Codexis Q2 2026 Earnings Report

Codexis EPS Results

• Actual EPS: -$0.13
• Consensus EPS: -$0.14
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Codexis Revenue Results

• Actual Revenue: $14.92 million
• Expected Revenue: $13.82 million
• Beat/Miss: Beat by +$1.09 million
• YoY Revenue Growth: N/A

Codexis Announcement Details

• Quarter: Q2 2026
• Date: 8/11/2026
• Time: After Market Closes
• Conference Call Date: Tuesday, August 11, 2026
• Conference Call Time: 4:30PM ET

Codexis (NASDAQ:CDXS), headquartered in Redwood City, California, is a leading protein engineering company focused on the development of innovative enzyme solutions for pharmaceutical, food and beverage, and specialty chemical applications. The company’s proprietary directed evolution platform, CodeEvolver®, enables the rapid identification and optimization of enzymes with enhanced activity, selectivity and stability. By leveraging this technology, Codexis provides custom biocatalysts designed to improve manufacturing efficiency and reduce environmental impact.

Since its founding in 2002, Codexis has expanded its capabilities from early-stage research to commercial-scale production. The company operates advanced research and development laboratories alongside cGMP manufacturing facilities, allowing for seamless scale-up of enzyme processes. Its multidisciplinary team of molecular biologists, biochemists and process engineers collaborates closely with clients to integrate tailored enzyme solutions into existing production workflows.

Codexis’s biocatalysts have been applied to the synthesis of active pharmaceutical ingredients, delivering streamlined routes and cost reductions in drug manufacturing. Beyond pharmaceuticals, the company addresses challenges in the food and beverage sector—such as flavor enhancement and ingredient processing—and in the fine chemicals and agricultural markets. Codexis’s commitment to sustainable biocatalysis supports industry efforts toward greener chemistry and resource conservation.

Serving a global customer base, Codexis engages in partnerships and licensing arrangements with leading industrial and pharmaceutical organizations. Its commercial model typically combines research funding, milestone payments and royalty streams, positioning the company for diversified revenue growth across multiple projects. With an emphasis on innovation and environmental stewardship, Codexis continues to drive advancements in the burgeoning field of enzyme-based manufacturing.

Codexis Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Financial flexibility improved: Second-quarter revenue was $14.9 million, while product gross margin rose to 73%; management now expects full-year 2026 gross margin in the high 60s. A recent financing generated approximately $25 million in net proceeds, extending the projected cash runway through 2028.
• Positive Sentiment: ECO Synthesis gained commercial traction: New data on precise phosphorothioate stereochemistry and starterless synthesis generated strong customer interest, with several engagements advancing and one of three CDMO partners entering negotiations for a long-term commercial contract.
• Positive Sentiment: RNA manufacturing scale-up remains on track: Codexis plans to begin construction of its approximately $25 million GMP facility after permitting, advance ECO Synthesis production from hundreds of grams toward 500 grams by year-end and eventually kilogram scale, and support customer IND filings and clinical trials.
• Positive Sentiment: Small-molecule biocatalysis is returning to growth: The business remains profitable and benefits from higher-margin products, four partner drug approvals in 2026, a label expansion, and 15 programs in Phase II or III; management sees potential for high-single-digit long-term growth, although sales can remain lumpy.
• Negative Sentiment: Execution and commercialization risks remain: Revenue declined modestly year over year to $14.9 million, the company continues to post quarterly losses, and its $72 million–$76 million 2026 revenue target requires a significant second-half ramp. ECO Synthesis also still faces technical scale-up, customer adoption and contract-conversion risks.

Presentation

[Operator]

As a reminder, this conference is being recorded. It is now my pleasure to introduce Georgia Erbez, Chief Financial Officer and Chief Business Officer. Thank you. You may begin.

[Georgia Erbez, CFO and Chief Business Officer at Codexis]

Thank you, operator. With me today are Alison Moore, President and Chief Executive Officer, Stefan Lutz, Chief Scientific Officer, and Britton Jimenez, Senior Vice President, Sales and Marketing. During this call, management 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 2026 revenue, anticipated milestones and product launches, facility expansions, technical milestones, and public announcements related thereto, 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 the beliefs and expectations of management as of this statement date, August 11, 2026.

[Georgia Erbez, CFO and Chief Business Officer 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 and 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. I'll turn the call over to Alison.

[Alison Moore, President and CEO at Codexis]

Thank you, Georgia, and thanks everyone for joining. Codexis generates manufacturing solutions using high-performance engineered enzymes. The investment of over 20 years of our expertise is playing out in our pharma biocatalysis pipeline, which supports 14 commercial products and a pipeline of 15 in phase II and III clinical development. This expertise has also enabled the creation of the ECO Synthesis manufacturing platform, a scalable aqueous process for the production of oligonucleotides. I'm pleased to share our progress through the first half of 2026, and I'm excited for the rest of the year and beyond. Today, we reported solid financial results for the second quarter of 2026 with revenue of $14.9 million. Our recent successful financing, which closed two weeks ago, resulted in a capital raise of $25 million of net proceeds. This provides us with greater stability and flexibility as we pursue our strategic goals.

[Alison Moore, President and CEO at Codexis]

Georgia will give us more details on our financial achievements later in the call. An important highlight of the quarter was the TIDES US conference in May, where we shared important new data on our ECO Synthesis technology. Codexis presented data demonstrating full-length siRNA synthesis with precise control of phosphorothioate chemistry using our technology platform. Stereochemistry plays an important role in how oligonucleotides perform. Stefan Lutz, our Chief Scientific Officer, will provide additional details on the growing capabilities of our platform later in the call. I am also pleased to report that the construction of our GMP manufacturing facility is proceeding according to plan. This facility is a core component of our strategy to enable the adoption of ECO Synthesis into the pipelines and supply chains of our customers. This facility will deliver GMP material to support IND filings and supply clinical trials and deepen Codexis production scale platform expertise.

[Alison Moore, President and CEO at Codexis]

Our building permit application will be submitted momentarily, and our manufacturing equipment has been ordered. We will begin construction following approval of the permit. The cost of the construction for this project is approximately $25 million. This investment underscores our long-term commitment to supporting product development, scale-up, and manufacturing for our customers. Years ago, the pioneering science of Codexis transformed the opportunities available to process chemists, enabling the manufacture of complex small molecule chemistries. This innovation has now become standard practice in the production of small molecule medicines. Today, we believe that the ECO Synthesis platform will similarly revolutionize the ability to generate large-scale quantities of siRNA medicines, making this advanced modality accessible to patients across all therapeutic areas. ECO Synthesis, which leverages enzymatic production solutions, offers a scalable alternative to the current solid-phase organic synthesis technology.

[Alison Moore, President and CEO at Codexis]

The latter is not sufficiently scalable and requires enormous quantities of solvent, posing significant challenges as demand for siRNA is expected to increase 30-fold by 2035. This manufacturing bottleneck is anticipated to emerge within the next three years, particularly as large phase III cardiovascular trials reach their conclusions. As communicated at TIDES, the industry recognizes the limitations of current production methods and acknowledges the need for radical new technologies. The impact of the ECO Synthesis platform is becoming increasingly clear as more organizations embrace enzymatic approaches. Codexis is in the leading position to industrialize this important new method. I will now turn the call over to Stefan for more details on our TIDES data.

[Stefan Lutz, Chief Scientific Officer at Codexis]

Thank you, Alison. At TIDES US in May, we presented new data demonstrating on how our ECO Synthesis manufacturing technology is not only advancing existing, but also unlocking new capabilities for production of siRNA therapeutics. Drug developers currently have limited control over phosphorothioate stereochemistry, as existing chemical manufacturing methods produce complex mixtures that vary in therapeutic potency and require time and labor-intensive downstream processing. In contrast, the engineered enzymes that power ECO Synthesis deliver products with defined stereochemical configurations, offering users unprecedented control within a scalable oligonucleotide manufacturing process. These stereopure molecules can confer overall improved product quality, enhance therapeutic potency, and streamline manufacturing by reducing process complexity. We continue to explore the biological impact of stereo control and believe that this capability promises a significant advantage for customers seeking to optimize for performance, manufacturability, and differentiation of their siRNA assets.

[Stefan Lutz, Chief Scientific Officer at Codexis]

In addition, we introduced starterless ECO Synthesis, a novel capability to launch RNA synthesis from a single nucleotide rather than a chemically synthesized starter oligonucleotide. Although still in the R&D stage, the starterless approach is a technically simpler solution for initiating oligonucleotide synthesis and lowers cost for siRNA manufacturing. This innovation is particularly relevant as the industry increasingly explores fragment-based assembly strategies in which shorter oligonucleotides are ligated to produce full-length siRNA therapeutics. In this context, eliminating the need for starter oligonucleotides offers even greater economic and operational advantages. Feedback from business and CMC representatives at the conference has reinforced our view that starterless synthesis marks a material advancement in enzymatic siRNA manufacturing. We will provide updates on this technology as additional data become available.

[Stefan Lutz, Chief Scientific Officer at Codexis]

More broadly, our innovations presented at TIDES USA have generated significant interest across the industry and have resulted in additional engagement with prospective customers and strategic partners. I will let Britton speak to that in a minute. One message that came through clearly at this year's TIDES conference, as companies envision the future of RNA medicines, they recognize the need for manufacturing technologies that can overcome the limitations of traditional solid-phase synthesis. Enzymatic approaches, including ligation and sequential synthesis, are integral to these future strategies. Our focus remains on executing against our development objectives and demonstrating that ECO Synthesis can be industrialized at the scale required to support broader adoption of siRNA therapeutics across larger patient populations. We believe our unique combination of product quality, stereochemical precision, and scalable enzymatic production represents a compelling competitive advantage in the emerging oligonucleotide manufacturing landscape.

[Stefan Lutz, Chief Scientific Officer at Codexis]

Our customers are an invaluable source for new ideas, and we listen to what matters to them. I will now turn the call over to Britton for an update on our commercial activities.

[Britton Jimenez, SVP of Sales and Marketing at Codexis]

Thanks, Stefan. The number of RNA medicines in development is expanding at an estimated rate of at least 10% per year, with over 100 product candidates in clinical trials and more than 400 in pre-clinical development. It is broadly recognized that current production technologies will not be able to keep up with future demand. The rapidly changing landscape for siRNA is felt most keenly by CDMOs who supply the vast majority of oligonucleotide medicines today using solid-phase organic chemistry. The ability to scale production is complicated by technical challenges associated with solid-phase synthesis and further burdened by the capital cost of building new facilities. It should be no surprise that some of our most motivated customers are CDMOs. For each of the three CDMOs we have contracts with, we have completed small-scale technology transfers into their facilities so that they can assess ECO Synthesis in-house.

[Britton Jimenez, SVP of Sales and Marketing at Codexis]

The most advanced of those assessments has been completed, and we are in negotiations for a long-term commercial contract. We are very excited about this prospect, as these relationships will be revenue generating and will create additional channels for adoption and scaling of the ECO Synthesis technology. Our engagement with biopharmaceutical companies continues to flourish. Our specific objectives are to promote adoption of our technology into therapeutic asset pipelines, in which we supply preclinical and clinical material and support IND filings. In addition, our technology can be integrated into an innovator's company's production environment. In the last quarter, we have been engaged with the pioneer siRNA companies, in addition to other large biopharma companies, to progress partnerships with these objectives. Our small molecule biocatalysis business remains stable and profitable, and it benefits from some recent new product approvals that have higher margins than the old legacy products.

[Britton Jimenez, SVP of Sales and Marketing at Codexis]

We continue to support 14 commercially approved products that are dependent on our enzymes, including four products that received regulatory approval in 2026. Another product received a label expansion, significantly increasing the market potential of that drug. After years without a new product approval, this activity has resulted in a renewed growth trend. The product pipeline also remains robust with 15 programs in phase II or III clinical development and data readouts expected on seven clinical trials in the next two years. We are excited for our prospects to demonstrate sustained, steady growth in this side of the business. With that, I will now turn the call over to Georgia for a discussion of our financial results for the second quarter.

[Georgia Erbez, CFO and Chief Business Officer at Codexis]

Thanks, Britton. Good afternoon, everyone. Today, 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 revenues were $14.9 million for the second quarter of 2026, compared to $15.3 million in the second quarter of 2025. We are particularly pleased with the revenue performance in this year's second quarter, as we experienced significant improvement in our biocatalytic enzyme business, which we see as a return to growth. Product gross margin was 73% for the second quarter of 2026, which was an improvement over the gross margin in the first quarter of 2026 and over the gross margin for the entire year for 2025. The strong result for the second quarter was primarily driven by higher sales of more profitable products.

[Georgia Erbez, CFO and Chief Business Officer at Codexis]

Due to this sustained improvement in the first half, we now expect gross margins to improve into the high 60s for the full year 2026. Research and development expenses for the second quarter of 2026 were $11.7 million, compared to $13.8 million in the second quarter of 2025. The decline was largely driven by lower employee-related costs and reduced spending on outside services and lab supplies. Selling, general and administrative expenses were $10.9 million for the second quarter of 2026, compared to $12.3 million in the prior year period. The decline was primarily due to lower employee-related costs associated with reduced headcount, lower stock-based compensation expenses, and lower allocable costs. Controlling expenses remains a focus of ours to ensure we are using our capital efficiently and in functions that bring the largest positive impact to the success of our business.

[Georgia Erbez, CFO and Chief Business Officer at Codexis]

Net loss for the second quarter of 2026 was $12 million, compared to a loss of $13.3 million for the second quarter of 2025. We continue to expect 2026 revenue in the range of $72 million to $76 million. Similar to the quarterly trends we saw last year, we expect 2026 revenue to be more heavily weighted towards the second half of 2026 versus the first half. Codexis ended the second quarter of 2026 with $54.9 million in cash equivalents, and short-term investments, which compares to $78.2 million at the end of 2025. Subsequent to the closing of the second quarter, we successfully completed an equity financing that raised a total of approximately $25 million net of expenses, resulting in a pro forma cash balance of approximately $79.8 million.

[Georgia Erbez, CFO and Chief Business Officer at Codexis]

We expect that our current cash will be sufficient to fund our planned operations and capital expenditures through 2028, extending our previous cash runway guidance. As a reminder, our financial guidance and cash runway projection includes the expenses associated with the build-out of our GMP facility. With that, I will now turn the call back over to Alison.

[Alison Moore, President and CEO at Codexis]

Thank you, Georgia, Stefan, and Britton. Codexis ECO Synthesis technology is already demonstrating its potential to alter the landscape of oligonucleotide manufacturing and enable siRNA therapeutics to reach indications with large patient populations. Our next steps are to advance the industrialization that will support deployment of our technologies into customers' pipelines. For investors, we want to show proof of success. We are working hard to sign higher value contracts as well as innovative licensing deals. We will also be focused on financial performance by striving to meet our revenue targets while being mindful of our expenses. We will continue to use our knowhow and years of experience in engineered enzymes to sustain and drive innovation in the field of RNA medicine. We are committed to achieving our goals and milestones for 2026.

[Alison Moore, President and CEO at Codexis]

This includes beginning construction on our GMP production facility, progressing toward 500 gram pilot scale production of siRNA in the ECO Innovation Lab, expanding a CDMO scale-up partnership for ECO Synthesis, securing the ECO Synthesis raw materials supply chain, and maintaining the pharma biocatalysis business at healthy growth margins. I believe 2026 will be the year that ECO Synthesis achieves the scale and performance metrics that prove it to be the technology of choice for our customers' siRNA medicine. We're excited by our prospects and proud of the dedication and achievements of the entire Codexis team who have been instrumental in making the ECO Synthesis technology a reality. Now I would be happy to take your questions. Operator?

[Operator]

Thank you. Ladies and gentlemen, at this time we will conduct the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we pull for questions. Your first question comes from Allison Bratzel with Piper Sandler. Please state your question.

[Allison Bratzel, Analyst at Piper Sandler]

Hey, guys. Good afternoon, and thank you for taking the question. Just following up on the stereochemistry data and the single nucleotide initiation capabilities you guys showed at TIDES USA, could you just talk more to what has customer reaction actually looked like since then? Has that translated into new engagements? Separately, could you talk to what kind of updates you'd expect to be able to show at TIDES Europe later this year and just what kind of customer conversations that could foster? Thank you.

[Alison Moore, President and CEO at Codexis]

Thank you very much, Ally, for the question. I'm going to have Stefan say a little bit more about the technology and what to expect next, and then we'll have Britton speak to what's happening commercially as a result.

[Stefan Lutz, Chief Scientific Officer at Codexis]

Yeah. Hi, Ally. On TIDES EU, I think we really see an opportunity to continue the story from TIDES U.S., talking about the capabilities of the ECO Synthesis platform, but also maybe address some of the data on the biological impact of stereo control.

[Britton Jimenez, SVP of Sales and Marketing at Codexis]

Yeah. To build on Stefan's comments there, from a customer interaction, actually quite a bit of excitement came from TIDES USA around both the stereochemistry control and the starterless initiator. From the stereochemistry control perspective, that's really allowed for us to engage with several customers that believe both in the value of stereochemistry control from a better therapeutic perspective, but also from a quality and a better product quality perspective. So those conversations just have advanced. We're in several conversations with customers around that and how they want to deploy this type of technology into their pipelines. So those conversations have been really, really positive. From a starterless perspective, because this was a brand new technology and enhancement to our platform, a lot of the conversations we are having have just started, but they're all significantly positive.

[Britton Jimenez, SVP of Sales and Marketing at Codexis]

We've actually had several past customers that were interested in our technology have now really changed their position where they want to advance and test our technology because of this new starterless tech capability that we have. So overall, extremely positive, and it's really allowed us to advance our conversations further with these customers.

[Allison Bratzel, Analyst at Piper Sandler]

Thank you.

[Operator]

Your next question comes from Kristen Kluska with Cantor Fitzgerald. Please state your question. Kristen Kluska, your line is open. Please state your question. Unmute yourself.

[Analyst at Cantor Fitzgerald]

Hi. Sorry. This is Jenny on Kristen's line. Thank you so much for taking my question. My first question is how might the advances in stereochemistry allow partners to lower dosage, maybe save money and potentially improve upon safety measures?

[Alison Moore, President and CEO at Codexis]

Thank you for the question, Jenny. I think maybe Stefan could, at least at a high level, describe some of our own work that we're doing there, and then maybe just recap what the field understands about the potential.

[Stefan Lutz, Chief Scientific Officer at Codexis]

Yeah. When it comes to stereochemistry, these drugs operate within the cell. The cellular environment is chiral, has stereocontrol, and these drugs certainly have the potential to also play to that nature. It is also a good indication that in the small molecule API field, the stereochemistry has shown to be an important factor in the therapeutic efficacy of assets. As far as playing to other strengths of offering stereocontrol, I think it is important to highlight the manufacturing advantages that such a capability brings, the reduction in process complexity as the products resulting from the synthesis are much more narrowly defined and therefore simplify the downstream processing, which today involves a very elaborate purification chromatography process. Those aspects certainly factor into advantages that we see of controlling stereochemistry as well.

[Alison Moore, President and CEO at Codexis]

We have also ongoing work here at Codexis, where we are evaluating ourselves in biological assays, the opportunity that is related specifically to activity or the potential of activity improvement.

[Analyst at Cantor Fitzgerald]

Great. Thank you so much. I was wondering if you could maybe talk a little bit about how much do you believe the desire to use precise control with stereochemistry is going to lead you to find potential partners? What are the key data or analysis that truly suggest its added benefits? Why will this matter as siRNA therapeutic development becomes more competitive in the upcoming years?

[Alison Moore, President and CEO at Codexis]

I think that what we know with our current customers is that some of them feel quite strongly about the opportunity of stereocontrol, and some of them are less concerned about stereocontrol. We have created engagements with both kinds of customers, and we are happy to deploy the ECO Synthesis technologies, whether they are interested in stereochemistry or not. It is not that we can only take one route there. However, we have one particular customer that is very interested in eking out any potential potency opportunity that we might have for their asset as a result of stereochemical control. Stefan and his team generated some very beautiful material and beautiful analytical data that we did share at TIDES that Stefan spoke to. You asked what happens next. We are making material with particular stereo configurations. We are advancing studies to understand the activity opportunities of different configurations.

[Alison Moore, President and CEO at Codexis]

We also have other companies that we are currently in negotiations with who are interested in doing the same.

[Analyst at Cantor Fitzgerald]

All right. Thank you very much.

[Operator]

Your next question comes from Matt Hewitt with Craig-Hallum. Please state your question.

[Matt Hewitt, Analyst at Craig-Hallum]

Good afternoon. Thanks for taking the questions. Maybe first up, Georgia, regarding the guidance of $72 million-$76 million in revenues this year, obviously back half-weighted, but that still implies a pretty significant step-up here in the second half. How should we be thinking about cadence and how much of that step-up here in the second half of the year is from contracts that you already have in hand, whether it is for individual enzymes or some of the work that you are doing with ECO Synthesis and the newer products?

[Georgia Erbez, CFO and Chief Business Officer at Codexis]

Well, it comes from a variety of different sources. As you know, our revenue base is quite diverse. The performance that we have in the base business has been improving. As you saw this quarter, we are continuing to see the same kind of trends moving forward, but we also have some strong leads in performance in the ECO Synthesis as well. So stay tuned and we will hopefully have another good quarter in Q3 and we can show you a little bit more about how the split works out.

[Matt Hewitt, Analyst at Craig-Hallum]

Understood. Regarding the four approvals that your partners have already received this year, what do those orders look like? Are they fairly consistent? Are you anticipating, and I am just going to throw out random numbers here, but do you expect $5 million a quarter from customer A or B, and it will just kind of ramp over time? Or will it be more lumpy? Meaning you get an order in Q1, then you might not see that customer come back until the third quarter. I am just trying to think about how to model that out. Thank you.

[Georgia Erbez, CFO and Chief Business Officer at Codexis]

I'm happy to spend time with you offline and work through some of this. But, as you know, every customer is different in how they prepare for commercial launch. Some stockpile drug, some don't. Some are a little bit more steady in their manufacturing plans. So I would say that it's still, as we have experienced in the past, it can still be lumpy and it can still be unpredictable. But overall, we are seeing positive trends from these approvals and we're pretty excited about that.

[Matt Hewitt, Analyst at Craig-Hallum]

Understood. Thank you.

[Operator]

Your next question comes from Matt Stanton with Jefferies. Please state your question.

[Matt Stanton, Analyst at Jefferies]

Hey, thanks. Maybe sticking with the biocatalyst business. Understanding the business can be lumpy. Just talk about the pipeline. I think you said 15 programs in phase II and III, seven of those read out over the next two years. Is there an opportunity for this business to see a bit more of an elevated growth rate, as we look out over the next couple of years as those read out and the 14 approved products continue to progress as well? Thanks.

[Georgia Erbez, CFO and Chief Business Officer at Codexis]

No, we are really excited about the prospects for the base business right now with the approvals coming up. As a reminder, in the last two years, we had hardly any approvals, and now we are starting to see some of our pipeline mature, and that is very exciting. I will remind you that the products that we have and the drugs that are in clinical development really span quite a wide range of markets. Some are very niche, some are orphan, and some are pretty large. So we have always said that we expect over the long term that this business, once we start seeing these approvals, could really grow in the high single digits for the next five to seven years.

[Matt Stanton, Analyst at Jefferies]

Okay, great. Thanks. Then maybe on the three CDMO contracts, did you say that all of them had completed small-scale tech transfers? Then, I guess, does that mean all of them are in these more advanced negotiations, or is there more work to do across the three? I guess my question is more, you talked about progressing towards longer-term commercial contracts. Is that one of the three, or are all three in flight? Then any more color just in terms of line of sight and visibility to hopefully getting one or several of those to the finish line here. Thank you.

[Britton Jimenez, SVP of Sales and Marketing at Codexis]

Yeah, absolutely. So, as I had mentioned, with those three CDMO partners, we have completed the first half of the project with Codexis, and now we have tech transferred at small scale the process into their facilities. Now, understand each of those CDMOs are not on the exact same timeline. Some are more advanced than others. But each of those CDMOs has our technology in their facilities. One has pretty much completed their entire assessment, and that is by far the most advanced CDMO that we have, which we are in long-term commercial partnership negotiations currently now. The other two CDMOs are just a step behind that lead, as they are in the process of doing the evaluation of our technology.

[Britton Jimenez, SVP of Sales and Marketing at Codexis]

We do see this kind of phased out over the time, but we are very excited about it, and we do think that lead contract negotiation, we are hoping to get that wrapped up here fairly quickly.

[Matt Stanton, Analyst at Jefferies]

Perfect.

[Operator]

Thank you. A reminder to the audience, to ask a question, press star one on your phone. To remove yourself from the queue, press star two. Your next question comes from Dan Arias with Stifel. Please state your question.

[Dan Arias, Managing Director at Stifel]

Yeah. Hi, guys. Thanks for the questions. First one is just a bigger picture question. It sounds like industry activity continues to head in a good direction here and your own sales funnel is growing. You mentioned that this is the year from a scale perspective. If things were to go well, what would be a reasonable ballpark of just how much siRNA could you be supplying to the industry in 18, 24 months relative to what you supply today? What could be the scale factor on your own supply overall in aggregate?

[Alison Moore, President and CEO at Codexis]

Yeah. What we've been communicating is, this year's an important year because we are currently producing at a hundreds of grams scale. When we ligate fragments together, by the end of the year, we can be operating at about a half kilo scale. Then just before we operationalize our GMP facility, we aim to be at kilo scale production. You will have heard us say a lot that our focus is really adoption. We intend to have customers who would purchase their own pre-clinical and clinical material from us. We already do supply pre-clinical material. As Britton has just said,

[Alison Moore, President and CEO at Codexis]

We're excited about the possibility of working with some of our CDMO partners, but that also creates an adoption channel and a scaling opportunity. Our focus is to, we sometimes use the word industrialize the technology. That just means operating at a scale where our customers, whether they are CDMOs or biopharmaceutical companies, can say, "Yes, that is at a scale that I can understand can start to generate material that can support my pipeline." We think that we can go from one kilo, then step up 10x probably, via our partnerships.

[Dan Arias, Managing Director at Stifel]

Okay. I certainly understand what you are talking about when you talk about your own capabilities. I think I am just trying to figure out the best way to understand what the industry might need 12 to 24 months down the line, because naturally there is a focus on what you guys can bring to the table, but the demand and how that is going to change over time, I think is maybe just a piece that is a little bit less understood.

[Alison Moore, President and CEO at Codexis]

Yeah. Well, I think it is a really important dynamic to be watching over the next three years. There are four very large cardiovascular trials ongoing. If only one of them achieves the kind of addressable patient population that they are interested in, it is going to cause a real constraint in the current installed capacity. That is why the CDMO space is spending money on stainless facilities. It is approximately USD 1 billion of stainless steel to generate one metric ton additional annually. That is an expensive route if we really think that demand is going to increase 30 or 30-plus fold in the next 10 years, and it takes a couple of years minimum to build one of those facilities.

[Alison Moore, President and CEO at Codexis]

I think where Codexis' technology is important is really thinking beyond this constriction point, and it is about the adoption of this new technology that does not have the scale barriers, nor some of the economic considerations and solvent considerations associated with current state technology. I think what we will see is the deployment of, or what we are seeing is the deployment of novel technologies alongside the existing solid phase organic synthesis. We have previously communicated that we think the ECO Synthesis platform will be approximately 70% more capital efficient. As the whole industry grows to support the opportunity of siRNA medicine, over these next few years, the introduction of these novel disruptive technologies will really pave the way to that production of the future.

[Dan Arias, Managing Director at Stifel]

Okay. Thank you very much for that.

[Operator]

Your next question comes from Brendan Smith with TD Cowen. Please state your question.

[Chad Wiatrowski, Analyst at TD Cowen]

Hey, everyone, it's Chad Wiatrowski on for Brendan Smith. I guess what were some of the technical risks or hurdles that you overcame as you've innovated this technology up to hundreds of grams? What do you see going forward as you scale to that kilogram as the main technical hurdles to overcome?

[Alison Moore, President and CEO at Codexis]

Yeah, thank you for that question. I think I would like Stefan just to say a few words about the uniqueness of our enzymes first in terms of technical barriers that need to be overcome, and then I'll speak a little bit more to the scale question.

[Stefan Lutz, Chief Scientific Officer at Codexis]

In order to really address the market needs for the composition of these siRNA assets, the enzymes don't simply need to be improved in one or the other capability. They need to be high performance engineered enzymes across a wide range of parameters. They need to tolerate the different building blocks. They have to have the robustness to operate over the length of the operation time. They need to recognize stereochemistry. All these aspects, to build this into the enzyme, has been a formidable challenge that Codexis has mastered to a good degree, relying on the two decades of experience that we bring to enzyme engineering. I think that is quite a unique capability, and it is the foundation really for process development to then achieve the scale and the quality manufacturing, that Alison can comment on.

[Alison Moore, President and CEO at Codexis]

Yeah, the kind of convergent disciplines that we have at work here at Codexis are the real strengths and expertise in enzymology and then the application of that enzymology into this production process. Even enzyme behavior as it is immobilized, for example, we've spent a lot of time optimizing that. In terms of scaling, scale factors, we have actually a very simple process flow, which is our nucleotides are in solution in a central tank, and then those nucleotides flow over an immobilized enzyme which polymerizes the nucleotides, and then a phosphatase that stops the reaction. It's a rather simple process flow, but the scale parameters that we're optimizing are kind of what I would call classic scale parameters.

[Alison Moore, President and CEO at Codexis]

Ensuring that the flow rates are correct, ensuring that the configuration of the immobilized enzymes is optimal, ensuring that temperature is well controlled, which sounds like a simple thing, but as you scale a process like this, there's a lot of nuance there. Also, as Stefan mentioned, these enzymes have been very uniquely engineered, and every addition of a synthetic nucleotide has its own character. As we scale, we need to make sure that we have a robust design space so that any sequence for any customer can be created at scale, and that we generate high-quality product at the end of the day. So that's what we're busy working on. Like I said, already at 100 grams end of the year, half a kilo is in sight.

[Operator]

Thank you. Ladies and gentlemen, there are no further questions at this time, so I'll hand the floor back to Alison Moore for closing remarks.

[Alison Moore, President and CEO at Codexis]

Well, thank you everybody for joining us today. We're looking forward to seeing you at the upcoming investor conferences that we have in the second half of the year. If at any time you have additional questions, please feel free to contact us. Have a good evening. Thank you.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you all for your participation.

Participants

Executives

• Georgia Erbez, CFO and Chief Business Officer
• Alison Moore, President and CEO
• Stefan Lutz, Chief Scientific Officer
• Britton Jimenez, SVP of Sales and Marketing

Analysts

• Allison Bratzel, Analyst at Piper Sandler
• Analyst at Cantor Fitzgerald
• Matt Hewitt, Analyst at Craig-Hallum
• Matt Stanton, Analyst at Jefferies
• Dan Arias, Managing Director at Stifel
• Chad Wiatrowski, Analyst at TD Cowen