CDXS - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Codexis Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference, Mr. Voss. Bruce begin. may you Sir,

Bruce Voss

Please you. of This all discuss LHA. you call. on business Voss quarter updated has pipeline snapshot website is participating in to Bruce slides progress. company’s for the to investors results with that today’s Codexis financial posted section Thank the and Thank note its Codexis’ second today’s call accompany

Officer; John and Codexis me are Nicols, Financial President Officer. Chief Chief from Sangster, Gordon Executive the company’s Joining and

be will the not management statements XXXX. management of During current a Private number Litigation Codexis. within call, August this management of of descriptions as that statements forward-looking making facts the regarding beliefs the They meaning Securities and are of historical made X, by extent the are expectations of of reflecting XXXX forward-looking Reform Act to statements

the You statements forward-looking some uncertainties other on factors should that unknown materially because they beyond control reliance place in risks, not known and affect actual and company’s these are, results. and could undue involve cases,

please as these obligation company’s that the release this details expressly accompanies law. about by statements, news earnings and see filings. forward-looking except any update the intent call to Codexis disclaims or required SEC For risks,

John? turn over the Now I’d like to to John call Nicols.

John Nicols

first XX% and the I’m you financial of XX% us. year-over-year second Thanks outstanding Bruce. Good quarter, afternoon everyone, of of for the proud with for growth thank half revenue our for joining and performance and XXXX. operating

with contributions Science Tate and Our growth by Health Nestlé has from & collaborators, R&D driven higher significant been sharply Lyle. revenues,

protein to advance the our project business, streams value increasingly Redwood they establish at as recognize dedicated customers their of engineering City revenue part and an our becoming are facility rapidly R&D platform Our of programs. more the CodeEvolver teams our sustainable

to a fourth had of project the times another of with other customers deal second our working struck initiated of industry during teams the the second continued therapeutic of to for we Sales We Merck, For a against of the dollars Lyle funded pleased quarter in for during added Tate platform novel Health the reinforcing Science we we at get partnering enzymes customers at here accelerate plus significant the quarter million last two our we a dedicated and a quarter. when with teams to pharmaceutical segment pharmaceutical Combined the of majority company, various business one, report goal -- the team XX for with company, them we company development provide the XX performance larger to manufacturing quarter. and new & Japanese our Nestlé set had Pharma dedicated Pharma Codexis processes. major across year. adoption our success U.S. major example, Pharma bio project recently and leading I'm that program, lightning sales

to -- new customer to first pharma the was even in Enzymes to growth advance new engagements start months. continued nicely announced designed establishing with off solid in and efforts a gotten in further, well. Our partnership reach few drive quarter teams have workflows Porton to joint our extend Other in and the as our Performance

the from proud with & industries, major Performance Performance Excellent of this pathology business and but of Enzyme we Tate For partnership to development at commercialization three in one where very November. in our to into move food industry, and up advanced early have team or confident now We our we the diagnostics and Conference veterans the new are comes our for new high-Performing those for XXXX progress up Enzymes of segment Enzymes highlights finished the Lyle. molecular remain other AMP we staffed the industry internal from promotion lining we are DNA as announce in industry, XXXX. the our second molecular ligase the

of Here of food M is the a beverage expected in the widespread & the known Tate its TASTEVA the for friendly Sweetener that new but paste Lyle's is Codexis Reb Stevia Stevia some starts industry bio it's novel Reb a a M, historical a clean that adoption applications. high limited Stevia leaf and zero-calorie, challenges. to suite from to conversion as ingredient major manufacture been team been and food labeling. Stevia into as Stevia route manufacture describes enables & sugar have consumer bitter held of time, tasting cost in has the their newest eliminate Lyle taste better M that back enzymes the sweeteners Stevia M type of engineered like Sweetener. leaf Tate its offering availability TASTEVA for and

most from enzymes, over now been Lyle's acid partner the low created, and then launch. sequence industry in came amino cost & where competition to for M found Codexis Reb for conceived Codexis no through a enable Less nature, one Reb could minuscule routes was decade, Codexis later, one in M leaf potentially intellectual Stevia process commercialize. a new to Tate that in. of be modifications, the than libraries of could a a even process landscape. Others have late in suite back TASTEVA route problem on M teams XXXX, enabled patented contemplated pathway or our to required that alternative several in and commercial Here’s enzyme cost patentability clean anywhere and have make years Reb the working could back property yield crowded, make from yet that M nearly break barriers, leading a of commercialized extract. for needed to XXX could that two The which

at technology receiving completed develop TASTEVA panel into our to the teams industrial the forward one sharing self-affirmed update as how key gears we an and pilot accomplishment encourage future. of in enzymes to Safe, we Codexis to M on or look registration for to Generally portfolio & GRAS, enzymes, R&D us from Lyle scale of as will milestones. Tate quarter, our the expert a second earning it significant Great the Shifting the TASTEVA Recognized received forward, all batches can us partnership. During enzymes commitment provide going that for July, verbal GRAS. by In be products model Performance the largest in updates weeks CDX-XXXX, to M safety the that with in our or segment We of sales both in best biotherapeutic trial Enzyme pleased with trial are forge fourth has Initiation our on and in-human we novel PKU we this patients beginning four dosing therapeutic CDX-XXXX. moving milestone similarly the trial Phase expect phenylketonuria, a disease. volunteers million dose receive for third cohorts of levels of are In we for first Xa This triggered our in Nestlé phase recently oral for $X the product of from is positive three initiated share candidate evaluating a the trial, successfully onto Xa enzyme has first dosing CDX-XXXX now few Codexis quarter. to level. cohorts and and with already increasing progress healthy completed this since that final been the

provide fourth safety as Recall from topline that to trial the results efficacy biomarker track a volunteers can this indications the well healthy in report Xa on in of year. by measurements quarter as Phase evaluation. results this are topline We

be early forward whether report exercise to the by development take over topline XXXX the will CDX Following Sciences’ their expect option Health known of we decision that to XXXX. Nestlé

house & to Vice welcome Dr. new in efforts the end, into biotherapeutics also and into skills candidates other in Alaoui accelerating is our clinical Development. President, Codexis. demonstrates position advance advancing to the biotherapeutics bringing and Research rapidly expertise Our discovery CDX novel that are XXXX creation drug encouraging. Hicham Alaoui, follow Biotherapeutics I’m initiation of pipeline continued this of in biotherapeutics pipeline To The early trials. valuable delighted discovery trials. out of development created Hicham build success company’s brings discovery drug Dr. clinical and responsible newly and conviction capabilities to our position directly the towards for to our our and

provides over on Gordon, the a like today year turning I’d our substantial to XXXX Codexis card ending which report XXXX. favorable pipeline to the snapshot our past over XX, to call our posted June review progress Before website, updated

projects past four can past have two the two you on years As years, added the you over XX increase that’s a pipeline time. XX can the see we added slide and slide during on to that in see year we’ve two, XX%

to level, is expand parallel, in multiple our strategy pipeline are we momentum industries as Our detailed pipeline and applications more across at excellent this well. showing and

M or Performance in Enzyme last X For from other example, increase installations. one at industrial equally XX Enzyme of year verticals. the that over the the have and now to Performance increased number and industries commercialized in of X July. now Codexis that important Similarly, two eight different Performance by late The discussion to number three phase another the three noting TASTEVA to of past doubled number projects Enzymes projects increased we stand total X clinical has have years covers in

diversity, unveil and increasing in numbers, summarizes Codexis talents projects pipeline, entirely Finally, the pipeline pipeline pipeline programs I'm the I biotherapeutics of funded from number larger the growth to to ago our snapshot. Codexis investments, to self our the and than has attribute have funding revenues, in two XX currently. the this the rewards XXXX generally progress Increasing Led access by advancing projects. could prospect to team. impressive sustained commercialized four of that grown our with which years that novel all to dedication proud of economic growth for these

over Gordon? Let to Gordon financial me the discuss now. the results turn call to

Gordon Sangster

for the from Gross for M XXXX Thanks, million quarter quarter Product segment. their versus related included $XX.X of of to sweetener. biotherapeutics XXXX Tate John. year performance and development revenues it Nestlé Lyle development $X.X $X.X versus of with product primarily increase Stevia Science segments to XX% XXXX was and from revenues second were the due second timing Total for mix. second year with a of of customer the of XX% in of the demand novel the million significant due were to contributions the TASTEVA XXX% $X.X CDX with related million XXXX QX $XX.X on million up to product enzymes. million for enzyme $X.X R&D the the up revenues ago million and margin the from were & for the quarter and compared prior decrease Health consisted for enzymes QX to XXXX revenues from XX% of

coming margin to expect increase product We gross in revenue on the quarters.

million million expenses The for operating expenses a rose of supplies. $X.X SG&A as expenses, R&D which XXXX year our segment, were R&D million the for primarily $X.X On the the segment. was The which million, year due due a number second quarter $X.X $X.X stock $X.XX loss costs per lab primarily segment million and the of Enzyme loss through was the second a in quarter, last Performance $X.X million The to associated million or million versus from with to net increasing expense biotherapeutics a $X.X for of higher the increase Turning share the $X.X million flowing $X.X a second loss $X.X million including $X.X for due comp increased the or was $X.X ago share. costs. second of costs $X higher Novel shared XXXX Biotherapeutics novel supplies of increase segment, or for Performance to and $X.XX to $X.X headcount expense. includes projects from was million net net recruiting Lab result were quarter ago the of corporate $X.XX Enzymes million facility the efficiencies. the and XXXX per net loss for of second per of a for compares quarter for non-GAAP share. year per with non-GAAP from basis, XXXX or quarter million based $X.XX and

cash biotherapeutics R&D first Turning from were XX% total for the $XX margin consisted and financial XXXX period revenues on XXXX million the million. up XX% were year months national of net of period. On which revenues rose or while XX% reported XXXX share. our of the first first the Total $XX.X million expenses the expenses versus $X.X R&D first segment million basis, XXXX a of of operating of were ago share, non-GAAP or of XX%. Cash first $X.X were $XX.X compares the the $X.X XXXX or from $X.XX for million XX, the $XX.X revenues and per year to XX% of half loss first $XX.X $X.XX half the prior loss $XX.X XXX% were Gross year-to-date to million XXXX loss for segment. per for December up as was of non-GAAP share net months expenses XXXX. a the first prior of or six loss novel $XX.X for over with share. was revenues net $X.XX We half million, for net million up the increased product $XX.X million of six from SG&A the half $X.X year XX, for the for per million versus XXXX, $X.XX Enzyme per million the a XXXX. June of and of equivalents half and the year-to-date million, results, as from Performance

completed XXXX in You reaffirming April million. financial which guidance, March. proceeds the in may we Today, that public net offering our this of on recall we for call conference $XX.X are of year we introduced

XXXX. and this over a total revenues to expect to for increase million be million We between $XX XX% represents XX% $XX and XXXX

to million total $XX million. revenue XXXX $XX and between expect for We be

margin we expect million John. XXXX XX% at evenly back XX% expenses XXXX expenses wit product to unchanged that, I’d We h year. to be expect be to and in throughout like relatively gross turn and the With call around revenues the spread operating to on between from $XX relatively

John Nicols

and well We in of the for financial half strategic performance and against performed exceptionally our Gordon. tracking objectives first are Thanks, year. fact XXXX

and pipeline new Our in our and long-term substantially prospects verticals bolstered to add confidence expansion success. our successful growth into our

segment, products. our products that relentless and and other the competencies focus creates discover our forward manufacturing competitively pharmaceutical going at that are Merged dynamic synthetic Codexis that successes of at with with platform Enzyme CodeEvolver artificial accelerating portfolio engineering our biology CodeEvolver accelerate our all cutting by of In to teams core will pace. growing to our with platform of ability be edge needs the unique intelligence, to an the continue generates center scientific begins is recent of technology. proteins strategy a CodeEvolver at will is heart ever revenue. catalyst Our the Performance of the continue practiced company our advantaged protein our on scientific Proprietary, customer’s we penetration of protein meet

technology growing our and pharmaceutical our world's of broadening the reach relationships the companies. Industry of are recognition CodeEvolver We is power customers across processes, with leading evidenced of our and pipeline. deepening more more by

with our a smaller Pharma are through broadening partnerships, Solutions. Porton and innovative pharma of the biotech We reach to companies universe as one such

industrial in success growing a Enzyme segment We by CodeEvolver verticals extending serve pharmaceuticals. beyond will amplify our Performance the to list of

Lyle. evidenced successful two by and the into rapid expansion in commercialization collaboration Our verticals for is industry impactful new food with Tate &

In of billion development industrial develop first addition, establishing the high-Performing significance $X markets. biotherapeutics now starting series molecular we are applications; a multiple just penetrate for several lastly, we discussions biology other underway marketplace, well further enzymes molecular and enzyme as discovery the with growing are to diagnostics are our industrial of novel and to And Enzymes for segment.

to and engine. and in our this clinical drug development more success as development medium discovery into for programs team biotherapeutics over the CodeEvolver validating XXXX CDX and a expanded increasingly well from bode advance discovery long-term, area in Our bringing expertise this

sufficient sheet wealth additional we our our to to Importantly, have capitalize to penetrate CodeEvolver of into our proprietary markets balance opportunities programs, on on enable for advance smartly as biotherapeutics well technology internal additional cash further verticals. industrial a current and expansion as

up I to open questions. comments, would Operator? these With the call like for

Operator

Instructions] [Operator

John Nicols

investor in mention to that we’ll the of question, September. of presentations the Conference posted on at While Investors conferences Annual XXth CL the held our XX like we’re Scott Conference York three will King Care Global include X I’d XX. and in be section Janney our H.C. for conference on to These codexis.com. being September New Montgomery Best first Wainwright Conference Webcast presenting September upcoming Health investor waiting held X; the City to be September Ideas

Okay, operator, we’re question. ready for the first

Operator

comes Couillard with question from first Brandon Jefferies. Our

line Your is now open.

Brandon Couillard

Thanks, good afternoon.

John Nicols

Brandon. Hey

Brandon Couillard

then one on the total first quarter, second timing on the more was just of with in to that John customer? just would many elaborate there? than customers sort quarter served related And the share second us revenues you the how product you comment, in can you

John Nicols

and it's you we small to pretty library, orders The lot about but So, it And customers not how and products hundred a thousand because customer, many we it's value of is be or dollars couple predict more have one are didn't do our project. that it exceed anything than of at careful eight taking small. Gordan's of hundred customers but out number look they taken to who in five and range. for a

Brandon Couillard

terms as growth as numbers. far Got nice you. in goes, absolute clearly then And pipeline of the

you If of in us buckets sort relative their sizes of could opportunities? of forced terms revenue rank help the different the

John Nicols

Yes.

manufacturing one characterize as any I than being think pharma I any larger category within wouldn't other. -- potentially

So order were Obviously, are a on that patented create three we the Probably if those the the projects the working commercialize ultimately a if already we're for product. time, quickly a the got is is we're ability how protein within I'd Enzymes we clinical market, all time – you've engineer protein market we our protein to that's developmental Performance ultimately generic. development to that clinic between for pharma a the creating the be project there drug in manufacturing. the and commercialize, to project in differentiation have say on commercialized can projects have or minor drug could quicker. differentiation that clinic, catalyst customers, for That's to generic, it wait there's only so where be then catalyst for a our

larger we're enzyme have average a us being industrial these we existing for revenue and are catalyst and whole of customer volume novel already for the protein I incumbent categories sectors, for project establish of biotherapeutics become largest programs the for or on other than that's will larger markets on peak The share these other believe & a generally can diagnostics dimension. There average for where suppliers for and opportunities food, pharmaceutical then our all Lyle addressing market food any of generally different the we're projects projects successfully molecular than larger course those for Performance are we've industrial targets Enzymes targeting projects the of arena. against industry, And is commercialized now prospect both larger evident that pharmaceutical competitors, in projects. Tate the amongst incumbent

that's question. job think you did your follow-up probably do primarily I or the that? addressing Did had some So with that

Brandon Couillard

equal of is framing and that that to two, with year? or this it's No, that revenues be in mismatch terms about some Is say page safe that as to it of we that that's in year? aware commercializing, greater on the lastly this guess moving product from to Yes. than just the things. I think R&D big revenue opportunity revenues respect product, scale number will helpful XXXX next of project to commercial from we there sort

Gordon Sangster

we've I may equal think because hard or to R&D this generated that's to project. not may R&D been year, the that significant for the be the revenues revenues company. have It

be quickly. it it prospect & could approach kind a penetrate markets. they of that we've only So see will will of Lyle we and well not function revenues TASTEVA if in years. very And market does product generated this Tate there's M. adoption their early its how much well of does But revenues that that

Brandon Couillard

good. Very Thank you.

Gordon Sangster

Brandon. Okay. Thanks,

Operator

from Matt Our with next Craig-Hallum comes question Hewitt Capital.

open. now is line Your

Unidentified Analyst

on Hi. for questions. This Hewitt. my Thanks for Charlie is taking Matt

any discussions Performance food with Enzymes. players with Have the in success had the has Tate utilizing you other other this Lyle Codexis's been First, space? that &

John Nicols

companies the food Yes, in having space. with discussions sure. We're other

interest amongst there's other that market in players. sure For

Unidentified Analyst

is mind to M. I Okay. from your XX% have growth guess growth commercializing at pipeline, XX% TASTEVA you've this that, to since looks XXXX. that I success had are here, question. able you XXXX I to like from more, XXXX, XXXX never mean, the on but they mean, announcement with One looking and

look would [Indiscernible] XXXX XX% small be we towards it As XXXX reasonable obviously numbers, would a and target?

Gordon Sangster

hope by by we that year. versus pipeline It's I have XXXX we the grew so forward a would XX. growth. [ph] by pipeline seven we aspire the grow like reasonable and generated target, going continue we double-digit did to this – grew XXXX. in the pipeline We We seven

Unidentified Analyst

progress third you has that been mentioned dedicated there Top CodeEvolver And XX any potential customer team? that primary the then has Pharma deal the towards a secured Okay. with

John Nicols

Yes.

license and the GSK. optimistic We in are with continue Merck multiple certainly option to a in companies continuing discuss large pharmaceutical to CodeEvolver of platform CodeEvolver endorsing put other like we’ve pharmaceutical be major we place and already companies licensing for

Unidentified Analyst

jump Okay. the queue. Thanks. back I'll in

John Nicols

Thanks.

Operator

with Our comes Schenkel from Doug next question Cowen.

is Your open. now line

Unidentified Analyst

is taking question. Hi. for for my on This Thanks Ryan Doug.

now You is your talked vertical partner a or there and about in the product who what pipeline customers. provide is? into Are the you any industry third industrial snapshot pipeline details on vertical the more entry can with the partnering within with your a

John Nicols

but notice No, of at out takes register on not only space it's is not at Its encouraged we huge rigorous have our industrial this other We're project it three early days, we're very that's a other indicated what players point. cost. and the It by filling with and/or on snapshot and but conversations It pipeline you'll about other by revenue the pipeline. verticals. evidence as internal it progressed of did snapshot least program and pipeline this generated $XXX,XXX bar, slide in to not work the our in register pipeline. $XXX,XXX

optimistic and various just in about be we continue So can how industrial protein engineering widely sectors. applicable to CodeEvolver be

Unidentified Analyst

expect have end the partner progress, XXXX And progressing say early by talked still important, is about Porton then one can and to you that year it. how some else far? about do you maybe or you anything Got early with installations so

John Nicols

them. well. both doing some We're capabilities with Pharma The co-promoting engineering We of a the a CDMO partnership catalysis been progressing Codexis is leading is is company. technology and combined Solutions protein co-promoting transfer customers Porton the leading together. to We're partnership

months. of of So in first it's really we've that kind the done couple work formative

this the from sharing optimistic us be detailed company we having maybe of in real impact a it's stage, the real. for is It's of some at the news very I'm material possible, XXXX, it great to as little but be early and this for So it's will move results will we material year partnership. prospect installation real, confident

Unidentified Analyst

on in margin, gross quick just more then, for significant can And bit last, product the Thank you. up quarter providing you helpful. guidance and achieve Very one that you'll step provide give gross in you comfortable make second detail the half? what margin on little the maybe

Gordon Sangster

Yes.

I product weighted think Januvia, for toward Sitagliptin the were line. revenues the Merck product

tends especially of margin margin significant ramp a lower margins that QX of and for on up So we newer and in based the a different than those products to lines. components seeing our be customers we're got higher that product variety

John Nicols

would I confidence range inside to Yes. good better have that visibility that we product we of being course year's and add remainder provided in the of both guidance a our sales sales to and margins. for bolster the

Unidentified Analyst

you. Thank

Operator

Our next Stephens. question Drew Jones comes of from

Your line is now open.

Drew Jones

Thanks. How are Hi, all? guys. you

John Nicols

Good. How are you're doing?

Drew Jones

Good.

world, Just broadly in enzymes GRAS one the speaking used Codexis opportunity in enzymes? or that just guys to that blessing received understand to me, TASTEVA side the the the on is of you from of is food specific certification trying a the

John Nicols

broadly. No. It's not

each We have to get GRAS affirmations individual for enzyme.

about So specifically GRAS were and enzymes the in press release the remarks TASTEVA those I we M. and spoke think self-affirmation my today for in even for prepared

Drew Jones

can anything going that timeline at there today [ph]? is this or initial use if forward, can going what we're it is that glean seeing condense forward be pretty you from going all So maybe to standard GRAS you be through run

John Nicols

any & drove had success GRAS was to the Codexis Yes. for actually we affirmation of commercial that gotten self-affirmation the in that had that this I first Tate with affirmations ever for our the of we GRAS GRAS second has agreement mean for was led its back we in execution supply that time it enzymes, received Lyle of for first XXXX received that's place time them sweetener, the another enzyme. today

alongside of just how we TASTEVA Lyle, able reason to part learnings actually get we to the quickly Two, we self-affirmation GRAS from time. that. a So those M of and applied this enzymes were lot for & commercialization of able accelerate the self-affirmation Tate were these

regulatory the ability project a very to for So Thanks M. very this question. proud the quick we're have TASTEVA self-affirmation in affected of team's for

Drew Jones

guys. great. Thanks Okay,

John Nicols

Thank you.

Operator

Our Instructions] question from Wainwright. Ramakanth Swayampakula [Operator H.C. with next comes

Your line is open. now

Swayampakula Ramakanth

commentary some on efforts I like some DNA other couple were would to enzymes. Good additional some the last quick you. and quarter afternoon doing And believe your questions. arena. John hear I in on also commercialization there commentary folks on enzymes Thank evaluations your of Ligase Gordon, that on and

So at where that process is point? this

John Nicols

Thanks.

Okay. quarter. excellent. I remarks. lot didn't in of spend But spend we're time prepared on time last time more This a

been think I time hands have brought -- molecular an has working in growing QIAGEN. bio highlighted commercialization industry on in in veteran field number industry of a from we've as diagnostics year of customers. directly long the with working are molecular They for hiring beginning well. those with customers two the the the She who trials remotely

just we processes gotten in So Ligase shop from is DNA to we arrangement. developed what customers ultimately tests and our we're customers their indeed drive of migration/conversion with through in in quarter, an enhancements we said efficiency, from of last assessments reiterating team kind improvement bolster what growing our commercial see conversion remarkable to with have our our with qualification performance with validation we working and the number clients of and those a stronger

to we Ligase. be on So very DNA continue the encouraged

We're in conference, diagnostics, its formal enzyme performance, patenting internal very validation us way disclosed we that forward what a encouraging and in second haven't yet. for our at encouraged he put to working shop of we're the molecular and I'll seeing results in side working and early the The November. affirming a on is AMP very package core conference the on enhancement that

measures, all into is that for penetration very us. quite the on our market for track plan penetration So large market much

there. to So, color a the little that you helps hopefully update on get

Swayampakula Ramakanth

by data you they the PKU release continue with in moving when also helpful this X milestone on some to CDX-XXXX, the underway to great milestone for the payment of product? its study year. see their Nestle Would that with get enzyme, to end to the Is Phase and That's the another the No. actually. trial Yes. and is Then get very potentially a of this there product? data development going decides of Phase associated the Xa start that when you're

John Nicols

Sure.

can question very I first the So answer explicitly.

Nestle aggregate. from for assuming had they opportunities those development. will that arrangement additional made from decision we – we Sciences that out the they but and few provided Nestle of exercise what CDX-XXXX clinical a through and not? cash we've will we set they in exercise million decide we $X earn we to the development the and the over for various additional quarter Codexis window exercises the the would assuming initiate triggers milestone we does us we a for window the to option of Health If CDX-XXXX payment earn that regards set of assume payments of option continued of or milestones exercise have continuing as yes stream for whether amount provide pre-commercial with over opportunities, point decision-making forward of fourth we Nestle the topline going Nestle to approvals they will then not would over take disclosed additional through the publicly other milestone Publicly are will that Health Science upon the option that to up well, a the -- the report the closing Nestle CDX-XXXX. milestone next be that drug CDX-XXXX, in are the the on opportunity be eligible to with So the call have for those be have so option further a take will deliverables, take development their After development of and

Swayampakula Ramakanth

CDX-XXXX, additional segment talking products any any are that in pipeline business you time last color same or there? commentary then behind And Okay. about

John Nicols

been when outside up well last you work and on to success CodeEvolver oral was option encouraged, quite given well the They not now prepared new had did of solution doing might collaboration programs that's also advancing. provide prospect success of Storage others nature are They create several of Nestle and teams didn't diseases well. only areas. think recall and a that on it addressing program to a that are our year PKU amino we're we up discovery before. to struck protein the just the veteran started we bringing since investment work Dr. those working hiring, we one investments deal in that for Health and neither in set warranted we Hicham established and projects we've important that's ever team our errors to are CDX-XXXX, But We where an doing put the in well in as why entered remarks the similar we're of comment company also We're has share Those multi-decade program. that on for these Alaoui. October. into work several the with so of worked kind up earlier of that in arrangement a and the CDX-XXXX those we how October issue the Codexis diseases and of to team pipeline work, highlighted my the in strategic several Codexis hiring metabolism project with nor other I addressing aggregate ever the final Lysosomal therapeutic disease, second dedicated that any We’ve amped refresh, rare is projects are are programs inborn Nestle in Nestle are targeting a Science parallel started to working. We acid where progress program partnering projects we stepping an Diseases. to we're on color So, very can

So partnering we're Science that we're working Nestle project encouraged accordingly. that with Health increasingly by

Swayampakula Ramakanth

That's very Great. helpful.

on the from the the by could color looking something Codexis project progress stating there relationship some there – since know Porton year. effort relationship. So the it's of and to you me gave project the last who a any you're economics kind by that as color potentially is the and of and announcing is if can sense end some be I of what of you're encouraged economics you what be an up that gets How you question initiated that in like combined would that? recognize you is sign going provide to from kind

John Nicols

pharmaceutical economics Sure. a Yes. from working Porton a with There's successful project potential two customer. and

could use to with is where improving economic of opportunity R&D where the First and product find that places Porton other have fit. second a the hadn't we access find lead partnership the targets new is from Porton of creating the installation catalysis found to if economic often the working is sales shelf, off world, new to for for ready go that which engineered benefit primary through course we client is to the hit manufacturing they if there's to protein engineering, who prior aren't client and Codexis require a be some sees But that it customer of would don't a enzyme service. which protein the protein Porton's Pharma can that protein benefit great to catalysts products development leads would and the larger so times Codexis to time to the of an available do

could And by so will turn course to generate from ultimately we opportunities engineered of proteins it arrangement new product Porton the revenues services R&D securing sales. that

an both or minimum just with of based or modest those on fee pass deal refresh those hook on either a the I'll annual basis. the Porton, to and use services is Porton engineering kind So of protein

the are we're So new we're that acceleration open partnership driving regardless economic for Porton procured our R&D and of that to products services we're really setup for. growth hope so of and setup I whether penetrate generate from pipeline, success this for and installations is to services and by not, of think well deal the the engineering that's or

Swayampakula Ramakanth

very you Thank much. answering Appreciate the fantastic. all Thank That's questions. you. Great.

Operator

Schwartz next First Analysis. Our from Steve question comes with

Your line is now open.

Steve Schwartz

afternoon gentlemen. Good

was I that, about Sorry mute. on

John Nicols

Hey, Steve.

Steve Schwartz

did four to projects, you parts, possibly think It's correctly? increasing therapeutics referred hear Yes. prepared One to think in company remarks, that self-funded I nice quarter. your a pipeline or I I John six from but question projects five on different the XX

John Nicols

are Somewhat, self-funded currently, of pipeline the them projects you self-funded two in projects. heard not that but XX to we all from projects therapeutic went four years

XX of details If and discovery look and generic the arena the drug pipeline molecular three roughly the the you programs seven are molecular chart, and are biotherapeutic in targeting biology novel at diagnostic in of is application. one

Steve Schwartz

back? four had & – backward this four Lyle years I the mean, [ph] have were those when CDX-XXXX to ago, your mean about right? others, that goes goes you writing that right? still I go and go in you you filings, And guys I had it Okay. mean way far three four, How was Tate back shell you two when back before

John Nicols

CDX-XXXX, our One Not in one target. one Two the biotherapeutics there of enzyme one X.XXXX novel actually the M was and of because were them on was so early front ingredient indeed four you those me. have like of them start TESTEVA if I food of any prepared for that to was that actually conversion do that could I and the no project so the was remarks therapeutics none we yield. we enzyme really, in another – two of the was own back risky frankly the It started [ph] account. said of project envisioned, go

lot -- So pitch people try or could backend a we to get would us. if benefit that we to couldn't we would people if we help of lose

own. So we did it on our

the so fourth And three. days that the Ligase. project was number project And was early of DNA

we and unaudited, hadn't is that I those honestly but point quite that all XXXX, we When the started the company the new. In any started those. self-funded doing this mean had all time On four those. XXXX just certainly molecular In envisioned was So we and we diagnostics. doing PKU of weren't project one projects. I this joined of projects Stevia We XXXX had hadn't we CDX-XXXX. project are XXXX weren't any

that further pretty memories accurate, and all you little So of a history that's the kind good Steve. of takes back

Steve Schwartz

Yes, yes.

researchers, nearly with a questioning you PKU the other project I with those. worked were nature basically And up on Okay. that here four, outright work And your is because little remember in three with projects that right? answer, to changing spare like certainly the my paid of so being on these think bit days those in then the the made cases I from time you

bringing takes this this So me am to up. ultimately why

just seven, therapeutics clear I on people, point mean, to in capital are estimate you've then much especially And fall this the How program. answer you how good obvious you lead doctors some I XX, come from at where one? may projects think point, additional are that the number arena? the into committing this coming to where but hired did is the develop got two, they number the this it the I'm You've the to in new be at so you

John Nicols

Yes.

or one that this Health company is of deal us at really last that three at Now the good where I on R&D all of had done ago beginning if PKU our we the trial, three work right emboldened a own to target of idea in to and the or Xa very days. look think division. its so so in company couldn't and And questions look chapter afford of four the in successfully come, four best mean CDX-XXXX you're right, not now best Phase We're those dose well a Nestle capacity the I the in growth my four the some really because five we self-funded years early track, cohorts do that is Codexis or We've we them then following idle work. struck struck essence of has over three right, how so over we arguably put just years. in clinic. with the And Science four years, of deal

all with molecular enzymes so Codexis. applying great we for their we other us work into revenue for talk it's worked, was they create was from need and the as we're of to market investment opportunity, just that results that thing, Ligase and well, a like and financial DNA looks therapeutic to same programs we improved it pathway Ligase. opportunities shareholder one DNA six and that's know we a some they with we're real lead and doing to like right. team customers product be to types forward tell Then looking us. to of to to put and early, its a the This great value, showing that of we first emboldened continued look So idea, the world diagnostic it is will didn't when really started CodeEvolver

so products going into that we are a And that now general of couple sectors. other we have

is three. So there

cash. revenue grown So Tate are they and We've I to a And it's its that think bringing We're gives the growing. more capacity company with as cutting is Lyle just more built a in Sitagliptin that do with revenue, has pipeline, you Merck deals Lipton & financial and Nestle with feel. investment. generating

So that your was first question.

programs self-funded. you pipeline, XX XX look are out at if So the of

it's primary input, of capital primary the is R&D capacity. the input So in capital terms resource

the of you being development could So okay, so products a sustaining a take are projects the of two-thirds funded revenue now are self away being third nine roughly self-funded which you see – and XX partners. are out by if XX,

think the And of to we that self-funded of years. we more roughly ownership create couple mix is significant, our expense is stayed and a of course which control is over actually products R&D roughly stable last over. third mix. that's So healthy that that And line a very have

Steve Schwartz

Okay.

you I mean, as here. you last do, this highly traditional, I It point capacity XX imagine sit depending is dialogue XX? be types do this the in see but to down variable your would how and along I kind can projects. want goals, and going. with my mean question When down I you What it sit will maybe at specialty put in you of XX of much do self the in know Alaoui you so this of where company utilization you thinking. is -- think? and And projects? what of the set you you on some lines of that terms Can the I’m funded don’t you get kind terms chemical more Dr. that's Do that's

John Nicols

ever as good to success; that. for difficulty] be the [technical and Yes, so presume given before and of to change I pipeline course numbers like to ebb And out and continued it will going capacity [Indiscernible] get an in is it’s all flow mean, corporation success. well we there financial

is what think this mean company. very rich I a I this really, target So

people the are be imagine for imagine about do, a customers we can to could those the more ever the what to companies created. and that fit that’s just trying kind of in. and corporation proteins have more doing And lot protein, see haven’t We CodeEvolver talk creating new we comes what proteins that of

go the there anything, mean in just we had an then this XXXX, idea to about had potentially amino again And we started that, enough just would yeah, process I cost launch no You about we on prepared we work remarks. enzyme thinking and was started was acid bragging did the right. what in with TASTEVA for reflect needed When be & make M. when low success our to that XXX we to a so put and work make can it right. say that to to make teams modifications Lyle money, the we enzyme Tate

that took CodeEvolver R&D do that. much So manipulation can only it

to we’ll business how adding we’re & case of build these that, do team a CapEx have putting the that's prospect of exciting earlier on to address Lyle. to I so And similar opportunities. put with dialogues and just a and here, factories; And analysis, them we don't when than it some We described to with enough because we it, a cost works lot lot team got really expense. what Tate work work a not not of many of big around to is companies a we've very course much of see

and Codexis laboratory to and after that's of We’re two scientists years. R&D can deploying come what And the them. out go beauty in

Steve Schwartz

for thank is it remarkable. Well no color John, it. Yes, that you appreciate on the

John Nicols

pleasure Yes, thanks.

Operator

the to like time, this I’d questions. remarks. turn over back I’m management for At call to no showing closing further

John Nicols

industries. November. year to and We half XXXX your everyone have growth business you for In the highly speaking for ongoing very a you of I progress, second strong please day. Hey and and a first entering the when we everybody look updates results great to our our our with of outlook proud core half are third all Thanks. we’re thanks meantime, additional performance with into excited good report questions. in providing for quarter the again in team productive forward and high-value about the our

Operator

gentlemen conference. This your and participation does Ladies you the program. conclude in thank for today’s

have great may You Everyone a disconnect. now day.

Codexis (CDXS) 8 Aug 182018 Q2 Earnings call transcript