we mentioned during Tides U. S. Earlier this year. Before sharing updates on our Ecosynthesis platform, let me start with our strong Q2 revenue, which was driven by increasing orders for enzymes supporting late phase and commercialized APIs within the Pharma Biocatalysis business.

Kevin Norrett
Kevin Norrett
Chief Operating Officer at Codexis

Codexis remains the gold standard in enzyme engineering. Customers continue to bring us their most challenging small molecule manufacturing problems because we have a proven track record of delivering high quality enzymes that address each client specific needs. That credibility has fueled the expansion of our early biocatalysis engagements with some recent wins within the large pharma segment. As we have mentioned before, our commercial focus has been on generating these new programs, but they take time to grow into meaningful revenue streams. However, provide the basis for future revenue growth as they move through clinical trials and towards commercialization.

Kevin Norrett
Kevin Norrett
Chief Operating Officer at Codexis

Shifting to our ECO synthesis platform, customer engagement is progressing nicely. At the Tides U. S. Meeting earlier this year, enzymatic manufacturing solutions were a central focus and three of our CDMO collaborators featured the ECO platform in their own presentations. That meeting also made it clear that ligation, otherwise known as the chemoenzymatic route, is rapidly becoming the new standard in siRNA manufacturing.

Kevin Norrett
Kevin Norrett
Chief Operating Officer at Codexis

As a result, we are extremely focused on winning new ligase customers with our machine learning capabilities and expansive ligase library. Some of our newest customers came to Codexis after they were not able to achieve desired performance from competitor and wild type ligases. We continue to believe ligase performance makes a fundamental difference in the productivity and cost of a manufacturing process and we are seeing indications that our customers are recognizing this too. As I mentioned before, we expect to add several new Ligase customers before the end of the year. Finally, we continue to believe that our Ligase business creates the bridge to our full ECO platform.

Kevin Norrett
Kevin Norrett
Chief Operating Officer at Codexis

We have also continued to fill our sales funnel with new potential ECO Innovation Lab customers. We have signed another new contract with Tides U. S. And we expect to bring additional customers onboard before the end of the year. These proof of concept projects with process development and material scale up allow us to show customers that we can develop for their assets before they commit to our process for GLP material for tox studies and future GMP material for their clinical trials.

Kevin Norrett
Kevin Norrett
Chief Operating Officer at Codexis

As we've said before, another critical element of securing long term customer buy in is to have a credible path to GMP grade material. Our CDMO partnering strategy provides one option, but establishing a Codexis owned GMP facility offers a few key benefits. First, it will dramatically improve our ability to create a seamless scale up process before tech transfer to a customer's chosen CDMO. Second, this facility allows enables us to service small and medium sized drug innovators, allowing them to stay with Codexis for the long term with supply of GMP grade material for their Phase one and two clinical trials. As you can tell, our Ecosynthesis business is lifting off.

Kevin Norrett
Kevin Norrett
Chief Operating Officer at Codexis

Our focus is on translating our exciting commercial momentum into meaningful revenue and we look forward to a busy second half of the year. With that, I will now turn the call over to Georgia for a discussion of our financial results.

Georgia Erbez
Georgia Erbez
CFO at Codexis

Thanks, Kevin. Good afternoon, everyone. Starting on Slide four, I will provide a brief overview of our financial results here on the call and invite you to review our 10 Q filed today for a more detailed discussion. Total revenue for the second quarter ended 06/30/2025 was $15,300,000 compared to $8,000,000 in the 2024. The increase was primarily due to variability in Pharmabio Catalysis customers' manufacturing schedules and clinical trial progression, further demonstrating the trends we've seen of order size and timing having effect on revenue.

Georgia Erbez
Georgia Erbez
CFO at Codexis

As we begin the second half of the year, it's important to note that we will continue to see some lumpiness in our quarter to quarter revenue due to the inherent unpredictability of our heritage business. This will be mitigated over time as ECO revenues begin to grow. But for the next few years, we anticipate a hybrid dynamic while pharma biocatalysis remains a significant percentage of our base business. Product gross margin was 72% for the 2025. This was up from 45% in Q2 twenty twenty four, largely due to shifts in sales to more profitable products and declines in less profitable legacy products.

Georgia Erbez
Georgia Erbez
CFO at Codexis

While this is a significant increase quarter to quarter, we do not anticipate this magnitude of change to be sustained over the entire year. We continue to push for efficiencies practices and expect gross margins to improve for the year for the entire year compared to 2024. Turning to operating expenses. Research and development expenses for the 2025 were $13,840,000 last year. The increase was largely driven by costs associated with higher headcount as well as internal reclassification of certain employees to the research and development function.

Georgia Erbez
Georgia Erbez
CFO at Codexis

Selling, general and administrative expenses were $12,300,000 compared to $15,700,000 in the 2024. The decrease was primarily due to lower stock based compensation expense, lower legal expense and reduced use of outside services. As ECO revenues begin to materialize, we are conscious of our burn rate and remain focused on carefully managing expenses. We are fortunate to be in a strong cash position and we are making the most of that by streamlining our business practices and thoughtfully balancing our resource allocation. The net loss for the 2025 was $13,300,000 compared to $22,800,000 for the 2024.

Georgia Erbez
Georgia Erbez
CFO at Codexis

Finally, based on our current operating plan, we are reiterating our 2025 guidance. As a reminder, we guided to a range of $64,000,000 to $68,000,000 for 2025. We ended the quarter in a strong cash position with $66,300,000 in cash, cash equivalents investments, which we expect will be sufficient to fund our planned operations through the 2027. With that, we'll be happy to take your questions. Operator?

Operator

Thank you. We will now be conducting a question and answer session. Thank you. Our first question comes from the line of Matt Stanton with Jefferies. Please proceed.

Matthew Stanton
Matthew Stanton
Analyst at Jefferies

Hi, thanks for taking my question. Maybe just to start off on the pipeline. If I go back to May on a Tide, I think it was over 20, now you're talking about well over 30, I think the deck had 34 specifically. So can you just help level set us, I assume these are at various stages of discussions, so maybe bucket them out a bit in terms of where they are in the funnel? And then any more color you can provide on the May over 20 to now over 30, coming out of Tide, just mix between biopharma originators or CDMOs, maybe even on a geographic basis, just a bit more flavor on some of those incremental opportunities coming into that pipeline there? Thank you.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

Kevin, that sounds like a great one for you.

Kevin Norrett
Kevin Norrett
Chief Operating Officer at Codexis

Great. No, super exciting to say that we have well over 30 discussions going on. I think that number might even be a little bit higher growing into the 40s as we speak today. Particularly, it's a mix of CDMOs, large drug innovators and small stealth biotech and medium sized biotechs. It's really hard to point any one single customer segment.

Kevin Norrett
Kevin Norrett
Chief Operating Officer at Codexis

I think the other thing in terms of where they are in various stages, I think I mentioned that we signed another one potential customer. We've signed another customer since the last time we spoke and we expect to sign several new Ligase customers before the end of the year. We're very much on track for both of those metrics. But they are at various stages of discussion and we're super excited about the progress we've seen so far.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

Yes. And the great thing about this breadth of pipeline is we can't hope to service all of them. So we can start to choose and select and say where are the places where we can get the most traction, which are the ones that look most interesting to us and that's really driving our strategy.

Matthew Stanton
Matthew Stanton
Analyst at Jefferies

Okay. Thanks. And Steve, maybe sticking with you. Just can you talk about in terms of process development projects entering the Eco Innovation Lab, any more color in terms of those customer programs? I know it's very early days, but how that's maybe tracking versus plan?

Matthew Stanton
Matthew Stanton
Analyst at Jefferies

If there's any way to kind of talk about where utilization of the ECO Lab is today or where it could be by the end of the year? And then maybe the second part of the question, you talked about in your prepared remarks around kind of exploring options for additional capacity. I guess maybe just any more color in terms of what those options are that you're considering? And any update on timing of when we could learn more about that? It sounds like the demand is far out seeing supply.

Matthew Stanton
Matthew Stanton
Analyst at Jefferies

So it sounds like maybe we'll get an update sooner rather than later given that reason, but would just love any more color in terms of the options and the timing around those things.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

Yes. So great question. The thing that we are really excited about is recruiting and locking in early phase projects where they start out of the gate as ECO projects and they remain ECO projects all the way through development and commercialization. The obvious challenge with that is it takes a while and there will be attrition. But the good news is it's actually relatively cheap for us to scale that early phase support.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

And so the very current conversation here within Codexis is how we set up Ecolab number two, because we had a certain capacity for Ecolab number one, and it's very easy to service that early part of the funnel. What we're also finding is that the performance of our platform is very, very good. And we're super pleased with the scalability and what we call volumetric efficiency, which means we can do more with a smaller footprint. And so we're actually rebuilding our models with aspirations to go a lot further ourselves and control the value that way.

Matthew Stanton
Matthew Stanton
Analyst at Jefferies

Okay. Thanks. That's helpful, Mitch. Maybe if I could sneak one more in on the guide. I know you talked about kind of lumpiness, but just any more color to provide in terms of phasing?

Matthew Stanton
Matthew Stanton
Analyst at Jefferies

Will 3Q be up relative to 2Q? I know 4Q is typically seasonally strong, but any more color on the cadence and just visibility and comfort just given the magnitude of the step up from first half kind of low $20,000,000 revenue to low to mid-40s in the back half? Any more color there would be appreciated. Thank you.

Georgia Erbez
Georgia Erbez
CFO at Codexis

Yes. So we still expect a pretty steady growth in our base business, but we've as we guided in the beginning of the year, that guidance is still the same. We do expect the bulk of the growth to come from our ligase and our Ecosystems business for the second half. Based on the cadence of the conversations that we're having and the negotiations we're having, that is where that growth will come from in the second half. And looking at the guidance, the average guidance on the Street, it's within the range of reasonableness.

Matthew Stanton
Matthew Stanton
Analyst at Jefferies

Super. Thank you.

Operator

Thank you. Our next question comes from the line of Allison Bratzel with Piper Sandler. Please proceed.

Allison Bratzel
Allison Bratzel
Senior Research Analyst at Piper Sandler Companies

Hey, team. Good afternoon and thanks for taking my question. Really a follow-up to some of the last questions. I just wanted to drill down on some of your commentary that you're exploring options to expand the bandwidth to maximize return on the ECO platform. I guess, could you just expand on how that changes the near term steps you plan to take in building out ecosystems?

Allison Bratzel
Allison Bratzel
Senior Research Analyst at Piper Sandler Companies

And also just where does the path to GMP come into play? You have optionality via CDMO partnership versus building out your own GMP capabilities. Could you just talk to the relationship there? And then maybe separately, just kind of a back to basics question, but one I've been getting from investors is, could you just remind us of your IP position around Ecosynthesis, the platform? What does that look like?

Allison Bratzel
Allison Bratzel
Senior Research Analyst at Piper Sandler Companies

And just can you talk to the overall competitive moat you have there around the platform? Thank you.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

Sure. And so what we're focusing on is filling the capacity that we have and working out where we need to build. So Kevin and his team are doing a great job of filling the capacity around the ligase platform and then building out the funnel of early opportunities. And it's the early opportunities where we can start them off with sequential synthesis of the ECO platform is where we're really focusing on increasing capacity. Now within that, what we're looking for is companies to work with that have a very good chance of succeeding, that they have a well thought through strategy clinically, they have good access to funds and the opportunities that they're pursuing could become significant.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

So we do have a filter that we look through. And then it's really how do we entice them onto the platform and work with them as partners going forward. And that comes to the second part of your question, which is the route to GMP. So what we need to do initially is provide them with high quality, well controlled material to test. Then we need to provide them with GLP grade material, which we can do right now out of the Eco Innovation Lab.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

And then in the fullness of time, once that's run through a year or so later, they start to need GMP material. That timeline is something that we can address ourselves. And we're increasing in our conversations with regulators also looking at the facilities we already have and those that are available to us. We think much of this we can actually do ourselves. So and which comes to your third question, which is about IP protection.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

So we have an excellent IP portfolio around the enzymes, the process, all that good stuff. But we are acutely aware that in the world of AI and everything else going on that trade secrets and know how are a very important part of defending your asset longer term and also being a great partner to work with. And it's I've said to you a number of times, I feel we're more in a high-tech kind of world than a biotech kind of world here where we're building a platform. And we have to think of all those things. So we pursue our IP strategy.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

We keep some of the secret sauce to ourselves, which is another driver of why we want to do more ourselves for longer. And then by the time this technology sees prime time, we are a very easy partner to work with, and we remove any incentives for people to try and work around us. So that's really our strategy.

Allison Bratzel
Allison Bratzel
Senior Research Analyst at Piper Sandler Companies

Thank you.

Operator

Thank you. Our next question comes from the line of Christine Kolczak with Cantor Fitzgerald. Please proceed.

Kristen Kluska
Equity Research Analyst at Cantor Fitzgerald

Hi, congrats on the quarter and the clear level of interest that you're getting questions for me. First, how should we be correlating this strategy to go for some of the earlier stage and work with them for the long term from a revenue perspective? Is it that more initial shots on goal could lead to more future revenues even if hypothetically like 30, 40% of these drugs end up being something meaningful? And then how should we also be thinking about the pace to collecting revenues, especially if there's a lot more companies upfront? Thank you.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

Great. So it is absolutely locking in a large number to get a slightly smaller number out the other end hitting when the supply becomes important. And in that is, as we move to be the direct supplier of the siRNA, we remove a lot of complexity out of the equation, like how you make money from reagents and raw materials and all that kind of stuff through to saying, no, we're going to be competing based on the quality, the timeliness and the cost of the material that we supply direct to the customer. Now what you also have to realize is in the early stages, we are asking often small companies to trust us with their baby, and we have to make that something that they can do easily. Some of that is by partnering with them very well, offering them reliability of supply, all those good stuff, being able to point to how we're going to make the GLP and the GMP material, but managing their costs early on.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

And so it definitely is something about be sort of less emphasizing the early revenues and really driving for a valuable market going forward as these assets mature. Now in order to pay for that, we have to drive revenues in the shorter term. And that's where the LigaS strategy where increasingly we are being validated in our assertion that we have a world beating ligase portfolio in customers coming to us that have tried others and didn't like them and come back to us. And our access to big late phase assets in the short term is through the ligation strategy. Anything to add to that, Kevin?

Kevin Norrett
Kevin Norrett
Chief Operating Officer at Codexis

No. I think we're seeing that play out based upon what came out of Tide and the chemo symptomatic approach being here to stay. That's the only thing I would add.

Kevin Norrett
Kevin Norrett
Chief Operating Officer at Codexis

I'd say, it's ligases here and it's a growing market and we're making inroads versus competition.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

Just to put that in sort of the better mousetrap metaphor, our ligase is a better mousetrap than something people are already doing. And so we can compete directly on performance against an existing alternate. With the ECO platform, it's about doing something new and taking with them step taking the partner with us stepwise as we progress it.

Kristen Kluska
Equity Research Analyst at Cantor Fitzgerald

Okay. Thank you for that answer. And then I would imagine as much as you guys want to go out there and do this in house to convince these folks to stay with you long term. They probably want the same thing so that by the time they're later stage, they don't have to worry about any tech transfer or any significant step ups that could delay their product getting on the market. So clearly, you've been having a substantial amount of conversations.

Kristen Kluska
Equity Research Analyst at Cantor Fitzgerald

Was it your experience that this is kind of what your potential partners were hoping for you to choose as well?

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

Absolutely. It's like the fewer transitions during the development timeline, the better. And it's also the impressive scalability because a year ago, we thought we knew what the scalability of our tech was. Now we're much more certain. As we take each step up, we're really pleased with the improvements that we're making.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

And it allows us to, as I say, to do more with a much smaller footprint, which is great.

Kristen Kluska
Equity Research Analyst at Cantor Fitzgerald

Okay. And I'll ask one last question. Just how should we be thinking about the time and the cost for this process? And clearly, it sounds like there's a lot of interest and you can be selective here about working with some partners that could help offset this a little bit. Thanks so much again.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

So, one of the things that we did talk about in our prepared remarks was we did a modest, very targeted top up of our cash position. That was designed to give us access to the facilities infrastructure and everything else that we need to do this scaling. So be reassured about that. We're not getting out over our skis. We can afford to do what we need to do.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

Yes, and it really is looking at working through the rest of the year and having clarity early next year in terms of the trajectory.

Georgia Erbez
Georgia Erbez
CFO at Codexis

Really depends on the mix of business that we see in the contracts that come out over the next six to nine months. And we'll give you more clarity on that when we do our 2026 guidance.

Kristen Kluska
Equity Research Analyst at Cantor Fitzgerald

Perfect. Thank you again.

Operator

Thank you. Our next question comes from the line of Matthew Wood with Craig Hallum Capital Group. Please proceed.

Matthew Hewitt
Senior Research Analyst at Craig-Hallum

Good afternoon. Thanks for taking the questions. Maybe first up, the variable manufacturing schedule that you noted, does that imply that there's maybe some pull forward push out that's occurring and that's what's creating the variability? Or is there something else that I'm missing?

Georgia Erbez
Georgia Erbez
CFO at Codexis

If you look at the variability from Q1 to Q2 last year and then again from this year, it really is that it's the timing of big orders. I don't want to get any more scientific than that. It's we just don't have a lot of visibility. There are some orders that we had anticipated, for example, in the fourth quarter, they came in the first quarter and vice versa. That's exactly what happened this time, probably not as the same magnitude that we expected this time.

Georgia Erbez
Georgia Erbez
CFO at Codexis

It's certainly not like what we experienced in the first quarter last year or this year, but it is it's definitely that. It's having not quite a lot of predictability in when some of these larger orders come in.

Matthew Hewitt
Senior Research Analyst at Craig-Hallum

Okay. That's super helpful. And then the GMP scale up partner that you noted in the press release and in your prepared remarks, is that likely one of the three CDMO partners that presented at Tides this spring? Or are there others that you're in discussion with that could ultimately leapfrog those three?

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

So we are talking to more than those three. They progress at different rates. But Kevin?

Kevin Norrett
Kevin Norrett
Chief Operating Officer at Codexis

Yes. I mean, certainly ones that we presented with are in the mix. But as Stephen said, there are others that have risen to the challenge, I would say, in the last couple of months and are accelerating in

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

terms of our conversations. Right. And I then come to what do we need CDMO partners for? And it's not immediately for scaling the ECO process itself. We can do that in house.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

This is for relationships with big customers that are doing chemo enzymatic. So quite often what we get is one of those CDMOs bringing us a problem to address for them to service one of the big players. So that's really one of the critical models that we're working on.

Matthew Hewitt
Senior Research Analyst at Craig-Hallum

Got it. All right. Thank you very much.

Operator

You. Our next question comes from the line of Brendan Smith with TD Cowen. Please proceed.

Brendan Smith
Director & Senior Analyst at TD Cowen

Great. Thanks for taking the questions guys. Really appreciate it. I wanted to actually ask, first, just a bit more about how you see the potential revenue funnels through clinical development. And I fully appreciate the ramp in revs is going to really depend on clinical success in therapeutic area, among other things.

Brendan Smith
Director & Senior Analyst at TD Cowen

But I guess just what kind of ramp from maybe preclinical to Phase one, two, three, are you broad strokes forecasting, at least among partners that you've already signed or are in talks with? And then have a follow-up. Thanks.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

Okay. So when you're talking about the very initial phases of feasibility, can the platform perform and do what they needed to do in terms of producing the construct, You're talking about collaborations that take a couple of months and are hundreds of thousands of dollars. You then move from that which is really a technical collaboration to some milestone based revenues on as we progress through development, but also the material supply itself. And in early development, the way we make ourselves whole is by supplying the material for a certain cost, but also milestones as we go through that. But as it becomes more significant in terms of quantity, it gets much simpler and it's just the amount they're paying for the siRNA that they're buying from us.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

So that's the way the ramp works. We try and sort of square the circle early with the milestones and payments such as it transitions to something very simple towards the latter stages.

Brendan Smith
Director & Senior Analyst at TD Cowen

Got it. Okay. That's very helpful. Appreciate that. And just maybe as a quick follow on.

Brendan Smith
Director & Senior Analyst at TD Cowen

I wanted to ask, I guess, just as of today and I again can appreciate this might shift over time. But can you just speak a little bit to what the scope of options is to kind of fund some of the scaling to GMP, maybe even faster than is necessary just given kind of the renewed interest? And maybe if potentially the sale of biocatalysis businesses or something like that would be on the table in that respect? Thanks.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

So we really like our biocatalysis business because even though its growth trajectory is modest, it is very profitable because a lot of these are significant assets that we baked in a while ago. We know how to make them. The margins are good. Now therefore, that is worth a lot to us as an engine that reduces our need for cash. There's also work around the ligase, particularly lucrative contracts there that can help us fund.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

And also, we don't need to spend all the money we need to scale right away. It's an incremental process where because the technology is very rapid to set up, we can stay just in front of the curve. It's not like we have to build a facility and then wait for two years. We can actually step forward with GLP within our existing footprint and then set up GMP in a very short time such that we're ready to supply as existing assets in our pipeline mature rather than building and hoping they come.

Brendan Smith
Director & Senior Analyst at TD Cowen

Got it. Okay. Very helpful. Thank you, guys. Appreciate it.

Operator

Thank you. I'm showing there are no further questions. I'd like to turn the call back over to Stephen Dilley for any closing remarks.

Stephen Dilly
Stephen Dilly
President, CEO & Chairman at Codexis

Well, thanks everyone for tuning in. And as you hear, we're very excited about where we are. We're thinking very hard about the market dynamics going forward and how best to capture the value from this exciting technology that we built in Ecosynthesis. And we'll be hoping to see some of you live at the forthcoming meetings over the next month or so. So thanks very much for tuning in.

Operator

This concludes today's call. Thank you for your participation. You may now disconnect.

Executives
    • Georgia Erbez
      Georgia Erbez
      CFO
    • Stephen Dilly
      Stephen Dilly
      President, CEO & Chairman
    • Kevin Norrett
      Kevin Norrett
      Chief Operating Officer
Analysts
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